Kyle's report alleged 12 wide-ranging violations, including ignoring basic accounting methods; disregarding state reporting regulations; and being unable either to account for thousands of taxpayer dollars -- or to prove the undocumented money wasn't disbursed for Johnson's personal use.
"This is what we call cracker-barrel accounting," Kyle says, describing how Johnson's office could not provide such basic accounting tools as a general ledger, a cash disbursement journal or monthly financial statements. "It's a textbook case of 'everything that could be done wrong, was.'"
Johnson would not comment on the audit and referred all questions to her attorney, William Wessel. Wessel blasted Kyle for attempting to influence Johnson's election, which is Saturday, Feb. 2. He says state auditors nit-picked minimal infractions to make it appear Johnson had committed grievous errors, and in a written response to Kyle, the attorney denied that Johnson had refused to cooperate with Kyle's office.
"Your recent efforts on the eve of the election to now jam through your audit report is a transparent political attempt to interfere with and influence the election in which some few disgruntled rich folk living in the fanciest and most expensive condominiums in the state have funded a candidate to run against Ms. Johnson so as to return to the old ways of low assessments for the wealthy and politically connected," Wessel wrote in a belligerent Jan. 21 letter to Kyle -- days before the final audit was released.
Kyle says his office first encountered problems with Johnson in 1999, when she was delinquent in having a certified public accountant prepare an attestation, an annual financial report required of assessors by state law.
"We wrote to her and asked her to engage a CPA to do the attestation, and we got no response," Kyle says. "Five letters [between Nov. 1999 and May 2001] and we didn't get a response."
His office received Johnson's report three months late and decided to launch a full audit. "The first clue was when we went in [to Johnson's office]," Kyle recalls, "and there wasn't a formal set of books and journals, ledgers -- they didn't exist. And ... she couldn't document many of the expenditures."
Kyle says Johnson continued to avoid contact with his office, ignoring communications from him and canceling or failing to show up at scheduled meetings with his office. "It was very difficult to get in touch with her," Kyle says. "She would make appointments and my staff would drive down [from Baton Rouge] to meet with her, and she wouldn't be there."
Kyle finally filed suit in a Baton Rouge district court and won a court order mandating that Johnson comply with the auditor's record requests and make herself available to the office. Despite the initial court order, however, Johnson continued to evade Kyle and his employees, he says. She capitulated after Kyle's office filed a contempt-of-court charge against her, according to Legislative Auditor General Counsel Jenifer Schaye.
"We don't like this to happen. All it does is divert resources for us to have to do this," Schaye says. "We actually had two senior guys down there at least five times waiting to meet with her, and that's a significant thing for us because we're not heavily staffed. ... Either she wouldn't come to meetings, or she would come late, or she would send someone else."
Wessel's letter does not address the suit Kyle filed to force Johnson's cooperation. However, he disputes that Johnson was uncooperative. Moreover, Wessel in effect argues it's none of Kyle's business how Johnson assesses property in her district -- that it's in her purview as assessor, not Kyle's as auditor.
"Do you exact the same sort of performance review on district attorneys and Judges?" Wessel wrote. "Do you tell them which charges to bring and analyze their sentencing practices? We think not! And until you or your auditors are elected assessor, the people of New Orleans have chosen Ms. Johnson to perform that function."
The 12 major violations alleged in Kyle's report include: failure to comply with state audit and reporting laws, failure to maintain financial records and refusal to provide available records, failing to include more than $8,000 personal expense allowance as wages in IRS paperwork, failing to report personal use of her publicly funded vehicle as taxable income, and incurring debt without approval. The latter two charges involve the 2001 Chrysler LHS that Johnson leased in August as a taxpayer-funded vehicle without obtaining approval from the State Bond Commission.
Other alleged violations are failure to prepare a budget message and release it to the public in a timely manner as mandated by state law, inadequate record-keeping of fixed assets, failing to control her staff's payroll and personnel policies, failing to have a policy determining staff cellular phone use, and failing to account for $26,116 spent by her office. "It could not be determined whether $15,006 of these payments were for business or personal purposes," the audit said.
The allegation most likely to get voters' attention concerns Johnson's lease of a 1999 Chrysler at taxpayer expense.
"The assessor did not report her personal use of an assessor-owned vehicle as wages, as required by federal tax laws," the audit states. "An employer-provided vehicle is considered a fringe benefit under the federal employment tax laws. Employees are generally required to maintain adequate records substantiating their business use of the vehicle.
"The assessor leases one vehicle (1999 Chrysler LHS) that is used by her for personal use; however, she does not maintain records substantiating the business use of the vehicle. For the year ended December 31, 2000, the assessor did not determine the value of the personal use and include it in her wages."
In response, Wessel argues that Kyle has no authority to audit Johnson's tax returns. He claims Johnson "uses her vehicle for official purposes and is on call 24 hours a day."
That does not, however, address Kyle's allegation that Johnson kept no documentation to back up her claim that she uses the vehicle 100 percent of the time for "official purposes."
The last violation cited, "Variances in Assessment of Property," refers to Kyle's inability to obtain explanations and documentation of what he termed "inconsistencies" in Johnson's assessments. "We attempted to obtain from the assessor explanations and documentation supporting the differences in assessment values ... on Jan. 8, 2002," the audit says. "However, the assessor, based on the advice of her legal counsel who was present, refused to provide us with any information at that time."
In response, Wessel wrote in his letter that Kyle's office "has demonstrated an obvious bias against my client" by initiating an on-site audit on Aug. 2, while Johnson's assessment roles were open for public review and comment -- a very busy time for all local assessors.
"She cannot possibly meet with a stream of citizens and sit around with your field auditors answering questions on the same day," Wessel wrote. "We doubt seriously whether you have begun an audit on other assessors upon the initial opening of the books."
Kyle shrugs off suggestions of political bias, pointing out that by Aug. 2, his auditors had attempted several times to contact Johnson. "I do not know this lady, I have never met her, and I do not know who is running against her," he says. "I am simply doing my job as state auditor."
"When those people went to begin the audit in August, it wasn't like they just burst in to disrupt her day," adds general counsel Schaye. "They had told her weeks before ... that they were coming, and she would not talk to them -- literally would not talk to them. And she had lawyers calling them and calling me as general counsel and saying 'You can't do this.' We couldn't reason with them. This our job -- we had to audit that office."
Wessel said Johnson did not comply with state law requiring yearly audits because her CPA died in 1999 and "considerable administration problems have occurred."
"He died long before the end of the year, and she had plenty of time to engage another CPA," Kyle responds. "State law makes no provision for excuses."
Sources close to the Board of Assessors, the panel composed of the seven elected Orleans Parish assessors, say they aren't surprised by the audit. "I literally watched those guys (state auditors) just wait four, five, six hours outside her office and she wouldn't show up," says one Board of Assessors employee. "There's no reasoning with her."
The employee describes Johnson as "volatile," with an office in City Hall characterized by boxes of paperwork stacked haphazardly from floor to ceiling. No one on the Board of Assessors has been able to determine what accounting model Johnson uses to arrive at her assessments, and Johnson refuses to tell anyone, say the sources.
Tax representative Karl Kehoe, a partner with Real Estate Tax Group LLC, says his clients include owners of several properties in Johnson's downtown district. He agrees with the Board of Assessors employee, saying Johnson's appraisal tactics and frequent alterations of assessments often cause frustration among his clients.
"I represent taxpayers, and we go in there and say, 'Here's what we think the building is worth, and here is why.'" Kehoe says. "And we ask her, 'How are you assessing it? How do you come up with your formulation?' And she has quite candidly told me, 'I'm not telling you -- I'm not tipping my hand.' It's a cat-and-mouse game.
"She's really not willing to serve the public. Working with her on a day-to-day basis has been a nightmare," Kehoe says. "She is so reluctant to give out information, even if they are public records."
Kyle's audit addresses the complaint that Johnson's assessments are irregular. The audit questioned similar properties that were given divergent assessments by Johnson. "She is required by law to document variations in the value of the property," Kyle says, "so we were checking to see if she had complied with that law, and there was no documentation provided to us as to why one assessment is higher than the other.
"We weren't trying to second-guess the assessment; we were trying to see if she was complying with the law in making the assessment." Because Johnson's records were so incomplete, Kyle couldn't make that determination, the audit says.
Johnson's assessments are frequently appealed -- "an average of 60 appeals a year, more than all the other parishes in the entire state combined," says the Board of Assessors employee.
Johnson usually chooses to fight the appeals in court, costing the local assessors board thousands a year in legal fees, the employee says. "If Pat had her way, literally, she would bankrupt the board. The City Council gave her $50,000 to pay her legal fees last year, but her attorney is still suing the Board of Assessors for [additional] legal fees."
That lawsuit, filed in October 2001 by Johnson attorney John Rawls, demands roughly $73,000 in legal fees for himself and $17,500 for attorney LeRoy A. Hartley. The case is pending in Civil District Court.
Kyle's office has sent a copy of the audit to state Attorney General Richard Ieyoub, as per state law. Because Johnson herself did not respond to the audit -- instead sending a response through her lawyer -- "the audit is over," Kyle says. "There will be no amendments to it. We will audit her again next year and, hopefully, some of these findings will be cleared up."
One of Wessel's arguments in his letter is that Kyle's office is making much ado about very little. "In the overall scheme of things in particular reference to the billion dollars spent by state and local agencies, you are dealing here with a miniscule amount of money," Wessel wrote.
Kyle's response: "Every public dollar is precious, and it's my responsibility to account for every public dollar spent. She has shown a total disregard for her responsibility to be accountable to the taxpayers. ... This one will probably go into the book I write after I retire." Additional reporting by Clancy DuBos