Editor’s note: Following this column, OCTA officials delayed action on this issue.
Orange County transit officials are gearing up to gut oversight and transparency protections for roughly half a billion dollars after the county Auditor’s office raised serious concerns about a lack of independent auditing over spending.
This coming Monday, OC Transportation Authority board members are looking at changing specific language from a 2006 road tax ballot initiative approved by voters that puts such taxpayer oversight in place.
The proposed change comes directly after Orange County Auditor Controller Andrew Hamilton spent the last year raising serious questions internally about why so much transportation spending isn’t audited in what he argues is the most thorough manner available.
At Hamilton’s quiet insistence – with the real threat that he can withhold his annual certification under the measure – transit officials have agreed this year to conduct a limited compliance audit of Measure M2 spending.
That’s a much more extensive audit than has traditionally been done of an agency charged with running bus services and overseeing road projects for OC’s 3.2 million residents.
It’s one that will now include a closer independent look at OCTA’s actual spending of these taxpayer funds for consistency with the measure as opposed to the general financial audit currently done.
Hamilton is the first Auditor Controller to require a compliance audit before he signs off – something three other elected officials in the position did not.
OCTA already does some spending reviews and reportedly finds violations.
Regardless, Hamilton’s action may prompt the first independent deep look of its kind in more than 30 years since Orange County voters first authorized a half-cent sales tax on themselves in 1990 to finance better roads, freeways and transportation enhancements.
Yet moving forward, transit officials want Hamilton out.
At an expected public hearing on Monday, OCTA staff are proposing to remove the Auditor Controller’s additional certification to the annual review done by a taxpayer oversight committee of public members under Measure M2.
Big Changes in the Dark
Note that the local transit agency – with a nearly $2 billion annual budget – is one of the few in OC that doesn’t video its public meetings.
That makes big changes easy to do.
Like on Monday, OCTA staff will advocate that the local elected officials overseeing OCTA operations authorize a major change to the Measure M2 ballot measure.
Without going back to the voters.
Hamilton, a local Republican, questions removing his oversight of the process – one that he says isn’t consistent with the intent of voters.
“I think the proposed amendments to Measure M2 are a bad idea,” Hamilton told me in an interview.
“First, in the minds of taxpayers, these are important safeguards purposefully placed in the Measure for necessary transparency required by voters,” he said.
“Second, I believe this is a major change to the Measure, as it relates to the rules set forth by the Measure, and the language is clear that major changes must be approved by voters.”
Ironically, Hamilton has found opposition to his in-depth audit from fellow Republicans on the OCTA Board: Elected officials like Orange County Supervisors Andrew Do and Don Wager, who is running for reelection this year to represent the Third Supervisorial District.
Wagner at OCTA meetings has publicly questioned whether the additional levels of auditing are worth the extra spending.
“It is an expense that is not justified,” Wagner said at the Oct. 9 OCTA board meeting where the expanded audit was approved.
The strongest voice of support for Hamilton on the OCTA board is coming from Democrats.
“We should not be taking away oversight,” said OC Supervisor Katrina Foley in an interview, questioning why officials would want less rather than more auditing.
“We should be expanding oversight.”
“Oversight,” Foley added, “I think was meant to be in place.”
Foley voted against setting a hearing for the proposed changes when first pitched to the OCTA board along with Santa Ana City Councilwoman Jessie Lopez and Irvine Mayor Farah Khan, who is running this year against Wagner for a county supervisors’ seat.
What’s in an Audit?
According to OCTA records, it looks like Hamilton first raised the auditing issues earlier last summer – before having to certify the agency’s spending.
And it looks like just after asking for more auditing of transportation spending, county Supervisor Do – the same supervisor who would argue publicly in favor of current level of certification – proposed a full performance audit of Hamilton’s own department during annual county budget deliberations.
Do also challenged adding staff to the Auditor Controller department – something that visibly caught Hamilton by surprise in open session.
The interchange reminded me of the battles that former OC Auditor Controller Eric Woolery – another Republican – faced when questioning county supervisors’ authorizing pensions for themselves in a questionable manner.
OC Supervisors ended up decimating Woolery’s staff budget, later prompting a move out of state to Kansas City before his untimely death.
[Read: Auditor-Controller Eric Woolery Apparently Died in Kansas, Not OC]
Hamilton has seemingly awoken a similar controversy.
While Wagner himself at one point publicly questioned whether Measure M2 can be changed without going back to the voters at a board meeting, OCTA staff argues it can.
They note the Measure M2 ballot measure allows officials to change its language with a 2/3 vote of the elected leaders of the OCTA board — although there are questions whether that applies to required audits — and holding a public hearing.
In a Nov. 6, 2023 memo to OCTA board members, CEO Darrell Johnson argued against Hamilton’s view of certification – contending that the role of the auditor controller under Measure M2 is to rubber stamp what the oversight committee of voluntary members of the public reviewed.
“For the past 32 consecutive years (including 20 years from M1), the TOC has determined that OCTA has proceeded in accordance with the Plan,” wrote Johnson to OCTA board members, noting that the committee reviews annual audits and holds a public hearing to determine that Measure M2 revenues are being spent along the lines of the ballot measure.
Johnson wrote that in past years, those transmittals were sent by mail and just informed the board that the oversight committee had reviewed audits and held its hearing.
Hamilton changed that practice.
As someone with a certified public accountant license, he told me he reads a certification a different way.
Before he signs off on an official certification, Hamilton said he needs to see enough compliance auditing – along with the opinion of the public committee – that the spending is consistent with Measure M2 promises.
At Hamilton’s urging, the taxpayer oversight committee voted to push for the kind of compliance audit he called for in September 2023.
Hamilton – who assumed office last January – voted against the latest certification as a member of the taxpayer oversight committee.
But he did certify the spending was consistent with the measure as Auditor Controller – apparently the last time he would do so as a nod to his predecessors.
Political Payback?
Once Hamilton’s request for the deeper audit made its way up the political food chain, things got rougher.
The request for additional auditing was approved.
But now cutting Hamilton’s certification out of the loop ramped up.
Johnson described the Jan. 22 amendments in his Nov. 6 memo largely as clean up.
The aim, he wrote, is to “address inconsistencies and interpretations of the individual responsibility of the Chair of the Taxpayer Oversight Committee as it relates to the annual certification that revenues have been spent in compliance with the Renewed Measure M Transportation Investment Plan.”
Yet in Johnson’s own letter, he outlines clear language when the ballot measure was sold to voters that indicates in addition to having a volunteer group looking at transportation funding that there would be a professional with an auditing background also signing off that spending was going according to plan.
It even raises a standard of “tough questions” and reviews that “independently certify” that “transportation dollars have been spent strictly according to the Renewed Measure M Investment Plan.”
Strictly.
That’s a pretty tight standard.
It goes even further stating that “The elected Auditor/Controller of Orange County must annually certify that spending is in accordance with the Plan.”
Again, that sounds pretty strict.
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