Despite documented evidence of sloppy bookkeeping and evasive accounting methods, the Anthony Town Council refuses to be held accountable for a lack of financial integrity that has left citizens with little confidence in the competence of the Town’s management.
Faced with its finances and budgetary controls in shambles, Council has failed to effectively address the problems but instead has played a shell game with its bank accounts, and instead of hiring bookkeeper opted to hire a bookkeeping consulting firm that initially charged a fee of $4,500 per month.
Town ended 2017/2018 fiscal year on September 30th without completing a financial audit of its books for the 2016/2017 fiscal year despite a state law that requires such audits each year to provide taxpayers an independent, objective assurance that the Town’s spending practices are transparent, efficient, and effective.
And the elected officials who over the past several years allowed our Town to ignore its fiscal responsibility are entrenched in office for the foreseeable future.
Council has long been aware of the problems and concerns over how the Town manages its bookkeeping. A copy of a Management Letter from a prior auditor, Peña Briones McDaniel & Co, dated June 10, 2017 for the Town’s 2015/2016 Fiscal Year Audit, raised numerous issues with the Town’s bookkeeping that needed to be addressed:
• The general ledger was not always properly adjusted to reflect accurate account balances; • Reconciliations were not prepared for certain bank accounts that have limited or no activity; • A lack of documentation of any review process by Town management; • Inaccurate financial statements from money being moved from the water/sewer account and general fund. As a result, accounts were not reconciled on a monthly basis leaving entries made to one account and not offsetting the other account; • Lack of tracking or posting collections against grant awards received by the Town; • Accounts receivable for water and sewer were not reconciled since they are kept in two different systems (Quickbooks and UDS); • Failure to perform a physical inventory of property, plant and equipment; •Failure to track or post loan payments made by the Town.
For the 2016/2017 Audit, the Town Council retained the services of Gibson Ruddock Patterson LLC firm. That audit was never finalized, apparently because the firm was unable to inspect and review financial records that the Town staff was responsible for gathering and providing to the auditors.
Under Texas Local Government Code, “A municipality shall have its records and accounts audited annually and shall have an annual financial statement prepared based on the audit.” The law requires the audit and statement released to the public.
Little to nothing has been accomplished by the Town Council to address or even acknowledge this dire situation, which has forced a partial shutdown of municipal services. Along the way, our Town Council has missed opportunities to begin work to correct the budgetary deficiencies.
After the Town’s bookkeeper resigned in January 2018, Council rejected the hiring of Maricela Ortiz for the position. Ms. Ortiz is a local resident with governmental accounting experience. The bookkeeping duties then had to be assumed by the Town Clerk, Mary Carter.
During Ms. Carter’s brief tenure, she identified deficiencies in the Town’s bookkeeping practices. Unfortunately, it appears the politicians prevented her from effectively pursuing her goals to remedy those defects.
On September 17, 2018, upon submitting her work for the 2018/2019 Budget Proposal, Ms. Carter submitted her resignation. Ms. Carter has an MBA in Business Administration and experience working in city and county government both in Texas and New Mexico. Her resume also includes extensive experience in grant writing and grants administration.
From speaking to Ms. Carter, her decision to resign was based on continuous restrictions that the Mayor and Council placed on her to limit her ability to accomplish any progress. For example, in a Special Town Council Meeting, one of the restrictions we saw was the fact that although she was a salaried employee she would have to ask the Mayor permission to work late. At that meeting she specifically requested permission to work late during scheduled Council and Planning and Zoning Meetings.
At a March 12, 2018 meeting, the Town Council approved the hiring of Protean Business Solutions of El Paso to provide bookkeeping services at a cost of $4,500 a month, a fee that later was decreased to $3,500. The Town was partially shut down to have Protean Business Solutions work with staff on resolving the financial issues prior to the preparation of the 2018/2019 Budget.
When people questioned the shutdown, Mayor Pro Tem Benjamin Romero minimized the problem by stating on his Facebook Page, “Police, water, courts and everything will continue to run and function as normal. The only change will be the girls in the office. We will only have 1 water clerk instead of the 2 we usually have answering calls and processing water payments. In regard to courts. Everything will go as scheduled. Whenever one of the court clerks has availability. They will focus their efforts on helping gather and organize some of the Budget documentation as well. That’s it. We are directing the necessary staff to help with gathering the budget documentation the accounting firm is asking for, so nobody panic. As you can tell in normal Anthony Small town fashion. Gossip rains supreme and Politics will always be played. It’s best to look before you leap and ask questions and verify the information before any assumptions are made. If you have any questions. Please feel free to contact me. My number and contact information is readily available and I will always take the time to answer questions and address concerns from our residents. Have a great day everyone.”
So according to the Mayor Pro Tem, there’s no reason to panic and any concerns over the Town’s budget and spending habits amount to gossip and politics. Mr. Romero seems to miss the irony of admonishing citizens to “verify information” before making any assumptions, while leading a Town Council that declines to provide those same citizens with certified, legally required annual audits.
Recently the sad state of affairs has been the topic of several special sessions of Town Council. There are budgeted items that are not listed on the present reports, and non-budgeted items that are listed. There are expenditures that are over budget or not even listed on the budget. At almost every Council meeting there has been a motion to spend money beyond which has been budgeted.
Sometimes the spending is for necessary items such as $30,000 to replace a pump and motor in one of the Town’s wells. Sometimes the requests are made for less important things such as $5,000 for a Noah’s Ark float for the El Paso Thanksgiving Day Parade, or for non-budgeted items like the mayor’s youth baseball programs. The Town Council approved the mayor’s request to start a baseball youth program upon submittal of a proper budget for the program. The town council complained that the youth program budget was never submitted for 2017/2018 fiscal year budget. Now the Mayor wants to purchase an additional 20 acres for another ball park. The Mayor has benefitted from the program by having his son umpire and receive pay, the Mayor himself has scheduled travel to Oregon at the same time his son’s team travelled to Oregon for a tournament. The venue he attended was a Fred Pryor seminar which could have easily been attended at home. The temptation of a quick fiscal fix has seduced just about every government official at one time or another. Reclassifying the youth programs under the parks department turned this unbudgeted program into a budgeted one. Additionally, the council has passed the parking ordinance mandating that parked vehicles needed to be parked on cement. A concerned citizen has expressed his frustration to the council that he was fined at the rate of $500 per day, and he told the council he would not be able to pay because of living on social security alone. The ordinance was passed by the council at time that even the Town itself is unable to comply. The town’s streets remain unkept, areas that town vehicles park on are not paved as required by the ordinance, weed overgrowth, and streets with potholes.
One of the most perilous quick fixes is the practice of taking funds out of one account and transferring them to another to meet operating costs. The result could be an overall deficit that never seems to go away. During the May 14, 2018 Town Council meeting, when the $30,000 request was made for a new pump and motor, it was discussed that the funds would come from a reserve account that some of the council members were not even aware existed. In addition to the Capital Improvement Fund which was not listed on the budget, a reserve fund has been brought to light with no prior knowledge of its existence. Prior to this resolution, funds for improvements or emergency repairs were routinely pulled from the water and sewer budget. The agreement, going forward, among the council members was that funds should no longer be taken from the water and sewer budget. Now that the Town of Anthony is in its 2018/2019 fiscal year, Council will need to hire a CPA firm to perform the 2017/2018 audit. What remains for the Town Council to decide is if they will rehire Gibson Ruddock Patterson to audit the 2017/2018 fiscal year.
Alderman Shawn Weeks, who has lately shown great frustration with the Town’s accounting situation, stated: “Okay so we have missed our first and second quarter reviews and getting close to the third. This is such an important thing that we made a resolution that we would have these reviews and how important it was for us to stay on top of our budget. At this point everything I ran on had to do with money and financial responsibility and we have not shown it in the last 6 to 8 months. I’ve asked at almost every meeting and I am to the point, do I contact the Texas Municipal League, do I contact the Texas Rangers, do I request a shut-down of the town until we know where we are at financially because we are spending money and paying bills and we haven’t had a review since we did our budget at the end of September 2017. This is important, this is the most important, and I finally had to put it on our agenda and vocalize it more because asking hasn’t gotten me anywhere, nor has requesting. The reason I put this on here is because ultimately, it falls on Martin (Lerma), our mayor. He is our Chief Financial Officer. He hasn’t left, he hasn’t changed, and he has been here. He is responsible for our budget and I have all but begged him to have quarterly reviews and have even reminded him that we were supposed to have one back in the first week of January 2018. We know we have a budget coming up, but we can’t do anything realistically if we don’t even know. We were told in meetings that we were taking money out of wrong accounts and paying things we shouldn’t be paying and so we started asking questions, so we need to stop what we are doing and make this the priority.”
Councilman Eddie Chavez responded to Mr. Weeks’ concern by clarifying that the Town Clerk and her Administrative Assistant had been the ones that discovered the errors and were doing their best to fix things that should have been dealt with in the past. “That’s what they are catching up on right now and part of that is the reason why we can’t get the reports on time,” Mr. Chavez said. “Yes, they are trying to catch up, but they are also trying to correct the mistakes that were done previously. So, we can’t blame our administrators right now because our administrators are doing what they can.”
It should be noted that Mayor Lerma and the members of Council have served more than one term with the exception of Councilman Louie Alfaro, who is serving his first term. By now, it seems they had sufficient time to correct the Town’s financial problems but unfortunately under their leadership it seems the Town’s financial troubles are only worsening.
The municipal election scheduled for May 5, 2018, was cancelled due to a lack of opposition. Under our state election law, a governmental entity can cancel an election by certifying a candidate(s) as unopposed and simply place them into office upon approval from the Council. On February 26, 2018, the Anthony Town Council approved the Order of Cancellation electing into office incumbents Mr. Romero and Mr. Chavez, and newcomer Mr. Alfaro. They will serve on council for another two years.
Our elected officials must ensure that the town has a competent bookkeeping staff that keeps accounts current and accurate. Originally, the Town bookkeeper duties included payroll; however, with the resignation of the bookkeeper, administrative staff requested assistance in processing payroll and all the reports that are required. On January 22, 2018, Council approved the hiring of ADP to process the Town’s payroll to ensure the Town’s continuity of operations without any delays and to complete reports.
It’s unclear whether the Town’s contracted bookkeeper, Protean Business Solutions, has helped the Town gain any ground on resolving the bookkeeping problems. Protean insists that they have completed various phases of the work, but the staff in the Town has to update financial records including the budget which was not entered by the previous bookkeeper employed by the Town. There was a big confusion related to the budget as, Councilman Weeks kept referring to the numbers entered in the proposed budget which had a breakdown, yet the finalized budget that was approve by the Town Council did not have the breakdown nor did it make any reference to the breakdown of the proposed budget. At a rate of $3,500.00 per month, Protean should be right on top of the books. Protean seems to take the stance of blaming the Town’s staff instead of keeping the books up to date.
In order to reduce costs and have someone on staff at all times, the most financially sound decision would be for the Town to hire an in-house bookkeeper or accountant.
There is more at stake here than simply “balancing the books.” Without annual and quarterly financial reports, the Town is prohibited from evaluating its present financial health or forecasting for future fiscal budgets. Right now, the Town’s financial information is not only not current, but the Mayor and Council members are disagreeing on, and constantly changing, strategies to regain control of the Town’s finances.
Our Town’s ability to provide its citizens with basic essential services depends upon its ability to adequately fund those services. The integrity and competence of the Town’s fiscal management has a direct effect on the everyday quality of life of our residents.
There probably has been no greater time or importance than the present, for the citizens of Anthony to scrutinize whether their Town officials are fulfilling their fiduciary duty and acting in the best interest of the community.