Task force hopes $3.1M state lab, built under Richie Farmer, can be saved

new ag commissioner hopes to plug drain at state fuel lab

jpatton1@herald-leader.comJuly 23, 2012 


    Members of the group tasked with turning the state fuel lab around are:

    Wayne Hunt, Hopkinsville, agribusiness. Chair of Agriculture Commissioner James Comer's transition team.

    Phil Moffett, Louisville, former president and CEO of Bluegrass Institute for Public Policy Solutions.

    Jenny Inman, Owensboro, private commodities broker.

    Steve Kelly, New Liberty, deputy executive director of state Office of Consumer and Environmental Protection, acting budget director of Kentucky Department of Agriculture.

    Kathy Gornick, Lexington, chair of Bluegrass Institute for Public Police Solutions board.

When James Comer took over as Kentucky Agriculture Commissioner this year, he knew the department had budget problems. But what he didn't fully realize was that along with dozens of merit employees and hundreds of state-mandated duties, Comer inherited a department with a gigantic money drain, a fuel and pesticides lab built under former Commissioner Richie Farmer using millions in state tax dollars.

Farmer's attorney, Guthrie True, did not respond to a request for comment from Farmer.

"We don't think that the fuel lab is as rosy a picture as has been led to believe in the General Assembly," Comer said in an interview last week.

In his first days in office, Comer called in state Auditor Adam Edelen to conduct a sweeping audit of the entire agriculture department.

The audit, with agriculture department employees pointing the way to problem spots, uncovered numerous issues, some of which have been turned over to the Attorney General's office.

The Personnel Office has opened an investigation, and Comer has said the Executive Branch Ethics Commission also is investigating.

Comer has put together a bipartisan task force to figure out what, if anything, can be done to fix one of the biggest problems: the fuel lab. The task force holds its first meeting 9:30 a.m. Tuesday at Kentucky Department of Agriculture offices, 111 Corporate Drive in Frankfort.

Comer said that the new fuel lab, built in 2008 with $1.65 million in state money — and, he said, with an additional $1.5 million somehow scraped from the cash-strapped Department of Agriculture, for a total cost of $3.15 million — has been steadily draining the department's annual budget of over $4.13 million in the past 41/2 years at a time when the department was requiring employees to take unpaid furloughs to make ends meet.

"It was hemorrhaging money, and we can't do that in an agency our size," Comer said.

"I have to say I was a bit dismayed that not only were we not getting any revenue or even breaking even on it ... with the investment on the state level that we've made," said Sen. David Givens, R-Greensburg and chairman of the Senate Agriculture Committee.

This was not how it was supposed to be. In 2006, just after the General Assembly appropriated $1.65 million, Farmer said the facility would save money.

"This facility will enable the department to do an even better job of making sure Kentucky consumers get the amount and octane level of gasoline they pay for," Farmer said in a 2006 report. "The lab will save us money that we spend having motor fuel and pesticides tested in outside labs. Plus, we think other agencies and other states will use our lab. It's a wise investment for the future of the commonwealth."

The fuels and pesticide testing lab is part of the Kentucky Department of Agriculture's mandate to protect consumers. When the testing program started, in 1995, the cost was $38 each for 6,000 samples, a total of $228,000 a year, to be tested at a lab in Tennessee; a few years later, the state was getting a tenth of the samples tested, at $198 each, for a total of $118,800.

Farmer's administration apparently came up with another way: build their own lab, test cheaper, test for other states and make money.

At least, that's the way state lawmakers say it was sold to them: a $1.6 million fix for a $118,800 problem.

Comer said that Farmer's administration told lawmakers they had contracts to test other states' fuel as soon as the lab was ready.

Apparently none of that ever happened. Instead of testing 20,000 fuel samples a year, the lab was only ever able to test a fourth of that. And Kentucky lawmakers say there were some questions as to the quality of the testing itself.

Auditors could find no evidence of contracts with other states, only of non-binding agreements that have generated about $2,010.

The state auditor's office also could find no records of a feasibility study or other documentation to show how the lab would become self-sustaining, let alone a moneymaker for the state.

Not one out-of-state fuel sample has ever been tested, Comer said.

But that is hardly an anomaly.

Comer pointed out that it's also set up to be a pesticide testing lab, a vital job for the department.

"They've never tested a single sample of pesticide, even though they had a full-time pesticide chemist working there, because they didn't have all the equipment to conduct the testing." Comer has since removed the chemist from the job.

Lawmakers were "misled," Comer said. "I would be irate if this had come out when I was on the agriculture committee; I would have been very concerned."

And several are.

"It was sold to the General Assembly as a moneymaker for the state, and I think the General Assembly was misled by Commissioner Farmer," said Sen. Damon Thayer, R-Georgetown. "It appears to be a money pit."

Thayer, who is on the regular and interim agriculture committees, said he has confidence that Comer will figure out a solution.

"It's an issue of consumer safety and spending," Thayer said "I'm very disappointed in Richie Farmer's performance. I think the taxpayers and the General Assembly deserve answers."

Comer said, "There's a serious problem. It's unfortunate. ... So many other things could have been done with that money. ... This is not a very good deal for the taxpayers."

Comer said the Department of Agriculture, as mandated, regularly samples pesticides for quality and safety. It has those samples tested at an outside laboratory at a cost of about $500,000 annually.

So what can the state do with its white-elephant lab? Form a task force.

Comer said he can't find a way to turn it around, but maybe better minds can.

The lab was sold as a way for the state to make a little money by testing fuel and pesticides for other states. But finding a way to make money off the venture, "I think it would be difficult," Comer said.

Sen. Joey Pendleton, D-Hopkinsville, said that although the original contracts with other states apparently never existed, he thinks the lab can be saved.

"I'm willing to give Commissioner Comer some time to get it on track," Pendleton said. "I'm convinced it could be used effectively and be cheaper for the state.

Reach Janet Patton: (859) 231-3264. Twitter: janetpattonhl.

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