League money: public or private?

lblackford@herald-leader.comJune 7, 2009 

Should city taxpayers be allowed to see how the Kentucky League of Cities spends its money?

Cities write annual checks from taxpayer funds totaling about $400,000 to the KLC in membership dues. And cities and other municipal agencies, such as water companies, pay millions more in insurance premiums, and interest payments on loans. For example, KLC Insurance Services takes in roughly $44 million a year in premiums.

The League responded fully to all Herald-Leader requests under the state Open Records Act, but officials said they believe the money they spend isn't really public money because it doesn't come from a specific tax allocation.

William Hamilton, director of insurance services, said the League is no different from a private insurance company such as Travelers, a Fortune 100 insurance company with 2008 revenues of approximately $24 billion. The only difference, he says, is that the city, rather than a private person, chooses the insurance company.

"I think the dues that cities pay are taxpayer money," Hamilton said. "The premiums they pay, I'm not convinced are really taxpayer money."

Sylvia Lovely, the League's executive director, agrees with Hamilton but called it an "interesting philosophical debate."

However, in 1993, then Attorney General Chris Gorman ruled in an open records case involving the Kentucky Association of Counties that a public agency is "any body that derives at least 25 percent of its funds ... from state or local authority funds."

Diane Whalen, the mayor of Florence and a KLC advisory board member, said the League is a "confusing mix," but "I don't think there's any doubt that everything, all the money comes directly from taxpayers."

There's another authority that considers the League to be a quasi-governmental body: the Kentucky Retirement System. League employees belong to the County Employees Retirement System, a benefit given only to "groups that are considered as quasi-governmental agencies," said the system's spokeswoman, Scarlett Consalvi.

State auditor Crit Luallen said that any organization whose operations are primarily funded through public money should be accountable to taxpayers.

"Their expenditures should be transparent and reasonable in nature, and those expenditures should be tied to quantifiable benefits to the public," she said.

Gorman, who is now a lawyer in private practice, said that by complying with open records requests, the League is being held responsible.

"It would be up to the cities to decide if that money was being well spent," he said.

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