North Dakota State Auditor Joshua Gallion joined SuperTalk 1270’s Talk of the Town with Steve Bakken, along with special guest co-host Jason Spiess to discuss some issues with recent audits, HB 1508, state-sponsored discrimination and questionable spending.
“I just want to make a comment that these legislators talk about all this money that we have to spend. I think a lot of these officials who have been here for a long time. They have forgotten that,” Josh Gallion said. “It's not their money to spend. It's not their money to hand out. This is the people's money, it belongs to the citizens of North Dakota. And we are just in elected office stewards of that money to make sure that we're doing”
HB 1508 was discussed and Spiess asked Gallion why this bill originated or what is the intention behind the bill.
“Do you think this HB 1508 is making the government more transparent or less transparent based on your experience as an auditor,” Spiess asked.
“My purview, my personal view of HB 1508. This is this is an attack against me,” Gallion said. “This is an attack against what I've tried to accomplish and bringing transparency to the citizens in the last six years. The state auditor.”
Bakken asked about HB 1508 and it’s intention and rationale.
“HB 1508 passed out of the legislative floor yesterday came out of committee do not pass,” Gallion said. “We had a lot of policy discussion in the political subcommittee overwhelmingly do not pass. And they clearly understood the ramifications that this bill would have. Then it went to the floor and a lot of misinformation as you mentioned a misunderstanding on appropriations at one point, we were accused of money laundering.”
Gallion continued explaining why he believes HB 1508 is more about using political power for personal interests rather than governing.
“What HB 1508 does is it restricts our ability to bill any source really when it comes to Higher Ed,” Gallion said. “What the bill sponsors are trying to do is not only restrict us from charging Higher Ed any of these funding sources for any of these audits, but they also want us to pay it back going back two years.”
As host Steve Bakken pointed out - “… because if you're not having the funding for that or being able to reimburse your department for that, then you're not going to go to the audits.”
“I think there's a lot of again misinformation here. I get branded as being an aggressive auditor. But North Dakota, what we have is we have a very broad set of responsibilities,” Gallion said. “Where we're looking at state government, we're looking at universities, we're looking at local governments and we have almost 2000 local government entities that are under our purview.”
Gallion continued explaining how their agency has over 60 employees and is one of the lower budgets per capita/employee in the state government considering the amount of areas they have to audit.
“We've got a division that is out working in the oil country, any federally leased lands that minerals are being extracted from. We're looking at those royalty payments as well,” Gallion said.
Below is the raw, unedited transcript from our artificial intelligence translator.
Steve Bakken
... Super 12 17 a wattage Wednesday. I'm steve back in your house along with Jason speeds from the crude life. Catch the crude life sunday mornings 10 am right here on super talk 12 70 joining us in the studio right now josh, galleon North Dakota state auditor. One of the bills that just uh past committee last night hB 15 08 for lack of a better terms, it's a bill to defund the auditor's office is the way that I read it. There's some legislators are out there saying, wait, wait a minute.
It's just about shifting funds and and not actually not shifting funds. And why are we paying state offices to have to budget to pay the state auditor when we're doing appropriations for their funding Anyway, there's a lot of confusion in it. And I wanted to have josh in to explain his take on H. B 15 08 josh, Thanks for coming in this morning.
Josh Gallion
Thanks for having me. So 1508 passed out of the legislative floor yesterday came out of committee do not pass. So we had a lot of policy discussion in the political subcommittee overwhelmingly do not pass. And they clearly understood the ramifications that this bill would have. Uh, then it went to the floor and a lot of misinformation as you mentioned a misunderstanding on appropriations at one point, we were accused of money laundering.
Um, double billing, hiding funds. I don't, I don't know. Uh, and what concerns me is is some of the individuals saying this are chairs of appropriations committees who do not understand possibly appropriations here in the state of North Dakota and appropriation is the ability to spend. So when we appropriate, and this is probably the largest budget um that North Korea has ever produced for the state government.
We don't have all of the money in hand. So when we appropriate, we're looking at revenue forecast, we're looking forward. This is the amount of money that the legislature anticipates to bring in. And so they give agencies the ability to spend part of that money. And a lot of that is the General Fund. So that money comes into the General Fund, there's the ability to spend it other funding sources such as special funds, which include uh the Special Fund and federal funds.
Those come from other sources. What 1508 does is it restricts our ability to bill any source really when it comes to higher ed. What the bill sponsors trying to do is not only restrict us from charging higher ed any of these funding sources for any of these audits, but they also want us to pay it back going back two years. So I want us to refund money back to higher ed.
Steve Bakken
So what that does is it precludes your ability to go out and do a random audit?
Josh Gallion
Well,
Steve Bakken
because if you're not having the funding for that or being able to reimburse your department for that, then you're not gonna go to the audits. And and that why
Josh Gallion
that word
Steve Bakken
this carefully. I think that's the rationale behind it.
Josh Gallion
That's that's the concern, at least the staff have. Because if if our funding sources don't change and we're not allowed to collect the funds correct? We don't have the ability to pay people, we don't have the ability to collect those resources because our local government team. So when we talk about special funds, that funding source comes from our clients, we conduct those audits we charge. But some
Steve Bakken
of the legislators, I talked to, uh, well, they, and and I quote this, we already appropriate funds to those budgets. So we're paying those state workers to do their job,
Josh Gallion
which that's the that's the misinformation. They think that because there's an appropriation, they don't understand the source. So appropriations and funds are two different things. While we might have an appropriation, the ability to spend money that those funds come in from other sources. So if it's not the General Fund, it comes from our clients.
That money comes into an operating fund, that's what pays our local government auditors, their salaries and benefits are operating and and what what is occurring occurring under HB 1508 is they're undermining our ability to do that. The other thing is we charge our federal audit. So any any federal dollars expensed by the state of North Dakota.
The federal government requires a single audit. We conduct that audit. We charge that audit back to those federal programs because again, it's the federal government, it's their rules, we are conducting an audit on their behalf. We build those programs, We deposit that money back into the general fund. And in the years past when we've asked for additional resources to keep up with the growth of the federal funds.
The basis of that is because we can build for it and that we can make hold the general fund for those staff time and those resources. This restricts all of that. So no longer can we build uh, the federal funds or the special funds? In fact, actually we can bill, but the math on this on this piece of legislation is laughable. 1,000th of 1% of just the operating dollars.
Steve Bakken
No, I think I read $10
Josh Gallion
somewhere. If you had a million dollar operating budget and you keep in mind the auditor's office, we're a small agency, 61 people. We got about a million million and a half dollar operating budget. That means if I was to audit the auditors office and that financial structure I could build for $15. That that's, that's almost laughable.
Jason Spiess
So if you have, I'm just writing down all kinds of questions here. So if you have 61 Employees and your budget is 1.5 million
Josh Gallion
just for the operating our total budget
Jason Spiess
is that compared to, you know, game and fish or job service or um the land department or Department of Education. I mean, I don't know, I'm just throwing, you know off the top of my head. Other agencies. Is this comparable or is this considerably less? Well,
Josh Gallion
we're, we're uh, we're heavily salaried, so our operating dollars are very minimal because the auditor's office, it takes people to audit. Uh, What we're looking at though is if, if we were to go conduct some of these audits, we would only be able to build for the operating portion of their budget. I mean, even if if even if you look at the entire state budget was about $18 billion, it's too much.
Um, this is, we talk about conservative legislature, I'll get into that a little bit here too. But on $18 billion 180,000 if we could, if we could build the whole state budget for our audit fees, that doesn't even cover an employee for biennium. And so the math here is ridiculous. And really what happens because of the poor math and the structure, they're not saying that they don't want the audits done.
You know, these legislators, they're not coming out attacking the actual audits or the staff, they're going after the funding mechanism. And so what this is gonna wind up doing is we're gonna subsidize the federal government by transitioning the cost of doing those audits back to the General Fund, back to the North Dakota taxpayers rather than to the federal government who should be paying for that audit.
It's something that they are demanding. And then for the local governments, here's another piece that I find frustrating. There's about 400 local governments that require an audit. We do about 70 of them. Well the other 330 are using the private sector. We can't build for the 70
Steve Bakken
private
Josh Gallion
sector is going to have to build for it. We're not subsidizing the private sector and those audits. So really the ones that are on our client list under this bill, we're gonna have to ask the general fund to pick up the tab for our team to continue doing these audits to subsidize these local governments for only a small few. So those few are going to feel like they won the lottery. All of the others are going to still pay their private audit firms. Uh increasing rates
Steve Bakken
were up against a break here. We're talking about josh galli in uh North Dakota state auditor, House bill 15 08 brought by representative from Grand Forks. Emily O'brien. I want to get into a little bit of where this is coming from. And I'm thinking this and from what I'm hearing this is coming from E. D. You also the comp with this from what I've been hearing is I.
T. D. Because apparently that's also going to be a target on cutting back those quote unquote appropriations if you understand what the appropriation side of things are, this is talk of the town on super talk 12 70. I'm your host bacon along with Jason speeds from the crude life. Catch the crude life every sunday morning 10 a.m. Right here on Super talk 12 70.
This is a wattage Wednesday on super talk 12 70 super pac 12 70. This is talk of the town on a wattage Wednesday along with Jason speeds from the crude life. Sunday mornings 10 am right here on site protect 12 7. You can catch the crude life. We're talking about josh galli in North Dakota state auditor. House bill 15 08 A bill to defund the auditor's office put forth by representative of grand forks. Emily O'brien, the sponsor on that bill um received the do not pass from the committee
uh passed on the floor of the house. However, so a little bit of a conundrum on uh on the auditor's office. And what's going on, we've got josh in the studio and mr galleon, what's your take on this as far as you being able to do your job? Um If they're going to defund the auditor's office uh in the methodology that this bill puts forward, what does that give you the ability to do and not do because you do a whole bunch of different types of audits.
Josh Gallion
We do. Um There is not a level of government in the state of North Dakota that the auditor's office is not involved with. Um And even during the committee discussions, nobody wanted to talk poorly about the audits. Everybody seemed to mention they liked the audits. But when you take away the funding behind the audits,
Steve Bakken
you're
Josh Gallion
taking away the audits. Uh And so a lot of this is very disingenuous in um this really undermines the auditor's office uh and our ability to do our job at places additional restrictions and barriers. Uh And and to me that's very unfortunate that we have a North Dakota Legislature who uh talks about conservativism and talks about transparency but clearly their actions do not back up their words.
Um They are actively trying to undermine the auditor's office. And in my opinion the auditor's office is the citizens greatest resource for transparency so that they can hold government accountable. And I think we have a very large contingent of legislators who want to undermine that very thing. And this this could stem from a lot of different issues. I mean we just had one of the legislation um wrapped up in a in a issue we had with the A.
G's office that we were called in. It's not something I sought out but we were called in to look into the A. G's office. We've had issues in higher ed continually. We we find issues with uh local schools. I mean we were just in Williston if you've read that audit, that's a very concerning audit. And it's it's extremely unfortunate that
Steve Bakken
well and that was an important on it because there's a movement right now with a bunch of parents and community members in bismarck public schools in the bismarck area in Lincoln because they want a state audit from bismarck public schools because they're, you know, they're taxpayers, they're looking around my, half of my property tax bill is going to the Bismark public school district. And where's that money going in?
The district's like, hey, we just had, uh, an audit done by this private accounting firm. But explain to me because this is the way I look at it. Those audits, especially privately are only as accurate as the information that you're given as an auditor to report on your, putting a report together on the information, given what the state has the ability to do is a little bit more of a forensic audit.
Josh Gallion
Well, not, not necessary forensic audit. Um, I mean, we have the best government auditors in the state of North Dakota. It's all we do is government auditing. When a private firm goes in there, they're not just doing government auditing, but they're doing financial statement auditing. They're doing other financial services for the private sector.
We just focus on governments. And so we have a better understanding of the laws, the rules, we've developed our processes and procedures to make sure that we know what questions to ask to get at some of the issues that we've uncovered. I mean Williston is I think a great example of how, how fantastic the team is, they went in there ask questions, looked in the right places we uncovered $6.5 million in debt that had never been reported to the citizens.
And it's very unfortunate that they were presented with with emerging of school districts, missing a lot of information and they were given poor financial information. And so I applaud those petitioners having the courage to go out collect signatures uh face probably scrutiny from school board members from from other members of the community to bring us in because it is a it is a daunting task, but when you look at the outcome is very justified and I'm very grateful to have the
opportunity to have uh the team from the auditor's office go up there to help that community and that's really what we're trying to accomplish is we're trying to have that transparency shine a little light, a little sunshine is a great disinfectant to let those folks know what's going on and and so that they've been presented this report, they've got a lot of decisions in that community.
Um whether or not we get to do the bismarck public schools on it, we're still waiting for that petition to be turned in. Um but if they do collect the signatures, we'll get it done.
Jason Spiess
Do you think this bill 1508 is making the government more transparent or less transparent based on your experience as an auditor. Um
Josh Gallion
My my purview, my personal view of 1508. This is this is an attack against me. This is an attack um
Jason Spiess
uh
Josh Gallion
against what I've tried to accomplish and bringing transparency uh to the citizens in the last six years. The state auditor. We have improved our ability to communicate, we've improved our auditing processes, we've improved our reporting uh at A. Level where more and more people can understand what's going on. And and I view I I view this as a way to keep us from uh continue to push forward on that. Uh Because that's to me that's important.
I work for the citizens. I'm accountable to them and I want to make sure that the auditor's office is doing amazing work putting valuable information, verified information in the hands of the citizens so that they can hold government accountable. That's what we aim to accomplish and everything that this bill does is geared at trying to restrict us or prevent us from doing that.
Steve Bakken
One of the things I look at is you can't keep handing government blank checks and that's what I look at. The auditor's office is a check and balance for that. Um You mentioned this is an attack on you and where my sense that I'm. And from what I'm hearing, where some of this is coming from is higher education, wanting to spend more money.
Um We talked about the Williston audit uh If the BPS BPS audit takes place, then I can see other school districts and taxpayers lining up to get audits within D. P. I. Um But I want to go back a little further. Do do you feel that this was an attack on you for auditing the governor in the governor's office? Is this retribution?
Josh Gallion
This could be retribution from many different uh areas. Whether it's the governor, whether it's other legislators, uh school districts, higher ed, you know a lot of the audits we've put out there, they've been critical as they should be when government officials are not using public resources. The way they are supposed to the auditor's office has an obligation back to the citizens to let them know how the people that they trust are using their funds and if they're not using
their funds and resources the way they're supposed to then it's my job to point that out. And so you've got a contingent in the legislature that I would love to undermine that and minimize my ability to hold, you know provide transparency so that people can hold government accountable.
Steve Bakken
And that's what it is for me is about the transparency when I was mayor of bismarck and I reach out to you. Um I wanted the state auditor, your office to audit the city of bismarck. I wanted the transparency on the finances so that everybody in the community. The taxpayers could see that I got fought at every turn on that. And uh there's never a reason to have less transparency when you're talking about government in your tax dollars were talking with josh gallon galleon, North
Dakota state auditor. I'm steve barking along with Jason speeds from the crude life. House bill 15 08 put forward by Representative Emily O'brien. She's a sponsor on that bill in Grand Forks. Uh it received the do not pass on the committee out of the committee resoundingly and then passed on the floor and uh I think it's doing taxpayers in North Dakota.
A big disservice when we come back. We're gonna finish up with josh galli and this is talk of the town on super talk 12 70. Super 12 70. This is talk of the town. I'm steve Bachman wattage Wednesday along with Jason species following uh what I deem as an important news story as house bill 15 08 passed on the floor of the house yesterday. It's a bill that basically defunds the auditors office. We're talking with North Dakota state auditor, josh galleon.
Uh This was put forward by Emily O'brien represented out of Grand Forks. The sponsor on that bill. The interesting part about this is this bill received a resounding, do not pass out of the committee, but then passed on the floor of the house. So we'll see what happens on that at crossover or any follow ups with that, Jason speeds with us this morning as well. Of course you can catch the crude life on super 12 70 every sunday morning at 10 a.m.
Jason Spiess
Thank you. Mr steve. We also have another website that's been doing very well. In fact we have subscribers from 28 states and 18 different countries now paid subscribers at E S V U dot org. That's environmental social governance dot org. University, E S G University. Um sorry for that plug. I just thought I'd take the opportunity as I was writing down my notes here because that uh this E.
S. G. Stuff is just it's it's starting to snowball bigger than I thought it was going to actually. I thought we would have at least until the summer before it took off, but now they're going after uh retirement account. So now the Fox News generation is very much paying attention to the story. Let's just put it that way. Now as I'm writing my notes here for this story because this is a fantastic story.
I asked you before about, you know, your budget, one point 5,000,061 different officers for an entire department to go into audits and that's you know, for salaries and that's benefits and everything else. I imagine there might be a gas allowance in there too. I don't know. But if it is ain't much I can tell you that, how do other states handle the transparency part of things?
How do they do the, you know I mean I asked you about how other departments compared to yours, So let's go to other states if they want to audit the department or they want to do something along these lines. How do you guys compare to other states? I guess for the operational
Josh Gallion
part. That's a good question. And I think there's a lot of again misinformation here. I get branded as being an aggressive auditor. But North Dakota, what what we have is we have a very broad set of responsibilities. Where we're looking at state government, we're looking at universities, we're looking at local governments and we have almost 2000 local government entities that are under our purview.
We've got a division that is out working in the oil country, any federally leased lands that minerals are being extracted from. We're looking at those um royalty payments as well. So very very broad um um set of responsibilities for just 61 people and that 1.5 million, that's just our operating budget. I think our total budget is closer to about 16 million for a two-year period, but still very very small cost for North Dakota taxpayers for the level of transparency that we
provide. Um when we look at other states, you know, one of the states that I look at the state of Mississippi uh that state auditor down there, they actually have a law enforcement arm. They have subpoena power, they have auditors that go in and they actually arrest people more
Steve Bakken
like the I. R. S
Josh Gallion
more like, well I mean similar but but they do have that ability um to have those resources when there is blatant corruption or theft that they go in. They do the auditing the investigation and they arrest them and they haul them off to jail. And one of the stories that I found very interesting here recently is the florida auditor general. She went in to a joint session so their legislative session and and the response that that she received from their legislature.
I mean I would love to have is they sat down and said what barriers do you have to doing your job better? They wanted to know what could the legislature due to better help the auditor provide greater transparency and accountability for their citizens. That's how florida response to their auditor here in north Dakota. We talk about having conservativism.
We talk about the transparency but I go into the legislature every session for the last several wondering what attack am I going to have to fend off? What what efforts are we gonna have from the legislature to undermine the auditor's office to restrict us to to hold us down because we have a group of people in the legislature that don't want transparency. They don't want accountability but I hear time and time again from the citizens across the state how much they appreciate the
work that the auditor's office does that we have the courage to go in and stand tall against some of this corruption and some of these issues that we see. And so for me it's just very discouraging when I see my colleagues around the country um actually celebrated for the work that they do. I, I sure wish North Dakota would be a lot more like that.
Steve Bakken
One of the problems I have is I take a look at all this money we have and when there's not enough oversight and transparency with that money with the legacy fund, uh now we're starting to chisel into that legacy fund and there needs to be accountability. I don't ever recall voting for the ability of having a hedge fund for a future office holder in the state, but that's kind of what we're sitting at.
And when you start taking a look at what those investments are doing and where they're going, we need more transparency for the taxpayers in North Dakota because those are our dollars, that's our money, that's our future, That's our kids and grandkids future.
Josh Gallion
Absolutely. Um, but do they want us in the auditor's office looking at any of that? No. Uh and so it's, to me it's just very, it's very discouraging to um, to face this day in and day out, but
Steve Bakken
especially when you're looking at what happens in other states.
Josh Gallion
I am. But you know what, I love North Dakota. I love um I love what the auditor's office and the staff do. I'm committed to fight for those folks. I'm committed to fighting for the citizens, I will stand tall, I will take this on head on and uh definitely appreciate opportunities like this to come talk about the amazing work that the auditor's office does. I mean we've been called small but mighty uh with some of our peers out there who look at what just 61 FTE s can do um and and the level
of responsibilities that we have and and I love going to work everyday, working shoulder to shoulder with these folks and I will do everything that I can to make sure that that we can continue moving forward providing these value added services back to the citizens. Uh it's just very discouraging that we have an entire branch of government at this point who is trying to prevent that and restrict us from doing it.
Jason Spiess
I got an odd question for you or it might not be so odd, it's um I'm certainly probably going to be odd to some people in bismarck but uh you can ask steve bock in or you can ask Dustin Gover low or myself or imagine a few other people in the media that have heard many of the legislators talk about how there's so much money for them to spend their like licking their chops where to, you know, send it and all these different things so from that, you know, different narrative and context.
I'm even looking at, you know, all these individuals that are really upset about this Legacy fund money and the Commerce Department. And if a citizen wanted to like audit the Legacy Fund or the Commerce Department or anything, um how would the average citizen even go about doing that or what is the first step in a process like that?
Is that a new hire? Is that a, You know, you got to go through some sort of paperwork process before you can audit I guess help me out a little bit to understand kind of a 101 for dummy type thing.
Josh Gallion
That's a good question. Um And your first part of that, I just want to make a comment that you talk these, these legislators talk about all this money that we have to spend. I think a lot of these officials who have been here for a long time. Uh they have forgotten that. It's not their money to spend. It's not their money to hand out. This is the people's money, it belongs to the citizens of North Dakota. And we are just in elected office stewards of that money to make sure that we're doing
the best thing we can. Now, you talked about legacy fund dollars, Different state agencies. Uh the legislature has set the responsibility for the auditor's office. That's actually um codified in our century Code. It's 54-10. It outlines the areas that we can look into. Legacy fund is not one of those. So the legislature has not granted the auditor's office authority uh to to audit or look into the
Steve Bakken
legacy.
Josh Gallion
No, no. Really, really, I mean, steve they want to stop me from doing local government audits and and building the federal government for the audits and make taxpayers pick up the bill. I mean, let's let's be serious here. Um but when you talk about somebody like a commerce department, that's a state agency. So if there are considerable issues there, we conduct that audit every two years.
But I also have authority in law to issue or request performance audits so we can actually look at specific things within state agencies. Um So my answer is it depends exactly what area you're talking about, but but there are options for the auditor's office but not everywhere. And and that is probably by design.
Steve Bakken
We're talking about josh galli in uh North Dakota state auditor. House bill 15 08 put forth sponsored by Emily O'brien, Representative out of grand forks received a resounding, do not pass out of the committee, but did pass on the floor of the House. And if people have any questions or need any more information from the auditor's office, how do they reach out and what's the next step right now, if you're listening to this program.
And and you're thinking this is wrong, reach out to your Legislature. Um your local legislators are gonna make a difference now. Where does this sit on the House side because um really this comes down to the Senate side now. Right.
Josh Gallion
So it's my understand that the House floor past it and then after they passed the bill, I've never seen this before. They referred it back to appropriations, who, I think they passed it last night.
Steve Bakken
Somebody kept leaving during those committee meetings and not voting on it so they could refer it.
Josh Gallion
So, so they, so they did that and then I think now it's going to wind up over at the Senate um and well keep the fight going and I will continue pushing back. I
Steve Bakken
view it as transparency. It's, it's our tax dollars, it's transparency and uh more transparency. Always a good thing josh. Thanks for coming in this morning.
Josh Gallion
Thank you. Thanks for having me
Steve Bakken
Josh Galli in North Dakota State Auditor, House Bill 1508 call your legislators if you want more information or reach out to the auditor's office.
Josh Gallion
W W W W W dot nd dot gov forward slash auditor. We have all of our contact information there. We'd be happy to hear from you.
Steve Bakken
Perfect. Thanks josh josh galli and north Dakota state auditor. I'm steve And this is talk of the town on super talk 12 70 on a wattage Wednesday
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