Flashback: OPEGA praises Turnpike for ‘sound’, ‘reasonable’ expenditures



After revelations of millions of dollars in travel and ‘training’ expenses that included staff parties, gift cards, and tens of thousands of dollars in catered lunches, public pressure continues to grow for the Maine State Housing Authority to clean up its act.

Reeling from months of negative publicity for problems ranging from extravagant spending on massages and employee bonuses to failed oversight of affordable housing conditions, MSHA Director Dale McCormick and her Democrat defenders have locked on to a strategy of running out the clock. With the short session of the Republican-led legislature rolling along, McCormick and company see a dim ray of sunshine on the horizon: the possible end of GOP control after the fall elections.

McCormick’s strategy now is to delay for a few more weeks the passage of a bill that would make her accountable to her board of commissioners, and then pray for a Democrat victory in November. The key delay tactic is heard in virtually every public statement the embattled housing director makes – “Let’s wait for the OPEGA report.”

OPEGA, the Office of Program Evaluation and Government Accountability, is the legislature’s investigative arm. OPEGA is in the process of an expedited review of MSHA spending, and many in Augusta are looking to the office to provide a non-partisan judgment of McCormick’s management. OPEGA’s work was the prelude to the downfall of disgraced and soon-to-be incarcerated Maine Turnpike Authority Director Paul Violette, and there are many that think the Maine Housing investigation is headed in the same direction. If this is true, those who would like to see greater accountability at Maine Housing should be very concerned.

The Maine Housing story has become disconcertingly similar to the Turnpike saga. We now know McCormick purchased $59,000 worth of gift cards, many of which may be unaccounted for. While OPEGA’s report was the prelude to the Turnpike’s day of reckoning, it was in fact the work of the Government Oversight Committee that uncovered Violette’s lawbreaking, not the original OPEGA report. Senator Roger Katz and Representative David Burns (the good David Burns, not the one recently indicted) probed deeper into the expenditures of the Turnpike Authority to find evidence of illegal activity, but not before OPEGA produced a report that actually praised the Turnpike for its financial management.

OPEGA’s report provided huge political cover for Paul Violette. After its release, the Turnpike Authority put out a press release with the following title:

OPEGA Report Reflects Positively on Maine Turnpike Authority

The 88-page report was a temporary respite for Violette. Though it did point out some questionable activities, it focused primarily on the structural risk of impropriety rather than actual wrongdoing. Here is how OPEGA summed up the Turnpike’s management:

OPEGA observed that MTA’s current expenditures are consistent with the culture of a regulated private entity that is financially sound, values quality, desires to stay current, believes in being a good corporate citizen, recognizes its employees and assertively promotes its own best interests. From this perspective, MTA’s expenditures overall could be judged as reasonable.

In hindsight, this is an embarrassing statement from OPEGA. Paul Violette improperly spent tens of thousands of public dollars on lavish vacations for himself and his friends, and is now looking at a prison sentence. OPEGA determined the gift cards Violette used to launder state funds for personal use were donated to other entities:

OPEGA identified over $157,000 in gift certificate purchases made in 2005 and 2006 from various hotel chains and restaurants that were coded to the Travel and Subsistence expense category. MTA reports that the gift certificates were donated to a variety of organizations, although no formal records of the donations exist.

In fact, Violette used many of the gift cards himself. This was not determined by OPEGA, but by the committee after the report was completed.

When it was released, the report was heralded as a win for Violette. The frightening truth is, if the OPEGA report alone had been used to determine the future of the Maine Turnpike Authority, Paul Violette might still be in charge.

As we look at the growing pattern of troubling management decisions at Maine Housing, the legislature should be extremely concerned that OPEGA may provide McCormick with the same mistaken exoneration it provided Violette.

The Government Oversight Committee needs to apply the same level of scrutiny to the Housing Authority that it did to the Turnpike Authority. It needs to dig deep into the pattern of political donations, out-of-control travel and training expenses, and the potential conflicts of interest in the hiring of consultants either personally tied to Director McCormick or her political party. But much of what needs to happen at Maine Housing falls outside the bounds of OPEGA or the Government Oversight Committee.

The Labor, Commerce, Research and Economic Development Committee is currently considering a bill that would make Maine Housing’s director accountable to her board of commissioners, to conform its management structure to every other quasi-state agency, and most other states’ housing authorities. This bill is a no-brainer, but Democrats seeking to save McCormick’s career are working hard to water it down. They are hoping OPEGA’s report will give them reason to exempt McCormick from rational supervision, or at least delay action on the bill long enough to run out the clock on the current session. Republican leadership can’t allow this political maneuvering to get in the way of sound policy.

LCRED Senate chair Chris Rector has made it clear that the current controversy at Maine Housing should not be part of the discussion of this bill. Rector wants the committee to judge the revised management structure on its own merits, absent any discussion of McCormick’s performance. If he holds true to these parameters, the OPEGA report should have no bearing on the future of this bill.

Rector chastised participants in the public hearing for mentioning the current controversies, and in fact prevented any mention of McCormick’s conduct. Democrat urging to ‘wait for the OPEGA report’ should be similarly dismissed. Rector’s position that this bill is structural and not specific to any particular director should mean that the committee will work through the bill without consideration of OPEGA’s timing, or, for that matter, its conclusions.

At the end of the day, McCormick’s record of social engineering and irresponsible spending should be dealt with in one of two ways. If what she has done is illegal – for instance, if she can’t account for the gift cards – it should be handled by law enforcement. Otherwise, it should be dealt with by a governing board of commissioners that can make the best decisions about the proper use of taxpayer funds.

The legislature needs to make sure such a governing board is allowed to manifest, and not be distracted by partisan Democrat efforts to protect one of their own at the expense of responsible government.