According to a report from Auditor of State Mary Taylor, the City of Wellston has been declared to be in Fiscal Emergency as of October 1, 2009. The declaration was based on a recent fiscal analysis of the city.
Taylor wrote the declaration is based on the "treasury balance, less the positive cash fund balances, exceeds one-sixth of the treasury receipts as of December 31, 2008 and June 30, 2009 by $588,915 and $623,915 respectively."
This is one of six conditions that can place a municipality in Fiscal Emergency and is the only one of the six conditions that led to the declaration.
Wellston Mayor Edgar "Butch" Hayburn told The Telegram, "We have to do what's necessary. I don't know what all this pertains to, but it may be a help to us. It may be a blessing in the long run."
Hayburn said he had received a phone call from the state auditor's office informing him of the declaration and as of Thursday morning was waiting on information as to what the city needs to do next. Hayburn said he intends to cooperate with state auditors.
He also said state auditors are still working in city hall. "We all just have to sit down to see what we have to do next," Hayburn said and added that Wellston is not alone when it comes to financial problems. "It's everywhere and I think it is going to get worse."
Also mentioned in Taylor's report is the city's Permanent Investment Fund. Taylor wrote, "We then identified funds that may be transferred ... to meet such deficits to arrive at the unprovided portion of the aggregate deficit."
Council can, wrote Taylor, remove the voter approval restriction on the Permanent Investment Fund by repealing the ordinance and may seek approval of the Jackson County Common Pleas Court to transfer all or part of the Permanent Investment Fund to the General Fund to be used to eliminate the deficits in other funds.
The Permanent Investment Fund was created on April 20, 1967 after the sale of the city's electric distribution and streetlighting systems. The ordinance requiring voter approval to spend that money was created at that time. The balance of the fund, as of August 28, 2009 was reported to be $2,433,835.00.
According to Taylor's adjusted aggregate sum of funds with deficit balances, the deficit total of eight funds was -$1,897,384. Funds with significant deficits are the Fire Levy Fund, Street Maintenance, Cemetery, Railroad Depot, Water, Sewer, Garbage, and Swimming Pool.
Now, a commission must be formed to offer suggestions and recommendations in developing a financial recovery plan. Steve Faulkner of the state auditor's office told The Telegram, "We don't make decisions for the city. We will provide a financial supervisor and we will make suggestions and recommendations. We feel the citizens of Wellston deserve accountability and have the right to know how public officials are managing their finances." He said the city makes all the major decisions. When a financial recovery plan is written by the city, it is then submitted to the commission for approval. "The commission may guide the city and make suggestions, but the city makes the decisions."
For full details concerning the commission, and of Fiscal Emergency, see related story in this issue of The Telegram.
While four of the members of the commission are ex-officio members, meaning they serve based on holding another office, three members have to be appointed from a list of five to be sent to the governor by the mayor and the President of Council.
Those names have to be submitted within 10 days of the declaration and the governor will appoint them within 30 days and will set the date for the first meeting of the commission. Within 120 days of the first meeting, the mayor must submit to the commission a detailed financial recovery plan. The commission does not write the plan. The members only approve or offer recommendations concerning how to modify the plan after it has been written by the city.
Members of the commission serve without compensation other than for necessary and actual expenses incurred while engaged in the business of the commission. The commission will enter into a contract with the Local Government Services Section of the State Auditor's Office which will identify the services needed by the commission, the rate associated with providing those services, and an estimate of the hours required to perform the services.
All expenses for services rendered for a period of 2 years will be paid by the commission from an appropriation made by the General Assembly. Expenses beyond the 2-year period will be paid by the city unless the director of the Office of Budget and Management waives the costs or other arrangements are made to pay them.