Audit questions use of Michigan petroleum tax

Associated Press

LANSING, Mich. (AP) -- Millions of dollars from a petroleum tax have been diverted to plug holes in the state budget and pay interest on debt, Michigan's auditor general said Friday.

Money in the refined petroleum fund is supposed to pay for problems related to leaking underground storage tanks and certain inspection programs. But the report said nearly $160 million has been used to make bond payments since 2004.

Lawmakers short of cash have used another $32 million for programs at the Department of Environmental Quality, mostly air quality, the audit found.

In response, DEQ said it simply followed orders from the Legislature. The agency said the money was used to "support programs that minimize adverse impacts on human health and the environment."

The policy remains in effect, spokesman Brad Wurfel said.

"Is the state budget still in a recovery mode? Yes, it is," he said. "These programs have some tie to petroleum. In a perfect world, we'd like to use the (fund) for cleanups. In the long term, that's the objective."

The Treasury Department also defended use of the tax to pay interest on bonds. The department said Michigan law, with some exceptions, allows any state revenue to be used to pay debt. The bonds were related to environmental projects.

The audit suggested an opinion from the attorney general might be appropriate. More than $5 million is being tapped for the debt this year, treasury spokesman Terry Stanton said.

The audit also found that money from the fund was used to send state employees to professional conferences outside Michigan.

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