Kentucky Gov. Matt Bevin's administration violated the law by withholding funds from Kentucky's Area Development Districts that lawmakers had earmarked for the agencies, claims a lawsuit filed in Franklin Circuit Court
In a 15-page lawsuit filed June 28, seven of the 15 ADDs in the state claim the state Department for Local Government used $867,000 that the 2016 General Assembly had designated for ADDS to make up a shortfall in its own budget after Bevin issued a budget reduction order for most state agencies in December 2017.
"By doing this, DLG balanced its bureaucratic budget by taking funds designated for the people of Kentucky," said the lawsuit.
The lawsuit said the ADDs do not know how the state ultimately used the money.
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Development districts are regional groups that funnel state and federal money into a variety of programs aimed at improving public safety, workforce development, regional planning and care for the elderly. They are run by the county judge-executives of each represented county.
The department's actions, and the approval it received from the state Finance and Administration Cabinet, violated multiple constitutional and statutory provisions, the lawsuit contends.
DLG Commissioner Sandy Dunahoo said in a statement Thursday that the seven ADDs "are using taxpayer dollars to sue another taxpayer-funded agency to recover less than 1 percent of their annual budgets."
"These legal and necessary reductions were made as part of a statewide effort to lower costs," Dunahoo said. "During an era calling for increased fiscal responsibility, DLG is disappointed that the ADDs are unwilling to adjust their administrative and travel costs. The money to bring forth this lawsuit would be better spent on Kentuckians than on litigation."
The suit seeks a court order requiring the state to pay the money it owes the ADDs, among other things.
The funds taken represent about 40 percent of the Joint Funding Administration program, which is funded by the state legislature and used by the ADDs for their various programs.
"The ADDS have repeatedly tried to work with DLG only to be ignored," the suit said. "Multiple requests have been made to DLG for meetings and for DLG to explain what it has done with the money allocated to the ADDs, however, DLG has refused to answer these requests. Rather than show what has occurred or explain why the DLG took the actions it did, DLG's agents have stated that how these funds are spent is discretionary to DLG. This is contrary to the facts and law."
The DLG is an agency within the governor's office. It is charged with, among other things, the administration of federal and state grants to local governments and funding for Kentucky's 15 Area Development Districts. The Finance Cabinet is responsible for allocation of funds to each ADD for carrying out the ADD's responsibilities and for matching federal and local funds.
Area Development Districts filing the lawsuit are Lincoln Trail, Barren River, Bluegrass, Kentuckiana Regional Planning and Development, Northern Kentucky, Pennyrile and Purchase. They are represented by the Lexington law firm of McBrayer, McGinnis, Leslie & Kirlkand PLLC.