Our government is supposed to be the mechanism by which we keep order in society and business. Through law and regulation, we impose strictures and mandates on behavior. Sometimes it’s to ensure that something will be done. Sometimes it’s to keep something from being done. Government is here to make the rules, and to enforce the rules. But what happens when the government itself thumbs its nose at the law?
The state Auditors of Public Accounts last week released their latest report on the Connecticut Development Authority. Given the scope of the auditors’ purview, the report was generally good – most of the issues found were nominal in nature. But the auditors found one glaring problem: when it comes to following the law, the CDA simply refuses to do so.
The Connecticut Development Authority is basically a bank owned by the taxpayers of Connecticut. Its mission is to invest in ventures that will enhance the state’s economy. That can be loans, that can be grants. But since the CDA is charged with taking on more risk than the average lender, it also means more of its investments wind up in the tank.
There’s nothing wrong with that, but it does mean that the CDA is obligated to be more open than a private bank. The opportunity for abuse or corruption at a big piggybank where losses are expected is just too great. That’s why the Connecticut General Assembly mandates that the CDA annually report on its borrowers. Who are they and what do they do? are the basic questions. But to be sure the money is being funneled economically, the CDA is also obligated to report on whether promises have been kept. What were the number of jobs and the average wage rate for the company when it applied for state funds, and what were they after the borrower got the money?
Take a hike, says the Connecticut Development Authority. We’re not telling.
The auditors criticize the CDA for failing to break out “revenue, wage rate and benefit level data separately for each recipient of assistance.” The CDA did, however, report the required data in the aggregate. But that’s not good enough, if the intent is to see whether individual companies are gaming the system.
This isn’t a matter of a mere oversight. After previously reprimanding the agency for lax lending standards, state auditors faulted CDA for the same reporting lapses in both their Fiscal 2004 and 2005 reviews. The development authority agrees it knows what the law demands, it just doesn’t want to comply. It believes the information is too sensitive on an individual company basis. So it’s refusing to obey the law.
State auditors say, if that’s the case, get the law changed. And the CDA has tried for at least two years to convince lawmakers to do just that. But state solons haven’t budged yet, and the Connecticut Development Authority shouldn’t be allowed to simply ignore any state law with which it disagrees.
Of course, rules have authority only when they have consequence. State auditors have no enforcement power, and no one seems inclined to force the CDA to live up to its obligations. So why shouldn’t the Connecticut Development Authority put on a mask of submission — We’re trying to get new legislation! — while it turns its back on the spirit and the letter of the law?
For three years running, the CDA has done just that. The board of directors doesn’t care, the governor doesn’t respond, and the legislature doesn’t have a clue. But it has shown us at least one thing. Changing the law, as the CDA wants, is a bad idea. Because if the agency so brazenly ignores its obligations when they are supposed to be public, imagine the mischief that will happen if it’s given permission to operate in secret.