Audit Boosts Gessler’s Decree to Cut Fees

February 27, 2014
Secretary of State Scott Gessler

Secretary of State Scott Gessler

DENVER — Secretary of State Scott Gessler’s much-criticized decision to cut filing fees on businesses is suddenly looking like the smart move.

The state auditor released a report this week showing 12 executive departments had violated state law by amassing $25.6 million in excess cash reserves, which must be reduced by lowering fees or expanding services.

The timing couldn’t be better for Gessler in his ongoing battle with the Joint Budget Committee, whose members have excoriated him for lowering business fees and waiving penalties in order to keep his excess reserves in check.

“While some in the legislature attacked my $3.5 million fee holiday for our filers, today the auditor’s report endorsed my office’s leadership and action to bring us into compliance with the law,” Gessler said in a statement.

“I share the Audit Committee’s frustration that government shouldn’t be hoarding taxes and fees, which is exactly why my office took deliberate actions to reduce our excess reserves and keep $3.5 million in the hands of businesses, notaries public, charities and non-profits,” Gessler said.

The report found that the Department of State had one fund with excess reserves–the Notary Cash Fund–but the amount has since been moved to the office’s cash fund, “bringing the office into full compliance,” according to a Gessler press statement.

Members of the Joint Budget Committee (JBC) have blasted the Republican Gessler for cutting his fees and waiving penalties after he reported a budget shortfall, which he attributed to $1.7 million in unexpected expenses associated with House Bill 13-1303, last year’s sweeping elections overhaul.

“Fast forward to this year’s budget discussions, and the same JBC members who supported HB13-1303 are questioning what happened to my department’s budget surplus,” said Gessler in a Feb. 17 letter to the committee.

“To repeat: my office reduced its excess surplus in compliance with state law before we knew anything of a partisan election rewrite,” Gessler said.

The secretary says he didn’t see a draft of House Bill 13-1303 until April, after he had cut fees to comply with state law. Gessler has since reworked his budget and projects a $550,000 cushion for fiscal year 2014, but he’s nonetheless under pressure from Democrats to increase fees on businesses and other filers.

“He made this mess all on his own,” said JBC chair Crisanta Duran (D-Denver) in a Feb. 20 statement. “He has been fiscally irresponsible by slashing fees, fines and penalties at the expense of meeting the needs of his office. He has a lot to account for.”

Departments are required by state law to maintain no more than a two-month reserve on programs paid for by fees, or risk triggering refunds to taxpayers under the Colorado Taxpayers Bill of Rights.

State Sen. Steve King (R-Grand Junction), who chairs the Legislative Audit Committee, has suggested holding a special meeting during the session with department heads to figure out why they’re sitting on so much surplus cash.

“I’m feeling a little cautioned now that I have indeed sponsored some bills that include moving some fees up,” state Sen. Lucia Guzman (D-Denver), the committee’s vice chair, said at the hearing.

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