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California Says Special Funds Audit Finds No Hidden Money

California Governor Jerry Brown’s budget office said an audit of more than 500 special funds used by state agencies found no hidden money, though it uncovered accounting discrepancies of $415 million.

Brown ordered the audit after the Sacramento Bee reported last month that the state parks department had squirreled away $54 million in special funds, even as lawmakers and the governor were seeking to close 70 parks to balance the budget.

“Parks was an anomaly,” Finance Director Ana Matosantos told reporters at a briefing. “There are no other hidden pots of money.”

The parks department revelations threatened to derail a campaign by Brown, a 74-year-old Democrat, to temporarily raise income taxes and sales levies through a ballot initiative in November.

The total amount in special funds reported by the state controller’s office as of June 30, 2011, after adjustments, was $8.4 billion, while the budget office reported $8.8 billion, a difference of 4.7 percent, according to a Finance Department statement.

“Differences are primarily due to methodology and timing,” the budget office said. “Human error also contributed to the differences.”

Under Brown’s plan, the statewide sales levy, already the highest in the U.S., would go to 7.5 percent from 7.25 percent. Income-tax rates would rise on earnings of more than $250,000 a year. Those making $1 million or more, now paying 10.3 percent, would be assessed at 13.3 percent.

If the higher taxes are rejected by voters, $6.1 billion will be automatically cut from state spending -- $5.5 billion coming from schools, enough to pay for 15 days of classes.

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