Transparency bill for development districts appears dead

Scheduling problems, divided lawmakers and a social media tiff apparently torpedoed legislation to reform area development districts statewide.

“I like that legislation,” said Sen. Joe Bowen, chairman of the Senate committee that was assigned the bill on March 28.

“I got the bill late, so it was a problem logistically,” said Bowen, R-Owensboro. “And there was some consternation among my members because we have many members who are big fans of their development districts, and others, like myself, who believe they need more scrutiny.”

Bowen also confirmed that Senate Majority Floor Leader Damon Thayer, R-Georgetown, was not a fan of the bill or its sponsor.

“If a sponsor of a bill has a checkered relationship with someone in leadership, it’s never helpful,” Bowen said. “Personal relationships are part of the political calculus.”

House Bill 438 is sponsored by Lexington Democrat Susan Westrom, who has been pushing for more accountability for development districts since 2014, when the Bluegrass Area Development District became mired in a scandal over excessive spending and lack of accountability. The House approved the bill March 22.

On March 26, Westrom posted a tweet regarding several stories about Thayer and his attempts to reconstitute the leadership board of the Kentucky Horse Park, which is in Westrom’s district.

“For those of us who care, public corruption is one of the best kept secrets in Ky and our GREATEST challenge. Just ask Sen Thayer!” Westrom wrote. “Corruption: The truth will always find you out, as well as those who cover it up with legislative retaliation.”

Westrom said Monday that she waited for two hours in Thayer’s office to talk about the bill.

“Sen Thayer wouldn’t even meet with me,” she said. “Obviously I had done something to offend the majority floor leader.”

Thayer denied that charge.

“I have no idea what Rep. Westrom is talking about,” he said Monday. “I respect her, we have worked together on a number of issues. This is a big topic bill that came to us really late.”

Thayer said he was ambivalent about the proposal. While there have been problems at some area development districts, “I’ve heard there are good reports about self-correction about some of the ADD districts, and we ought to give them some time to work that out.”

Development districts are regional groups that funnel state and federal money into aging and employment programs, among other things. They are run by the county judge-executives of each represented county.

House Bill 438 would require the districts to officially post all employment positions and would ban any bonus payments to employees. The bill also would require the state to prepare yearly reports on how much money has flowed to the districts, how it was spent and how much is left. Districts also would have to undergo additional audits.

Two years ago, the state’s then-auditor, Adam Edelen, found widespread conflicts of interest, questionable spending and a lack of accountability at Bluegrass ADD, which covers Fayette and 16 other counties. This month, Education and Workforce Development Secretary Hal Heiner found problems with the bidding process for a contract to manage workforce development money in the region. The cabinet also has questioned about $2.5 million in spending; last week the state told district officials they would have to pay back about $890,000 in questioned costs, much of it related to issues brought up in the 2014 audit.

Issues of spending and accountability also have come to light at the Barren River Area Development District.

“It is disappointing that once again a much-needed piece of legislation that would enhance transparency and accountability of our statewide system of area development districts will not become law,” said Ron Bunch, president of the Bowling Green Area Chamber of Commerce, which has criticized the Barren River district. “The nature of these failures clearly highlights the structural conflict of interest in the ADD system statewide and the systemic problems stemming from that improper governance structure. Time is of the essence to rectify the situation so that public tax dollars are more efficiently employed to benefit the customers — our businesses and citizens in the Commonwealth of Kentucky.”

Darrell Link, executive director of the Kentucky Council of Area Development Districts, said his group did not work against the bill, but there was concern about the costs of more frequent audits, which would have to be paid for by the districts.

“We were always wary of additional costs,” he said.

Westrom said some county judge-executives began calling senators to oppose the bill.

She said the only group to support the bill was the Kentucky League of Cities, which endured a spending scandal in 2010.

“They have said they learned a different lesson, the need to welcome transparency and learn from it to make themselves stronger and better,” Westrom said.

Thayer said legislators probably will look more closely at the legislation this summer and fall.

This story was originally published April 4, 2016 at 4:31 PM with the headline "Transparency bill for development districts appears dead."