State Treasurer Riley Moore today applauded the passage of a bill that will provide greater transparency, accountability and oversight of taxpayer funds used by the state Economic Development Authority.
Senate Bill 295 passed the Legislature Monday. The bill contains several recommendations proposed by Treasurer Moore to guarantee that taxpayer funds used for economic development loans are managed and spent in a transparent and fiscally responsible manner.
“West Virginians expect their tax dollars to be spent wisely, with absolute transparency and accountability,” Treasurer Moore said. “This bill will put the proper controls in place to ensure taxpayer money is protected from waste, fraud and abuse.”
The importance of these controls was highlighted by a legislative audit released earlier this year which found the state Economic Development Authority (EDA) took a $24 million loss on a taxpayer-funded venture capital program created in 2002 and failed to maintain adequate accounting documentation.
The law creating that program required the funds be transferred from the Consolidated Fund managed by the Board of Treasury Investments. The Board is chaired by the Treasurer and the consolidated fund includes short-term operating funds used by the state and local governments.
In addition to the venture capital program, state law requires the Board of Treasury Investments (BTI) to frequently provide the Economic Development Authority with funds for other programs it administers, including loans and loan insurance for economic development purposes, such as broadband expansion.
“During our transition we were already preparing legislation to give the Board of Treasury Investments greater oversight powers to ensure the funds they are required to provide the EDA are used and managed properly,” Treasurer Moore said. “With the passage of this bill, we can help make sure our citizens’ tax dollars are handled properly and aren’t misspent.”
Among its controls, the bill:
- Requires that the Economic Development Authority allow the Board of Treasury Investments to inspect and copy all Economic Development Authority records related to any BTI-related loan.
- Requires the Economic Development Authority to adopt appropriate accounting practices and develop internal financial controls for loan funds, including detailed record-keeping practices.
- Prohibits the Economic Development Authority from deducting its administrative or operating costs from BTI loan money.
- Requires the Economic Development Authority to submit quarterly reports to the Board of Treasury Investments, Legislature, and Governor on the status of insured broadband projects and loans and submit to a biennial legislative audit.
- Requires the Economic Development Authority maintain broadband loan money in a separate, segregated account, which the Authority may not access unless a broadband provider defaults on an insured loan. Before drawing on the account in the event of default, the Economic Development Authority must notify the Board of Treasury Investments and certify that the Authority will pursue available remedies to make the state whole.
- Establishes standards for the minimum information and criteria that the Economic Development Authority must consider in its loan insurance application review process. These standards will help inform the risk of default that a broadband provider presents to the Consolidated Fund.
The controls were incorporated into a broadband loan insurance bill proposed by Gov. Jim Justice. The Senate passed the bill on Feb. 22. The House later made some modifications and passed a revised bill last Friday.
The Senate concurred in the House changes Monday morning. It will soon go to Gov. Justice for his consideration.