In a continuing effort to mute the criticism of executive spending practices, the boards of the Kentucky League of Cities have suspended credit card use by the League's top officials.
Last week's move came several days after the League acknowledged a credit card charge at a Las Vegas strip club, and six weeks after stories in the Herald-Leader reported that the top three executives had $300,000 in credit card expenses in three years.
On Monday, State Auditor Crit Luallen began an audit of the League in response to the stories. The audit is expected to take several months.
The two governing boards of the League — the executive board and the board that oversees insurance services — have instituted weekly conference calls with KLC's executive staff as they institute new policies for spending and oversight. The League is a non-profit membership organization that provides lobbying, financial and insurance services to 382 Kentucky cities.
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Mayfield Mayor Arthur Byrn, who chairs the insurance board, said executive director Sylvia Lovely recommended that credit cards no longer be used by her executive staff, including deputy director Neil Hackworth; William Hamilton, director of insurance services; and general counsel Temple Juett. The board then voted to suspend all credit cards — including Lovely's.
All expenses will now be paid through reimbursements, Byrn said Monday.
"I'm not saying they will no longer have the use of credit cards from here forward," he said. "But until we have reviewed our policies and both boards have adopted those policies, we decided we would take this action."
Executive board chairwoman Connie Lawson, the mayor of Richmond, has convened a committee to examine the group's policies and practices. That group is supposed to present its findings to the larger board in August.
Shortly after the stories appeared in June, Lovely stopped using a League-paid BMW SUV, suspended League-paid travel for executive spouses, and stopped League functions at Azur, a restaurant co-owned by her husband.
The charge at a strip club in 2006 was made by Hamilton at Diamond Cabaret; he reimbursed the League for the charge this spring. League officials called it a mistake. In Las Vegas for a meeting, Hamilton was accompanied by Hackworth; Mike Goff, the League's administrator of product development; and James Johnston, president of Collins & Co., a Chattanooga, Tenn.-based insurance adjuster and appraiser used by the League. Hamilton rents space to Collins & Co. in Georgetown.
League officials said they didn't realize at first that the Diamond Cabaret was a strip club.
However, photos of the Diamond Cabaret on the Internet that are dated December 2006 show that the word nude is above both sides of the front door in large, red, neon letters.
Overall, Hamilton and Hackworth charged nearly $2,000 to the League during the five-day trip, including more than $1,500 to stay at the Paris Casino Resort.
Currently, the League also is dealing with fallout from member cities. Earlier this month, Owensboro Mayor Ron Payne proposed severing ties to the League but changed his mind after being contacted by League officials.
Last week, the Henderson City Commission voted unanimously to suspend its membership in the League until it strengthens policies on spending and travel.
On Friday, the League board members said cities should withhold their dues if they are concerned.
"If they're not comfortable sending them, then we want them to be comfortable," Byrn said. "If they have concerns we want them to call us."