Sunday, July 14, 1996

Taxpayers paying the bill for expenditure abuses

By STEVE RAY and JOEL SHULER
Harte-Hanks Austin Bureau

AUSTIN - Hundreds of Texas tax dollars were spent at Austin nightclubs - including $700 at a topless bar - by the executive director of the Permian Basin Council of Governments.

Thousands more were spent by other state COG officials to pay for trips for their wives or hus- bands, lease expensive cars and attend two-day meetings at resorts where only 19 minutes of business was conducted.

The expenditures came to light in an examination of records obtained by the Harte-Hanks Austin Bureau under the Texas Public Information Act.

The records are part of an ongoing probe of the state's 24 councils of government by state lawmakers examining possible abuse of travel expenses, high salaries and administrative costs and potential misuse of 911 funds.

A House subcommittee will begin hearings Thursday into the councils, which in 1995 controlled almost $265 million in local, state and federal funding.

Councils of government, organized in the late 1960s, administer funds for numerous federal, state and local programs. Those include senior citizen programs, job training, regional economic development, solid waste planning, rural transportation, 911 planning and implementation, and housing programs.

Membership in each council is composed primarily of area elected officials and can include city and county governments, school districts and other governing bodies.

Critics say the councils are largely unregulated and have lax policies dealing with how funding can be used.

"There's no consistent set of rules or laws," said a source close to the Appropriation Committee's investigation. "It is the responsibility of this subcommittee to develop guidelines under which the COGs can expend funds."

Supporters believe problems are isolated incidents and that the majority of the state's councils of government are good trustees of taxpayer funds.

"These folks run a good operation, they operate honestly and try to serve the taxpayers to the best of their abilities," said Dimmitt Mayor Wayne Collins, president of the Texas Association of Regional Councils. "There is always a little bit of difference ... as to the way things ought to be done, but they are all conscientious and try to do a good job."

But a preliminary examination of council records has revealed:

• Taxpayers footing the bill for spouses to travel with board members and employees to meetings in Orlando, Fla.; Cincinnati, Ohio; Dallas and Austin. One East Texas council paid $37,675 last year for spouses to attend those meetings with their husbands or wives, according to a Legislative Budget Board evaluation.
• Salary and retirement perks much higher than similar positions supported by taxpayer dollars. Three COG executive directors make more than the Texas governor, who has a yearly salary of $99,122. Two more get bigger salaries than the Texas comptroller who earns $79,247.
• Questionable expenses such as: the lease of a Cadillac De- Ville for a 73-mile round trip from Houston to Galveston by three Concho Valley COG employees. Cost to the taxpayer: $341.74.
• Unusual purchases such as a $1.4 million apartment complex by the Central Texas Council of Governments.

Staff members from the House Appropriations committee are poring over thousands of pages of paperwork sent from across Texas - including notebooks and audits from the Concho Valley, Permian Basin and West Central Texas councils of government.

West Central Texas Council of Governments includes the counties of Knox, Kent, Stonewall, Haskell, Throckmorton, Scurry, Fisher, Jones, Shackelford, Stephens, Mitchell, Nolan, Taylor, Callahan, Eastland, Runnels, Coleman, Brown and Comanche. The Permian Basin Regional Planning Commission has 17 counties, including Howard, and the Concho Valley Council of Governments serves 13 counties, including Coke.

The state scrutiny began after an investigation by the San Angelo Standard-Times revealed a two-year total of $320,000 spent on out-of-region trips by the Concho Valley COG, including annual trips to a Horseshoe Bay resort where the council's governing board was supposed to hold its monthly business meeting.

This spring, Concho Valley COG executive board members amended travel policies by elimi- nating travel per diems and ending the Horseshoe Bay re- treats after 15 years.

State Rep. Rob Junell, a San Angelo Democrat who heads the House Appropriations Com- mittee and sits on the Concho Valley Council of Governments board, asked Speaker Pete Laney to allow his committee to investigate any similar problems in other councils.

"One of the reasons given for the issues that developed at the Concho Valley Council of Gov- ernments was that everybody does it," Junell said. "So I thought, 'Let's look at everybody and see if everybody really does do it. And if so, is that an appropriate policy?' "

Ernie Crawford, the executive director of the Permian Basin Council of Governments, based in Midland, says his forays into Austin's nightlife were legitimate expenses.

In October 1994, he and his guests spent $221 in taxpayer money to eat, drink and watch topless women dance on four different stages at Sugar's Cabaret.

During the same trip, they traipsed down 10 steps into Austin's Cloak Room bar - a small, dark, underground hangout frequented by Texas politicians and state Capitol workers. Before they left, the group had charged $86 in alcohol to Texas tax- payers.

In the 12 months of fiscal year 1995, Crawford and his friends charged hundreds of dollars at Austin nightclubs on COG credit cards.

Almost $700 went to Sugar's Uptown Cabaret, a strip bar known for cheap food, valet parking and $20 table dances by topless women.

Another $167 went for two nights of two-stepping at a country nightclub called the New West.
Credit card statements show Permian Basin COG members frequented Sugar's at least six times during the fiscal year - and on one occasion twice in the same day.

Crawford said his charges at Austin nightclubs were allowable expenditures under policies supported by his board.

"Those are all charged to local monies, not grants," Crawford said. "That's an eligible expense as far as the local (board) is concerned. ... That has been our policy. So unless the state changes our policy or my board changes the policy, that's the way it's going to be."

Local funding comes primarily from membership fees paid by local governments and govern- ment officials as well as interest off such funds as 911 emergency communications funds.

Crawford insisted his board of directors makes the rules, and he's following them. The Permian Basin Policies and Procedures handbook does not list alcohol as a prohibited travel expense. But the policies do list "personal entertainment" and "amusements" as prohibited expenses.

"The board still runs it, to this point," he said. "And if the state decides they want to make the rules, that's fine, but until they make the rules, we're operating under the rulebook."

Others were not so sure.

"I don't know if they did or not," said John Buckner, executive director of the Corpus Christi-based Coastal Bend Council of Governments. "If anyone did that, it wouldn't be too smart. You have to (show receipts), and if someone had a Sugar's receipt it might not be too cool ... it would be kind of dumb.

"I would consider that a flagrant abuse."