House Speaker Robert A. DeLeo called the news “disconcerting.” Republican lawmakers demanded an investigation. And Representative David Linsky, chairman of the House’s auditing committee, announced that he was launching a preliminary inquiry.
Reaction was swift last week when reports surfaced that former governor Deval Patrick “secretly diverted” millions of public dollars into “off-budget accounts” that paid for a wide variety of government initiatives — including $1.35 million for overseas trade missions, or “junkets,” led by the governor.
But Linsky, heading the inquiry, says he has turned up no evidence of wrongdoing to date.
And a Boston Globe review shows that, in budget documents and press releases, the Patrick administration was open about its plans to divert millions from a series of independent, quasi-public agencies to the state government in the midst of a historic recession.
The Legislature itself explicitly embraced the practice in at least two of its budgets. And officials with several of the quasi-public agencies, including Massport and the Massachusetts Convention Center Authority, said their boards approved the budget transfers in open public meetings.
Linsky, of the House Post Audit and Oversight committee, said the transfers were either “specifically authorized by the Legislature” or “allowable under existing budgetary rules” and “do not appear to be in violation of either any laws or procedures.”
He added that his panel has not yet looked at the spending side of the ledger: how the Patrick administration allocated the quasi-public funds, some $35.7 million of them routed through trusts the Boston Herald referred to in several stories on the matter as “off-budget accounts” or “off-the-books-trusts.”
But he suggested the panel would have a hard time pinning blame on Patrick when it came to the expenditures that have generated the most interest: those related to trade missions.
“We’ll look at it,” he said. “But I can also tell you there aren’t any explicit laws on the books about expenditures . . . on overseas travel and trade missions. . . . Without any established laws, rules, or regulations, it is going to be difficult to cast any fault upon the executive branch.”
This may be a moment, he added, for the Legislature to establish clear rules for overseas travel.
While there is no broad state policy governing trade mission expenditures, the Patrick administration did sign agreements with quasi-public agencies dictating how their contributions to the state would be spent.
One agreement between the administration and the Massachusetts Technology Collaborative reviewed by the Globe set out a handful of specific trade-promotion uses for the funds, none of which made direct reference to overseas trade missions.
But there was language in the agreement stating that, beyond the enumerated uses, the administration could dedicate MassTech money to other costs incurred by the state’s international trade office.
Greg Bialecki, who signed the agreement as Patrick’s secretary of housing and economic development, defended the administration’s handling of foreign trade missions. “I’m prepared to explain to anybody where the money came from and where the money went and why it was a great investment for the state,” he said.
Similar agreements made with Massport made no reference to trade missions, but included broad language calling on the state to seek new international flights to airports owned and operated by the agency, such as Logan International Airport. Patrick sought new flights during his overseas trips.
News accounts from the time do not provide detailed descriptions of the funding mechanisms used to pay for the trade missions. But the stories show the Patrick administration regularly disclosed that quasi-public agencies such as Massport and MassTech were contributing money.
The $1.35 million state tab for nine overseas trips included $332,193 in flights, $535,558 in hotel stays, and $305,976 in transportation, among other costs. The total and breakdown were first reported by the Herald.
The budgeting maneuvers at issue date back to October 2008, when Patrick moved to close a $1.4 billion shortfall as the economy cratered.
He slashed more than $1 billion from the budget and eliminated 1,000 state jobs in what the administration called the worst set of midyear cuts in Massachusetts history.
But as the administration noted in a press release at the time, it also secured money from quasi-public agencies “to mitigate the impact of state cuts.”
The release listed the agencies and their contributions: $4.5 million from MassDevelopment and $2.5 million from the Massachusetts Convention Center Authority, among others. The total, from 11 quasi-public agencies, was $46 million, a figure noted in a Globe article the day after the announcement.
The Patrick Administration routed a portion of that money through trusts, a practice that would continue for the next six years. It’s unclear what the precise rationale was for using the trusts. But trusts are a common budgeting tool, often used to wall off funds for specific purposes.
All of the quasi-public money identified in October 2008 was to be spent by state government on purposes in line with the agencies’ missions: the MassDevelopment money, for instance, would support local permitting activities and technical assistance for small businesses.
Several months later, the Legislature enshrined this approach in the next state budget, delegating quasi-public funds for many of the precise purposes Patrick had laid out in his midyear budget revision. The Legislature repeated the move the following year.
Patrick vetoed the measures both years, preferring to lean on the independent agencies for voluntary contributions rather than mandate them by law. But the Legislature overrode his vetoes.
The Patrick administration, if cool to the Legislature’s exact approach, continued to openly tout the value of mining the quasi-public agencies.
Documents in the governor’s proposed budgets for fiscal years 2011, 2012, and 2013 provided detailed breakdowns of the financial commitments various quasi-public agencies had made to the state government.
Scott Jordan, a former undersecretary of administration and finance under Patrick, said the administration pursued the contributions in “a transparent and open manner with the support of the Legislature and the boards of the quasi-publics.”
With the economy on the uptick, Patrick did not propose any quasi-public contributions in fiscal years 2014 and 2015. But the state did pluck $7 million from the agencies in fiscal year 2014. And when the governor faced a final mid-year shortfall last fall, he called on an old tool.
In a letter to “the Honorable Senate and House of Representatives” explaining his plan to remedy the state’s budget woes, he wrote that “we have secured the commitment of several of our quasi-public partners” that received money via an economic development bill “to return a portion of those funds to the Commonwealth.”David Scharfenberg can be reached at david.scharfenberg
@globe.com. Follow him on Twitter @dscharfGlobe.