Kentucky mayor handed out $114,000 in employee bonuses. It violates Constitution, report says
The mayor of London spent a total of $114,753 to give city employees bonuses in violation of the Kentucky constitution, according to a report released Tuesday.
The bonuses totaled $100 for each full-time employee and $50 for part-time employees in December 2019; $200 for full-time workers and $100 for part-timers in December 2020; and bonuses of $600 per employee in December 2021, according to the report from the office of state Auditor Mike Harmon.
The Kentucky Attorney General’s Office has said that awarding such bonuses violates the constitution because doing so uses public money “to pay for services not actually performed,” the report said.
London Mayor Troy Rudder said in a response that his intent was to provide an incentive for employees, but that if Harmon’s position was that the city could never pay bonuses, he would follow the recommendation.
The report included several other findings, including that the London Tourism and Convention Commission paid $45,000 to a music group for a 2020 concert that was canceled, but hadn’t gotten back the money as of late February, and that Rudder’s stepdaughter was hired for a city job at a pay grade higher than the city council had set for the position.
“In layman’s terms, the tourism commission did not have proper oversight on how their public dollars were being utilized, but instead decisions were being made by the city,” Harmon said in a release.
‘More troubling’
The report was from a special examination of the city and the tourism commission, not an audit. The auditor’s office sometimes does such exams in response to concerns it receives about possible waste or abuse.
Harmon’s office said the goal of the exam was to come up with recommendations to make sure financial activities were accurate, transparent and legal.
The exam covered the period from July 1, 2019 through June 30, 2021. The finding about the bonuses was included because the tourism commission reimbursed some of the money.
Harmon said two findings from the exam would be referred to the city’s Ethics Board for review, but noted the board had not met since 2013 and that the city could not provide documentation of any appointments to the board since 2016.
The lack of appointments “makes the current operating atmosphere all the more troubling,” Harmon said.
The exam said the city and commission didn’t have clear written policies on the roles and responsibilities of each, which led to confusion, conflict and ineffective operations.
For example, the report said the commission spent more than $1.5 million to operate the Levi Jackson park, but had minimal involvement in overseeing the facility, which the state turned over to the city in 2019.
Most of the money to operate the tourism commission and attractions such as the park comes from a 3% tax on sales at restaurants in London.
When asked about policies and rental fees at Levi Jackson, members of the tourism commission said the employees at the park worked for the mayor and that the commission had no authority over hiring decisions.
Commission members said the mayor hired employees for the park “behind the commission’s back,” and the employees were not responsive to requests from the commission even though the park was under its purview, the report said.
The report also said the commission and city had failed to follow purchasing laws and rules on budgeting and financial reporting.
City employees helped the commission buy a fleet of vehicles in 2019 for a total of $187,716 without following bidding requirements, the report said.
The commission made changes to become an independent entity of the city last fall, giving it greater responsibility over its finances, according to responses filed with the auditor’s report.
The city had provided payroll and other services earlier.
‘Concerning position’
The first job of the commission is to be fiscally responsible, board chair Vinson Starr Handy said in a response.
“This is a commitment we take seriously with each and every decision made,” Handy said.
The report did not identify that any money was missing from the city or commission.
Among the other findings in the report:
Cleaning services
Rudder hired a city employee’s company for cleaning services for the city and tourism commission without proper approval.
The employee’s company received a total of $131,718 from January 2013 to December 2021.
State law bars a city employee from contracting with the city in most cases, the report said.
The employee said the company belonged to his mother and that they city attorney had said he deal was acceptable, though the attorney said he didn’t recall signing off on the arrangement, the report said.
Missing contract
The tourism commission didn’t have a written contract with the music group that it paid $45,000 for the planned May 2020 concert.
That left the city and commission in a “concerning position” when the festival was canceled because of the coronavirus pandemic. The $45,000 payment issued in January 2020 hadn’t been returned as of Feb. 23, the report said.
The report recommended taking steps to get back the money.
Salary questions
The city did not have an updated personnel plan or salary scale during the examination period, and violated its own ordinances by not setting maximum salaries.
When Rudder’s stepdaughter was hired in 2016, her pay grade was several levels higher than the city council had set for the position, the audit said.
Rudder said the position had been mistakenly listed at a lower grade, but the city did not correct it, the report said.
Rudder said in his response that the city is working with the Kentucky League of Cities to update its personnel policy.
The mayor also said that the city had already made changes to fix many of the concerns raised by the review, and that others will be taken care of in contracts between London and the tourism commission.
This story was originally published April 5, 2022 at 12:31 PM.
