The Montgomery County Council unanimously passed a bill on Tuesday that gives broader oversight power to the county’s inspector general and dramatically increases the suggested funding for the office.
The bill was introduced in May and amended after a lengthy discussion by the council’s Government Operations & Fiscal Policy committee in late September.
The final version expands the duties of the inspector general to include a rotating review of the internal accounting practices within every executive department and office.
The bill also grants the inspector general broad discretion to audit “high-risk” government contracts, generally defined as those valued at more than $1 million.
“This is about being proactive, not reactive,” Council Member Andrew Friedson said during the council’s session on Tuesday. “I think it reflects our core responsibility to take fiscal oversight seriously and show we’re doing everything we can to make sure every taxpayer dollar is invested efficiently.”
The bill’s passage comes months after the prosecution of a former Montgomery County employee who stole nearly $7 million from the government. The county’s financial oversight agencies said they were unaware of the embezzlement until Internal Revenue Service agents began investigating the employee’s financial transactions.
Friedson, who spearheaded the bill, said the Office of the Inspector General was previously limited to investigating complaints of financial impropriety and offering general suggestions on improving government efficiency. But the agency was never tasked with reviewing county contracts or auditing departments on a regular basis.
It would be difficult for the agency to provide that oversight without a significant increase in funding. In fiscal year 2019, Montgomery County allocated $2.11 million to government auditing, including roughly $1.14 million to the inspector general. Nearby jurisdictions provide far more, Friedson pointed out on Tuesday.
Fairfax County, Virginia provided about $5.3 million for auditing over the same period. Washington, D.C., provided $28.6 million, including $18.8 million for its inspector general.
To ensure greater resources for Montgomery County’s inspector general, the bill takes the unusual step of recommending additional funding as a condition of its passage.
Adding the language wouldn’t require either the county executive to recommend additional funding or the council to approve it, senior legislative attorney Robert Drummer said at the September committee meeting. But it would indicate the council’s commitment to granting the inspector general oversight capabilities.
Inspector General Megan Davey Limarzi, who took over the position on Sept. 1, specifically requested more funding at the committee meeting.
Requiring the inspector general’s office to review just 1% of the county’s highest-risk contracts — only including those valued at more than $1 million — would require 13 more employees and more than double the department’s budget, according to a recent analysis by former Inspector General Ed Blansitt.
“I think it was important to have her participation,” Friedson said before the bill was passed on Tuesday. “It makes sure we don’t only set the expectation for what her office would do, but also that we have a serious and honest conversation about what those changes would cost.”
Legislators never mentioned Peter Bang, a former economic development officer who stole $6.7 million from Montgomery County over a six-year period. But the bill was announced just months after he was sentenced in February to four years in prison for the embezzlement.
The county is also seeking $450,000 in damages in an ongoing civil case against the former employee.
An inspector general report published after the federal Internal Revenue Service uncovered the embezzlement scheme documented serious gaps in oversight over Bang’s department, which the county operated until 2016.
The Office of Economic Development was never audited over that six-year period, the report found, and no one questioned repeated transfers of county funding into a private company Bang created for the scheme. That lack of scrutiny allowed his theft to continue unchecked until the IRS began investigating his personal transactions, the report concluded.
The new bill is an effort to retain more oversight over government finances. The legislation also requires the Office of Internal Audit, part of the county executive’s office, to identify areas of risk within the county and begin submitting annual work plans to the chief administrative officer and the County Council.
The office would be required to submit an annual report to the inspector general’s office.