ST. PAUL - The Minnesota Appeals Court will decide whether a 2015 law unconstitutionally took away some of the state auditor's authority.

Attorneys representing three Minnesota counties argued to appeals court judges Thursday, March 9, that the decision to contract a private auditor is up to local counties, not State Auditor Rebecca Otto.

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Otto is suing Becker, Wright and Ramsey counties, contending that the state Constitution grants only the state auditor authority to decide how local government financial records are monitored.

The counties agree with the 2015 law that says they should be allowed to forego the state's auditing services in favor of lower-priced private auditors.

Scott Anderson, an attorney representing Becker and Wright counties, said the core function of Otto's office when dealing with local governments should be "to make sure they're collecting taxes from them," he told judges at the hearing.

Judge Randolph Peterson, one of three judges to decide the case, referred to the private sector, where he said a board's decision to hire a private auditor can raise suspicion among investors.

Why, Peterson asked, would taxpayers not feel suspicious of local governments who do the same?

Anderson answered that the auditor's office regulates and determines the standards for all certified public accountants who would conduct the audits.

Robert Roche, assistant attorney for Ramsey County, said the county has so far been pleased with the services Otto's office has provided, and would not outright refuse a contract with Otto's office.

But the county, Roche said, is hesitant to enter a multi-year auditing agreement with the state.

"We're not going to sign a three-year contract until we know all the facts..." he said. "The plaintiff is asking the court to make Ramsey County stay with her services years from now, even if they're not happy with them."

Local governments in Minnesota gained the option to contract private auditors thanks to state law Republicans penned in 2015. Since then, more than 40 counties have opted for private auditors over Otto's office.

The law, said Otto's attorney Joseph Dixon III, "gutted" the core function of his client's office.

"This is transferring core executive function outside of executive departments," Dixon said.

Otto previously told a House finance committee she sued in order to keep auditing local governments, which she sees an essential part of her job.

The meeting included 90 minutes of pointed questions from Republicans about the lawsuit, particularly the costs.

Otto's office has so far shelled out $250,000 on the suit. The money, she said, comes from "salary savings" banked from when employees leave.

Last month, Wright and Becker counties each reported spending more than $40,000 on the suit. Ramsey County had spent more than $20,000.

Rep. Paul Marquart, a Democrat whose district covers part of Becker County, introduced a bill in February to require the state to cover Becker and Wright counties' costs.

"It is basically these three counties defending a state law ... for all 87 counties," he said. "It is fair to spread it statewide."