Pol Watchers

Beverage testimony details alleged political corruption in Transportation Cabinet

ALLEGES HE WAS ASKED TO INVESTIGATE STUMBO
Fletcher calls allegations ludicrous

Former state highway engineer Sam Beverage alleges widespread political corruption within the state Transportation Cabinet in testimony he offered a prosecutor earlier this month.

A summary of his testimony was ordered released today by Franklin Circuit Judge Thomas Wingate, who sentenced Beverage to two years of unsupervised probation for official misconduct.

Beverage is the final criminal defendant in the lengthy investigation of personnel actions in the administration of Gov. Ernie Fletcher. He had been charged with perjury.

The five-page summary of Beverage's testimony, offered as part of a plea deal, details several potential scandals, including allegations that:

• several specific hirings were politically motivated.
• he was asked to investigate Attorney General Greg Stumbo.
• the governor funded highway projects in return for senators’ votes for his programs.
• an ongoing sale of bonds to fund highway projects is being used for political purposes.

UPDATE: Fletcher, after speaking at the Winchester Rotary Club today, called Beverage's allegations "ludicrous" and questioned Beverage's credibility given the previous charges against him.

Beverage, who was first appointed to the Transportation Cabinet by Democratic Gov. Paul Patton in October 2001, also provided details regarding the efforts of Patton political appointees to secure jobs protected by the state Merit System before Fletcher, a Republican, took office.

Wingate, in sentencing Beverage, said that what Beverage did was not only legally wrong but morally wrong.

Besides probation, the judge ordered Beverage to write a letter of apology to a state transportation worker whose job was moved from Jackson to Somerset for political reasons.

Beverage told the judge Friday that he was sorry for what he did. Beverage’s attorney, Burl McCoy of Lexington, said his client was pleased with the sentencing.

The summary of testimony Beverage offered to Commonwealth's Attorney Larry Cleveland suggested that Fletcher traded highway projects for votes by state senators.

He said the original list of potential projects to be funded by a bond sale was submitted to the governor and he personally selected the projects to be funded.

“The governor asked that each senator’s name be placed alongside each project that was in their district. Projects were then selected for those senators that voted for the governor’s programs.”

Beverage said a transportation employee placed the senators’ names on the project list and could reproduce the list if necessary.

UPDATE: Fletcher called the notion that his office selected construction projects based on the voting records of legislators "ridiculous."

"We've obviously worked with some senators better than others. That’s clearly part of the process over there," he told the Herald-Leader. "But as far as keeping track and punishing folks that way, we have been very balanced on our roads."

The administration makes its road decisions on two main criteria: "safety and return on investment," Fletcher said.

Beverage also said that the sale of the bonds will require about 15 percent of the highway funds for repayment, starting after next year.

“This will in essence cut the level of service for highways significantly unless a gas tax is imposed,” Beverage said.

Beverage described a $42 million-a-year discretionary fund used at the discretion of the cabinet secretary "is where the real politics is played."

"This fund is essentially a large campaign chest and is used accordingly," he said.

Beverage said that in late spring of 2005, Transportation Deputy Secretary Jim Adams asked him to investigate Stumbo “and find any wrongdoing that I could for a high-ranking Republican official.” Beverage said there is an e-mail trail of the findings he sent to Adams.

“This is a violation of state code since highway funds can only be spent for highway purposes,” Beverage said.

UPDATE: Fletcher strongly denied that he or anyone in his office ordered that.

"That is ludicrous," Fletcher said. "We wouldn't be involved in that. I'm not even sure it's worthy of comment ."

The governor also said these allegations were suspicious because they are largely based on events that supposedly took place three years ago and "they're bringing it up now in a political season."

"These are part of the politics of destruction that continues to go on, and we're going to focus on what's important," he said.

Beverage also said that nearly all entry-level positions in two Eastern Kentucky highway districts at Jackson and Manchester were filled “with the recommendation and concurrence of the designated representative of the governor’s office.”

Beverage initially was charged with a Class D felony for perjury, but that charge was reduced to a misdemeanor count of official misconduct.

Beverage was indicted last year by a special Franklin County grand jury for lying during his appearance before the grand jury.

The grand jury was investigating whether Fletcher’s aides improperly doled out legally protected jobs to political supporters.

- Jack Brammer and Ryan Alessi

House Democrats weigh options for energy session

FRANKFORT —The Democratic-controlled House has the option of meeting and adjourning immediately if Republican Gov. Ernie Fletcher follows through on his plan to call a special session next week on energy incentives, House Speaker Jody Richards said today.

But Richards, D-Bowling Green, quickly added that he does not know for sure what action the House will take because the governor has not yet officially issued the call and outlined what issues will be on it. He said House leaders are looking at several options.

“We are trying to figure out if the governor sees this as an emergency for his re-election or if there’s a reason here that rises to the level of an extraordinary session,” Richards said.

Robbie Rudolph, Fletcher’s cabinet secretary and running mate, later said the governor will call a special session “very soon” to begin July 5 “for economic development in Kentucky” in trying to attract a $3 billion coal conversion plant to the state. He said no decision has yet been made on what other issues, if any, will be on the call.

Kentucky is competing against Indiana and Illinois to land a Peabody Energy synthetic gas plant, “and it’s important we show our interest in it through the special session,” Rudolph said.

“I’d be very disappointed if the House did not take this up and we would miss a chance at this economic development,” Rudolph said.

Rudolph also dismissed comments that the governor is calling the session to help his fall race for re-election against Democrat Steve Beshear.

Richards and other key House Democrats had harsh words for the governor yesterday during an “informational meeting” called by Richards for House members.

They said the issue of energy incentives can wait until January’s regular session and that a special session would cost taxpayers about $60,000 a day. They also said it is inconsiderate of the governor not to have yet made public his plans for a special session.

--Jack Brammer

Several candidates start with big financial edge

The three incumbent officials seeking re-election in this year's down-ticket races are starting the general election with six-figure funding leads over their challengers, campaign finance reports show.

And Democrat Jack Conway also has nearly a $150,000 advantage over Republican Stan Lee in the race for the open position of attorney general.

Meanwhile, both candidates for the open spot of state treasurer must essentially start their fund-raising from scratch for the fall race.

Here's a breakdown:

ATTORNEY GENERAL

• Conway, a Louisville lawyer and former aide to Democratic Gov. Paul Patton, raised $326,000 en route to his 44-point victory over Bob Bullock, who pulled in nearly $92,000. Conway finished the primary with $154,544 in the bank.

• Lee, a state representative from Lexington, was the top fund-raiser in his four-way GOP primary race with more than $134,000, which outpaced the $107,000 of Tim Coleman, a commonwealths attorney. Lee starts the fall campaign with $3,365.

STATE AUDITOR

• Incumbent Crit Luallen, a Democrat, faced no primary opposition and was able to stockpile $121,419 in preparation for the November election.

• Challenger Linda Greenwell, a Republican UPS employee who lost to Luallen in 2003, also ran unopposed in the spring race, allowing her to bank $15,123.

SECRETARY OF STATE

• Incumbent Trey Grayson, a Republican, wasn't opposed by anyone in his party and has $289,410 available for the fall campaign.

• Challenger Bruce Hendrickson, a former Democratic local official from Pineville, narrowly won a three-way primary race, despite the fact that runner up Dick Robinson raised $72,000 compared to less than $10,000 for Hendrickson. He finished with $4,576 for the fall.

STATE TREASURER

• Democratic nominee L. J. "Todd" Hollenbach IV, a Louisville lawyer, finished atop the four-candidate primary with $3,662 left over. The $45,000 he spent in the primary was the most of the four Democrats.

• Republican Melinda Wheeler, the former director of the Administrative Office of the Courts, narrowly won her primary over three state representatives with $1,210 to spare. She spent nearly $54,000, which was essentially the same amount as third-place finisher Ken Upchurch but half of runner-up Lonnie Napier's $109,000.

COMMISSIONER OF AGRICULTURE

• Incumbent Richie Farmer, a Republican, has $100,841 after winning his primary.

• Challenger David L. Williams, a Democrat, raised $150 during the primary.

- Ryan Alessi

Judge says Duncan can go back to work

Mike Duncan, the state Transportation Cabinet investigator whose May 2005 firing coincided with the start of the state hiring investigation, should immediately be allowed back at work, Franklin Circuit Judge Thomas Wingate ruled today.

Gov. Ernie Fletcher's administration had appealed to Wingate the state Personnel Board's decision last month to reinstate Duncan and provide him with two years worth of backpay.

While Wingate affirmed the State Personnel Board’s ruling that Duncan was improperly fired from his protected merit position in the cabinet’s office of inspector general, he didn’t make a decision on whether Duncan should receive that back pay.

Wingate left that part open ended pending further court proceedings.

Meanwhile, the state Personnel Cabinet continues to investigate whether Duncan was originally improperly selected for his merit job.

- Ryan Alessi

Fletcher alters position on expanded gambling

Gov. Ernie Fletcher no longer supports allowing Kentuckians to vote on a constitutional amendment that would bring casino-style gambling to the state, Fletcher campaign manager Marty Ryall said today.

"The voters will have their chance to decide this issue in November," said Ryall. "To put it on the ballot would be redundant."

Fletcher has previously said he would not actively oppose efforts to allow a vote on expanded gambling, although he is personally against the concept.

Ryall said Fletcher's opponent, Democrat Steve Beshear, has made expanded gambling the premier issue of the campaign by proposing to fund much of his platform with new revenue generated by gambling.

"Steve Beshear drew this line in the sand and we're happy to debate it with him," Ryall said. "We'll lay out how casino gambling would be detrimental to the state of Kentucky."

Beshear's camp quickly described Fletcher's new stance as just another example of the governor's lack of integrity.

"Kentuckians are looking for leadership," said Robert Kellar, spokesman for Beshear. "What they aren't looking for is somebody who panders, has no vision and isn't honest with them."

Fletcher's move to oppose gambling is a clear indication of his position as an underdog in the polls, said Scott Lasley, a political science professor at Western Kentucky University.

"He has to find issues to separate him and Beshear and this is a natural one," Lasley said. "This is going to energize a lot of people, especially his core supporters."

READ THURSDAY'S HERALD-LEADER FOR MORE ON THIS STORY

- John Stamper

Environmental group questions need for special session

The state has doled out millions of dollars in recent months to companies considering building coal conversion plants, causing an environmental group to question the need for a planned special legislative session to provide tax incentives for the companies.

The Kentucky Resources Council, a non-profit environmental advocacy group, revealed today that three of the four companies that wrote Fletcher last week and said the legislation is needed already have applied for and received grant approvals from the Governor's Office of Energy Policy to support projects in Kentucky.

"Given these commitments and the status of the projects for three of the four signatories of letters released by the governor's office, the justification for calling the General Assembly into a special session this summer is that much more questionable," said a news release issued by the council's executive director, Tom FitzGerald. "The claimed need by the administration to create such incentives to attract these companies to the Commonwealth appears to be at variance with the representations contained in the applications on which the grant funds were approved."

In May, Peabody Electricity received a $400,000 grant to help fund a feasibility study for a proposed 30,000-barrel-a-day plant in Western Kentucky, to be developed in cooperation with Rentech Inc., the council said. (Peabody/RentechProposal) (PeabodyContract)

Peabody's application indicates that the project's feasibility phase won't end before next spring, well after the legislature meets again for its regular annual session.

"The application for grant funding did not state that the choice of Kentucky for locating the project is contingent on further funding commitments from the state; rather the application indicated that the development agreement is a project in Kentucky," the council said.

Also, EnvirRes LLC got a $2 million grant in February to build and operate a gasification and coal-liquids demonstration plant in Kentucky. (EnviResProposal) (EnviResContract) (EnviResInvoices)

The funding was requested to evaluate a specific property in Ashland and to complete preliminary engineering design work.

"According to the application, the next phase is testing of the gasification process in Sweden, to be followed by engineering design of a demonstration plant that is estimated to cost $300 million," the council said.

The council said any state incentives for coal-to-liquid or other emerging technologies should focus on research that helps the state meet its energy needs without increasing greenhouse gas emissions.

The Fletcher administration had no immediate comment.

Fletcher has said he plans to call a special session to begin July 5 but has not yet done so.  A special session would cost taxpayers about $60,000 a day.

House Speaker Jody Richards, D-Bowling Green, and other leading Democrats have repeatedly questioned the need for a special session. The House Appropriations and Revenue Committee is expected to meet Thursday to hear from FitzGerald and others on the matter.

READ THURSDAY'S HERALD-LEADER FOR MORE ON THIS STORY

--Jack Brammer

Democratic Party low on cash; Caucuses are too

The Kentucky Democratic Party has depleted its state account over the last six months.

The party showed $1,081 left over in its account after spending $127,194.71 since December, according to reports filed yesterday with the Kentucky Registry of Election Finance. It also has $162.84 left over from the $53,772 that tax payers designated to the party through income tax check-off boxes.

In comparison, the state Republican Party showed a combined $62,000 left in those two accounts.

Both state parties also have an account with Federal Election Commission that allows greater contribution limits than state rules. Updates on those accounts aren't due until next month.

The Senate Democratic Caucus, aimed at helping state senate candidates get elected, remained largely stagnant through the last six months, and it's balance remains at about $6,200, compared to the Republican Senate Caucus fund of nearly $36,400.

The report for the House Democratic Caucus Campaign Committee showed more activity. It has $10,976.29 in the account after spending $24,679 in the last six months -- a period that didn't include any House elections. The caucus raised nearly $30,000 in that span, mostly from campaign committees of key House members.

Much of the money from the caucus was spent on hotel and restaurant costs, but most entries don't list the names of who made those purchases or participated in the meals.

Among the more detailed/interesting expenditures were:

• a $125 meal charged by political consultant Jennie Arnold for a "lunch with leadership and Steve Beshear" on May 31.
• a $115 charge to the Louisville Holiday Inn Express for a "coordinator lunch" on Feb. 8.
• $12,802.96 in mileage reimbursement to House Caucus Director Jonathan Hurst. At the current federal reimbursement rate of 48.5 cents-per-mile, that works out to be about 26,398 miles. UPDATE 2:51 p.m.: Hurst called to say that the mileage stemmed from his work during the 2006 election cycle that included all of the House races. He added that the reimbursement rate was 44 cents-per-mile, meaning that he travelled 29,097 miles last fall.
• a $30.21 charge to Mayan Gypsy in Louisville on Feb. 8 for a "candidate recruitment meal."

- Ryan Alessi

National Democrats descend upon KY this week

The Bluegrass state is playing host to two fund-raisers for Democratic presidential hopefuls on Friday, while two other prominent officials will help the state party collect donations.

After all, the state party is low on funds, according to state reports filed to the Kentucky Registry of Election Finance on Tuesday. The party shows $1,081 left over in its account after spending $127,194  over the last six months. It also has $162.84 left over from the $53,772 that tax payers designated to the party through income tax check-off boxes. In comparison, the state Republican showed a combined $62,000 left in those two accounts.

Here's a roster of Democratic events featuring national figures this week:

Tonight, West Virginia Gov. Joe Manchin III, will headline a state Democratic Party fund-raiser in Louisville at the home of Christina Brown, owner of Louisville Stoneware Co., said Democratic Chairman Jonathan Miller. Manchin will take the helm of the Democratic Governors Association next year. Brown was a backer of Miller's campaign for governor before he dropped out and threw his support to eventual nominee Steve Beshear. Beshear will attend tonight's event, Miller said.

On Thursday, former Gov. Brereton Jones will have National Democratic Party Chairman Howard Dean to his Woodford County horse farm for another event benefiting the state party, Miller said. Jones' term as governor from 1991 to 1995 overlapped Dean's time as Vermont's top official. Dean was elected in 1992. And like Jones, he served as lieutenant governor before that.

And on Friday, Elizabeth Edwards, wife of presidential candidate and former North Carolina Sen. John Edwards, will be in Lexington for two events -- a private fund-raiser for the campaign and a $15-per-person function at the Downtown Art Gallery, reports WKYT's Bill Bryant.

Also Friday, presidential hopeful Chris Dodd, the longtime Connecticut U.S. Senator, is raising money in Louisville for his campaign. Dodd is a 1972 graduate of the University of Louisville law school, according to the biography on his Web site.

These national figures are arriving in Kentucky just as Beshear and Repbublican Gov. Ernie Fletcher are gearing up their fund-raising efforts for the fall governor's race. As reported yesterday, Beshear and Fletcher both exhausted their campaign funds during their spring primary races and are having to re-stock their coffers.

- Ryan Alessi

State GOP calls for dismissal of newspaper employee

The Republican Party of Kentucky called on the Lexington Herald-Leader on Tuesday to dismiss a newsroom employee because he donated to the presidential campaign of John Kerry.

Brian Throckmorton, the paper's copy desk chief, donated $250 to Kerry's campaign in 2004. The donation, along with those of 142 other journalists across the nation, was disclosed in a recent report by MSNBC.com. Only 16 of the journalists donated to Republicans.

"The Herald-Leader is consistently outspoken in its sanctimonious pursuit of those it believes engage in the evils of influencing the political process," said state GOP Chairman Steve Robertson in a news release. "Perhaps it should turn the same judgmental eye toward Throckmorton as he ignored company policy and arrogantly sought to position himself above scrutiny."

The policies of both the newspaper and its parent company, the McClatchy Co., say political contributions are a matter of personal choice but cannot be represented as having been made by the newspaper.

"We have no plans to fire Brian," said Linda Austin, editor of the Herald-Leader. "He violated no existing policy. However, we are reviewing our policy regarding newsroom employees and political contributions."

As copy desk chief, Throckmorton oversees staffers who edit news stories and write headlines and captions.

"I now regret the contribution because it's important to avoid even the perception of bias," Throckmorton said in a written statement. "But I also regret that some can leap so quickly to perceive bias whether it's there or not."

- John Stamper

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House committee will hold energy meeting Thursday

FRANKFORT -- Saying state House members need more information on energy incentives, House budget chairman Harry Moberly Jr., will hold a meeting of his committee Thursday in anticipation of a special legislative session next week.

"We feel that we need more information.  Neither the governor nor the Senate has been working with us," Moberly, D-Richmond, said today.

"The governor should be talking to our leadership, especially House Majority Leader Rocky Adkins who came up with the energy bill."

Gov. Ernie Fletcher, a Republican, has said he will call a special session to begin July 5, but has not yet done so.

House Democratic leaders have questioned the need for a special session, saying it could wait until the 2008 General Assembly meets in January. Some Democrats contend that Fletcher wants the session to gain politically in his fall campaign for re-election against Democrat Steve Beshear.

Fletcher last week presented letters from four energy companies, saying they support a special session. Fletcher is backing a bill that would provide hundreds of millions of dollars in tax incentives to promote plants that convert coal into alternative fuels.

Sen. Robert Stivers, R-Manchester, unveiled a bill last week outlining the incentives.  It was modeled on a bill Rep. Adkins, D-Sandy Hook, sponsored in this year's legislative session that the House and Senate could not agree on.

Moberly said speakers at the 1 p.m. Thursday meeting in room 149 of the Capitol Annex will include Kentucky environmentalist Tom FitzGerald and an expert in coal-conversion plants.

Senate budget chairman Charlie Borders, R-Russell, said the Senate has been working with House members on an energy bill.

He noted that Adkins got to talk at least 45 minutes at an interim joint budget committee hearing last week in Northern Kentucky.

"Either Chairman Moberly was misquoted or his statement is not right," Borders said.  "I believe we are working together very closely."

Meanwhile, House Natural Resources and Environment Chairman Jim Gooch, D-Providence, wrote a letter today to the governor, voicing his support for a special legislative session on energy incentives.

"With the incentives currently being proposed, we could see up to $3 billion invested in this Commonwealth toward coal technology, with up to 1,000 construction jobs and 800 permanent jobs employing Kentuckians for each plant," Gooch wrote in his letter to Fletcher.

"It's a long process to bring such a facility online, but that simply underscores the need to begin the process as soon as we can. We cannot wait until 2008 to get the ball rolling," he wrote.

Gooch also urged Fletcher to consult with legislative leaders before the session begins.

"Communication is the key to making any special session a success," he said.

--Jack Brammer