Counties seek reimbursement for defending failed state auditor lawsuit

State Auditor Julie Blaha supports a bill that would pay for her predecessor’s error.

A 2015 law gives all counties the authority to have their annually required audits conducted by a CPA firm, rather than the Office of the State Auditor.

Rebecca Otto, the former state auditor, sued three counties who chose to have an outside firm review their books, claiming, in part, the change eliminated a core function of the office.

Three courts, including the Minnesota Supreme Court, disagreed with the assertion.

Rep. Eric Lucero (R-Dayton) believes legal expenses incurred by Becker, Wright and Ramsey counties in defending themselves should be covered by the state.

As amended, HF187, was held over Thursday by the House State Government Finance Division for possible omnibus bill inclusion.

Rep. Eric Lucero

“It is really unknown as to why those counties were selected,” said Lucero, the bill sponsor. “ … The counties obviously incurred expense to defend themselves against the auditor.”

The shared cost between Becker and Wright counties to hire an outside attorney was $140,606; Ramsey County, which used in-house counsel, spent $34,652. The bill seeks reimbursement in Fiscal Year 2020.

Assistant Wright County Attorney Greg Kryzer said because they were forced to defend a state law, the expense should be borne by everyone in Minnesota not just the residents of the three counties.

“The protection of the constitutionality of laws we pass and the governor signs should not fall on local government,” said Rep. Duane Quam (R-Byron).

“No matter what you thought about the lawsuit, I think we can agree that the dispute was between the [state auditor’s office] and the Legislature, and as a result, we think that it makes sense to keep the costs in that realm as well,” said Blaha, a DFLer. She believes legal costs for the state auditor’s office to fight the law were about $250,000 over three years.

Rep. Jamie Long (DFL-Mpls) suggested an assessment occur to the reasonableness of fees charged.

“It seems like in this case, having an independent evaluation before the Legislature would pay for those fees would be appropriate,” he said.

Lucero wondered who would pay for that.

“I don’t want to incur any more tax dollars,” he said. “We’re attempting to close the door, turn the page, move on.”

A companion, SF154, sponsored by Sen. Mary Kiffmeyer (R-Big Lake), awaits action by the Senate Finance Committee.