Kentucky Auditor Mike Harmon’s Office released their findings of the statewide broadband project called KentuckyWired and found that it will cost Kentucky taxpayers almost $1.5 billion over 30 years for the project. The reports said this project is now almost $100 million over budget and the original completion date has already passed and according to Harmon, the state is making “availability payments” to contractors for a network that is not available or operational. According to the report, some of the other issues with the project include:
- Significant changes were made that placed the burden on taxpayers during a lengthy and unorthodox procurement process between late 2014 and late 2015. The proposal made to the state included private funding and greater responsibility in key areas on the private sector. However, in late 2015, Beshear administration officials signed agreements with less favorable terms and committed taxpayers to essentially all project costs.
- Forty-five percent of expected revenue needed to support the project will not be available from K-12 schools. State officials proceeded despite being warned in writing by the Kentucky Department of Education these funds would not be available. Other warnings were given to officials that they ignored prior to signing contracts in 2015.
- The state is increasingly relying on speculative wholesale revenues from the network to fund the project. Revenue models call for steadily increasing rates to be charged for use of the network. Also, a portion of the state’s share of wholesale revenues will be distributed to The Center for Rural Development for revenue generated from parts of the network along I-75 and in eastern Kentucky.
- The state has not finalized an $88 million settlement with a construction vendor for which funding was authorized in the 2018 legislative session.
- Additional findings and recommendations detail increased monitoring and analysis needed to reduce costs if the project continues and to avoid repeating these mistakes on future projects.
Auditor Harmon’s report will be referred to the Executive Branch Ethics Commission for further review and possible action.