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North Dakota State Auditor Josh Gallion

North Dakota State Auditor Josh Gallion appeared before the Legislative Audit and Fiscal Review Committee on July 17, 2019, in the state Capitol in Bismarck.

Barring a legal challenge or referendum, North Dakota's state auditor and a committee of lawmakers who review audit reports will agree to disagree on a new law limiting his ability to launch certain audits.

State Auditor Josh Gallion on Wednesday told the Legislative Audit and Fiscal Review Committee he will abide by North Dakota Attorney General Wayne Stenehjem's opinion that the new law requiring committee approval for him to launch performance audits is likely unconstitutional.

"We will not be seeking approval of performance audits, but what I will tell you is communication is key," Gallion said as he presented a memo to lawmakers.

The Legislature's top budget analyst, Allen Knudson, told the committee the new restriction is law, effective July 1, until deemed unconstitutional by four of the five justices of the North Dakota Supreme Court.

But Gallion pointed to an addendum that the opinion "governs the actions of public officials until such time as the question presented is decided by the courts."

A House-Senate conference committee late in the 2019 legislative session added the restriction to Gallion's two-year budget. Lawmakers said the restriction was meant to improve communication with Gallion's office.

Performance audits are essentially deep-diving probes on specific, fiscal questions, such as the governor's office's use of state aircraft, investigated in 2018.

The first-term Republican auditor asked for Stenehjem's opinion on the new law. Stenehjem in June said a court would likely find the restriction to be unconstitutional as a separation of powers violation. He said the same of mandating committee approval for Gallion to contract for federally required audit work.

Lawmakers had a variety of questions and comments Wednesday for Gallion, hitting on his dissemination of news releases with audit results before lawmakers say they can see the findings.

"I don't like to read in the newspaper an audit that's been completed and not have been notified that this audit was done," said Rep. Gary Kreidt, R-New Salem.

Gallion said audits are widely published after his office receives responses from the audited entity. His office won't hold audits for the committee, he added.

Sen. Jerry Klein, R-Fessenden, who chairs the committee, said he plans to work with Gallion and values his opinions on the direction of audits.

"My effort will be to continue to work with you," Klein told Gallion. 

Neither Gallion nor lawmakers expressed an interest in a legal challenge.

"Just because of the time and the cost and putting that on the taxpayers, I don't think is the right thing to do," Gallion said. Klein agreed.

"I hate to see us waste a lot of resources on doing something that certainly I don't think is a big issue," Klein told The Bismarck Tribune.

But Rep. Mike Nathe, R-Bismarck, criticized Gallion for his stance in "ignoring the law."

"I think it hurts your credibility," Nathe said. "You're out auditing somebody, you're asking them to follow the law and yet you're not." 

Gallion declined to respond to Nathe's remarks. He said he hopes the 2021 Legislature removes the new law, which Rep. Keith Kempenich, R-Bowman, said he'll introduce legislation to do. Kempenich brought the restriction's concept to the conference committee.

Legislative leaders declined to call a special session in the wake of Stenehjem's opinion. Senate Majority Leader Rich Wardner, R-Dickinson, echoed Klein's sentiments that the auditor issue is "not that big a deal" to call a special session or sue.

"I think the auditor is just fine. He's taking care of things in a good way," Wardner said. "We'll get through this; it's just that others think it's a big deal."

Organizers of a proposed referendum to repeal the auditor restriction have until July 31 to file a petition with Secretary of State Al Jaeger to get a measure on the June 2020 primary ballot.

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Reach Jack Dura at 701-250-8225 or jack.dura@bismarcktribune.com.

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