CFGA April 2010 Newsletter

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This is the April 2010 newsletter from Citizens for Government Accountability.

State Auditor Finds Several Inadequacies In Union County Fiscal Court Audit

The Kentucky State Auditor’s Office released its annual audit report, dated 11-3-09, on the Union County Fiscal Court with the following findings and comments:

  • There is: A lack of adequate internal controls over the collection of and accounting for occupational/net profits tax.
  • A lack of adequate segregation of duties over revenues and bank reconciliations and financial statement preparation.
  • Lack of adequate internal controls over decentralized receipts.
  • Lack of adequate internal controls over expenditures. Specifically: Unused checks were kept in an un-secure location. One vehicle was not properly bid for within code. Eight expenditures (including county credit card) were missing supporting documentation. One vendor was underpaid.

The auditors report states; The control deficiencies listed above are considered to be significant and material. An outline of the report was printed in the March 3, 2010 Advocate. The full report can be read online here. The auditor’s report states these findings were sent to Judge-Exe. Jenkins, and the fiscal court magistrates.

State Auditor Blasts Taxpayer Funded KACo For Reckless Spending And Lack Of Board Oversight

After the Lexington Herald-Leader reported on the excessive spending by KACo officials in June of ’09, the Kentucky State Auditors Office announced in July of ’09 they would do a full audit of both KACo and the Kentucky League of Cities. The 3 page KACo audit, released at the end of October 2009, can be viewed in its entirety by logging on to the auditor’s website at The following are some of the findings we have taken directly from the report:

Auditor Crit Luallen states: KACo’s ‘self-serving’ culture resulted in more than $3 million in questionable spending over the years audited (July ’06 thru June ’09). KACo is a public funded non-profit, governed by elected county officials. In 2007 and 2008 they spent $48,426 for board Christmas parties. They also spent $43,000 for alcohol, $28,700 for ballgame tickets, $11,593 for birthday lunches, $10,315 on staff and board member gifts, $12,600 for the use of two Frankfort condo’s for one year, and $278,154 for legal defense of convicted government officials.

Board Pay: The auditor’s office reported KACo paid $334,300 to pay board members for attending meetings. To clarify information in our last newsletter, the CFGA sent an open records request to KACo in Feb. of 2010 that yielded the following for the years 2008 to current date. Their response stated board pay was $250/meeting for the executive committee, and the program board members plus travel reimbursement. Regular board members are paid $100/meeting. Union County Judge-Executive Jody Jenkins currently, and in past years, sits on the KACo All Lines Fund Board. Henderson Co. Judge-Exe. Sandy Watkins sits on 3 separate boards with KACo.

Of Note: KACo’s letterhead states they are: “Working for you in ways you never imagined.” After reading the auditors report; you don’t have to imagine anymore.

Traveling Man – And He Just Can’t Stop

Beginning with his 2007 trip to the Czech Republic, we have tried to cover as many of the out-of-state trips Judge Jenkins and his wife have taken at taxpayer expense. We have reported on, or made mention of several (N.Y. City, Memphis, K.C.,etc.). Most recently; New Orleans, 1st week of Jan. 2010. But these are only a few of the total number. The overlying question is: what did all these trips bring back to the county? And how have county taxpayers benefited from the judge’s trips out-of-state, or even the constant in-state travel? The next segment will hopefully help explain some of this and how the good-ole-boy system works at our expense.

The Milkman and The Cow; (county elected officials training program): The county elected officials association’s collectively lobbied for and got passed in 1999 H.B. 810, which became K.R.S. 64.5725, which gives elected county officials extra pay for going to seminars and training meetings. The rate of pay is adjusted annually based on the consumer price index, with 40 hours of meetings equal to 1 unit. A unit is worth $906 in extra pay in 2010. The extra pay comes from county taxes.

Our View: While most training is good, it is also part of the job. They are already making an average of nearly $75,000 plus benefits. Should the taxpayers have to pay them extra to go to voluntary training throughout the state and country? We reported in the Jan. 2009 newsletter that elected officials associations have voluntary membership, at a rate of roughly $1,000/yr. Union Co. officeholders do not pay their own dues. They have them paid by taxpayers out of their office expenses. (source: u/c year end financial reports/ expenditures by elected office). Obviously: The milkman is the elected official and the cow is the county taxpayer.

Connect-GRADD or GRADD Mis-Connected With Your Tax Dollars?

We stated in our July ’08 newsletter that the number of towers stated by GRADD officials to bring high-speed inter-net to the rural sections of the 7 counties it serves was under-estimated by at least half. This we learned from speaking with others in the industry. The idea of high-speed inter-net availability to all is a good idea that we agree with. However, we disagree with the connectgradd program’s obvious lack of a complete feasibility study that would have polled rural residents on their likeliness to sign up for the service. The following info is taken from a 1-14-2010 Owensboro Messenger-Inquirer article: Currently there are 1,160 customers of connectgradd spread across 7 counties. At least 4,200 customers are needed to pay back the loans the counties took out for the project. The counties put up $1.2 million initially, then borrowed $1.1 million from the Kentucky Infrastructure Authority. GRADD recently applied for nearly $2.1 million in federal stimulus funds, and agreed to match 20% of that amount. If the stimulus funds are received, 11 more towers will be built, bringing the total to 68.

Of the few people we have spoken with who have connectgradd, most love it, but say their neighbors either can’t get it or have spotty service. Our stance from the beginning has been that the better use of tax dollars would have been to work with existing phone companies who were already upgrading their lines for high-speed service to rural counties, covering the cities and surrounding areas first. Assisting them to upgrade the rural areas of the counties would bring the service in faster, although it would not be wi-fi. Currently AT&T, and others, have high-speed access in populated areas around rural cities here at a rate of $24.95 and $29.95/month. Cheaper than connectgradd. If connectgradd can not quadruple its customer base, then guess who is going to bail this thing out. Union County Judge-Executive Jody Jenkins is on the board at GRADD.

Money Don’t Grow On Trees

In past newsletters we have covered the high cost of the multi-million dollar buildings built in the past decade in Union County. Beware of the politicians and their supporters who say most of the money came as a grant from the state, and cost us nothing.’ Nothing is free. Money from the state is simply our state tax dollars. It seems what our local elected officials haven’t done in the past 25 years is bring jobs here. Instead they keep spending our taxes on large buildings, in a county with a dwindling population and skyrocketing substance abuse. The old adage, ‘If they’re gonna waste our taxes they might as well do it here,’ is just as silly. How about don’t waste our taxes. Don’t build things that require more state/local taxes to maintain because they are not self-sufficient. No politicians name should be on any of these structures, since they were built with taxpayer dollars. We do need change in political culture. That always takes a change in elected offices. Political change should be ongoing at all levels of government. If not, we end up with what we now have in Kentucky: A billion dollar deficit, and politicians living like kings.

Your Property Tax Distribution: Taken from the chart posted in the Sheriff’s office concerning where your taxes go. Remember the sheriff only collects the taxes, each tax board sets their own rate.

  • School 61%
  • State of Ky. 13%
  • County 11%
  • Library 8%
  • Extension Service 4%
  • Health Dept. 3%.

State Takeover of County Jails Via Privatization

As recently reported in the local news media, the State of Kentucky is considering a takeover of the county jail system to lessen the burden on the county taxpayers. The first CFGA newsletter in the spring of 2006 covered the county jail system and the occupational tax put in to help offset the cost of funding a new facility. While we are not arguing for or against a jail run by the state or the county, or even having a transport facility here. We simply are providing some independent information for these decisions whether made at the county fiscal court level or at the state level.

Reasoning behind State Privatization

  • county jails financially break small counties via personnel and liability costs.
  • Ky. already has 3 privatized state prisons with much lower costs than govt. run facilities.
  • flat rate per prisoner and no employee costs saves state taxpayers money.

Effect at the county level

  • No need/excuse for an occupational tax.
  • county prisoners would be responsibility of state and private prison contractor, not the county taxpayer.
  • current jail employees would have to apply for jobs with private operator.

Jailers position

By state law an elected jailer gets to keep their jailers pay rate until next election. This is true even if fiscal court votes to operate the jail as a transport facility. Jailers position would become a transport officer at a maximum pay of $30k/yr. with part-time employees.

Of note

The last time the state tried to help the counties via a regional effort was with county economic development. The idea is good. Union and three other counties belong to North West Ky. Forward, which does economic development for the counties. The annual fee the county pays to N.W. Forward, around $30,000/yr., is a fraction of what it cost a county to operate this office themselves. ($150,000/yr. plus employee benefits). The Problem: Union County did not discontinue these positions, they simply renamed them from county economic development director to director of community development and director of tourism. Thus no savings to taxpayers, but more cost. Would you really expect anything else from local bureaucrats?

Electric Companies Rate Increase: More Is Never Enough

In our June 2009 newsletter we reported on the tri-state utility providers annual net profits, CEO compensation, and all of their requests for rate hikes even before the ice storm, and the costs reported by the utilities that the storm caused. Recently the Kentucky Public Service Commission (PSC) has granted most rate increases, and now Eon (k.u./l.g.&e) has sent letters with the monthly bill showing a requested monthly increase of $11.70 for residential customers and $17.40/month for general service. The way the game is usually played between the PSC (3 governor appt. members) and the utility company, is the utility asks for a big rate increase and gets a smaller one.

Our information requests of the Ky. PSC for the June ’09 newsletter stated they used a “complex accounting method” to determine if a utility company had enough net profits going forward to be profitable. The information request also yielded the following concerning Eon (parent company of Ky.Utilities): net profit for 2008: $7.1 billion ($986.9 million from KU/LG&E).

Their expected 2009 net profits were expected to be inline with ’07 and ’08 profits. 2007 CEO compensation was $3.7 million.

Deep In The Heart Of Texas

We contacted state and city (Arlington) officials in Texas, as they de-monopolized electric companies 5 years ago. A person can purchase electricity from one of many companies that operate in the state, that are regulated by the Texas Public Utility Commission, whose mission statement is: To protect the customer, foster utility competition, and promote high quality infrastructure. Texas is one of 7 states with no state income tax. Their sales tax is 6.25%. Now that’s political leadership! We sent a letter of protest on behalf of rate payers to protest this latest rate/fee increase, along with the information on Texas, to state senator Dorsey Ridley and state representatives John Arnold and Mike Cherry. Without enough complaints from citizens to our elected officials, be prepared to pay more, more, more.

A $1 Trillion Stimulus or Just More Bureaucrats Gone Wild?

Many have argued the true need, effect, and actual job creation of the nearly $1 trillion federal stimulus. While there’s no doubt over the pork barrel projects and massive overspending contained in the stimulus programs, there has been a much circulated alternative approach to the $1 trillion federal plan to fix the ailing economy caused by the Wall Street to Washington connection. Here’s our take on it: Some have said with nearly 300 million people in the U.S. it would be cheaper to give everyone a million dollars. If you limit that to those over the age of 25 with at least a high school diploma, who aren’t in jail, can pass multiple drug tests, our guess is the figure is closer to 150 million people. To receive the million you would also have to agree to immediately: pay off your credit card debt, pay off your home loan and/or buy a new home and pay cash. – Banking and real estate crisis solved?? Pay off your car loan and buy a new Ford , GM, Chrysler and pay cash. – A much better way than having the federal government takeover GM and Chrysler. Anyone over the age of 55 that gets a million would have to quit their job and stay out of the job market for at least 2 years. – Job crisis partially solved??

The real problem

Neither ‘stimulus’ plan addresses the problem that caused the crisis. More importantly, it does not hold those accountable that created the problem, prospered, then were ‘bailed out’, and now are prospering again at taxpayer expense. Until the problem, the money flowing between the two major political parties and Wall Street is curtailed, and all are held accountable, then we are doomed to repeat this process until we get it right. Obviously, what we need is new elected officials at all levels of government.

Don’t be fooled by congressmen who have decided not to seek re-election because they, ‘don’t like Washington.’ Public Citizen reports that 43% of the members of congress that have left office since 1998 are now registered lobbyist. And many more are un-registered lobbyists. Since giving themselves a pay increase in early 2009, members of congress make nearly $200,000/yr. As lobbyists, the average is roughly $1 million a year.

Notable Quote

“I have come to the conclusion that one useless man is a shame, two is a law firm, and three or more is a congress.” - John Adams – 2nd President

In Closing

Thanks to all that have donated. Contributions are tax deductible. View current/past newsletters at the Union County Library, or on-line at , or you can request current or past newsletters by emailing us at

Thanks to all those who contacted us to express their anger over Judge-Executive Jody Jenkins’ wife being appointed to the state coal mining board over the former miners that had applied for the position. We would have covered this issue in the January newsletter, but the January edition had already been printed when the appointment was announced.

Don’t forget to vote on May 18th, and even though some elected officials have no competition in this election you can still let them know at the voting booth you’ve had enough. Simply don’t vote in those races. A low vote count is the only way you can let someone with no competition know you aren’t satisfied.

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