FRANKFORT, Ky. — The city of Whitesburg is coming under fire from State Auditor Mike Harmon’s office, with the release this morning of results from a special examination of the city’s finances.
The scathing, 80-page report covers a period from January of 2014 to April of this year, and contains nine findings, two of which are being referred to the attorney general’s office for investigation and potential prosecution.
The report says auditors found very poor oversight and controls over the city’s finances. That includes a finding that Mayor James Wiley Craft operated his private law practice out of city hall and received money from the city to cover the cost of a family health insurance plan, while other city employees were limited to single coverage.
Another major finding is that the city’s water and sewer service currently has over 1,500 delinquent accounts, owing over $350,000. Of those, 20 percent are 90 days or more past due, and 29 bills were for over $2,500 each.
Those owing past-due accounts include one city council member and three city employees. Additionally, the city owes $11,000 in past-due bills, the Letcher County Jail owes $16,000, a business affiliated with a city council member owes $8,000, and another business owned by the city attorney owes a disputed bill of over $22,000.
Other findings include:
- More than $92,000 in municipal road aid was withheld because the city failed to meet auditing and financial reporting statutory requirements.
- The city failed to collect licensing fees from several local businesses, including the mayor’s law office being operated out of Whitesburg City Hall.
- Money collected from licensing fees for the city’s Alcohol Beverage Control fund was spent in other areas, which is in violation of state law. The city spent $35,000 for holiday celebrations for the city, including $19,000 for a fireworks display and entertainment for Whitesburg’s 2015 Independence Day celebration.
- The city failed to report the city attorney’s compensation to the Internal Revenue Service, and an unclear contract agreement between Whitesburg and their city attorney.
“Taxpayers rightfully expect those they elect to be responsible stewards of the funds that are provided through taxes and other areas,” Harmon said in a statement. “Clearly our report shows that much improvement is needed, and I urge the leadership of the city of Whitesburg to begin correcting the multiple issues uncovered in our report.”
A full copy of the report and the auditor’s press release can be found below.
[su_document url=”http://apps.auditor.ky.gov/Public/Audit_Reports/Archive/2017cityofwhitesburgexamination.pdf”]
[su_document url=”http://apps.auditor.ky.gov/Public/Audit_Reports/Archive/2017cityofwhitesburgexamination-PR.pdf”]