Attorney general to study whether money was legal

By David Ingram, Journal Raleigh Bureau

RALEIGH -- A new report from State Auditor Les Merritt confirms that legislative leaders directed millions of dollars in the past year to the communities of political allies, without the approval of the General Assembly as required by law.

The money included thousands for a state job for former state Rep. Michael Decker, and officials also said yesterday that Decker's job is being extended for 90 days using federal grants and private money.

Merritt's staff spent weeks combing through the state's budget process, spending records, e-mails and memoranda.

The result was an 88-page summary of how leaders in the N.C. House and Senate found themselves with $14 million to spend, and of how they spent it.

In the case of Decker's job, House Speaker Jim Black's staff just exchanged e-mail with officials in the N.C. Department of Cultural Resources. They tailored a job posting for Decker, and they directed money for the job.

Rita Harris, an adviser to Black, wrote to department officials on Feb. 18: "Speaker Black requests $45,000 of Discretionary Funds be directed to the Department of Cultural Resources, Division of Archives and History for promotional work in assisting local communities in business and economic-development planning around historic sites, and local resources and attractions."

Merritt's report was delivered this week to Attorney General Roy Cooper, who requested it after the discretionary money got renewed scrutiny in March.

The auditor wrote that Cooper might want to consider whether the money was given out legally, given that state law prohibits spending money on purposes that aren't spelled out in law, and whether officials violated the N.C. Constitution by appropriating money, a function that belongs to the General Assembly. Noelle Talley, a spokeswoman for Cooper, said that the office is looking over Merritt's report.

"Our lawyers have worked with the auditor's staff from the beginning of this process to review the relevant statutes and case law," Talley said. "We'll issue a legal opinion as soon as we review the auditor's findings."

The Winston-Salem Journal first reported in March that Decker, with Black's help, had been hired as a community-development specialist for the Department of Cultural Resources. Decker, a longtime Republican who briefly switched to the Democratic Party in 2003, lost re-election last year to his House seat in eastern Forsyth County. His switch helped create last session's coalition between Black, D-Mecklenburg, and Co-Speaker Richard Morgan, R-Moore.

In budget negotiations last summer, Black, Morgan and Senate leader Marc Basnight couldn't agree on how to spend about $14 million for small community projects, Merritt's staff wrote in their report. So instead of putting the specific projects into law, the budget agreement approved last July included reserves of $10.3 million for cultural projects, $2.4 million for health projects and $1.3 million for miscellaneous projects.

Basnight had $6.5 million to spend, Black had $4.6 million to spend, and Morgan had $2.9 million to spend.

Auditors partly attributed the creation of the fund to the hectic and top-down methods for writing the budget. Legislators had less than half a day to read the final version before voting.

"The limited time in which the budget was finalized, printed and then voted on by the legislature limited budget transparency," the audit report reads. "It was difficult for members of the General Assembly to adequately process the detailed information in the complex multipage final budget in a restricted time frame."

Among the beneficiaries have been Old Salem, the new civil-rights museum in Greensboro, a U.S. Marine Corps museum in Jacksonville and the Exploris Museum in Raleigh. Dozens of smaller museums, arts councils and libraries got grants from $5,000 to $500,000.

Not all the $14 million had been spent as of June 1, state auditors found. About $1.2 million was still available then, and the state's fiscal year ended yesterday.

Legislative leaders have said they regret not putting the projects into law, but they have defended the projects themselves.

"I continue to believe that every project the Senate recommended for funding last year was truly deserving," Basnight wrote in a response to Merritt's report. "Investing in cultural resources, the arts and tourism brings a tremendous benefit to our economy - and at the same time enhances the quality of life for all people in our state."

In his response to the report, Black defended Decker's new job.

"I thought Mr. Decker's background - a history teacher who has an interest in State historical sites and experience in public service - fit with the identified needs in Cultural Resources," Black wrote. "I therefore recommended him to the Department of Cultural Resources as someone who could fill that type of position, and I was glad that the Department of Cultural Resources found him qualified and offered him a position."

Decker has worked on several projects at the department but has focused on developing interest in the state's gold mines, said Susan Lagana, a spokeswoman for the department.

He is working on maps and other resources, and the department decided to extend his job for 90 days with nonstate money to allow him more time. Lagana said that the department will continue evaluating the position.

"He's really at the beginning of some of the projects he's been working on," she said.