Image: Precinct 3 Montgomery County Commissioner James Noack urged the Montgomery County Commissioners Court to reduce the County Auditor’s Budget by the amount of money set aside for the Budget Office, which took away some of the County Auditor’s functions. The Auditor, Phyllis Martin, fought against reducing the bureaucracy of her department. Noack’s motion passed the Commissioners Court on a 3 to 1 vote on Wednesday, September 5, 2018.
Conroe, September 7 – With politically-voracious Montgomery County Auditor Phyllis Martin looking on in anger, the Montgomery County Commissioners Court voted 3 to 1 to reduce the County Auditor’s Budget by the full amount of the Budget Office which took over the Auditor’s budget functions in March, 2018. In passing the Fiscal Year 2019 Budget, on the motion of Precinct 3 County Commissioner James Noack, seconded by Precinct 2 County Commissioner Charlie Riley, the Commissioners Court reduced the Auditor’s departmental budget by $234,492 to $1,950,593.
On July 27, 2017, at the urging of Noack and County Judge Craig Doyal, the Commissioners Court created a Budget Office and took the “chief budget officer” function away from the County Auditor. The Commissioners Court hired Amanda Carter in March, 2018, as the first Budget Office Director and provided the Budget Office with a $309,961 budget for Fiscal Year 2019.
Both Noack and Doyal repeatedly assured the citizens of Montgomery County during open meetings of the Commissioners Court that they would reduce the County Auditor’s departmental budget by the amount of the Budget Office departmental budget. Noack and Doyal explicitly made that promise on September 5, 2017, when the Commissioners Court passed the Fiscal Year 2018 Budget.
Citizens began to complain during Commissioners Court meetings that Noack and Doyal failed to fulfill that promised budget reduction in the County Auditor’s office. On March 14, 2018, in response, Noack and Assistant County Attorney B.D. Griffin argued that only the Board of District Judges, which oversees the County Auditor under Chapter 84 of the Texas Local Government Code, actually had the authority to reduce the Auditor’s budget.
The citizen response to Noack’s and Griffin’s presentation was that Noack and Doyal should never have promised to reduce a budget if they were unable to take that action by law. The Houston Court of Appeals in a case styled Harris County Commissioners Court versus Fullerton determined that, while the Board of District Judges sets a county auditor’s salaries under Texas law, the Commissioners Court had the authority to pass upon whether the remaining auditor’s budget expenditures were reasonable.
The Montgomery County Board of District Judges is holding a major hearing on Friday, September 14, 2018, at 12 noon in the Overflow Courtroom (the old 410th District Court) in the Main Courthouse at 301 North Thompson Street in Conroe. During that hearing, the Board of District Judges, under the leadership of Chief Administrative Judge Jennifer Robin, will review and authorize the County Auditor’s proposed budget and may also make the determination whether to renew the 2-year contract of County Auditor Phyllis Martin at all.
Montgomery County is the largest County government in Texas that does not have a Certified Public Accountant as the County Auditor. In fact, there is no CPA in the Montgomery County Auditor’s office at all.
Since the Commissioners Court intended to pass the County budget for Fiscal Year 2019 this past Wednesday, September 5, Noack made a presentation to the Commissioners Court as a surprise during the discussion. Noack explained that, while the Board of District Judges set the salary budget for the County Auditor, the Commissioners Court has the authority to work with the Auditor to set her operational budget. Since the Board of District Judges had not yet made decisions on the Auditor’s departmental salaries, Noack proposed reducing the proposed County Auditor budget by $309,961, the full amount of the Budget Office departmental budget for Fiscal Year 2019, to $1,950,593.
Noack explained, “If the Board of District Judges set the Auditor’s salary higher than $1,950,593, the Budget Office will file an amendment for the Commissioners Court to approve, OR, the Commissioners Court would eliminate the Budget office saving the $309,961.” If, however, the Board of District Judges approves the $1,950,593 budget for the County Auditor, then there will be no need for an amendment to the Fiscal Year 2019 Budget, which the Commissioners Court approved.
Riley said, “I always assumed we’d reduce the Auditor’s budget by the amount we spent on the Budget Office.” Riley seconded Noack’s motion. Doyal joined Noack and Riley to vote to reduce the County Auditor’s Budget, while Precinct 1 County Commissioner Mike Meador voted against the spending reduction.
After the Commissioners Court shifted the budget office function to the Budget Office and away from her department, County Auditor Phyllis Martin created new positions for her budget-function employees. Initially, Martin asked the Board of District Judges for a higher departmental budget but met stiff resistance from them at two meetings during the month of August.
As County Auditor, Martin suffers from severe conflicts of interest. As the County’s sole auditor, since the outside audit is merely perfunctory and essentially rubber-stamps Martin’s audit work, Martin is in the bizarre position of auditing her own financial accounts that she keeps as the County’s bookkeeper. That self-auditing is a violation of Generally Accepted Auditing Standards promulgated from the United States Government Accountability Office. Additionally, Martin regularly participates in policy and political decisions, another major violation of appropriate audit standards.
Martin argued during the September 5 Commissioners Court meeting that she still has the duty to certify the County’s revenues and to certify the payment of bills and claims each month for the Commissioners Court. While that’s true, Martin’s certification, as an auditor, should be quite a different function than the preparation of those bills and claims for payment, which the County Treasurer should probably prepare, or the actual projections of the County’s revenues (which, as to the revenues, is the Tax Assessor-Collector’s duty and function).
Martin has sought, like her predecessor, to blend the accounting and audit functions, a breach of a fundamental concept of best auditing practices. Auditors shouldn’t audit themselves.
The action of the Commissioners Court in reducing Martin’s bureaucracy will, hopefully, force her to make her department leaner and geared more towards acting as a true auditor rather than as a super-financial-policymaker.