CARBON HILL - The Carbon Hill City Council sat incredulous Monday night in a work session to hear that receipt records have not been found yet to balance records, with tens of thousands of dollars unaccounted for over several years, including $65,000 in alcohol tax revenue alone.
Council members, however, noted they were grateful to finally be receiving up-to-date numbers, and officials were hoping to clear up confusion over the next few months or so. City officials also repeatedly emphasized the city's investigation into the financial records is in the early stages and that they are hoping to find more information - and that it was too early to point fingers yet.
"We're not trying to cast stones because we don't know at this point. I don't want it to look that way," Interim City Clerk Janice Pendley said, saying no conclusions have been made as to what has happened. "But the things you could normally walk in there and find, you can't find."
District 1 Councilwoman Cindy Killingsworth said, "It looks like the come-apart took place between 2016 and '17 ... Business as it should have been was non-functional and non-existent." Pendley said it appeared the problems were also seen in 2018 and 2019, and that problem overall really started after late 2016.
It was clear that the city is missing a massive paper trail of records, going back about three years, and that it will have to work with other parties it has dealt with to solve a large mystery. The city is also expected to have to live within its means, at least for months, and possibly work out deals in order to catch up on payments, especially to the state and IRS.
"We're basically going to have to operate with what they've come up with," Mayor Pro Temp Greg Anderson told the council. "That's all we know for now." District 3 Councilwoman April Kennedy Herron said she is hoping that some entities can "have mercy on us" and reissue some checks to reconcile the difference.
Mayor Mark Chambers and District 2 Councilman Clarence Colbert were not present, and the vacant District 5 council seat has not been filled. Anderson, the District 6 councilman, presided. Department heads from police, fire and street were not present at the thinly-attended called meeting.
The council has been growingly concerned that they have not been getting a full financial report on the city finances, and it was recently revealed the city is several years behind on audits.
Pendley, a former city clerk in Carbon Hill brought back temporarily, on Monday submitted financial information to the council. She sat with the incoming clerk, Carbon Hill native Sherry Garner, who is being trained.
Council members were given the bank balances as determined by the Carbon Hill office of the First National Bank of Hamilton, "which is correct as far as the bank is concerned," Pendley said. "Our books probably reflect something different."
She said the package show bills that are due "that we are aware of at this point. There some utility bills. Just about everything we've looked at are maybe three months due, so we are doing catch up." She said it may take another month to "get everything in order. This is what we have thus far."
Two more payments for deductibles are due to the Alabama Municipal Insurance Corporation (AMIC), the mutual insurance company organized and used by the state's municipalities, she said.
"The General Fund has $72,000 in the bank, but that also contains the $25,000 we transferred," Pendley said. "We have not transferred that back over yet because our retirement is behind since March of this year. That is paid weekly. It is approximately $950 a week.
"That's one we've got to get caught up by the end of the year," she said.
On the 941 payroll tax payments to the IRS, "I'm not real sure," she said. "It looks like some of it hasn't been paid since I left in 2016. We've got to get that caught up. We'll be able to work it out with them. We'll just have to tell them what is going on." She said maybe six quarters have to be caught up.
Pendley reviewed various departments, although she apologized some of the information was vague or sketchy - although she said that was all that was available at this time.
"When you look at these reports that I've given you back here, you are going to see the last postings pretty much on all of them was the month before I left" on Nov. 3, 2016, Pendley said.
Looking at park and recreation as a comparison, Pendley said she ran a report going back three years ago to compare on revenue and expenses then, and detailed by months. She compared three months in 2016 and 2019 for comparison.
"There are just not any deposits hardly. There is nothing to compare. There are several things for sure we got in, that I am aware of, but they have not been posted," she said.
Herron pointed out the improvement fund is used for items like the Blue Gym and the pool.
"We are supposed to have almost $15,000 in that account," Herron said. "We should have gotten a check," noting she had been told a check had come in late this year. "It was a recent council meeting since (District 1 Councilwoman Cindy Killingsworth) has been here, and (the account) is still showing only $136.38."
Pendley said she had not found the money.
Anderson asked if any checks to the city that haven't been deposited been found. Pendley said there are "some I am going to have to ask for and pray that they will give them to us."
Pendley said, "If you look at the alcohol fund, we were collecting from $1,500 to $2,500 a month. There are none of them posted after a while. And this is not a blame game, this is just to tell you where we are so that you can see what we should be expecting in but that we probably don't have."
On the alcohol tax, "there were no collections in 2017, 2018, and until we started posting these in November 2019. So that is probably an estimated $65,000 right there, that we don't have it." She is sure it had to have been mailed.
Answering a question from Anderson, Pendley said the city can currently see what is coming in and going out, noting garbage is one of the better examples and is not in bad shape with $34,697.04. "This was being reconciled until I left," she said. "The bank balance is $31,823.54."
Deposits were made in August 2017 of $36,000 - but in July, August, November and December that year there were no deposits, showing big gaps being found, she said. "But they did make good their checks," she said.
She said the fire department was in good shape with its financial accounting under Fire Chief Buddy Smith. However, no monthly tobacco tax deposits were made until one was made last month, which seemed to surprise council members. Smith said he had been getting the monthly payments, but that they were probably not being posted by someone else, Pendley said.
Much of the reconciling to 2016 will have to involve finding out where the bank shows checks or deposits went through. "It's not going to be a two-week thing," she said. Bank statements will be obtained - at cost to the city - but the city books have to agree with what the bank statements have. A few bank statements "are scattered around," she said, but it would be best to order the whole period together.
The street fund was once collecting three gasoline taxes per month, amounting to $2,000 to $2,500 a month, Pendley said. In 2017, a $3,000 deposit was made in April, and another deposit was made in 2018. "In 2019, they've just begun again since we've started," she said.
In the insurance fund in 2017, the city had an $82,417 deposit from Alabama Power, the city's largest contributor. "We usually put that into the insurance fund, because AMIC is so expensive," she said. "There was a payout to AMIC for $77,689.81. In 2018, there was no deposit and no AMIC payment. I have no idea. We may find that in the General Fund. But this is what our record show. The General Fund is hopefully where we will find a few things."
The police had no deposits in 2017 except for a railroad grant of $1,000. "They had no deposits in 2018 and 2019," she said. "Their bank balance is $945.33." Donations have not been deposited.
On the improvement fund, in 2016 a $20,000 deposit was made, followed by a $19,000 deposit the next year. No deposit was made in 2018 and 2019. Herron said, "So that is two missing." Pendley said officials could "pray" it might be in the General Fund. "We still have a lot of work to do," she said.
In terms of fines and revenue from the municipal court, Pendley said no deposits had been made since 2016, except for a $6,000 deposit was made in February 2018. At the end of each month, the city is supposed to pay different entities in the state from the court funds. Up through October these were being paid, and in November 2016, some were paid, mostly for October. Then deposits and payments stopped.
She noted most of the fines paid involved cash.
"I don't not sure how this is working with these state entities, because I don't know how we're getting on without paying them. We've already gotten a couple of bills," Pendley said. "Very little of this stuff has been paid to the state, so I am kind of concerned about that."
Asked about receipt books, she said, "The receipt books are missing." She said she plans to check the court computer. The only receipts on hand are ones under Pendley, she said. Council members seemed astounded and made sure they understood she had no receipts, including the pool, which Herron was involved with. She said she knew those receipts were turned in. Pendley said that might have gone into General Fund.
Pendley also noted that Goodwyn, Mills and Cawood is owed $24,516 on what is probably the interstate lighting project, apparently on a local match, noting she would ask Chambers about it.
She said she is calling a number of entities to check about bills, finances and such. She noted Walker County entities have been good to work with.
"We're not accusing or anything. We've just got to find some of this," she said, noting that some areas of City Hall have not been searched yet. She said many of the usual file cabinets and areas one would expect to find the information have been searched.
She said receipt books and other equipment have been ordered to be used now. Meanwhile, she said the retirement and IRS tax will be major concerns and will come out of General Fund. She felt payment arrangements could be made in good faith.
"This has already told us more than what we were getting," Killingsworth said, who said she knows more than at any time since taking office in August. Herron and Anderson agreed, noting they have been in office longer. "I've been here a year, and I've found out more in the past couple of weeks," Anderson said.
Pendley said the council should be getting a financial report at least monthly. "And you should ask for them if you don't get them," she said.
Killingsworth said she is encouraged situations are being dealt with. "There are things being looked after. Somebody is getting the mail. Someone is putting checks in the bank. Somebody is documenting it," she said. Pendley said, "I think it was probably just let go too long."
Herron said it is probably not as bad as it appears to be, although the fact some functions were not performed is not good.
She said Chambers also was informed and was shocked at the developments. "He's about as stunned as we are - probably more so" Pendley said.