Press Release from Ed Hatchett,
Kentucky Auditor of Public Accounts

Subject: Olive Hill utility rate increases fueled by mismanagement
Release Date: August 15, 2000
Audit online at: http://www.auditor.ky.gov/Public/Audit_Reports/Archive/OliveHillReport8-15-00.pdf

Commonwealth of Kentucky
Auditor of Public Accounts
144 Capitol Annex
Frankfort, KY 40601

Contact:
Harold McKinney
Legal Counsel
Phone 502-573-0050
FAX 502-573-0067
APA.PressReleases@auditor.ky.gov
(Frankfort - August 15, 2000) The City of Olive Hill imposed unnecessary utility rate increases as a result of fiscal mismanagement and failure to follow previous audit recommendations according to an audit released today by State Auditor Ed Hatchett.

"At least 40% of this increase should not be necessary," said Hatchett. "Robbing Peter to pay Paul leaves one of them with a deficit that has landed on the backs of Olive Hill citizens."

Hatchett's office advised in 1997 that subsidizing the City's General Fund with transfers from its utility fund violated KRS 96.200.

"Olive Hill ignored our recommendations," said Hatchett. "They can't claim the Utility Fund has excess funds, transfer them to stop bleeding elsewhere, and then inflict a utility increase on customers to replenish their reserves."

Stripping resources from the utility fund also violated lending requirements of the city's lender, the Kentucky Infrastructure Authority. Reserves were so low that the note being held by KIA was technically in default.

Other findings of the investigation included:

  • The Utility Fund subsidized the General Fund by $481,308 during the three fiscal years ending June 30, 2000
  • The City violated its own budget ordinances when the subsidies exceeded the budgeted amounts by $36,658 and $45,000 for the years 1999 and 2000
  • The Utility Fund had deficit bank balances on five occasions with overdrafts averaging $20,000
  • The General Fund was overdrawn on seven occasions with overdrafts exceeding $1300
  • In 1999, the City violated KRS 91A.030(8)(b), which prohibits a city from enacting a budget in which appropriations exceed revenues
 

Edward B. Hatchett Jr.
Auditor of Public Accounts
144 Capitol Annex
Frankfort, KY 40601
WEB: www.auditor.ky.gov/