A public agriculture corporation that said last year it was too busy to be audited now has a state audit requirement grafted onto its funding bill. This time, the Agribusiness Development Corp. isn’t putting up a fight.

“They’re not going to object,” said Rep. Richard Creagan, who chairs the House Agriculture Committee.

That’s probably because the audit requirement is now tied to the corporation’s funding.

“If that bill fails, then they cease to exist,” Creagan said.

Oahu Market Chinatown papaya along King Street. 23 july 2016

Hawaii’s Agribusiness Development Corp. last year opposed a bill providing funding for papaya research after an audit requirement was attached to the measure. This year, the agency’s entire budget depends on an audit.

Cory Lum/Civil Beat

Creagan credited House Finance Committee Chair Sylvia Luke and a new approach she’s brought to budgeting. Instead of passing one massive budget bill run through only the House Finance Committee, Luke has carved out smaller budget bills for certain programs.

Committees like Creagan’s agriculture committee then got the chance to weigh in and in some cases make funding contingent on program changes.

The agribusiness bill is just one example of the changing budget landscape that empowers committee to change spending plans.

• A bill that funds the Department of Commerce and Consumer Affairs’ Division of Consumer Advocacy cuts two hard-to-fill public utilities rate analyst positions from the division, along with $130,492 from the consumer advocate’s budget.

• Another bill adds four positions to the Department of Business, Economic Development and Tourism’s Creative Industries Division and one position for DBEDT’s general support.

• Yet another bill, shepherded through the Intrastate Commerce Committee by its chair, Rep. Takashi Ohno, places caps on amounts collected by certain special funds administered by DCCA to cover costs of regulatory programs. Some of these funds have millions of dollars in surplus revenue collected as fees or surcharges, Ohno said, money usually sits in accounts and can’t be used for other purposes.

In the case of the Agribusiness Development Corp., the current budget bill would not cut any positions, but instead would do something Creagan has been trying to do for a while: audit the corporation.

It manages approximately 3,300 acres of land and infrastructure acquired with $71.4 million in taxpayer money.

Creagan’s previous push for an audit stalled in conference committee at the end of last year’s session. Creagan had tacked that request onto a bill providing funding for papaya research. The corporation’s executive director, Jimmy Nakatani, initially supported getting the papaya money, but changed his mind when the audit request was added.

Jimmy Nakatani, executive director of the Agribusiness Development Corp., earlier this month said an audit would “disrupt the daily and project based tasks of the ADC staff.”

Stewart Yerton/Civil Beat

Scott Enright, who was the chair of the Hawaii Agriculture Board at the time, concurred with Nakatani that the ADC couldn’t be bothered with an audit.

“The attached agency has limited employees to do all this work and an audit would hinder the agency’s ability to carry out its important State work,” testified Enright, who earlier this year was replaced by a new chair, Phyllis Shimabukuro-Geiser.

This session, Creagan introduced another bill requesting an audit. Again, Nakatani was hardly enthusiastic.

“A management and financial audit will disrupt the daily and project based tasks of the ADC staff; creating possible delays in meeting milestones and requirements for fiscal and managerial administration,” Nakatani said in written testimony submitted Feb. 13. “Additionally, it is not clear for the reason of the audit, as no negligence in fiscal nor managerial administration has occurred nor been reported.”

But state Auditor Les Kondo said the Agribusiness Development Corp. has been the subject of multiple official audit requests since he took office in 2016, as well as informal requests from legislators and requests from citizens. In fact, Kondo called the corporation “the one state agency that I’ve been asked to audit more than any other agency.”

The agriculture committee ultimately let the audit-specific bill die this session, but added the audit requirement to the corporation’s budget bill.

Nakatani hasn’t objected to the budget bill. And Creagan said it won’t make much difference for him to.

Although the bill does have to go to the Senate, where it could be amended, any changes would be subject to approval in a conference committee. If the measure dies in conference committee, as it did last year, this time around the corporation will get no operating funds, Creagan said.

“They can’t escape it this time,” he said.

In addition to requiring the audit, the measure also enhances the corporation’s reporting requirements. Creagan stressed the purpose was to bring greater accountability to the ADC.

“We’re not trying to get rid of them,” he said. “We’re just trying to find out what they’ve been doing.”

Nakatani did not return calls for comment.

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