An accountability audit, released today by the State Auditor’s Office, charges the City of Seattle with illegally using funds collected from Real Estate Excise Taxes. According to the report, the city used nearly $2.8 million in REET 2 money to pay for excavation and retaining wall work related to fire station construction and another $415,000 to create or extend trails. By law REET money, especially the “2” variety, is restricted to certain roads projects and can’t be used to fund things like fire stations or trails– even if the city says the trail functions like a sidewalk. In it’s response to the audit, the city also argues that the fire station retaining wall abutted Yesler Way and should therefore be counted as roadwork as well. Still, the city says that it will substitute REET 2 for the less restrictive REET 1 money in this case, which makes you wonder why they didn’t just do that in the first place.