Explaining the importance of the State Auditor

Thank you for taking the time to join us on this spring Saturday. Now, and on occasion in the weeks to come, we’re focusing on Council of State positions that don’t attract much attention but that nevertheless have important ramifications for the business community. Today we’re discussing the State Auditor.

Currently, Jack Clark and Dave Boliek are in a runoff for the Republican nomination. The winner of this May 14th contest will face Jessica Holmes, who was appointed to the position by Governor Cooper. 

Before we get to November, let’s take a look back in time…

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But for a brief interlude immediately following the Civil War, North Carolina has always had a state auditor, even when we were still under colonial rule.

The Fundamental Constitutions of Carolina, adopted in 1669, stipulated the colonial laws governing a large part of the American southeast, including North Carolina. That document established 12 assistants, called “auditors,” to the treasurer’s court, and empowered them to “take care of all matters that concern the public revenue and treasury.”

That general system endured until 1862, when the General Assembly passed a law creating the Office of Auditor of Public Accounts, who would be elected by the legislature for two-year terms. Only two people held the role – Samuel F. Phillips and Richard H. Battle – until it ceased to exist in the legal milieu that consumed North Carolina in the years following the Civil War.

In 1868, the state finally succeeded in adopting a new constitution. It established an independently elected State Auditor who would serve four-year terms, transferring the position from the legislative branch to the executive branch. For the next century, the State Auditor held various combinations of duties that are now ascribed to the State Treasurer, State Controller, and Office of State Budget and Management.

In 1974, in the aftermath of the Watergate scandal, the General Assembly authorized the State Auditor to conduct “operational audits” of state agencies, ushering in the modern duties and the political sensitivities of the office that we know today.

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The outcome of operational audits can be embarrassing for the state’s chief executive. If an audit concludes a program run by the executive branch is rife with corruption of incompetence, it can create negative publicity for the governor and, in extreme cases, portend electoral fallout or even impeachment. For that reason, an independent auditor that acts in good faith can prove threatening to a governor; similarly, a politically-minded auditor can protect an ally’s malfeasance or launch bad faith audits to harm a rival.

These sensitivities featured prominently in a 1978 interview with Henry L. Bridges – who at that time had served as State Auditor for 31 years – published by the “North Carolina Center for Public Policy Research.”  Still only a few years removed from the Watergate scandal, Bridges went to great lengths to emphasize his office’s apolitical culture. “[I call] a spade a spade, and politics is not a consideration” in audit decisions, Bridges said. Bridges’ deputy said in the same interview, “The executive branch does not have the independence found in this office.”

Three decades and four auditors later, Beth Wood burnished a similar reputation. She frequently issued scathing audits of state agencies. It is impossible to know whether she withheld certain judgments, but the reports she did publish seemed to spare no one. Ultimately, that reputation proved Wood’s undoing. She could not escape accusations of hypocrisy when a 2022 post-holiday party hit-and-run revealed she used state vehicles for personal trips, “including jaunts to spas and far-flung shopping centers.”

Wood resigned because of the scandal, prompting Gov. Roy Cooper to appoint Jessica Holmes to finish Wood’s term through this year.

Holmes is a prominent figure in Wake County Democratic circles, having previously served on the Board of Commissioners. Her recognition was boosted during her unsuccessful run for Commissioner of Labor, losing to Josh Dobson. Soon after the race, Holmes was rewarded by Governor Cooper with a highly sought appointment to the North Carolina Industrial Commission. In her current capacity, the few investigative or operational audits published since assuming office in December 2023 look to have been largely conducted under the tenure of her predecessor. She is running this year for a full term.

Holmes’ Republican challenger for office won’t be known until the May 14 runoff election. The two candidates, Jack Clark and Dave Boliek, have very different resumes. Clark is a young General Assembly staffer. Boliek is a former prosecutor and business owner who chaired the UNC Board of Trustees. In that role, Boliek created the university’s first audit committee, balanced the university’s budget, and eliminated an operating deficit. Boliek’s campaign website also discusses his push to instill more ideological diversity on campus.

State agencies have great influence over North Carolina’s business climate. The rules and enforcement actions they undertake can allow business to thrive or subject it to a maddening bureaucratic maze. The Office of State Auditor, if occupied by the right person, can keep state agencies operating honestly and according to law. But the auditor can also easily fall prey to political considerations, which is why it’s important that this Council of State position be held by an honest, experienced, and good faith occupant.