http://www.duluthsuperior.com/mld/duluthtribune/8281817.htm

Posted on Fri, Mar. 26, 2004

STATE MONEY: Minnesotans for Responsible Recreation says state snowmobile trail money isn't going where it was intended.

BY SCOTT THISTLE AND JOHN MYERS

NEWS TRIBUNE STAFF WRITERS

ST. PAUL - A Duluth-based environmental group is questioning why state snowmobile trail money is being paid to an American Legion club.

The city of Orr and Voyageur Trail Society Inc. gave state grant-in-aid trail money to the American Legion in Orr, according to Minnesotans for Responsible Recreation. Although that financial arrangement occurred, it was perfectly legal, said state Rep. David Dill, who works for the society.

State grant-in-aid money originates from snowmobilers' share of gas taxes and license registrations and is distributed based on miles of trails groomed. The society has 12 employees, two full-time, including Dill. It maintains about 180 miles of trail.

On leave from his city job in Orr, Dill, DFL-Crane Lake, said the state trail money is a reimbursement for work done by the snowmobile club and can be used however the club wants.

Department of Natural Resources officials on Thursday also said there appears to be no law restricting how Voyageur spends its money -- as long as the snowmobile group performs its required trail maintenance.

Minnesotans for Responsible Recreation, however, isn't the only critic. Dill also is being criticized by members of his own political party.

"If our law is worded so poorly that they can get away with this, then we ought to be ashamed of ourselves," said state Sen. John Marty, DFL-Roseville, who has proposed legislation to tighten state oversight of grant-in-aid money and is also raising concerns. "I can't see much here that you can call it other than theft of taxpayer dollars."

The city, snowmobile club and American Legion struck a three-way deal that gives the Legion $5,000 a year to help it run a community center, Dill said. In turn, he said, the Legion agreed not to open a pull-tab operation in Orr that would compete with the snowmobile club's gambling operations, which are at 11 northern Minnesota taverns.

In 2001, Voyageur earned more than $1.5 million from gambling receipts, although it claimed a $3,741 net loss on gambling operations, according to its financial report to the Internal Revenue Service.

In another transaction, Voyageur agreed to pay $5,000 for economic-development services that Dill provided when he served as an Orr official.

"We're not denying that; we're admitting it because there's nothing illegal here," Dill said.

Characterizing the scrutiny as "baseless and without merit," Dill said it is originating from his political opponents and "radical environmentalists" who oppose motorized recreation.

"Show me where we broke any laws," he said. "And now this radical organization and a senator that feels passionately about the same things is saying we are bordering on criminal activity -- you've got to be kidding me."

Voyageur's financial records, however, have come under scrutiny. In February, the snowmobile group entered into a consent agreement with the Minnesota Gambling Control Board for failing to properly report to the state board.

"There's record-keeping and internal control issues," said Gary Danger, a board compliance officer. "A lot of it has to do with repeat violations. They are corrected. We come out, and the same things are found again. But we are not talking about embezzlement or anything of that nature."

In a letter to DNR Commissioner Gene Merriam this week, Minnesotans for Responsible Recreation asked the DNR to withhold public grant-in-aid snowmobile trail money from Orr and the snowmobile club until the disbursement of trail money can be investigated.

The group cites a Feb. 9 city of Orr document that shows the $5,000 in trail money was used to "make payments to the Orr American Legion for expenses incurred in operating the Orr Community Center."

Dill said the community center, inside the American Legion post, is used for a variety of private and public meetings and gatherings. But a list of allowable expenses in the DNR's grant-in-aid manual does not include payments for that purpose, according to Minnesotans for Responsible Recreation.

Dill contends he used state law to his community's advantage by constructing a trail system that is considered a premier system statewide. "So here we are, doing all this good work, and we're getting taken to the cleaners on it," he said.

In a written statement, Joel Astleford, a Voyageur Trail Society officer, said the state funds "carry no restriction on their use once received by the sponsor. The society believes that the Minnesotans for Responsible Recreation claims are baseless and without merit."

"It all started before I took over as mayor," said Orr Mayor Doran Klakoski, who took office in January. "What I found out today is... everything was done correctly... everything was done legit."

Jeff Brown, executive director of Minnesotans for Responsible Recreation, said the Orr situation may represent a systemic problem of how state trail money is being spent.

"Orr is the tip of the iceberg," he said.

Instead of being used to maintain trails and provide law enforcement, trail money is going to society staff salaries, bonuses and unrelated activities, Brown said.

C.B. Bylander, a spokesman for Merriam, said top DNR officials reviewed the state's contract with the snowmobile society this week.

"The commissioner is very concerned with fiscal accountability. But after reviewing our contract with the club, he concluded that there is no legal way we can withhold funds from them," Bylander said. "Our contract with them is a performance contract. If they do the work, the grooming, we have to pay. What they do after we pay is not really our call. That's up to the state auditor."

Merriam, however, has called for a review of all DNR contracts with snowmobile clubs to see if more specific restrictions should be applied to trail expenditures.

Brown said snowmobile clubs should only be paid for actual costs of trail grooming. "There shouldn't be any money left over," he said. "If the DNR doesn't see that there's something wrong with that, then the DNR is part of the problem."

On its 2001 federal tax return, Voyageur listed payroll expenses to directors and employees at $34,784.

"It's sold to us down here like this is a volunteer thing," Marty said.

It's the second time in two weeks that Minnesotans for Responsible Recreation has raised questions about Dill. Last week, the group asked the state auditor to investigate potential conflicts of interest and misuse of public trail money regarding Dill's dual positions with the city of Orr and the Voyageur Trail Society. Dill, who has been on the society's payroll for 10 years, was paid $2,250 in 2001. During 2002, it paid $440 a month to cover his family health insurance premiums.

In its 2003 audit of state trail spending, the legislative auditor concluded the DNR should prohibit local governments from allowing the same local official who oversees trail grants to snowmobile clubs from also being an officer or bookkeeper with the club receiving the money. Dill is neither. So far, the DNR has taken no action on that recommendation.

Rep. Alice Hausman, DFL-St. Paul, also has introduced legislation to address how trail money is spent. Her bill has not yet received a hearing.

"With a budget shortfall and so many unfunded and important needs to address, the state should make certain that the funds we have are being wisely used and only for legally allowable purposes," Hausman said.

Dill said the rift reflects a deeper divide between Minnesotans split on motorized recreation.

Allegations of misspending by snowmobile clubs really amount to an attack by city residents against rural people's values, he said.

"What this is really about is a culture war," Dill said.