State Auditor Crit Luallen's office will examine the finances of Blue Grass Airport after a newspaper story revealed last month that its executive director spent more than $200,000 on travel and other expenses over 27 months.
Luallen confirmed that her office will conduct an audit of the Lexington airport, shortly after the Urban County Council gave tentative approval Tuesday to a resolution by Vice Mayor Jim Gray asking for her help. The measure was placed on the council's Thursday docket in an 11-4 vote.
"The public needs to be reassured that airport funds are being spent as effectively as possible and that strong management controls are in place," Luallen said.
Airport board chairman Bernie Lovely pledged to cooperate with Luallen.
"We have been in conversation all day long with the council, the vice mayor and Crit Luallen," Lovely said in a statement. "We have always been an open book."
Mayor Jim Newberry said he understands the council's concern, but continues to believe "it is the airport board's responsibility to publicly account for these expenditures."
"I think the board is very interested in transparency and accountability and that the members will act accordingly, if given the opportunity," he said in a statement.
Luallen and the council are responding to articles published in the Nov. 23 Herald-Leader revealing that airport Executive Director Michael Gobb spent more than $200,000 for trips and other expenses from January 2006 through March 2008.
The expenses are in addition to Gobb's salary of nearly $220,000 a year, plus benefits that include unrestricted use of an airport SUV, unlimited gas, home Internet and cell-phone service costing more than $6,000 a year, and club memberships worth thousands of dollars.
A Herald-Leader survey of the travel and training expenses of top officials at airports with passenger counts similar to that of Blue Grass shows that Gobb's expenses outstrip all of them.
Luallen said she will set up a meeting "right away" with airport representatives and an audit team to begin defining the scope of the audit and a time line for completion.
"At that point we'll define in writing what the scope will be, but obviously we're focused on the questions raised in recent media coverage regarding the expenses of management at the airport and the oversight and controls that were in place regarding those expenses," Luallen said.
At Tuesday's council work session, Gray said council members have an obligation to address the financial questions raised by the newspaper article.
"We all know it's often a bitter pill to swallow, but sometimes it's better to go ahead and swallow the bitter pill and get it over with," he said of the proposed audit.
Councilman David Stevens, a member of the airport board who opposed the resolution, said he believes the airport board should be given a chance to examine Gobb's expenses and bring any questions to the council for discussion.
If an audit is required, Stevens said, an independent firm that specializes in airport finances should be hired.
Luallen said her office is more than qualified to conduct the audit. "We are not auditing the operations for the airport," she said. "We're auditing financial transactions."
Although the council's resolution won't be final until it gets two readings, Luallen said she has the authority to proceed without its "invitation."
Councilman Dick DeCamp, who voted against the resolution, was critical of asking for a state audit "based on a newspaper article."
Whether an audit is required should be a decision made by the state auditor "after some basic investigation.
"Let her swallow the bitter pill," he said.
The resolution, "no matter how it's worded," DeCamp said, calls into question the operation of an airport that has won multiple awards by its peers for financial management.
"And they have consistently operated in the black," said DeCamp, a former member of the airport board who rotated off in 2007.
Stevens, a current airport board member, urged postponing action until the Dec. 9 council meeting, because the airport will be negotiating $63 million in bond sales next week.
"I think it is inappropriate for us to put this stigma on our airport right now" and possibly jeopardize the bonds, he said.