Leachville task force discusses taxes; council addresses financial problems

Wednesday, March 23, 2005

A special task force formed by the Leachville City Council met at 5:30 p.m. Wednesday to assess the city's ability to pay back taxes for the years 2001-2003, and to propose a compromise and terms for payment.

All six council members were present, along with Mayor Ralph Wells and City Attorney Mike Bearden.

"We need to look at receipts and deposits for years 2001, 2002, and 2003," Bearden said. "There has been no consistent pattern."

"Payment of taxes just quit in 2001," Stan Whitlow said. "No cash receipt journals and no cash disbursement journals were found."

"The IRS said they had a letter telling them that we had no employees," Wells said. "When I asked for a copy of the letter, they could not find it."

"Ruth Ann (Keith) is doing one heck of a job, helping with this," Bearden said. "We don't know now if the money was taken, or just where it is. Hopefully you will be able to see where it went. Income statements will be needed."

"We have found $30,000 in cash in the former treasurers' desk drawer many times that needed to be deposited," Wells said.

"I'm not thinking that the money was stolen, but we want to know where it went," Tommy Stone said.

"We hadn't had a problem before," Bearden said. "Where is the money?"

"Since the IRS was not being paid, the city always had money," Wells said. "During council meetings we would ask if we had money to purchase something and Teresa (Austin) would tell us we did.

"I talked to Don Zimmerman about possible employee layoffs," Wells said. "We may want to look at 6 months layoff with employees working two days a week, and off three days, where they could still draw their unemployment."

"That would only be a short-term fix," Stan Whitlow said.

The council also discussed taking money out of the firemen's fund, industrial funds, discontinuance of revenue office, and reduction of employees.

"Are we here to cut the budget or here because there is a problem?" Bearden asked. "Frank Heath (tax consultant) needs us to give him a formula to pay back. First we have to prove we can't pay the whole amount of taxes. An offer in compromise could mean payment options such as, payment in full, a down payment and balance over 23 month period, or no down payment and payments over a 24 month period.

"We need to get this to Heath by April 1," Bearden said.

"We have to cut back somewhere," Alderman Bill Hetler said.

"Something has happened here," Bearden said. "Changes have to be made. You're all interested in fixing it. You have an income strain but you do have assets. The whole city will need to work on this."

The council proposed to pay a down payment of $56,000 with funds possibly taken from Fire Department and LIDC accounts, with possible employee layoffs to pay monthly payments.

Bearden agreed to talk with Heath about the city's proposal, before plans are finalized.

A special called meeting of the Leachville City Council was held at 8:30 p.m. Thursday to discuss an emergency financial situation. All six councilmen were present, but not Mayor Ralph Wells.

"I talked to Ralph and told him about the special called meeting," Alderman Shelia Spurlock said.

In the absence of the Mayor, and the fact that Recorder Ruth Ann Keith was not an elected official, the council selected Spurlock to preside over the meeting.

"We need to look at transfer of funds, so we can meet our obligations for this month," Spurlock said. "We also need to look at cutting expenses."

Keith reviewed projections in accounts receivable and general fund bank totals.

"We have $1,882.55 in our checking account, and we need over $14,000 for the month," Keith said. "The summary of projection in our accounts is $43,550.11."

The council reviewed city funds available for transfer, which included C.D's in City Park Fund, Cemetery Fund, Industrial Funds, Street Funds, and General Fund, totaling $43,550.11.

"This would be a one time fix if we use all the C.D.'s now," Alderman Teresa Johnson said.

"I'm just asking for your help," Keith said. "Looking at what is due, what we have, and suggestions to help or control this situation."

"The Fire Protection Fund does not include rural fire fees of $2,200," Keith said. "Jessie (Johnson, fire chief) told me, you can pay anything out of Fire Protection Funds as long as you don't use rural fire fees.

"We might look at the theatre paying some of their utilities," Keith said. "The ball park pays it's own expenses."

"I'll get with them (theatre committee) and then get back with council," said Hetler.

The council discussed other cutbacks, such as the Revenue Office, electricity and gas for the Scout Hut, four city cell phones (two for police, and two for water department), parking city vehicles in off-duty times (includes three in Water Department, two in Sewer Department, and four in Police Department), reduce city portion of employee insurance, and possible selling of paver, back hoes, and dump trucks.

"This would be like a fire sale," Keith said.

"We need to come up with enough money to get through the month, then plan for the long-term fix," Keith said. "I was told when you hired me, that if I needed money to make expenses to come to you, and that is what I have done."

"Are we going to have this same problem next month," Hetler said.

"Yes," Keith said. "It took us four years to get into this situation and it will probably take that long to get out."

The council voted to cash in the general fund C.D. of $15,243.74, and Cemetery C.D. of $5,000.

The council went into executive session to discuss hiring and firing and demotion of employees. After a brief session the council emerged to vote to lay off five employees, in order of seniority, and reduce hours on another. These include: Marcia Davis and Larry Ballard, water department; Tony Stone and John Criddle, street department; Terry Rowton, police department; and reduction of animal controller, Steve Bowman, to 20 hours.

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