Tax money funds $15,647 in meals.
$11,487 spent in 117 trips to Wal-Mart.
$8,875 to buy snacks.
Money Used To Pay For Bar Tab, Wine, Okra, Pop Tarts, Room Service.
One JCVB Meal Equals Entire 12 Month Food Budget For Dunn Visitors Bureau.
Part 1
By Oonagh McQuarrie and Mickey Lamm
A joint investigation by The Daily Record and WTSB Radio has uncovered a pattern of potentially wasteful spending at the Johnston County Visitors Bureau (JCVB) in Smithfield. The investigation has prompted an audit by Johnston County officials.
According to financial documents, over the past five years, the bureau has spent $11,489 on snacks and food at Wal-Mart, and $15,647 on meals for board meetings and possibly personal meals. The board members are not paid, but there will be more on that in a follow-up article.
The Johnston County Visitors Bureau is a “public authority,” according to their bylaws, and receives money from Johnston County’s 3 percent motel occupancy tax, as well as from towns in the county and other revenue sources.
Click here for bar tab and Walmart receipt.
Meals Eating Away Tax Dollars
The Johnston County Visitors Bureau board meets 10 times a year, and the sports council, a subcommittee of Johnston County Visitors Bureau, meets six times a year. Since 2010, the Johnston County Visitors Bureau has spent $7,068 on lunches and meals for the two boards.
The two boards have met around 85 times in the past five years and in more than 30 instances, the tab for meals was more than $100, with some costing taxpayers nearly $1,000.
The December board meetings are particularly expensive, as members, staff and their spouses are invited to attend. In 2010, receipts show that the board paid $639 to Skylines Cafe in Clayton for their December meeting. The Facebook page for Skylines lists their most expensive menu item at $12.50. According to the receipt, 21 people were served at the meeting at $22 a head. Two bottles of wine were also charged on the card, which is prohibited.
Others were as cheap as a $29 Papa John’s pizza party as a “research study incentive.” The expense report did not mention who attended the pizza party.
In 2011, the board paid $419 to Golden Corral for their December meeting. It is not indicated on the receipt how many people were served at that meeting. In 2012, the receipts show $436 was paid to The Boathouse in Smithfield. In 2013, $775 was paid to Wagner House. JCVB paid for 25 entrees and desserts according to the receipt, averaging $31 per person.
In 2014, Johnston County Visitors Bureau held their December meeting at Double Barley Brewing, a brewery in Smithfield. The cost for that meeting was $870, or the same amount Dunn Tourism Authority spends on a year of lunches for its board. Also on the receipt was a $98 bar tab, which is again prohibited, but was paid for with taxpayers money.
“Several board members did taste and sample craft beers, and the charge was placed on the ticket, which was closed out on the credit card,” Bailey-Taylor said.
All told, the December meetings alone cost $3,043.
“We usually have around 25 to 30 people at those Christmas meetings,” said Donna Bailey-Taylor, President and CEO of the Johnston County Visitors Bureau. “We have a dinner banquet, for 25 people, I don’t think that’s extravagant.” Ms. Bailey-Taylor has been with the authority 20 years.
December meetings are not the only time the Johnston County Visitors Bureau spends hundreds of dollars on meals.
In September of 2012 and July of 2013, Johnston County Visitors Bureau paid $492 and $482 respectively to have lunch served during a visit to the N.C. Call Center. The call center is located in the women’s prison in Raleigh and North Carolina Tourism contracts with the prison to staff the telephone lines. The board spent $373 on lunch for the sports council in March of 2013. A $313 meal was served at a regular board meeting in June of this year and in June of 2012, JCVB receipts show $300 was spent for a joint luncheon with Johnston County Commissioners.
Ms. Bailey-Taylor said she thinks the cost for lunch meetings tends to average $10 per person.
“Our sports council when we were doing the parks and rec master plan was anywhere from 25 people to 45 people, when we were doing the parks and rec master plan it is anywhere from 25 people to 45 people,” she said. “I haven’t done any analysis on how much it’s costing per head, but caterers, it’s normally about $10 a head —but I haven’t done any averaging — and you can’t hardly go anywhere and get a lunch and a drink for less than $10.”
There is no county or state requirement that food and drinks must be served each time the JCVB board holds a meeting.
Questionable Travel And Marketing Charges
There are dozens of charges to the Johnston County Visitors Bureau credit card for meals at Burger King, Cook Out, Bojangles, McDonald’s and more, mostly under $10. For example, in November of 2012, a member of the JCVB staff charged $5.60 at the Chick-Fil-A in Smithfield as a travel and trade show expense.
The Internal Revenue Service publishes rules for what expenses can be classified as travel expense for businesses. According to Drew Holland, Dunn finance director and bookkeeper for Dunn Tourism, although there are no “set in stone” rules on organizing expenses, agencies tend to follow “budgeting standards” which are similar to IRS guidelines.
IRS rules say meals can be deducted as travel expenses if “your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. Meals include amounts spent for food, beverages, taxes, and related tips.”
IRS rules do say business-related entertainment is appropriate to deduct from business expenses, but the receipt from Chick-Fil-A only shows one meal purchased.
If a member of the Dunn board had a class in Greensboro, the expense of getting there, lodging and food would be a travel expense, Mr. Holland said. But, if a board member went to Cook Out in Dunn and ordered a meal for themselves, that wouldn’t count. “Just because I’m with the tourism authority doesn’t mean I can charge my lunch to the board,” Mr. Holland said. “That’s a personal expense. If I’ve got folks coming from out of town who have to do with tourism, that would be a travel expense, but not just one person.”
Other questionable travel expenses at Smithfield businesses include $11.50 for honey buns and snacks at Food Lion, $24.18 for food at Gandolfo’s, and $98.33 for snacks and other items from Wal-Mart.
In August of 2010, a JCVB staff member spent $6 at the Smithfield Wal-Mart on cookies 40 minutes before spending $66.83 on a marketing lunch at Cracker Barrel. Both expenses are categorized as miscellaneous expenses, the reason for both purchases is listed as a marketing lunch.
In April of 2011, $8.53 was spent by the Johnston County Visitors Bureau at Cook Out in Selma and categorized as a miscellaneous expense. The reason for purchase is marked as a marketing lunch.
“(Dunn Tourism) gets audited once a year, and if auditors come in and find something out of place, if it’s … $100 of office paper and it’s in maintenance and repair instead of office supplies, it’s probably an accident,” Mr. Holland said. “If they see that there’s a lot of things like that, they’ll say, ‘Look, you’re repeatedly putting things in the wrong category, you need to put them in the right category.’ If it happens once, it’s probably an accident. If it’s repeated, then it’s intentional.”
Board And Staff Food Purchases Categorized As Marketing/Advertising
According to information on the Johnston County Visitors Bureau website, the tourism board received $934,994 in fiscal year 2013-14. The information on the website says $474,449 of that money was spent on marketing-related expenses including advertising, prospect development and travel and trade shows.
Miscellaneous expenses fall under the umbrella of marketing and advertising expenses, according to the JCVB documents.
From 2010 to 2014, miscellaneous expenses totaled $21,886. Credit card statements from 2010 to 2015 reveal that $8,875 of miscellaneous marketing and advertising money has been used to buy snacks for the Johnston County Visitors Bureau break room, meetings and visitors.
In the past five years, Johnston County Visitors Bureau has spent more than $11,000 at Wal-Mart and nearly all of those receipts are classified as miscellaneous expenses, removing them from the operational expenses and adding those dollars to the marketing total. In the notes for many of these receipts, it is listed that the purchases are “supplies for office” although they are classified as miscellaneous expenses and not office supply expenses. Many of those expenses are then included as part of the Johnston County Visitors Bureau’s spending on marketing and advertising.
Ms. Bailey-Taylor said employees of the Johnston County Visitors Bureau must fill out a form before they can use the credit card. “I know what we’re using the card for, we pay the card at the end of the month and match all the receipts up,” she said. “I think you’re getting caught up on the term ‘supplies for office’ which I think is something that’s, when we write details on the cover sheets, we’ll be clearing some of that up. We’re working with the auditor on making things clearer, clarifying and making improvements.”
117 Trips To Wal-Mart
Since 2010, 117 visits were made to Wal-Mart by Johnston County Visitors Bureau staff. Receipts show staff members spent more than $100 at Wal-Mart 55 of those times. These shopping trips included items like bananas, peanut butter, dozens of mini candies like Snickers and Baby Ruth, cauliflower, oranges, ice cream, bell peppers, cream cheese, hazelnut spread, apple pie, cakes, pickled okra, chicken salad and other items.
“Office expenses are related to copiers, and if it’s something related to running the office like paper towels, batteries etc., it goes under miscellaneous,” Ms. Bailey-Taylor said. “It’s the cost of running the office. We try to separate things that don’t fit as well in the category. I truly don’t think there’s any wrongdoing.”
However, with the Johnston County Visitors Bureau needed a copier/scanner in 2011, the $452.64 expense was not paid for from the office supply budget. It was taken from funds earmarked specifically to promote the Town of Smithfield. Town of Smithfield funds were also used to promote the Clayton Piano Festival and pay for a $28.43 JCVB meal at San Marcos restaurant.
Chad McLamb, finance director for Johnston County, receives submitted payments from the Johnston County Visitors Bureau. Mr. McLamb said the county “acts as (JCVB’s) account holder.” McLamb said he checks the way receipts are coded but doesn’t look at it in great detail.
“I do what I can to help them out, but they’re ultimately responsible for how things get coded,” he said. “At the county, if we buy something and it doesn’t quite fit into another category, I add it to office supplies, because at the end of the day it was stuff we got to run the office. They have a miscellaneous expense and do the same thing.”
Johnston County does not have a miscellaneous expense code or line item like the JCVB. However, McLamb says, “I have advised (the JCVB) before it is a dangerous line item.”
McLamb said “there could be questions raised” about coding the majority of Wal-Mart purchases as miscellaneous. “If they’re putting receipts to marketing and it’s just for the office … I can see if they’re buying snacks for meetings every once in awhile, they have committees that go in and they’re using those snacks for those meetings, I could see that being a legitimate marketing expense,” he said. “If they’re lumping it all into marketing, there could be questions raised as to whether it’s all marketing.”
Ms. Bailey-Taylor said the “real story” is not the spending, but the increased tourism revenues for Johnston County. In 2014, Johnston County saw a 5.1 percent increase in domestic visitor spending. Occupancy tax collection was up 12 percent for the same period.
Credit Card Spending / Missing Receipts
The JCVB is not required to include an itemized receipt with credit card statements submitted monthly to Johnston County for payment. Johnston County Visitors Bureau officials say their policy is different from Johnston County’s which does require a receipt. “…we have our own forms and procedures…” Bailey-Taylor said. “Staff checks with the President/CEO before using the card stating what it is for and how much.”
A 5 year review of Johnston County Visitors Bureau credit card expenditures show more than 200 items would not have met the County’s tougher level of scrutiny for credit card expenditures and reimbursement. The County policy simply states, “It is the Department’s responsibility to approve the purchase, keep all records of the purchase, including receipts and travel authorizations. Also it is the Department’s responsibility to verify that all purchases on the statement are accurate and legitimate.”
Among the Johnston County Visitors Bureau items that lacked attached receipts were $63,130.73 in items, the majority, $53,838.94 with one company, Google. The Google receipts were not provided during our first Public Records Request but were later provided, when the expense was questioned. An additional $9,291.79 in expenses, which may be fully legitimate, lacked receipts or complete records.
Among the 200 plus items with no receipts provided to the Dunn Daily Record/WTSB for our Public Records Request included: $95 at Dollar Rent A Car in Florida, tips to bellman at hotels on 6 different occasions, hotel room service, meal tabs, $85.94 at Food Lion, $231.40 at Southwest Airlines, and $27.35 for Cascata Restaurant and Bar.
JCVB Chairman Ernie Brame said he has never personally reviewed what the President or other employees spend on their monthly credit card statements. “On her credit cards no, we look at financial reports each month.”
Commissioner Chairman Orders Audit
In response to the Dunn Daily Record / WTSB News investigation, Tony Braswell, Chairman of the Johnston County Board of Commissioners has asked for an “internal review of JCVB financials and internal controls.” The audit will review the past 12 months. However, the pattern of questionable spending practices dates back at least 5 years, the longest period Johnston County retains public records.
Johnston County government pays all the bills for the Johnston County Visitors Bureau. The Johnston County Human Resources Department assists with hiring of Johnston County Visitors Bureau employees. The County Finance Department issues monthly payroll checks. Johnston County Visitors Bureau employees are also covered by the County’s group health insurance plan. Bailey-Taylor also attends monthly department head meetings with County Manager Rick Hester.
Braswell said he wants to see what the internal audit reveals before deciding what action, if any, might be taken.
As for who is responsible for oversight of the spending, that remains unanswered.
JCVB Board Chairman Ernie Brame said the County is ultimately responsible for oversight. Chairman Braswell said, “The Johnston County Visitors Bureau is responsible for their spending.”
Hester said the county would review their options once the internal audit was completed. “Anytime concerns are raised, the County takes it seriously and implements an internal financial review. The Board will review the findings of the internal audit, and if necessary, evaluate options at that time.”
As for the purchase of alcohol and gifts to board members with taxpayer money, Braswell said, “Alcohol should never be paid for with public funds.”
Johnston County Visitors Bureau Chairman Brame sees no problems with the Johnston County Visitors Bureau expenditures. “We review it each month and the board finds it acceptable, not excessive, and we continue to operate at record level tax revenue by hotels, and I just stand by her (Donna Bailey-Taylor’s) work.
