Accountability reforms have significantly cut number of unauditable governments

The number of unauditable governments in Washington has dropped dramatically, leaving only eight that have failed to provide basic financial records and cooperate with an audit by the Office of the Washington State Auditor.

The State Auditor's Office (SAO) launched a campaign to highlight the issue of unauditable local governments in 2019, focusing on approximately 40 governments that failed to meet state accountability laws. The Legislature passed reforms aimed at addressing the issue in 2020, allowing counties or the State Treasurer to withhold funds from unauditable governments in their jurisdiction, as well as dissolve or absorb those governments.

“Every government, large or small, must account for its use of public funds, and this initiative has brought us a long way in making sure that happens,” said State Auditor Pat McCarthy. “The combined efforts of the Legislature, counties, government associations and our Office have motivated many unauditable governments to step up and do the right thing.”

Rep. Gerry Pollet (D-Seattle) was the prime sponsor of ESHB 2588 in 2020, developed in partnership with Auditor McCarthy. Under the law, counties can take over or dissolve governments that collect taxes but do not submit financial statements and refuse to comply with an audit.

“Thanks to the light shined on unauditable and unaccountable special purpose districts and local governments by our State Auditor Pat McCarthy and her staff, the era of special purpose governments using taxpayer funds while operating in violation of the fundamental principles for open and accountable government is ending,” said Rep. Pollet.

In a recent status report to the Legislature, SAO noted that it only reported two small local governments as unauditable in 2021, while six previously named governments remained on the list. In total, six governments are awaiting action by the local county, while one is preparing for an audit, and the final government is in the process of being dissolved. The full report can be found here.

Most unauditable governments have been small special purpose districts, such as irrigation or flood control districts. Since reforms took place, the majority of unauditable governments have taken steps to comply with accountability laws and some have been dissolved by the local county.