From the Arkansas Advocate:
State lawmakers spent nearly two hours Friday questioning elected officials from an East Arkansas city about its financial troubles, particularly under its recently removed mayor who was arrested by state police last month.
Arkansas Legislative Audit, a nonpartisan entity that investigates government, flagged a range of concerns in its report on Helena-West Helena’s financial behavior in 2023. Issues included multiple expenditures beyond what the city appropriated in its budget. The city’s deficits at the end of 2023 totaled more than $604,000, including $173,122 in the general fund, $192,094 in the street fund and $238,833 in the landfill fund, according to the report.
The city also failed to pay retirement system payments in 2024, resulting in a loss of state funds, and as of March had not paid remittances to the U.S. Internal Revenue Service since August 2023, according to the report.
“The City’s inability to pay its debts timely led to late payment fees, bank overdraft charges, utility shut-off notices, repossessions, and some vendors requiring cash payments on delivery,” the audit report states.
Auditors also noted unauthorized withdrawals from the city’s bank account, failure to make payments for financed purchases and lack of supporting documentation for credit card transactions.
Helena-West Helena is currently over $2 million in debt, an increase from $173,000 before ex-mayor Christopher Franklin took office in January 2023, city treasurer Derrick Turner told the Legislative Joint Auditing Committee.
Franklin was removed from office Monday by a court order issued July 1. State police charged him with four counts of Failure to Pay or File a Tax Return, a Class D felony, after an investigation revealed Franklin had not filed taxes in four of the past five years.
City Councilman Don Etherly is serving as Helena-West Helena’s mayor pro tempore, and Gov. Sarah Huckabee Sanders will appoint someone to finish the remaining year and a half of Franklin’s term.
Etherly, Turner and City Clerk Sandi Ramsey are jointly responsible for running the city, they said Friday while answering questions from lawmakers about the audit and the city’s ongoing financial struggles.
“I think the city of Helena-West Helena has sufficient revenue to operate, but there’s some spending that, as I describe, [has] just been reckless,” Etherly said, attributing the spending to Franklin. “If it’s controlled, I think the city can operate functionally.”
In late May, Franklin refused to resign as mayor after the City Council voted 6-0 that he step down. The resolution was a response to a profanity-laden video call between the mayor, his adult daughter and his adult niece that went viral online.
The Helena World reported at the time that petitions were being circulated in Helena-West Helena seeking a recall election to remove the mayor.
Franklin was present at Friday’s committee meeting, but he said he could not answer lawmakers’ questions due to pending litigation.
The 2023 audit found “a lack of adequate controls” over Helena-West Helena’s accounting, which had been an issue in previous audits. Franklin said in his response to the report that the city clerk and treasurer should be held responsible for such issues instead of him. He said he would make sure the clerk and treasurer “rectify this weakness without delay.”
Sen. Tyler Dees, R-Siloam Springs, asked Ramsey if she agreed that there was a “weakness” in her office, and she said she disagreed.
“I am a good city clerk [and] I try to find the money to pay the bills,” Ramsey said. “…The responsibility of running the city is not totally on the clerk or the treasurer. It’s always been a joint effort to make sure we do things right.”
‘Stop the bleeding’
Part of Ramsey’s job is to advise the city council on whether to approve expenditures and appropriations based on whether the city has the money, she told Rep. RJ Hawk, R-Bryant, the committee’s House vice chair.
“Even though we tell them we’re going to have trouble making a payment or we don’t need to make a payment or whatever, it’s their decision to vote on it, and then we just try to find the money to make the payment,” Ramsey said.
The city’s biggest expense is its payroll, which costs about $140,000 every two weeks, and cutting staff and services would be the most efficient way to get the city out of debt, Ramsey said.
Turner said the city has roughly 140 employees, with 20 working for the water department and about 50 working for the police and fire departments.
Rep. Jack Ladyman, R-Jonesboro, asked if current city leaders can make staff cuts and other financial decisions in the absence of a mayor.
“You all have to stop the bleeding here, and it needs to be done quickly,” Ladyman said.
Ramsey said attorneys with both the city and the Arkansas Municipal League have advised her, Turner and Etherly “not to make any major decisions,” but the city has stopped hiring in most departments and decreased most spending, including putting a moratorium on overtime pay.
Sen. Fred Love, D-Mabelvale, asked if Helena-West Helena tried to bring in more revenue by raising utility rates for water or garbage collection. Etherly said the city raised its water rates after failing infrastructure left the city without water in January 2024.
Additionally, the water department had to use its sanitation fees “to keep their doors open” this year, even though the money was supposed to go to the city’s general fund, Etherly said.
The city has not considered filing for bankruptcy, Turner said, as far as he is aware.
The Legislative Joint Auditing Committee voted with no dissent to file the audit report.
