TAX ALLOCATION BYPASSED GUIDELINES

Anti-Drug Funds Worth $6.4 Million

Jackson County Executive Katheryn Shields acknowledged Friday that she has
spent millions of dollars in surplus anti-drug sales tax money without
following voter-approved guidelines.

The quarter-cent COMBAT tax specifies a formula to allocate the money among
police, prosecutors, corrections, drug treatment, courts and drug
prevention. That was done for an estimated $19.5 million expected to be
collected this year.

But Shields said she did not follow that formula in allocating $6.4 million
of the surplus tax money this year. She said the money primarily went to
law enforcement agencies, but she did not know the exact percentage.

Shields provided some records about spending the surplus at the request of
The Kansas City Star. The administration was still compiling records on
Friday to present to the county Legislature.

Shields said she did not believe the guidelines applied to the tax surplus.
She also noted the expenditures were on county budget documents. Shields
said she did not think it made sense to allocate the surplus funds
according to the percentages specified by the tax.

"I think what you need to do is base it on need," she said. But next year,
Shields said she will hold public hearings on spending of the surplus money
and consider dividing it among all recipients.

The vice chairman of the county Legislature, Henry Rizzo, said her spending
raises legal questions and prompted him to call for an audit.

"I'm wondering whether the ordinance allows discretionary spending," he said.

Friday's development follows a week of turmoil in the county courthouse.

County Prosecutor Mike Sanders called for an audit and announced a criminal
investigation into possible conflict of interests regarding the county's
anti-drug tax. Sanders subpoenaed records for county officials and employees.

Shields said the investigation was politically motivated.

Earlier this year, agencies that receive the tax money were told revenues
were down, no extra money was available and cuts were made in some programs.

Yet records provided Friday showed the discretionary spending of the
surplus has gone on for years. The county has spent or appropriated $12.4
million of the surplus since 2002, records show.

Since 1996, the largest amounts of surplus funds went to police and
prosecutors, giving them money well above their allotted percentages of 9.5
percent each.

The largest amount of extra money in that time - more than $7 million -
went to the prosecutor's office, the report stated, with about $2.4 million
of that while Sanders has been prosecutor.

Sanders said Friday he did not know of the surplus fund, doubted his office
received that much and added, "I think that ought to stop, too. It should
all be divided according to the percentages."

Voters approved the tax formula because they were afraid politicians would
determine where the money was spent, Sanders said.

"Now it appears that may be the case," he said.

Sanders said the records show the need for the audit, and he plans to
address the issue Monday at the Legislature's Finance and Audit Committee.
Shields said she would not oppose an audit.

Rizzo said he did not know of the surplus until this week and wondered
whether the years of discretionary spending were legal. At the very least,
he said, all the spending should be listed and carefully accounted for.

Rizzo also said the Legislature should audit the money regularly through
its own independent auditor. The county charter states that the legislature
"shall provide the scope" of an audit of all departments at least every
three years. Rizzo said the Legislature has not done its job in auditing
COMBAT.

Police have complained this year about not receiving enough tax money and
have talked of an audit. News about the discretionary fund caused concerns.

Independence Police Chief Fred Mills said Friday that a $50,000 cut to the
Drug Abuse Resistance Education budget forced him to cut an officer, and he
was turned down in a request for money for more drug officers.

"I was told there were no reserve funds and my budget cuts were due to
reduced revenues," he said.

Shields said that the budget review Friday showed that DARE was mistakenly
cut and $112,000 in funding would be restored.

Police and prosecutors may not have realized they were getting extra money
from the reserve fund because the funds are automatically forwarded to
them, she said.

The fund is mentioned in a line item on paperwork and in yearly county
budgets, she said.

"If they didn't know it existed they certainly should have," she said.
"Most if not all of them have received money out of it."

For next year's budget, she said, she would support public hearings before
the COMBAT commission that allow citizen input on how a specified amount of
reserves should be spent for all recipients of the money, including law
enforcement, treatment and prevention.

The reserve fund dates from the early years of the tax when money was
collected and few programs were in place. It also accumulates over the
years from unspent appropriated money; it amounted to $10.4 million two
years ago.

Legislator Ronald Finley, chairman of the Finance and Audit Committee, said
he knew the reserve fund existed because it was listed as a line item in
the budget, but he knew little beyond that.

As to whether he would support an audit, he said he is waiting to see the
county figures and hear the prosecutor's concerns on Monday.

"I'm not sure where this is going," he said.