CAVE SPRINGS -- The city attorney cautioned leaders about possible financial difficulties for failing to pass a millage resolution for 2017 and submitting an altered millage resolution in its place.
"The city has received $10,000-$12,000 or so in property tax payments [so far] from those 5 mills that were not voted upon in October. I'm asking you to set that aside. There may have to be a refund," City Attorney R. Justin Eichmann said during Tuesday's City Council meeting.
About millages
Each year cities are required to notify their county of the amount of millage to be levied for the city. The city council must adopt the millage rate through a resolution, said Don Zimmerman, director of the Arkansas Municipal League.
The resolutions are due before the Benton County Quorum Court meeting held in November. The Quorum Court is required to levy the millage rates for the county at that meeting unless an extension is granted, County Clerk Tena O’Brien said.
Source: Staff report
About 30 community members attended the meeting at the American Legion building.
Benton County Prosecuting Attorney Nathan Smith said Friday that the State Police's investigation into the city administration has been completed and he is reviewing the findings.
Mayor Travis Lee said last week he had no part in altering the millage resolution passed in 2015 for 2016. The altered resolution was submitted to Benton County Clerk Tena O'Brien for 2017. Lee's former assistant Nicole Ferguson and Recorder-Treasurer Kimberly Hutcheson also denied altering the resolution.
Lee said State Police were investigating the altered resolution.
The council unanimously approved a resolution presented by Alderman Randy Noblett to put the $10,000-$12,000 in millage money collected so far into an escrow account. Eichmann said he has been notified by a county official that Cave Springs will stop receiving millage monies until the altered resolution issue is resolved.
Eichmann in his remarks at the top of the meeting strongly recommended creating the account. He also stressed that financial difficulties may lie ahead if the city has to refund millage tax monies generated this year. The city made about $364,000 in millage last year. That money went into the city's general fund.
"You may have a $364,000 hole that you cannot rely upon. It may be lost for the year 2017," Eichmann said. "This year is going to be a tough year."
The city's finances are already fragile, Eichmann said.
"I believe the city is experiencing a financial crisis that needs to be addressed," Eichmann said. "If you look at the general fund balance you are at 10 percent of where you were two years ago. All of your discretionary funds are going down."
Eichmann said while Cave Springs is a growing city that can weather the financial crisis, he recommended a May 22 work session to figure out city finances.
Alderwoman Mary Ann Winters said the council never passed a millage resolution for 2017.
The discrepancy was discovered by a state auditor, Lee said. Arkansas Legislative Audit in Little Rock has been working on a routine audit on the city for the years 2015 and 2016.
O'Brien sent Lee a letter dated Sept. 15, 2016, asking for a certified copy of the city's 2017 millage rate as passed by the City Council, according to a copy of the letter Eichmann provided in response to a Freedom of Information request.
O'Brien said she emailed a reminder to Lee on Oct. 20 asking if his city had adopted the 2017 millage levy. Lee responded on Oct. 25, telling O'Brien he had been in Haiti for the past week and would send the copy.
Ferguson emailed the resolution to O'Brien on Oct. 28. O'Brien responded to Ferguson, requesting a certified copy. Lee emailed Hutcheson on Oct. 31 asking her to send O'Brien the certified copy.
O'Brien said Nov. 2 someone faxed her the resolution from the earlier email. O'Brien said the copy she received by fax was almost an exact copy of the resolution passed in 2015.
Eichmann provided a copy of the millage resolution for 2017 faxed to O'Brien. The bottom of the resolution states "PASSED and APPROVED this 12 day of October, 2015."
"Everything is exactly the same, except for the resolution number from the one that I received [from Cave Springs] in 2015," O'Brien said.
The resolution O'Brien received from Cave Springs in 2015 had the resolution number 2015-17 at the top of the resolution. The resolution faxed to her on Nov. 2 had 2015-19 at the top.
"But everything else, the body of it, is the exact same," she said.
Lee said someone wrote over the seven in 17, changing it to a nine.
Hutcheson provided email sent to her in which both Ferguson and Lee asked her to send O'Brien a certified copy of the resolution, both telling her that the resolution number is 2015-19.
Lee said that the altered resolution could have only come from Hutcheson because city records were kept in her office.
Lee said he didn't know a 2017 millage rate for his city had to be submitted to the county until he received an email from O'Brien.
O'Brien emailed Lee and Hutcheson on March 29 saying it had come to her attention the resolution she received in 2016 was a copy of the 2015 resolution.
Terry Rakes, a lifelong resident, spoke to the council during the meeting and expressed concern over the millage matter.
"Hopefully someone will be held accountable and we won't lose that much money. That's a huge amount of money," Rakes said.
NW News on 05/10/2017