Report: KY mayor’s son double-billed for work as city contractor, agency head
A contractor for the city of Salyersville who is the mayor’s son double-billed for more than 200 hours of pay, according to a report released Thursday.
The examination also found that the city spent money that was supposed to promote tourism for unrelated purposes, including mowing a cemetery and buying a fire truck.
The local commission that’s supposed to oversee tourism spending hadn’t met since 2009, according to the report.
Salyersville Mayor Pete Shepherd said in response to the findings that his son filled out time sheets incorrectly but actually did all the work for which he was paid.
“There’s no fraud or nothing involved in that,” Shepherd said.
State Auditor Mike Harmon said the findings from the examination would be referred to the Kentucky Attorney General’s Office, the U.S. Department of Housing and Urban Development and the local ethics board.
Harmon said his office did the exam in response to concerns it received from people about how local leaders were spending tourism money. The office reported the findings to Shepherd in a letter.
The city has a tax on restaurant sales to generate money to promote tourism.
However, a review of 63 expenditures of money from the tax between July 1, 2017 and April 30, 2019 showed that only 15 were partly or entirely related to tourism, the exam found.
About half the transactions appeared to go toward the operation of the city rather than supporting the goal of increasing tourism, according to the letter.
The report cited a number of examples, including paying election workers, covering medical bills for two city employees, paying health and workers’ compensation insurance, buying coffee for city hall and the fire department, and spending $5,000 for work on a tornado shelter and $4,000 for a fire truck.
“These dollars have been expended without the guidance of the tourism commission,” Harmon said in an interview.
Some of the spending appeared to be personal, which would be an improper use of public funds, the letter said.
One instance was the use of tourism money to pay charges at a florist, and the other was a “payday advance” to a city contractor.
The state Constitution requires that wages be paid only for work performed. The payday advance identified in the audit amounted to an interest-free loan from public funds, according to the letter to Shepherd.
The letter recommended re-establishing regular meetings of the tourism commission and letting it oversee the use of money received from the restaurant tax.
State law and the Constitution don’t specifically address the use of tourism money, but both bar using money intended for one purpose for something else, the letter said.
Salyersville, the county seat of Magoffin County, is about 95 miles from Lexington. It bills itself as the Gateway to Appalachia, and local leaders have worked to develop tourism.
Shepherd said he has appointed new members to the tourism commission and it plans to meet soon.
But Shepherd said he believes much of the questioned spending from the tourism tax does relate to tourism. Donations to the rescue squad, for instance, qualify because members help with traffic control at festivals, while the fire department uses the pumper truck to clean city parks after frequent floods, he said.
“I try to justify it all I can,” Shepherd said of the use of tourism money.
The other finding in the report released Thursday was that one of Shepherd’s sons billed duplicate hours in fiscal year 2018 for his job as a city contractor and head of the local housing authority.
There were 148 instances — totaling 224 hours — in which time recorded on contracting work overlapped with time reported at the housing authority, according to the findings.
The auditor’s office was not able to figure out the amount of money involved.
The report said it was unclear whether the city or the housing authority paid “for work not performed,” but said it was clear the mayor’s son charged duplicate hours.
The exam found that timesheets covering 78 percent of the money paid from tourism funds to city contractors in fiscal year 2018 didn’t note the review or approval of a supervisor.
Two of the mayor’s sons worked as contractors in that time, the report said.
City employees gave conflicting responses on who supervised the mayor’s sons. If the mayor supervised them, that created a conflict of interest and could violate the city’s ethics code, the letter said.
Shepherd said that during the time the auditor’s office reviewed, one of his sons worked at the housing authority and also did contract work after hours and on Saturday, such as cutting grass at the city baseball fields.
His son filled out time sheets incorrectly, but did not double-bill the city and housing authority, Shepherd said.
Shepherd said he hadn’t checked the time sheets closely enough. His son no longer does contract work, he said.
Harmon’s office recommended that the city enforce the rule that no family member of the mayor or council member hold a paid position with the city or affiliated agencies, and that no city officer or employee supervise a family member.
This story was originally published August 6, 2020 at 11:54 AM.
