When state Rep. Keith Hall, D-Phelps, steers millions of tax dollars to water and sewer line construction in his Pike County district, the money sometimes ends up in his own wallet.
Since taking office in 2000, Hall has earmarked millions in the state budget for Mountain Water District in Pikeville, including $8.1 million in the current budget, according to his own press release and interviews.
At the same time, the water district has paid Hall's B.M.M. Inc. nearly $3.2 million to build sewer lines, according to district records.
So far, Hall's three sewer projects have cost an average of 58 percent more than he originally bid for them, with one still under way. The water district — which a state audit criticized last year for sloppy business practices — adds more work and money for Hall after he wins the initial contract. The final cost of one project doubled to $1.9 million by the time he finished.
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Also, Hall's son works at the private firm, Utility Management Group, that runs the water district on behalf of Pike County.
Jordan Hall, who previously helped oversee his father's companies, started a year ago as personal assistant to Greg May, UMG's chief operating officer. Jordan Hall says he doesn't assist his father from within UMG and avoids handling projects in which his father shows an interest.
"He has never had any insider information to my knowledge, and I'm sure that he would say the same thing," Jordan Hall said.
In this summer's special legislative session, Hall supported a little-noticed, last-minute addition to a state budget bill that effectively protected UMG's $34 million contract with the water district, which had been challenged locally.
The situation strikes some observers as too cozy, with a lawmaker giving and taking public funds at the hometown agency where his son is employed in management.
"I can tell you this, that's not something that I would do," said Rep. Leslie Combs, D-Pikeville, another House member from Pike County who assists the water district with funding.
Hall said his private sewer work is permissible under state law because he submits bids to the water district, just as any businessman could.
"I don't see it as a conflict of interest," said Hall, a member of the House budget committee, which writes the state budget. "I see it as an additional service to my constituents."
State ethics laws do allow legislators to privately pursue money they put into the budget as long as the same opportunity is open to others, said Anthony Wilhoit, executive director of the Legislative Ethics Commission.
Likewise, it's legal for a lawmaker's son to work at an agency he funds — and does business with privately — as long as he does not use his state influence to get his son the job, Wilhoit said.
"The law recognizes that our representatives have their own business interests, as do their families," Wilhoit said.
Still, one critic said, common sense suggests that a lawmaker who funds projects should not get to pocket some of that public money.
"If Keith Hall wants the contracts to build sewer lines, that's fine. But then he should let another lawmaker sponsor the funding, not do it himself," said Richard Beliles, chairman of the non-profit watchdog Common Cause of Kentucky. "This one just doesn't smell right at all."
Hall said he decided to enter the sewer business after he was elected to the House and saw the many millions of tax dollars spent building water and sewer lines in rural areas.
Among Hall's various companies were several experienced in using heavy equipment in construction and coal mining. He said he assumed that building sewer lines wouldn't be much of a stretch and that by submitting bids, he could make the water district's projects more competitive.
"I've probably lost more of these projects than I've won over the years. I'm just the fourth or fifth biggest contractor," Hall said. "But I keep it competitive because the other companies know that I might be putting my bid in there. They have to stay sharp."
Hall said he first worked on sewer lines as a subcontractor in 2002 for Akins Excavating Co.
His own company, B.M.M., was submitting bids by 2004. Mountain Water District awarded it the Lower Shelby Valley Sanitary Sewer Project for the low bid of $977,625, documents show. However, the water district kept approving more work and money for the project, so that by the time B.M.M. finished three years later, the price had ballooned to more than $1.9 million.
The water district awarded two more contracts to B.M.M. in 2005 and 2008 for a total of $1 million. Thus far, with the 2008 project still uncompleted, the total cost for those projects has risen to $1.28 million because of additional work approved by the water district.
Hall said it's legitimate for the water district to expand an ongoing project if it has additional public money available and a contractor is on location, rather than go through a new bidding process.
'His own pockets'
Toni Akers, who until Thursday was chairwoman of Mountain Water District's five-member board, said she is pleased to work with Hall as a lawmaker and a businessman. She does not see a conflict between his two roles.
"He's just looking out for the interests of Pike County," Akers said. "I'm sure that he's looking out for his own pocket as well, but nevertheless, I think his real heart is in Pike County."
In last winter's General Assembly session, critics protested another example of Hall mixing government work with private business.
Hall sponsored a bill to reduce the number of miners at small coal mines who must be trained in emergency medical treatment so they can quickly assist injured colleagues. Although the state offers the training for free, Hall said the law places too great a financial burden on small mine owners.
The Lexington Herald-Leader then reported that a small Pike County mine owned by Hall's Beech Creek Coal Co. had been closed by state inspectors for not having such medical responders on duty. Another member of the House, Majority Leader Rocky Adkins, D-Sandy Hook, is paid by Hall as a consultant for Beech Creek.
Hall acknowledged that his bill would make things easier for his coal company. This prompted the United Mine Workers to complain that he was exploiting his House seat for personal gain. After some debate with the union, Hall dropped the bill.