Senate panel advances state auditor budget after agreeing to restore operating funding and cut vacant local‑audit positions

The Senate Appropriations, Government and Operations Division considered House Bill 1004, the State Auditor’s budget, and approved a do‑pass recommendation as amended after debate over operating reductions, temporary salaries and the size of the local‑government audit team.

Why it matters: The State Auditor’s office conducts audits and limited reviews across state government and local political subdivisions. Changes to its staffing, billing for small‑government reviews, and operating authority affect audit coverage, training, and the agency’s ability to assist small local governments.

State Auditor Josh Galley opened by describing one of the principal budget changes: the request to move funding for two local‑government audit positions from special funds to the general fund so the office can perform small‑government limited reviews without billing the political subdivisions. Galley said the change would relieve many small entities of fees that can range from “$200 to $1,500” and allow the auditor’s office to provide additional training to local officials.

The committee discussed multiple line items. Members and the auditor’s staff agreed to restore a general‑fund operating reduction that had been included in the governor’s executive recommendations; the House had already accepted that restoration. The committee also agreed to reduce the number of proposed FTE cuts in the local‑government audit team beyond what the agency initially offered: the agency had offered five vacant local‑government audit FTEs; committee members agreed to remove two additional local‑government audit positions from the budget (a net seven FTE reduction from the agency’s previous request, subject to final amendment language).

Galley and business manager James Carroll described several related items the committee weighed: a federal‑funded Mineral Royalty Auditor position (the office would host a federally funded auditor working with the Office of Natural Resource Revenue), IT contractor costs and NDIT hosting increases, an ongoing peer review requirement under government auditing standards, and migration to a new audit software system. Carroll explained the auditor’s internship pipeline and said the office was requesting an additional temporary‑salaries appropriation (the agency asked for about $114,064 more for temporary salaries and related NDIT licensing costs to sustain internships across the biennium); senators debated whether to fund part of that request.

Senators pressed on the 2,000,000 revenue threshold used to determine which local governments require full financial statement audits vs. limited reviews. Galley said the $2,000,000 threshold is well‑established and that roughly 1,000–1,100 local entities fall under the auditor’s oversight rolls, although the office is still validating entity status for some units.

Committee action and votes: Senator Dwyer moved and Senator Sigler seconded a motion to adopt amendments that (a) restore the previously proposed reduction in general‑fund operating authority (roughly $139,783) and (b) remove special‑fund authority that would be unused if the agency no longer bills for certain small‑government reviews. The committee also directed that two additional local‑government audit positions be removed from the agency’s budget request. The Division then voted to give HB 1004 a do‑pass recommendation as amended; a roll call was taken and the ayes carried.

Agency and committee next steps: The State Auditor said the Department could operate under the amended numbers but reiterated that operating cuts constrain travel, continuing professional education and IT security work that supports audits. The agency and committee staff will prepare formal amendment language for the bill before full Appropriations and possible conference committee consideration.

Ending note: The Division advanced the auditor’s budget with targeted restorations and position changes; the bill will move to the next stage of the appropriations process with the Division’s amendments.