- Associated Press - Thursday, May 26, 2016

LINCOLN, Neb. (AP) - The Nebraska Tourism Commission fired its executive director Thursday in the wake of a blistering state audit that found questionable spending and a lack of oversight within the agency.

Kathy McKillip had been suspended with pay before the 8-0 vote to terminate her contract. Commissioners appointed deputy director Heather Hogue as a temporary director until they name a permanent replacement.

The state auditor’s office released a report April 29 that highlighted numerous spending problems within the agency, such as running $4.4 million over budget over three years with an advertising firm’s contract and paying $44,000 in speaking fees for a 90-minute speech by a corporate executive. The agency also spent nearly $19,000 to move one commission employee from Sidney to Kearney, about 215 miles away.

McKillip was not at Thursday’s meeting and did not respond to a phone message seeking comment after the vote.

Gov. Pete Ricketts and former Gov. Dave Heineman have called on the commission to fire McKillip since the audit became public, saying she wasted state money. And on Thursday, a group representing the state’s travel industry said commissioners also deserved some of the blame.

“I think they need to be questioned as well,” said Todd Kirshenbaum, president of the Nebraska Travel Association. “We’re going to really hold their feet to the fire.”

Commission Chairman John Chapo said members have taken the audit seriously and will work with lawmakers and the governor to determine how to proceed.

“It is critical that we resolve the issues that the audit brought to light,” Chapo said in a statement after the vote.

Many of the auditors’ criticisms focused on McKillip and a promotional photo shoot near Valentine, which was intended to market the state to millennials. According to the report, Omaha marketing firm Bailey Lauerman requested more than $5,200 in reimbursement for travel costs that weren’t properly documented. Because the state didn’t have adequate documentation, auditors obtained financial records directly from the firm.

Those records revealed that Bailey Lauerman requested more than $350 in repayment for alcohol and cigarettes, including bottles of wine, gin and Crown Royal Canadian whisky. In addition, Bailey Lauerman hired McKillip’s daughter as a model for the shoot. Auditors expressed concern that using McKillip’s daughter may have run afoul of a law that prohibits “improper personal gain” by public officials, employees and their family members.

McKillip has said none of the activity was illegal or fraudulent, and the marketing firm has repaid all of the money that was not reimbursable under state rules.

The audit outraged some workers in the tourism industry, who have fought for years to promote Nebraska even though the state’s tourism budget is much smaller than those in neighboring Colorado, Wyoming and South Dakota.

“Our tourism dollars are so precious and vital,” said Frank Pratt, who shot video footage for Nebraska tourism projects on behalf of the Lincoln advertising firm Snitily Carr.

McKillip had served as the commission’s executive director since it became independent from the Nebraska Department of Economic Development in 2012.

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