Interim DMR director looking for $4 million in overspending on projects

klnelson@sunherald.comFebruary 16, 2013 

Ziegler

BILOXI -- Danny Guice, the interim director of the state Department of Marine Resources, has told the Sun Herald he can't account for millions in state money that has come to the agency in the last decade.

"There were monies that I thought should have been available that turns out aren't," he said, "because they're not there. The money was spent."

Guice discussed the issue during a series of interviews over the past two weeks on how difficult it is to navigate DMR spending. And he conceded the agency "just hasn't been managed well."

Guice took over in January when Director Bill Walker was fired after coming under scrutiny for spending practices; the creation of a foundation that financially benefited from its relationship with the DMR; and the use of federal money to buy land from a relative.

The agency also is the focus of investigations by the State Auditor's Office and the FBI.

"When I first got here and started looking at the books, just from a cursory glance, I thought we had a little money set aside, but we don't," Guice said. "And I'm in the process now of finding out where that money went."

The money, roughly $4 million, is from multiple projects, but only one funding source -- state Tidelands money, he said.

That's the money the state receives from leasing land -- the bulk of it from casino leases -- that is subject to tidal ebb and flow.

The DMR has a committee that decides how Tidelands money will be spent and sends a list to the Legislature for final approval as long as it's for "conservation, reclamation, preservation, acquisition, education" and better access to the water.

But going back through the years, Guice said he is finding cases in which more money was spent on projects than was budgeted and cases in which leftover money was spent on projects that weren't on the list.

"What I was trying to find out is what they spent it on and I'm not sure they know what it was spent on," Guice said.

He said some of the project accounts were "overspent by five or six times what was budgeted."

"I'm concerned about money that we should have had in reserves. We're talking millions," he said. "A lot of money."

Guice offered the Sun Herald a list of years' worth of Tidelands projects he has been looking at, but did not include the amounts budgeted for each project.

The pages of projects had the amounts cut off.

"They don't add up the way they ought to," Guice said. "That's why I cut the numbers off the page. Until I can give you something accurate, I don't want to give you numbers."

He said he would be more specific when he learns more himself, and said he is considering calling in the state auditor to do "a regular audit, so we'll know where we are from this day forward."

Guice said, "Records are missing. We can't locate them to reconcile them."

But he is not calling the money missing. He said it appears the money was spent on projects.

"I've never suggested there was any wrongdoing," he said.

"I just want to know that the money was not misspent. And from what I've seen, everything seems to be OK," he said. "It's just that some things are not on a list or not on a list that we can find."

He said DMR Chief of Staff Joe Ziegler, whose job it is to manage Tidelands money, is helping reconcile the accounts. But Ziegler doesn't have the authority to spend the money, Guice said. "That has to come from the executive director."

He said he would not consider calling Walker. He said reconciling the accounts is "something we ought to be able to figure out here, and we're going to."

Earlier he said, "It should not be complicated and it will not be complicated from this day forward."

On a different front, Guice blames the flood of federal money going through the DMR -- including $71 million from the Coastal Impact Assistance Program, tens of millions in early BP oil-spill money and $61 million for Katrina-disaster relief -- for other planning and spending issues.

Guice said he believes having that kind of money created an agency that wasn't planning for "the lean years."

Last week, Guice said, "I want to get us on track so that we know from month to month what our expenses are going to be and what we're going to need to meet those expenses.

"It hasn't been done in the past, he said. "Not that I could see."

But he said tighter budgeting is necessary now, with an agency that is more than $1 million over budget seven months into the fiscal year. "We've got to do that. We can't survive waiting on another hurricane or another disaster. That's not the way to survive."

Still, the DMR expects to receive millions more in BP oil spill-restoration money that's coming to the state.

He blamed budget shortfalls last year and this year on a lack of planning. "We have funded a lot of things on this Coast, a lot of good things.

"But we're at a point now where we can't do that any more. When you have plenty of money, it's easy to spend other people's money," he said. "But we need to take care of the needs of the DMR and make sure that we're doing things right."

Guice has closed one account in particular, a special account only Walker had the authority to use, in addition to his executive spending account. When Guice closed "601 special," he moved more than $1 million to the agency's general fund.

Expressing in one recent interview the frustration of navigating DMR spending records, he said, "Grants have numbers. But some of these other projects … you almost have to have a booklet to go through it and see what this is or that is. Things are way more complicated here than they have to be."

In December, Vernon Asper, president of the Commission on Marine Resources that oversees the DMR, was in the dark about most of the agency's spending of federal money.

The commission had a clearer idea of how it spent state money, he said.

But in January, the commission passed a resolution requiring the executive director to provide more-detailed financial reports at the monthly meetings, reports that include federal grants.

Describing the DMR accounts system, Asper said, "Every account is in flux and there's a lot of them."

He pointed out the commission isn't charged by law with overseeing the DMR's budget. State law does require the executive director to deliver a report that includes detailed expenditures to the governor and the Legislature at the beginning of each year.

"If things are going well, the commission has no need to intervene in any of the spending decisions," he said, "And in 18 years, there's been no question about the spending."

But that has changed, he said.

Guice pointed to $1.46 million the agency spent on two large recreational fishing boats that belong not to the state, but to a foundation Walker directed. The Sun Herald reported on those expenditures in December. And in that case, the agency used money from the Rigs to Reefs Program, one of its artificial reef accounts, to make improvements and upgrades.

"It's like these boats," Guice said. "That was $1.4 million. That's a lot of money."

"We're not spending any money on those boats now," he said. "We're not even using those boats."

He said they are still at the Biloxi Small Craft Harbor, in row C, slips 8 and 9.

They're part of state and federal investigations, he said, and "they're not going anywhere."

"Our legal staff is looking at the process of placing a lien against them for the equipment that we bought," he said.

At one time, the state agency considered repossessing the equipment, but was told the state may eventually come to own the boats.

"So it doesn't make sense to tear them up," he said.

"The Sun Herald uncovered something that should have never happened in the first place," he said. "And I want to get it right, but this is such a strange mix of stuff, state audit people, federal audit people. It's not normal. And unfortunately, it's going to go on for months and months to come."

Anita Lee and John Fitzhugh, Sun Herald staffers, contributed to this report.

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