New financial disclosures were supposed to make Louisville Metro more transparent. Instead, they caused confusion
When Louisville Metro Council approved new rules this year requiring officials to disclose more information about their finances and potential conflicts of interest, supporters framed it as a win for transparency and good governance.
The ordinance, which was authored by District 9 Council Member Bill Hollander, a Democrat, requires city officials to add sources of income, Kentucky businesses they own and investment properties to their annual financial disclosures. The legislation made it clear that candidates for local office are also required to file a financial disclosure with Louisville Metro’s Ethics Commission.
When the ordinance came up for a vote on March 4, Metro Council passed it unanimously.
“What we are doing here is identifying and correcting what I think is a weakness in current ethics laws,” Hollander said ahead of the vote.
A review of new financial disclosures by WFPL News, however, found that many respondents wrote “N/A” or “none” for a majority of the questions on the form. At times, those responses conflicted with publicly available information. And more than three months after the April deadline, more than two dozen officials and candidates for local office have yet to file their disclosures.
Officials say they lacked guidance on the new forms
Local policy makers and city officials are already required to recuse themselves from making legal or contract decisions if they have a conflict of interest. But previously, there was no mandate for them to report much about their finances, making it hard to know when a conflict existed.
One of the new fields on Louisville’s financial disclosure form asks officials and candidates to list “any source of income” above $5,000 a year for them and their spouse. Eight Metro Council members wrote “none” or “N/A” in response.
David Waskey, a lawyer and chairman of the city’s Ethics Commission, said those representatives should have at least disclosed their government salaries. Every Metro Council member currently makes $51,258 annually.
Some council members listed additional occupations for them and their spouses, but failed to disclose compensation for that work. They also failed to disclose the type of income they receive, such as a salary, commissions or business profits.
One example was Democratic District 12 Council Member Rick Blackwell, who noted on his form that he is the president of DeSales High School, a private Catholic school in Jefferson County. Blackwell wrote “N/A” for income above $5,000. Likewise, Republican Robin Engel, who represents District 22, did not claim any income over the reporting limit despite being a senior sales representative for R.J. Schinner Co.
Another council member, District 7’s Paula McCraney, a Democrat, owns two businesses, P Mc & Associates and The Traveling Boutique, but she also failed to disclose whether she made more than $5,000 from those businesses last year.
When contacted by a reporter, both Blackwell and McCraney said they misinterpreted what the question was asking for. McCraney added that she received no guidance or training about how to fill out the form.
“We’ll do whatever is required,” McCraney said. “But we should have received more training, evidently.”
At least two Metro Council members, including Blackwell, said they filed amended financial disclosure forms with additional information after receiving questions from WFPL.
It wasn’t just council members who failed to provide basic information on the new forms.
Mayor Greg Fischer, a Democrat, also wrote “N/A” when asked about his and his wife’s sources of income. Fischer receives an annual salary of $140,000 from Metro Government. His wife, Dr. Alexandra Gerassimides, is a pediatric pathologist. According to Norton Healthcare, Gerassimides provides services for the company and is employed by an outside medical group.
Asked why Fischer failed to disclose his household’s sources of income, spokesperson Jessica Wethington said the mayor “inadvertently made a mistake.”
“The Mayor is correcting the error and will file an amended form,” she said.
Wethington added that Louisville Metro is considering offering training on filing the annual financial disclosures.
The forms submitted by Fischer and some of the other council members stood in stark contrast to how other Metro officials handled their financial disclosures. Democratic District 8 Council Member Cassie Chambers Armstrong said she was also unsure how to respond to some parts of the form, but chose to err on the side of transparency. She even disclosed a $500 speaking fee she got from Clemson University, just to be safe.
“With any new system, there’s going to be miscommunications, there’s going to be errors as we work out the kinks, but I think the public should expect that we all put forward a good faith effort,” she said.
Hollander, who authored the legislation expanding disclosure, went beyond the requirements, detailing mutual funds and retirement annuities he has invested in. He also disclosed that he is a board member for the local non-profit TreesLouisville, even though he has no financial interest in the organization.
He said he does not believe the errors made by other officials were nefarious or a result of people not taking ethics seriously.
“I think because of the relatively short time frame and the changes in the law, there was significant confusion among some people about what they needed to do and when they needed to do it,” he said. “That’s something that can be fixed moving forward.”
Some Metro officials and candidates didn’t file the forms
Even though Metro officials and candidates for local elected office were required to submit their financial disclosures by April 30, the Ethics Commission says 26 people have still not filed.
Republican and Democratic candidates who ran in the May 17 primary elections were not even notified of the requirement to submit their disclosures until May 11, according to a recent report from WDRB. Waskey, the Ethics Commission chairman, blamed delays in putting the new forms together and getting guidance from the Jefferson County Attorney’s Office.
The Commission sent out certified letters to the 26 individuals who had not filled out their financial disclosures during the first week of August, a full three months after the original deadline.
Waskey declined WFPL’s request for an interview, but said via email that he is aware of the findings that a number of officials failed to disclose sources of income for themselves and their spouses. He said the Commission has already started making changes to the form.
“Compliance with next year’s disclosure form will be accomplished by better communications, required annual training of Metro Officers and as simple as adding a statement on the form to contact the Commission with any clarifications needed or questions,” he said.
Metro officials and candidates who fail to file a financial disclosure within 10 days of receiving the certified notice face a fine of $25 per day, up to $500. But even if someone lies or fails to disclose information that would be important for identifying a conflict of interest, the Ethics Commission is unlikely to catch them.
If there is an obvious omission, Waskey said the Commission can reach out to an official or candidate to have them amend their form. Otherwise, the body assumes the disclosures are complete and everyone is acting in good faith. All of the officials with errors on their forms who were contacted by WFPL said no one had notified them.
Waskey said the Ethics Commission will only investigate important omissions if someone lodges an official complaint, “none of which have been filed to date.”
Is the Ethics Commission ready for more responsibility?
In addition to the expanded financial disclosures, Metro Council is currently considering other transparency-focused ordinances that give more responsibilities to the Ethics Commission.
Another proposal authored by Hollander would require anyone who’s paid to influence Metro Council decisions to register with the Commission as a lobbyist. They would also have to disclose who their clients are and how much money they’re spending on advertising in support or against a local government action.
Members of the Council’s Government Oversight and Audit Committee, which is currently debating that proposal, have questioned whether the Ethics Commission has the capacity to take on these new duties.
The Commission is a volunteer body whose seven members are appointed by the mayor and confirmed by Metro Council. They’re supposed to meet once a month, but the first four meetings of 2022 were canceled. The Ethics Commission’s only full-time employee is Celia Gregory, a human resources officer
At a recent Government Oversight Committee meeting, Democratic District 21 Council Member Nicole George asked Gregory how much time and resources had been spent on getting compliance with the new financial disclosure rules, and how much more time would be spent on lobbyist registration.
“I did have to stay a few nights late, but not too late, to get this done,” she said. “In the beginning, just trying to get in contact with everyone, it did cost a few extra man hours.”
Gregory added that “maybe a second” employee would be needed to handle the new responsibilities.
At present, the Ethics Commission does not have its own budget and any expenses must be approved by the city’s Human Resources Department. Those expenditures also come out of the HR budget.
Anyone considered a lobbyist would not have to register with the Commission until about six months after the ordinance passes, giving the body time to create guidance documents and distribute them. Hollander said that, in retrospect, he wished he would have built in similar lead time for the expanded financial disclosures.
Hollander also said he believes the Ethics Commission has the capacity to handle the new responsibilities he wants to give them. He said if it turns out the Commission does need an extra employee or a budget of its own, Metro Council has the ability to do that.
“If there’s a need, people on Metro Council will have to decide if that’s something they want to invest in,” he said. “Certainly, I think transparency is worth investing in.”
The Government Oversight and Audit Committee is expected to continue discussing the proposed lobbyist registration ordinance at its meeting on Aug. 30.