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Comptroller Calls For Reform Of Utility Districts
The Tennessee State Legislature has passed a bill that will provide for more transparency and stricter regulation on the state's utility districts. The bill now goes to Governor Bill Haslam who will likely sign the legislation into law.
The bill, sponsored by State Senator Ken Yager, R-Harriman and Rep. Ryan Haynes, R-Knoxville, provides for enhanced regulations on utility districts, specifically, expedenditures.
The bill stipulates that "all expenditures of money made by utility districts must be made for a lawful district purpose."
The bill, drafted by State of Tennessee Comptroller Justin Wilson, is the result of a series of audits conducted by the state comptrollers office in which numerous cases of misspending and malfeasance were discovered by auditors.
Several utility districts were discovered to have misspent funds. Among those was the Sevier County Utility District which had been found to have misspent funds in two audits.
Among the questionable transactions were; A gas grill pit installed at the district president's home at company expense and the installation of a gas grill pit in exchange for Tennessee Titan tickets.
A transaction involving a former district vice-president who reportedly used his position to receive a personal benefit of $10,055 raised questions as well. According to the auditor's report, the former VP negotiated the trade of a district 2007 Chevrolet Silverado to a local car dealership. The NADA trade in value was stated at $32,175. the district receved an allowance of $17,000 towards the purchase of a new vehicle. He then purchased the vehicle from the dealership for $17,000. Days later, he traded the vehicle and received a trade-in allowance of $27,055.
Auditors discovered district funds were used for guided bus tours and spousal travel.
The comptroller questioned charitable donations made with district funds such as a $25,000 donation to the Robert F. Thomas Foundation and $5,000 to the Educational Foundation of the Sevier County School System.
The district paid $750 at a silent auction for eight Tennessee Titan tickets. The district management told auditors the tickets were given to district employees but could not identify the employees that received the tickets.
Auditors found that district commissioners had received excessive compensation after they were presented with $500 gift cards at Christmas. Other gifts included $1,699 spent on steaks for board members.
Auditors questioned uniform allowances which provided $2,500 annually for commissioner's clothing.
In other findings, auditors reported inadequate petty cash records were kept and purchases were made using district money for other than district purposes. The auditor cited a subscription to XM satellite radio.
SCUD President Matt Ballard initially responded by telling auditors he was unaware this charge had been paid by the district. However, auditors obtained a statement from XM Satellite Radio dated 12-31-07 that Ballard had initialed signifying his approval.
Travel expenditures were scrutinized after auditors discovered that SCUD was among five utility districts that sent officers on a junket to Costa Rica.
Auditors produced dinner receipts from a steakhouse in Knoxville in which the district was charged $243.48 for dinner for four.
Another itemized receipt for a bar tab in Boston, Mass. for $95.50 and a receipt for the entry fee in a golf tournament for $400 for board of commissioners members raised questions from auditors.
In response to the findings of the audits, Ballard said "All findings and recommendations by the state have been rectified and reimbursed and policies have been put into place regarding these issues. This does not imply any misuse on our part. "
The new law will change how board members are selected in at least 41 of the 185 utility districts in Tennessee. County mayors will have some input into the appointment process for the first time.
Following approval by the general assembly, Wilson commented "I have often said sunlight is the best disinfectant. This legislation will bring more information about utility districts into the sunlight."
According to published reports, the utility review board is considering the removal of commissioners from several boards including SCUD. During the February 3, meeting of the Utility Management Review Board procedures for removing members of utility district commissioners were discussed. According to the minutes of the meeting, commissioners can be ousted by three methods.
The first would require a petition signed by 20 percent of the district's customers. The second method would be a determination by the UMRB that a commissioner has knowingly or willfully committed misconduct. The UMRB can remove a commissioner for failing to comply with an order of the UMRB.
Ballard disputed the report saying no members of SCUD's board of commissoners has been targetted to be ousted.
Update: The UMRB will meet again on June 2 to vote on ousting members of the SCUD board of directors and the members of several other utility district boards in the state according to Blake Fontenay, communications director for the state comptroller's office.
The Sevier County Utility District board of commissioners consists of three members. The board consists of Jerry Hays of Gatlinburg, who was re-elected to the Gatlinburg City Commission Tuesday, David Ogle of Gatlinburg and George Seaton of Sevierville.
Seviercountynews.com will post updates as the story unfolds.