State Budget Director J. Pari Sabety said that by unnecessarily sounding alarms about Ohio's financial situation, state Auditor Mary Taylor may have cost the state more in interest payments on its bonds.

Taylor, meanwhile, suggested that the inability of Sabety's office to provide the financial reports needed to audit the state's books showed a lack of priorities and has caused unprecedented delays in ensuring that the 2008 budget was really balanced.

The two state government fiscal leaders were generally unflappable in the face of tough questions from the Senate Government Oversight Committee, which asked them to testify about why the state's financial books from fiscal year 2008 have not yet been audited.

Sabety, a Democrat, was smiling and shaking her head as Taylor testified. Taylor, the state's only statewide, non-judicial Republican office-holder, did not stick around to hear Sabety's testimony, but her office fired off some sharp rebuttals later in the day.

Taylor said that although she could declare the state unauditable, she has not officially done so, mainly because the state is not held to any legal timeline to complete its financial reports.

"However, if and when we get to a point when we can no longer work and make progress toward fulfilling our statutory obligation to audit the state of Ohio, we will declare the state unauditable," she told the committee.

Sen. Eric Kearney, D-Cincinnati, argued with Taylor over the use of the word unauditable, saying it's an "inflammatory word and is not applicable here."

Later, Sabety suggested that by implying that the state's books were unauditable in a news conference on March 2, Taylor might have helped contribute to a one-half percentage-point increase in the interest rate charged for money borrowed through bonds.

While there are a number of factors at play, Sabety said, "It obviously doesn't help when there are exaggerated claims out there. Media calls were made to Ohio's rating agencies. Investor calls were made to trading desks about the stability of the state of Ohio and its financial condition."

Taylor's office dismissed the link.

"They need to stop making excuses and do their jobs," said Chris Abbruzzese, spokesman for Taylor.

Sabety said the delay in putting together the reports needed to audit the state books is attributed to a new $158 million payroll and accounting system. She said the system is highly technical and requires significant validation to ensure that first-time reports are accurate.

She said other states have experienced delays for similar reasons, and Ohio audits have been delayed in the past because of such issues as the Coingate scandal at the Bureau of Workers' Compensation.

Sen. Keith Faber, R-Celina, told Sabety she was "trying to point the finger and say, 'somebody else did something wrong, so we can do it, too.' I don't think that's a good answer for Ohioans."

Sabety said the reports will not be ready until June, meaning the audits won't be completed until fall.

That disappointed Republican lawmakers, who said they wanted the audit finished before they must vote in late June on the new two-year, $54.4 billion budget that takes effect July 1.

"I think we have been very patient," Taylor said. "From our perspective, it's a matter of priorities. We would have hoped it would have been made a priority and those issues would have been addressed."

jsiegel@dispatch.com