Leachville Council request full audit

Wednesday, June 28, 2006

Leachville city councilmen Bruce Wilson, Anna Beth Thomas, and Mark Wheeler called a special council meeting last Wednesday at 6 p.m. June 21, to formulate plans for repayment of their outstanding $411,018.71 bill for unpaid taxes.

All six of the councilmen were present at the meeting which was called to discuss the need for a full audit for prior years, ways to repay tax debt and review of city employee handbook. Leachville Mayor Ralph Wells was present in the audience, but chose not to take part in the meeting. Alderman Bruce Wilson presided.

"Don Ray did our 2003 legislative audit," City Recorder Ruth Ann Keith said. "It will take a lot of prep work by the city to prepare information for a full audit. If we hire a CPA it would take eight months or so to get ready. In a Municipal League conference I was told a full audit would not be recommended unless there was a real general problem, and not to go back more than two years."

"We need to find out what a full audit would cost," Wilson said. "The loss of $411,000 is a lot of a problem and would warrant it."

"We have been standing still too long," Keith said. "We thought the problem was solved when the former clerk (Teresa Austin) left."

"We have to solve this tax problem, before we do anything else," Alderman Tommy Stone said.

"What is the city's tax ratio?" asked Wilson

"We are not supposed to make a profit," Keith said.

"We have to make a profit to have any hope of paying the taxes back," Wilson said. "Let's see what an audit would cost."

"It sure wouldn't hurt to find out," said Alderman Bill Hetler.

"If we don't start digging, we will never know," Alderman Thomas said. "I think we could eliminate the slack without eliminating people. We need more information than we know now. When information is withheld from the council, as it has been, we simply don't know where we stand. Perhaps our department heads could come into council meetings and tell us how we can cut back on expenses."

Police Chief Ken Womack started to speak about consistent police attendance at the meetings when alderman Wilson waved his hand for him for silence. "You are not to speak at this meeting," Wilson said.

The council voted 6-0 to find out the estimated cost of an audit by using professional services.

The council discussed ways to pay back the tax debt by reviewing cash on hand.

"Have you talked with, or had any correspondence from our attorney (Mike Bearden)?" Wilson asked Keith.

"No," Keith said. "But the Mayor did."

"If we look at the money in departments and consider percentages, then every department can give a little," Wilson said. "We have to pay this back. We are all responsible for the debt, not personally, but as a city."

"We have to look at the long range forecast from now until it is paid off," Keith said. "We can't deplete all our funds, but we can cut back."

The council reviewed a report from Rebecca Clowers.

Mayor Wells left the room at 6:45 and went to his office as the council began to discuss availability of internal funding to pay back the tax indebtedness.

"I don't think that the IRS will ever approve our tax effort, until we have a change in management and get our record keeping in line," Wilson said. "Our fire department can't even get a grant as long as we have this outstanding debt."

"We had $60,000 lost in the computer for year 2000, before this all started," Stone said. "That was never accounted for."

"There is no way to do business in a non-professional way," Wilson said. "I came in with a large water bill and it was adjusted without someone authorized to do so. We have bad management problems."

The council developed some predetermined suggestions to compile $118,884.43 in funding for payment of the tax indebtedness. Listings for use of revenue included: $20,000 from General Fund; $10,622.76 and $15,939.43 from General Fund CD's; $10,000 from the Melody Theatre Fund; $3,307.66 in checking; $15,000 from Water Department; $5,045.91 and $2,566.30 from Cemetery Fund CD's; and $31,076.33 from the Industrial Fund.

"We will need to come up with $109,000 to have enough to make an offer for pay back of the principal, with hopes the IRS would forgo the other $200,000 in penalties and interest accrued in the tax bill," Wilson said. "Hopefully they would be willing to negotiate on the remaining balance."

"We can't count our chickens before they hatch," Keith said. "Our sales tax and franchise fees can change from month to month. Some funds can't be touched, like the firemen's pension fund and relief funds."

"I think everyone is willing to do their part to help us get this debt paid," Hetler said. "I will meet with the Melody Theatre Committee, but am sure they want to do their part."

"The Leachville Industrial Development Committee has agreed to set aside $30,000 for infrastructure needs, which will help us in case of emergency."

"We will have to look at possibly making payments on the needed money if we can't come up with it," Wilson said. "Right now we have a lot of things that are unknown, like what Mike Bearden will charge us to do negotiation. We need to see who will service us best and what it will cost us."

"Using Mike will expedite things for us, as he is already familiar with our situation," Alderman Mark Wheeler said. "We could get a longer time loan, with less to pay each month."

"We have to do what is affordable," Wilson said.

"We have been owing this tax debt for five years, and they assume we don't care, at this point," Wheeler said. "We can't let this go on."

"In good faith we are trying to pay them what we owe," Wilson said. "We can set aside the $118,000 in a tax payment account, to hold it until we can come up with the rest of the money. We can talk to the fire department, about their help, and add to the amount later."

The council unanimously voted to place the $118,884.43 amount be put in a CD earmarked for payment of the tax debt.

The council discussed adoption of the Employee Handbook. Several changes were agreed upon and the need for reprinting the book before adoption. A decision was tabled until the July meeting.

The council voted to move the regularly scheduled July 3 council meeting to July 10, due to the nearness of the July 4th holiday.

Following the meeting Mayor Wells talked to members of the press in his office.

"I did not preside over the meeting tonight, because I was not invited to," Wells said. "I didn't even know about the meeting until they put a piece of paper on my desk today. I think the council was unethical in their approach tonight. This has all been discussed before. They are just playing games with this and I don't appreciate what they have done."

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