Going back over 140 plus posts Slabbed has done on the financial operations of the City of
Mayberry Bay St Louis serves as a reminder that we’ve been on that particular beat since the Spring of 2014 and had been paying attention for about a year before that. In hindsight 2013 was the watershed year and that year also happened to be the last election year for City officials. To understand what is happening now is to understand what was going on back then. Also key to understanding today’s events is to understand that “A Place Apart” truly is Apart from a Home Rule Charter standpoint and therein lies the root cause of the problem. First up is the City’s Charter which is colloquially known as “Strong Mayor-Weak Council”.
There are about 300 municipalities in Mississippi and the overwhelming majority (90% or so) use the “Weak Mayor” home rule option. Bay St Louis is one of ten municipalities that use Strong Mayor: Here is the skinny from the Stennis Institute at Mississippi State:
The mayor-council form of government is essentially a “strong mayor” form of government made available by the legislature in 1973 and approved by the Department of Justice in August 1976. It is used in 10 municipalities in Mississippi: Bay St. Louis, Biloxi, Columbus, Greenwood, Gulfport, Hattiesburg, Jackson, Laurel, Meridian and Tupelo.
The Bay is the runt municipality in the strong mayor world. The proverbial strong mayor has vast power including almost complete control over the City’s workforce. Larger Cities benefit from this kind of organization because keeping the bureaucracy on point is easier when there is a clear Chief Executive. In smaller Cities with smaller work forces like “A Place Apart” it has the drawback in allowing day to day municipal operations to be dominated by a single person, in this case Hizzoner.
The City Council (as opposed to Board of Aldermen in “Weak Mayor”) only controls two things directly and those would be the budget and the annual audit. City Councils also have investigative authority under the law.
With that set up we need to circle back to the previous City Council that was in place in 2013. Not long before the election that Council began to allow the Mayor to spend the remainder of the municipal reserve fund on capital projects such as decorative street lamps for Wards 2 and 3. By the time the party primary elections took place in May 2013 the City was effectively broke despite the Mayor’s very public denials in the media. We know the City was broke because less than a year later the City’s auditors disclosed they were considering issuing a “Going Concern” opinion on the City’s financial statements. But its worse than just being broke.
When a business’ spending outpaces its income it must “rightsize” its operations or go bankrupt. Government is unique in the power to tax. If expenses exceed tax revenues the government can raise your taxes if the elected officials can take the political fallout. And then there are what we call “stealth taxes”, where everyone’s costs goes up but there was no vote in advance of the “tax levy”. Now let’s take a trip down memory lane courtesy of the Sea Coast Echo:
Bay city clerk decries rumors, says finances in good shape ~ Cassandra Favre, August 9, 2013
At Tuesday’s Bay St. Louis City Council’s meeting, part-time municipal clerk David Kolf blamed one city councilman and the Sea Coast Echo for igniting a string of questions concerning the city’s funds.
“I would like to address some of the rumors that have been flying around here lately and I keep getting e-mails and numbers that are completely unsubstantiated,” Kolf said.
Kolf displayed the city’s audits from the years 2005 to 2012.
“There have been a lot of accusations recently and a lot of newspaper articles, particularly from one councilman,” said Kolf, “making allegations that the city’s broke, bankrupt and I believe one e-mail said we are going into liquidation.
“But I’m here to tell you that we are not bankrupt, cash is tight.”
And in that alternate reality when the City was using the Utility payments to fund general government cash was “tight”. The truth is if Kolf were an actual financial professional instead of Hizzoner’s straw man he would have advised Councilman Seal exactly why keeping a Municipal reserve fund is vital, mainly by its use funding City operations during the lean months when property tax collections are low. In Strong Mayor Bay St Louis Kolf owed his job to Hizzoner and it was that master and his accompanying political ambitions that Clerk Kolf served, not the citizenry. Lest I digress more links:
Bay Violated Open Meetings Law ~ Echo staff
Bay Vows to Pay Overdue Utility Bill – Dwayne Bremer, November 12, 2013
Bay St. Louis Mayor Les Fillingame, on Tuesday told the Hancock County Utility Authority that the city will get current on its back-payments by the end of the month.
Last month, it was revealed that the city was about $258,000 behind in its monthly payments to the utility authority.
The authority, which is made up of utility servicers from the cities of Bay St. Louis, Waveland, Diamondhead and several rural water and sewer districts, operates from revenues generated by its members and paid back to the authority.
Utility authority Chairman Bill Johnson of the Kiln Water and Sewer District said Tuesday that the city of Bay St. Louis’s recent lapse in payments is putting a crunch on the agency’s budget.
“We are concerned on the financial side,” Johnson said.
Utility authority Director David Pitalo said the authority only has enough funds available to make payroll for another month unless Bay St. Louis pays what it owes.
Not long after that the City borrowed $500,000 without statutory authority and caught up Hancock Wastewater. By that next May the Administration disclosed the City would default on its water and sewer bonds unless they were refinanced as the City’s water and sewer fund was unable to recover financially after being raided to pay for general government the year before. This is the reason you folks in the Bay are now paying a $13/month surcharge on your water bills. In essence you are paying for the water you used in 2013 again thus the term “stealth tax”. Refinancing the bonds also costs well over $300,000. To make things even better from a shamelessness standpoint was Mayor Fillingame pointing the finger at City’s Citizenry for his financial failings:
Mayor says residents’ failure to pay bills is keeping Bay behind ~ Geoff Belcher February 7, 2014
When you look at the financial carnage from a longer term standpoint the decision to spend the municipal reserve carried a cost of well over $300,000 a year later when the water and sewer bonds were refinanced. Voting yes back in 2013 were MacDonald, Seal, Compretta and Reed.
Ultimately it was the old council’s inability to clean up its financial house before the new council took office in July 2013 that would dominate the next four years of council business.
Here are a few archival links that describe how this disaster was made:
In Part two we tackle the missing DoJ funds.