A private, for-profit company that is paid more than $11.6 million a year to manage water and sewer systems in Pike County is a public entity under the Kentucky Open Records Act and must disclose financial information, Attorney General Jack Conway's office has ruled.
Utility Management Group relies on contracts with Pike County and the city of Pike ville, but it refused to share its internal financial data with state Auditor Crit Luallen for a report she issued in January. As a result, Luallen said, she could not determine whether local ratepayers were getting a fair deal from the privatization of their water and sewer services.
From 2005 to 2010, she said, publicly owned Mountain Water District paid more than $36 million to UMG to run its operations.
Conway's office ruled that UMG is a public entity under the open records law because it derives more than 25 percent of its income from public sources. However, reaching that conclusion required some legwork because UMG also refused to share financial data with the attorney general, Deputy Attorney General Patrick Hughes wrote in the opinion, released Monday.
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The attorney general's opinion carries the weight of law in open records cases, although UMG plans to appeal to circuit court, said its attorney, J. Guthrie True.
"We were a little disappointed but not terribly surprised by the opinion," True said. "The current wording of the law sort of ties the attorney general's hands."
R. Roland Case, an attorney for Pike County Fiscal Court, submitted the open records request at issue. Case asked UMG for "a list of expenditures including check number, date, amount and payee for all checks written from Jan. 7, 2005, to the present."
UMG refused, calling itself "a wholly private entity" that did not have to comply with the open records act.
"This was what we wanted," Case said Monday.
Mountain Water District and UMG have been at the center of controversies in recent years other than the open records battle.
The Legislative Ethics Commission plans to hold a public trial next month for state Rep. Keith Hall, D-Phelps, over no-bid contracts that one of Hall's companies won from the water district while he steered millions of dollars in public funds to the district. Hall's son also was given a job at UMG.
UMG also became an issue in the 2010 bid-rigging trial of highway contractor Leonard Lawson and former state Transportation Secretary Bill Nighbert in U.S. District Court. Nighbert collected payments from UMG, which Lawson co-owned, and federal prosecutors said that amounted to bribes. However, a jury acquitted both men on all counts.