By JULIA ROBERTS GOAD

Staff Writer

PIKEVILLE, KY – The financial state of Mountain Water District has been a point of contention within the Pike County Fiscal Court, and it seems information about discussion of MWD at a recent court meeting has led to some confusion.

Although it is the policy of the Williamson Daily News to attend meetings of the Fiscal Court, the reporter who normally covers the Fiscal Court was unable to attend the meeting of Feb. 16 because of inclement weather and hazardous road conditions. At that meeting, an audit of MWD and the company hired to manage the District, Utilities Management Group, were discussed.

The District is periodically reviewed by the Kentucky Public Service Commission, but the Fiscal Court felt an audit by the State Auditor would be substantially more in-depth and would investigate specific financial issues the public has about the financial operations of WMD.

The cost of an audit by the State Auditor’ Office, and who would be responsible for paying it, has in itself become an issue.

At the Nov. 3 Court meeting, when paying for an audit by the state auditor was questioned, Magistrate Chris Harris said he felt MWD should pay, but if they were unable, “the Court should pay if the District could not.”

At that meeting, the Court adopted a resolution requesting an audit of MWD to help identify numerous issues that have some magistrates concerned.

At the Feb 16 meeting, the cost of an audit and who would be responsible for it was brought up by Rhonda James, chairwoman of the board at MWD.

James told the Court the cost of an audit would be $55,000, plus the cost of a CPA and an attorney, which would be an additional $20,000.

Judge Rutherford said an audit for the Fiscal Court cost $20,000, and that he thought $55,000 was excessive.

“Where did they come up with this cost?” the judge asked. “If you take our two audits (at $20,000 each) and double it, that is $40,000. Pike County’s budget is four or five times larger than MWD.”

As the Daily News was not present for that meeting, a a press release issued from the office of the Pike County Judge-Executive was used in place of a story written by newspaper staff.

The statement said, in part:

Harris said he would pay for the audit out of his funds if the brunt of the costs were determined to in fact fall on the county.

“You said you would pay for the audit,” James told Harris on Tuesday. “We are here to take you up on that offer.”

However, after reviewing the official minutes of the Nov. 3 meeting and a videotape of the Feb 16 meeting, the Daily News found that Magistrate Harris did not in fact offer to pay for the audit.

“We welcome an audit,” James said. “But the cost is a burden, and I don’t think its fair that burden be placed on that district when actually what we’ll have to do is pass that along to the customers.”

“I certainly don’t have a problem with making a motion to take care of the audit if you all (MWD) can’t do that,” Harris told James. “I know you can’t afford it . . . I’m encouraged about the fact that you all finally realize that you have a financial crisis that you’re dealing with.”

“I didn’t define it as a crisis” James said.

“Well, that’s what I define it as,” Harris replied. “I think its ridiculous to stand here and say you pay Utility Management Group $800,000 a month, and we’re going to have to pass along a $50,000 audit as a rate increase to the customers of Pike County. I think its ridiculous.”

Rutherford asked Harris where the money to pay for an audit would come from.

Harris explained the county has $150,000 in line items in the county budget. That money was set aside for short water line extensions and fire hydrants. It was Harris suggestion that money be used to pay for a state audit of MWD.

“I would like to make a motion that we (Pike County Fiscal Court) suspend all payments to MWD, all budgeted payments that we have in our budge to the district and that we hold that money in abeyance until such time as the audit is completed. And, if MWD is unable to pay for it, that we use those funds to pay for the audit,” Harris said.

Rutherford commented that his office, as well as the offices of the magistrates, have received several requests for fire hydrants.

“I don’t think you want to tie all the magistrates money for fire hydrants,” Rutherford said.

Harris disagreed.

“I recognized that there’s going to be a year of suspension going on, that we want to hold off on fire hydrants and water line extensions for a year, but I think the people of Pike County want to know that their water district is being operated correctly,” Harris said.

He agreed to amend his motion regarding holding money from the budget to pay for the audit. The motion was changed to note that $55,000 with withheld for the budget, so that the entire $150,000 was not tied up.

The motion was tabled, however, in order for the Fiscal Court to meet with the state auditor to discuss the amount charged to conduct the audit.

“It’s a shame we should have to do this. Every other entity that’s audited pays for their own audit,” Harris said.

James said MWD did pay for their audits. Judge Rutherford confirmed with James that this would be the third audit for Mountain Water.

“This is something the court asked for,” Ancie Lee Casey said.

“No, this is something the people of Pike County asked for,” Harris said.

“We represent the people of the county, and I think they want to know that their water company is being operated fairly.”

When asked about the discrepancies between the statement released by his office and what the official records showtranspired at the Feb. 16 meeting, Judge Rutherford said he was confident the statement reflected what happened at the meeting.

“Magistrate Harris’ motion (to conduct an audit which would be paid for with money set aside in the county budget) didn’t even make it to the floor, it was tabled until we can have a work session,” Rutherford said.

“We stand behind our press release.”