Unchecked Mayoral Fund Raises Questions

by admin on June 16, 2011

During his last term as mayor of Louisville, Democratic lieutenant governor candidate Jerry Abramson spent over $180,000 from an unchecked discretionary fund with little to no documentation. The expenditures have raised more serious questions about the lack of transparency and poor oversight in city spending.

While many procurements appear innocuous and well-intentioned, such as a $10,000 donation to the American Red Cross, eyebrows go up with other purchases including: $3,400 at an upscale steakhouse in Washington, D.C. for “Louisville business leaders;” $10,000 for  four different Derby Day brunches to honor state legislators; and another $2,378 to the Baltimore-based Cordish Cos., developer of Fourth Street Live, for a football game celebration.

Abramson, who is Gov. Steve Beshear’s running mate in the 2011 gubernatorial race, was unable to comment for this story, but the Kentucky Democratic Party did respond to a request for comment.

“The contingency fund is a long standing program allowing for economic development and community improvement,” said Matt Erwin, a KDP spokesman. “Two aspects of his administration of which Mayor Abramson is proud.”

Records obtained by WFPL show the mayor’s office was allotted approximately $41,000 annually that was spent without any internal review or approval from members of the Metro Council, who themselves have come under recent scrutiny for their use of discretionary funds.

Besides charities, checks were written to individuals for art exhibits, local newspapers for business luncheons, consulting fees and public lectures over a four-year period, but in many cases Metro Government had no invoices to back up how the funds were spent specifically.

The finance department did provide WFPL with letters of intent signed by either Abramson or a proxy that mention the third party, amount for each check and the public purpose of the funds. But overall, many purchases had vague descriptions of their pubic purpose, such as $7,500 for “census outreach” given to Insight Media.

Councilman Kelly Downard, R-16, who ran against Abramson for mayor in 2006, says the council never saw the purchases made by the administration and would have had several questions about their usefulness if given the chance to review them.

“We found out in the last six months that there are many things that are pretty loose. I didn’t know we were writing checks to people, but again I didn’t know we had Kroger gift cards either,” says Downard, a former budget committee chair. “I am confused that these things went on with no records keeping. I mean the mayor is the executive branch of government. They know they keep records in the finance department. Presumably somebody knows you ought to have an invoice.”

Former Abramson spokesman Chad Carlton defended the practice and contends the council had ample opportunity to exercise its check and balance powers, but never cut the funding.

“If you look at the funds use it is  mostly for charitable contributions that was used pretty sparingly,” he says. “And it’s a pretty small amount of money overall compared to the budget and look at the history, it’s used for things that are needed.”

In April, however, an internal audit of the mayor’s office and its financial operations from July 2010 to the end of last year found the public purpose given by the Abramson administration were insufficiently documented. For instance, no invoice was included for public funds given to the Cordish Cos. in February 2007 for the University of Louisville’s football team’s Orange Bowl victory celebration.

“That offends me,” Downard says. “Why are we giving money to the Cordish Cos. if we’ve already given them several million dollars to have an event that brings people to their property to make money? Show me the public purpose for that.”

The audit report also found the Abramson administration did not properly track or maintain a listing of office purchases and was running the risk of misappropriation. Many suppliers who received public funds were either not registered or not in good standing with the city.

Since taking office in January, Mayor Greg Fischer has used $6,500 of contingency funds with $4,000 going towards a quick-recall tournament for Jefferson County Public Schools students and $2,500 to pay for his attendance at an innovation forum hosted in Chicago.

Mayoral spokesman Chris Poynter, who previously worked for Abramson, says Fischer believes the account is necessary for unforeseen expenditures that can’t be anticipated, but found the lack of documentation unacceptable and immediately moved to change the policy.

“We noticed that and that’s why we have internally made changes to the mayor’s contingency fund so those receipts have to be there for future purchases.  It wasn’t a practice in the previous administration for whatever reason,” he says.

In Fischer’s first spending plan, which the council is currently revising, $41,200 has been appropriated for mayoral discretionary spending. It is unclear if the council will cut or restrict the account, but given the debate surrounding tighter regulations of their own discretionary funds it could become a point of contention.

For the past several weeks, council spending has been under a microscope given the ethics charges against Councilwoman Judy Green, D-1, who has been ruled to have deliberately misused taxpayer dollars.

City lawmakers are allotted $30,000 in office funds, $75,000 in Neighborhood Development Funds and $100,000 in Capitol Infrastructure Funds that they are allowed to transfer to their lower accounts.

Earlier this year, the mayor’s office recommended tighter restrictions on funds given to non-profit groups and the mayor has warned those dollars could be cut given the city’s deficit problem.

Asked if Fischer would be willing to submit the mayor’s discretionary spending to the council for review before purchases are approved, Poynter said that would be taken under consideration.

“You know, that’s an interesting question,” he says. “That would obviously slow down the process and maybe something we need to look at.”

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