The Journal Gazette, 600 W. Main St., Fort Wayne IN

Allen County homeowners have the county auditor’s office – and specifically Deputy Auditor Tera Klutz – to thank for catching an error by the Indiana Department of Local Government Finance that would have cost taxpayers almost $6 million. It’s an example of more first-rate work by the local auditor’s office and also of the deteriorating relationship between the state agency and local government officials – a relationship so frayed that the DLGF has hired two liaisons to work with local officials.

Gov. Mitch Daniels, whose appointment of Commissioner Cheryl Musgrave marked the beginning of complaints about the agency, should consider whether he has the right person in a post that demands cooperation with school and local government officials.

Already months behind in property tax billing because of changes in state law, Allen County Auditor Lisa Blosser’s staff was working long hours, including the Fourth of July weekend, to calculate charges for almost 151,000 properties. On July 9, Klutz found a number that surprised her among the hundreds of figures in the final budget order approved by the state. What the DLGF provided as the county’s total local homestead credit – $8.1 million – was less than she expected. For 2007 bills, the number was $12 million, and the deputy auditor knew that many new homestead credits were owed because more homeowners had filed in the past year for the increasingly valuable homestead exemption.

Because the office staff was trying to get the final figures to the treasurer’s office so that bills could be prepared, Klutz, a certified public accountant, immediately sent an e-mail to the DLGF questioning the number. The reply came a few hours later, with a corrected figure of $13.9 million.

The difference of almost $6 million is money that – if the deputy auditor had not noticed – would simply have been billed, collected and distributed to local units of government, but the intent when the City Council initially approved the local credit was for it to go to homeowners as property tax relief.

In an interview, Musgrave said her department acknowledged the error immediately and that, in an e-mail, she “thanked them profusely.”

Musgrave did send a rather formal e-mail to Blosser on July 10: “Auditor Blosser, Thank you for your e-mail expressing concern about the accuracy of the Allen County COIT Homestead rate. As you know, the department endeavors to issue correct information for the benefit of the units and the taxpayers. In this case, an error was discovered in rates issued for Allen County by you and your staff. It has been quickly rectified by DLGF staff. … I thank you again for your diligence.”

But Blosser was concerned that the error might have affected more than Allen County numbers, so she contacted Musgrave, who told her that the rates were double-checked the week before. Klutz had drawn DLGF’s attention to the mistake only that week, however.

“She didn’t exactly tell me the truth,” the auditor said. “She said the error had been caught earlier, but we contacted them on the (July) 9th, and they sent the correction later that day. … It’s pretty insulting.”

Blosser and Klutz are quick to note that the state agency is coping with tremendous change in the recently approved property tax legislation. But so are they, and Klutz managed to catch the error in spite of the urgency to prepare bills so that schools and other local units of government could avoid borrowing to meet budget obligations.

This page has earlier detailed complaints from local government officials that the relationship between them and the DLGF under Musgrave has changed from a partnership to one of mistrust. It’s not a partisan issue – all involved in this case are Republicans.

“They have a big job to do. I really respect what they do,” Blosser said of the DLGF. “Hopefully, that goes both ways.”

State Auditor Tim Berry intervened in the exchange between Musgrave and the local office. He said he was frustrated at the time that communications had broken down. “Lisa and Tera both do a great job,” he said. “There was a mistake, and they needed recognition of their work. … I don’t think the DLGF fessed up to the mistake that was made.”

Berry, a former Allen County treasurer, said he believed the new ombudsman post is in recognition of the communication problems and that it should help mend the frayed relationship.

But taxpayers shouldn’t have to pay employees to run interference between the head of a state agency and their own elected officials. Musgrave boasts of a new taxpayer-focused approach when, in fact, her failure to work with local government officials compromises service to taxpayers.

Allen County taxpayers should recognize the good work by Blosser’s staff. It was the first and only in the state to mail refund checks to homeowners before Jan. 1, and now the deputy auditor’s diligence has ensured them the $6 million refund they were due. Gov. Daniels and his DLGF commissioner could take a lesson in customer service from them.