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April 10, 2012

Time to lay claim to $206 million

Imagine a scenario in which somebody shows up at the Indiana Unclaimed Property Division to claim all the cash from the latest state accounting error courtesy of the Indiana Department of Revenue.

The dialogue for some unassuming clerk would start something like

this: “Excuse me, is Mr. Zoeller, Mr. Greg Zoeller here? I’m an Indiana taxpayer, and I’m here for my share of the $206 million.”

“The $206 million,” a confused clerk may respond.

“Yes,” a confident taxpayer might retort. “I’ve read where the latest state accounting error took away that amount from cities, counties, towns, libraries, schools and whatever else is funded by the state, which I guess includes all major state universities. I don’t want all of it — just my share if you don’t mind.”

For those of you who just joined this issue, before last week, the last time this happened was just before Christmas when Gov. Mitch Daniels announced there was a slight, $320 million error caused when a fund collecting e-filings for business taxes was not included in the mix for state revenue – for three years. The Indiana General Assembly in its finite — not infinite — wisdom, decided to right that wrong by giving all Hoosiers a $50 rebate.

But legislators aren’t in session now until next year, which means it may be up to Daniels to decide how to right this latest wrong. To put this amount of cash in perspective, the $206 million error is roughly the amount any of last month’s three record Mega Millions lottery winners collected before taxes, which is enough to run the city of Indianapolis for a couple of months, according to one projection.

To say that any taxpayer or the president of the Indiana Civil Liberties Union or Grover Norquist could stop by the Indiana Attorney General’s Office and lay claim to $206 million is sardonic. But to point out that Zoeller and his staff are charged with the responsibility of returning millions of unclaimed stock dividends, safety deposit contents, insurance revenue and other personal property to rightful owners is purely ironic because Daniels will have a devil of a time ever returning $206 million to the rightful taxing units that were owed the money in the first place.

And how will he compensate all these taxing entities that had to borrow money just to make payroll? He won’t. That will be a cost passed along to us, the taxpayers. He won’t pay a penalty. He won’t serve time, and he won’t lose his job.

Yes, in less than six months, Daniels, a former White House budget director for George W. Bush, managed to lose track of at least a half billion in tax dollars. Given the ongoing lawsuit involving the state and IBM over the botched Medicaid reform system IBM implemented for Daniels, the state could be out another half billion, depending on what settlement is eventually reached.

And there’s more. Daniels has called for an independent audit to determine what other errors might have been made by the Department of Revenue. An audit may never tell us if Daniels ever questioned or attempted to find out if the Department of Revenue was doing its job.

But the real issue here is not just what errors have been or are still being made. It’s what can and will be done to remedy this Keystone Coppery of a state budget process. And incidentally, who audits local government to make sure all its books are in order? You guessed it, the state does.

The sad thing is that if no one claims unclaimed property in the attorney general’s office, the funds go to the state by default. But the ineptitude of the Daniels administration has allowed the state to confiscate money local units of government should have had all along — and keep it.

Who could potentially be filing “claims” for part of that $206 million?

How about police in Marion County who are plugging over a $30 million budgetary gap, or the school corporations that laid off teachers as class sizes ballooned? And then there are all the public safety employees in cities such as Logansport and Muncie. Support your local fire department signs appeared in Logansport as jobs were cut when Daniels tightened the state’s purse strings. Hoosiers blindly put their trust in a public official who had no clue that there were hundreds of millions virtually stored in the state’s mattress in Indianapolis.

The reason, we assumed? It had to be the national economy hitting Indiana hard. It wasn’t.

Speaking of irony, the last time somebody in Indianapolis was found to have taken $200 million from people who had it coming, federal authorities seized the records of Indianapolis investment manager Tim Durham and indicted him. Not so coincidentally, Durham has been a huge contributor to Daniels’ campaign, and Daniels hasn’t returned that money to Durham’s alleged victims in Ohio and Indiana either.

Meanwhile, as the state’s books were still simmering from the latest cooking by revenue officials last week, Daniels was in a curious place – the Middle East. Presumably, it’s a trip that could build his resume to be a vice presidential hopeful when Republicans meet in Tampa this summer. But this latest fiasco makes a former White House budget director look like a former Supreme Court justice who couldn’t tell you how many amendments to the Constitution there are, or a former member of the Joint Chiefs of Staff who has lost track of all the nation’s nuclear warheads.

The elephant in the room on this issue is an elephant, small in stature, completing his second term in a state that has no recall petition, but millions of residents who will one day be able to recall the worst budget debacle in Indiana history and the man who claimed to be fiscally responsible at the forefront of it.

They say elephants never forget. Hoosiers will never forget this elephant either.

• Dave Kitchell is a columnist for the Pharos-Tribune. He can be reached through the newspaper at ptnews@pharostribune.com.

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