Local News Noise & Notes Politics

Lawmakers Differ on Mayor Ignoring Cuts to Council Discretionary Funds

Louisville Mayor Greg Fischer will give up his discretionary account to help fill the budget deficit next year, but the Metro Council is split on whether to follow suit.

Each council member is given a total of $205,000 to spend annually, with $75,000 in their Neighborhood Development Fund in addition to a $100,000 Capital Infrastructure Fund and $38,000 in their office accounts.

During last year’s budget address, Fischer warned city lawmakers that they could see their accounts reduced in future budgets to offset growing shortfalls. The mayor’s new spending plan for fiscal year 2012-13, however, makes no reductions to the accounts.

Councilman David Yates, D-25, says residents want to reduce spending, but local representatives should have the ability to appropriate taxpayer money.

“Should all that money be allocated from the mayor’s office or should it be better left, at least some of that money left all the way down to the Metro Council offices where we’re actually out there on the street talking to the neighbors. I think that’s a very good use of that money,” he says.

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Scott Conducts Audit of District 1 Finances

Louisville Metro Councilwoman Attica Woodson Scott, D-1, is withholding discretionary funds to community groups while awaiting results of a financial audit.

The 39-year-old community organizer was appointed to replace former Councilwoman Judy Green, who was expelled from office due to ethical violations in connection to discretionary spending involving outside groups.

In October, Scott asked the city auditor for a financial review of the District 1 payroll, office expenditures and discretionary funds during her predecessor’s tenure.

Scott says she wanted to come in with a clean slate and meet with neighborhood groups and other non-profit organizations before appropriating them taxpayer dollars.

“I wanted to wait until after the first of the year to begin accepting applications for funding because I felt like me coming in new I really didn’t know many of the organizations that I needed to get to know them for taking applications for funding. I wanted to build relationships instead, really look at programs and make sure they had a public purpose and benefit,” she says.

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Consultant to Review Council Discretionary Spending

The Louisville Metro Council has hired a consultant to advise lawmakers on how to better use their discretionary funds.

The accounting firm Mountjoy Chilton Medley will be paid close to $10,000 to review policies and recommend how council members can be more transparent and responsible with their office accounts, which have come under heavy scrutiny for the past year due to the scandal involving former Councilwoman Judy Green and other questionable expenditures.

Each lawmaker is allotted $30,000 in office funds, $75,000 in Neighborhood Development Funds and $100,000 in Capitol Infrastructure Funds. Funds from the infrastructure and neighborhood accounts are watched by the appropriations committee, however, there is little oversight with the office accounts that have been spent on gift cards, holiday parties and festivals for constituents.

City lawmakers have differed on the use of discretionary spending along party lines for years, but Councilwoman Tina Ward-Pugh, D-9, who chairs the government accountability committee, says contracting a firm will eliminate some of the partisanship in the discussion.

“We are political in every way because we are elected officials, but this is one of those opportunities where we can perhaps get 97 percent of the politics out of it by taking the bulk of the recommendations and then having the political conversations about the those few things we disagree on,” she says.

The consultant is being charged with making sure that the current policies are transparent and how to improve accountability, but council Republicans have said the discussion and recommendations should go farther to question whether the council is following a good policy in general.

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Lawmakers Question Mayoral Fund

Leaders of the Louisville Metro Council are voicing concern about purchases made from a discretionary fund by Democratic lieutenant governor candidate Jerry Abramson during his tenure as mayor.

Council members have suggested a number of possible actions regarding the mayoral fund, from tighter restrictions on the current administration, calling Abramson to testify before the Government Accountability and Ethics committee and contacting state Auditor Crit Luallen to examine the account.

Each year council members approved a $41,000 account that the mayor could access, but city records show many expenditures made by the Abramson administration lacked any invoices or receipts.

Several procurements went to innocuous charitable organizations, however, other purchases include: $3,400 at an upscale steakhouse in Washington, D.C. for “Louisville business leaders”; $7,500 to Insight Media for “census outreach”; and another $2,378 to the Baltimore-based Cordish Cos., developer of Fourth Street Live, for a football game celebration.

The funds were spent without any internal review or approval from lawmakers, and no receipts were turned in for several purchases, though that is not required. Council President Jim King, D-10, says the city auditor needs to examine the fund and report back to the council.

“The council is responsible for appropriating taxpayer dollars and if we give a fund to the executive branch to spend we do expect it to be spent wisely and to be documented,”  he says. “I certainly think the council would have appreciated a report from internal audit to the extent documentation was not there.”

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Unchecked Mayoral Fund Raises Questions

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.

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Council Members Debate Discretionary Funds

Four members of the Louisville Metro Council debated the need for discretionary spending Wednesday, disagreeing along party lines on the funds use and whether they should be cut or significantly curtailed.

The Louisville Forum hosted the discussion, which featured Council President Jim King, D-10, and fellow members David James, D-6, Ken Fleming, R-7, and Jerry Miller, R-19, and was organized in response to the growing scrutiny of the council’s spending.

Each year, every city lawmaker is 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.

King and James defended the spending practice as necessary for needy non-profit groups and unforeseen disasters in their areas, but both admitted there are flaws in the system that need to be addressed.

Still, cutting the funds as GOP members have suggested is unacceptable to council Democrats because it would give the mayor more authority over spending priorities.

“I believe that good government begins at the grassroots level and there is no one more familiar with the needs of a district that its council member. Eliminating the NDFs and CIFs would mean we’d have to make a case to the mayor for every little need we have. This is not only impractical, it’s nonsense,” he says. “Especially in those areas of town represented by Democrats that are typically less affluent and deteriorating.”

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League of Women Voters to Study Council Discretionary Funds

In the wake of growing scrutiny around city spending, the Louisville League of Women Voters plans to launch a year-long examination of how Metro Council members use their hefty discretionary funds.

Each fiscal year city lawmakers receive $75,000 in Neighborhood Development Funds for community groups and $100,000 in Capital Infrastructure Funds for building projects, which they are allowed to transfer to the lower account.

In recent months, those tax dollars have received more attention due to the ethics charges involving Councilwoman Judy Green, D-1, a controversy over Kroger gift card purchases and questions about $2.8 million in unused building funds from previous fiscal years.

League Vice President Victoria Markell says it’s time to look at where the money is being spent and how the system can be improved in the wake of those scandals.

“Our concern stems from wanting to have an effective and transparent government. We need to know where the money comes from and where it goes. If there are pots of money sitting around that could be used to take care of the city business then we certainly want to look into that,” she says.

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Union Leaders Will Meet With Fischer on Budget

Louisville Mayor Greg Fischer will meet with union leaders later today to discuss the grim outlook on future city budgets before introducing his first spending plan Thursday.

The city is facing a $22.5 million shortfall for the 2011-2012 fiscal year and the mayor’s spending plan is expected to include a number of cost-cutting measures—including firing Metro employees—to balance the deficit.

Mayoral spokesperson Chris Poynter says the administration was able to close the gap through a number of one-time measures, including $3.5 million seized by police during drug raids that was sitting in a savings account.

The meeting with union leaders Wednesday is less about detailing this year’s budget proposal and will instead outline serious changes to Metro Government in the future.

“We’re meeting with the unions to say we face a major problem with our budget cycle overall,” Poynter says. “We don’t have enough revenue to cover all our expenses and so we need unions to begin thinking now about how they’re going to strongly participate.”

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Council Members Hold $2.8 Million in Unused Construction Funds

Members of the Louisville Metro Council have over $2.8 million in unused Capital Infrastructure Funds from previous fiscal years that have yet to be designated for specific projects.

Each year council members receive $100,000 to be used for district building projects such as sidewalk replacement, street paving and tree stump removal. Any remaining funds are rolled over, which has accumulated to over $300,000 for some members.

The bulk of the $2.8 million are held by council Democrats, who spend their capital funds individually and at their own discretion. The highest unallocated fund is Councilwoman Mary Woolride, D-3, who is holding onto $389,972 as of May 1.

With a $22 million budget deficit looming, it is unclear what the plans for those public funds are or if the money will be used at all.

“The biggest question is whether or not there are plans for that money. If that money has been saved so that it can be used to pave a major street or construction of a library, then I would see no reason to be concerned,” says Republican Caucus Director Steve Haag. “If the money is just planning to sit there and just collect for infinity then I would say that would be something people would be concerned considering the different issues that we have due to the budget.”

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Council Democrats Defend Gift Card Purchases

Gift card purchases made by the Louisville Metro Council have ignited a new round of audits and raised more questions about discretionary spending, but members of the Democratic caucus say the practice is justifiable.

Records show council Democrats are doing most of the spending with Councilwoman Cheri Bryant Hamilton, D-5, leading the pack with $1,550 spent on gift cards over three years, some of which went to residents in a raffle contest.

The Kentucky state constitution prohibits cities from using public funds for gifts under any circumstances and outside experts have likened the practice to “handing out cash.”

Many Democrats have defended the use of gift cards, however, saying it is easy to “nickel and dime” Metro government but the gift cards are used in a way to get people involved with their neighborhood

And Democratic caucus spokesperson Tony Hyatt says members are concerned that reports of council purchases are being exaggerated.

“I won’t say that everyone thinks it’s blown out of proportion because everyone welcomes scrutiny, but there are several council members who believe that do you not expect people to operate their office or interact with constituents in the community with this kind of scrutiny,” he says. “There’s been more concern that we’re making more of this an issue than it actually is.”