BOZEMAN (AP) — The Montana Board of Livestock has created a panel to address its budgeting problems following a legislative hearing about an audit that found the state agency had used illicit practices to balance its books.

The budgetary subcommittee will be made up of four board members and will encourage industry groups to help solve the Department of Livestock’s funding shortfalls, board chairwoman Jan French said in a statement Wednesday.

Livestock department spokesman Steve Merritt said the decision to create the budget panel was based on several factors, not just the July 14 Economic Affairs Interim Committee hearing and the May legislative audit.

“It’s related to a combination of things, including ongoing budget concerns and the executive planning process,” Merritt said. “Sure, the EAIC (hearing) and the audit played a role but I wouldn’t say it was exclusively in response to that.” 

The announcement comes two weeks after the legislative committee confronted French about the audit that found the department had used three illegal and unconstitutional practices to balance its 2012 and 2013 budgets.

“You’re one of the only agencies that has come to us under water,” committee chairman Bruce Tutvedt of West Valley said in the hearing. “When did you become aware of this and why haven’t you taken any steps?”

Auditors said the agency withdrew $197,000 from the state treasury using a prepaid expense account that was not documented for months, illegally increased the per-capita fees it assesses for each livestock animal sold and dipped into deferred funds before it was supposed to do so.

Livestock department executive director Christian MacKay said the agency would stop using the prepaid account but did not agree with the finding that its fee increases were illegal. 

The Department of Livestock, like Montana Fish, Wildlife and Parks, is funded mostly through special fees and not the state’s general fund, state budget director Dan Villa said. The people who pay those fees are dwindling in number, causing the agencies’ budgets to be stressed, he said.