LINCOLN — Gov. Pete Ricketts on Monday said he plans to look at whether the state’s tourism agency should be under the governor’s control again, saying the agency has “some very serious problems.”
Ricketts commented in the wake of a state audit, released Friday, that faulted the Nebraska Tourism Commission for excessive spending on conference speakers and photo shoots, improperly reimbursing a contractor for alcohol and cigarettes, and using the executive director’s daughter in a state tourism advertising campaign.
In addition, the state’s contract with its marketing agency was overspent by more than $4 million over three years, the audit said.
Discussion of the audit is on the agenda today for the nine-member State Tourism Commission, which will meet at 1 p.m. at Omaha’s Henry Doorly Zoo.
State Auditor Charlie Janssen has said the audit by his office showed that the commission — which became an independent agency four years ago — had taken advantage of taxpayers.
Ricketts on Monday said the problems are an example of what happens when an agency is independent of the Governor’s Office. Tourism was a division within the Nebraska Department of Economic Development prior to 2012.
The governor appoints the nine commissioners to the board, but Ricketts said that after those appointments are made, he’s mostly powerless to make changes.
If it were up to him, the governor said, “we’d be looking very closely at this and what happened.”
State Tourism Director Kathy McKillip has acknowledged that mistakes were made, but she attributed them mostly to the lack of a policy and procedures manual for the agency.
When asked whether McKillip should resign from or be replaced in her $86,364-a-year job, Ricketts did not respond directly.
Two state senators, Heath Mello of Omaha and John Stinner of Gering, said that decision is up to the Tourism Commission, which hires the director.
One of those commissioners, Roger Jasnoch of the Kearney Visitors Bureau, declined to say.
“I think we need to do what’s best for the commission and what’s best for the (travel) industry,” Jasnoch said.
The Tourism Commission’s agenda for today’s meeting includes a presentation from an assistant state auditor, Craig Kubicek, on the 79-page report. The commission also is expected to discuss forming a committee to draw up a policy manual for the agency.
The Legislature’s Appropriations Committee has already taken action to tighten oversight of spending and contracts at the tourism agency. The committee, as part of this year’s budget bill, ordered the agency to contract with the State Department of Administrative Services to review bills and spending on contracts.
Mello, the chairman of that committee, called the requirement a “pre-emptive strike” to the audit. The committee knew the critical audit was coming and had discovered that the tourism agency was spending more state lodging tax dollars than it was taking in.
“There’s now an extra layer of accountability put into the system,” Mello said, because the Department of Administrative Services will review spending and could refuse to approve bills that it finds inappropriate.
Mello said he does not, at this point, support ending the tourism agency’s independent status. But both he and Stinner said they want to see a plan of action adopted by the commission quickly to address the problems uncovered in the audit.
“A lot of challenges exist,” Mello said. “The commissioners have a lot to do to right this ship in the next six to nine months.”
The state audit found that the tourism agency lacked documentation for several expenses, forcing it to seek receipts from the state’s marketing contractor, Bailey Lauerman, on meals billed to the state. It also found that the tourism agency had wrongly approved bills from Bailey Lauerman for alcohol and cigarettes purchased during a photo shoot. The state does not reimburse for liquor purchases.
In a related development, the manager of Bailey Lauerman’s account with the state, Rich Claussen, is taking a new job as an ambassador with Prosper Lincoln, a pro-entrepreneurship group.
An official with Bailey Lauerman, Mary Palu, said the move was not related “in any way” to the audit, which also criticized the ad firm. Claussen submitted his resignation on April 18, Palu said. His last day with Bailey Lauerman is today.
Also criticized in the audit was the ad firm’s selection of McKillip’s daughter as part of a group of seven college-aged models for a nine-day photo shoot at tourist sites across the state. The daughter eventually ended up on the cover of the state tourism guide.
McKillip said she had nothing to do with the selection. The state audit, however, said the use of the daughter gave the impression that the tourism director was obtaining something of value for her family or that it was being offered by the ad firm to curry influence. Both would be illegal.
The state audit, as is the practice, has been forwarded to the Nebraska Attorney General’s Office to determine whether any criminal charges should be filed.
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