An audit of the V.I. Legislature has found that it violated the V.I. Code by spending $1.16 million more than was allotted in Fiscal Year 1999, thus contributing to the government's operating deficit, and circumvented Finance Department rules by using its imprest fund "as a revolving expense account" to pay hundreds of thousands for salary advances, travel items and other services.
Conducted by the U.S. Interior Department's Office of Inspector General, the audit covered the fiscal years 1997-99. It found that in 1999, the Legislature underspent its appropriation by $373,602 but overspent how much was actually allotted to it by the V.I. Office of Management and Budget by $1,158,541.
"The Legislature's director of Business and Financial Management told us that the Legislature adopted the position that it was entitled to its full appropriation," the audit states, "because the Legislature believed the government's executive branch did not have the authority to reduce its appropriation."
But the audit goes on to cite the V.I. Code, which explicitly states that no government officer or employee can spend more than is apportioned. And the Legislature's business director informed then-Senate President Vargrave Richards at least twice of impending overspending, according to the audit, imploring him to institute cost-cutting measures.
"The realities are that the Legislature cannot continue to spend without regard to the financial woes that the government is experiencing at this time," the audit quotes the letter as saying. In addition, at least three memos outlining cost-cutting measures for the Senate were drafted by the business director but never signed or issued by Richards.
The Legislature dipped into the General Fund when its allotment ran out, the audit said, contributing to the government's operating deficit for 1999.
In his response to the audit, Richards did not concur with its findings and again insisted that the Legislature can spend as much as it appropriates for itself, regardless of whether the Management and Budget Office actually gives it the money. He cited in support a section of the V.I. Code that he said prohibits the OMB director from unilaterally reducing how much is allotted to the Legislature.
Regarding the imprest fund, which works like petty cash, the audit found it was used to pay for senators' expenses and legislative operations "regardless of dollar amount or purpose," in transactions totaling more than $1.2 million from 1997 to 1999.
"The director of Business and Financial Management told us that the Legislature adopted the practice of paying for day-to-day Legislature operations from the imprest fund because local vendors did not always accept government purchase requisitions and because the Department of Finance did not always process payment requests in a timely manner," the audit said.
It found four instances in which advance payments to various contractors, which were to be repaid to the imprest fund once payment was received from Finance, were never repaid, for a total of $23,000. In his response, Richards detailed how all but one of the payments (for $5,000) had been researched and repaid.
In all, the Legislature concurred with eight of the audit's 12 recommendations; the Inspector General's office has asked that the Legislature reconsider its position on the four others.
