MOSES LAKE - State auditors may investigate the Moses Lake Irrigation and Rehabilitation District's new budget.

District Manager Curt Carpenter reported the change to the district's budget, which he called illegal, to the Washington State Auditors Office. He read the letter during a recent meeting.

The board voted 2-to-1 to cut the 2012 budget from $1.4 million to $830,250 in January.

"The budget that was formerly not correctly approved, does not comply with (state law)," Carpenter said. "I informed the board of that. Legal (counsel) informed the board of that, and they went ahead and approved it."

Carpenter tried to address the issue internally, but Chair Mick Hansen wouldn't listen to him, he said.

"At this point in order to protect the district, I have no choice, but to report this to you and ask that you intervene and conduct an investigation into this matter to make sure the district maintains its long-standing record of compliance," he said.

In particular, Carpenter said the surplus fund is 43 percent of the budget, and it's only allowed to be 25 percent. This makes all the other items out of compliance.

"We can very easily fill the amounts in. I left it in the slush fund so it could go one way or the other," Hansen said. "It's not a totally open slush fund, but on the other hand, I didn't want to put items in one category and then not be able to use it in another category."

Carpenter claimed Hansen ignored what the letter said, saying the board needed to reinstate the original budget until it could be properly amended.

"I don't think it does," Hansen replied.

Carpenter didn't know when the state would reply to the letter, he said.

Director Ron Covey asked what was wrong with reinstating the budget the district originally approved in December, and have another study session.

"He's absolutely right," Covey said. "We're not in compliance."

Hansen agreed to take a look at it in a special meeting on Feb. 28 at 7 p.m. at the Moses Lake Irrigation and Rehabilitation District meeting room. He didn't agree to change the budget before the meeting.

"There's no reason to go back to the original budget than there is a reason to go back to any other budgets," he said. "In two weeks, we'll decide where we're at with it and go from there."

Director Rich Archer asked district Attorney Chris Ries whether the board needed to do anything before they received a letter from the state.

"The greatest issue with the budget is when the expenditures get out of whack with our assessment figures," Ries said. "So it's the expenditure of money that is consistent with that budget that is the culpable act."

Until money is spent which is inconsistent with what it is assessed for, the district isn't culpable, Ries said.

Archer asked Carpenter whether Hansen's budget would stop the district from paying bills.

Covey has seen expenditures, including purchase of equipment, which the district can't do because the money isn't in the budget.

"So our staff is not working. They're sitting here doing the assessment rolls," he said.

Carpenter explained the budget needs to be formally amended to pay the items, saying several of them are due within the next two months.