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Editor’s note: Last week the News-Aegis reported on how the new mayor of Argo, Paul Jennings, is trying to find solutions to dig his town out of serious debt incurred from the previous administration. This week’s installment deals with how deep the debt is for the town and a look at the accounting practices that put Argo into approximately $1.5 million in debt.



In 2007, the City of Springville decided that it might be a good idea to incorporate the Town of Argo into the fold to increase its revenue and provide another outlet for a city on the grow.

The move was controversial. Springville narrowly passed a “Willingness Ordinance” to allow the consolidation that was later rescinded. In Argo, residents signed a petition that showed that they were in favor of incorporation while their town council was against it.

The incorporation never took place in part because Argo, which lies in both Jefferson and St. Clair Counties, ran up an astounding amount of debt which kept Springville from voting for incorporating.

After the debt was run up by Argo’s administrators and what some call the mismanagement of building a new town hall, the county elections last year saw Argo’s mayor, Louie “Butch” Glenn, Jr. replaced by former mayor Paul Jennings, who left Argo with a $239,000 surplus when he left office in 2004. Argo had $42,500 in its coffers when Jennings took over from the Glenn administration.

What follows is a look at some of the larger debts the town must figure out how to manage. Jennings said that the approximately $1.5 million in debt may take as long as 30 years to recoup and by that time the town hall, which took the lion’s share of that debt, will most likely be outdated and ready to be replaced.

New Town Hall

Argo owes Metro Bank $1.2 million and must make monthly payments of $9,913 on a loan that accrues $163 in interest each day. The town must make those payments for a town hall that cannot be used because of a clause that states that the warranty will be void if the town occupies the building before construction is completed.

While the money may have been borrowed by the previous administration to complete the hall, it is far from complete.

“Within two weeks of being in office, I went to Metro Bank and asked to borrow money to catch our arrearage up,” Jennings said. “I also asked to borrow some money to put the new complex in a working order.”

The bank asked Jennings to present a working budget for the town before they would release any more funds. “That’s nothing but common sense and I don’t blame them,” Jennings said. “I’d want more than that myself.”

Jennings said that Argo owes contractors just under $100,000 for work done to the new town hall.

“The prior administration has drawn that account dry,” Jennings said. “There is no more to draw out of that line of credit. That’s still a line of credit like a builder’s loan. It hasn’t even been set up as a permanent loan yet.”

The new town hall also has other problems that literally start from the ground up. The concrete slab that was poured for the foundation cracked and left a long line throughout the building. But the company that poured the foundation performed a stress test and deemed the foundation as strong as it could be and, thus, it did not have to be re-poured and it remains cracked.

Tiles in what will become the police evidence room are stretched where they were laid on top of the cracked foundation. There are also visible cracks several feet away in the unfinished fire wing.

Another conundrum at the new town hall’s site is the $45,000, 10-foot-high retaining wall that runs the length of the rear of the building, poses a danger to young residents who might be playing at the town’s playground atop the hill behind the facility. That wall was not part of the original architect’s plan and was put in after the leveling of the area where the building sits. “What happens if a child goes to chase a ball down that hill?” Jennings said. “Also, what would happen if one of our seniors drove off that wall?”

To add to the structural problems, the magnetic locks in the building do not function properly and there is no hot water tap installed for the fire department’s wing of the building.

Other allegations of short-sighted efforts while the building was being completed include: spending borrowed money on 15 closed-circuit cameras throughout the building, three 52-inch flat-screened televisions that were to be placed in the mayor’s, police chief’s and police department’s offices, a $8,000 marble-topped council rostrum, industrial kitchen equipment that the building was not meant to hold and a state-of-the-art senior exercise area that includes heavy lifting machines and intense jogging equipment.

State/Federal Taxes

“Just to show the foolishness that they did with our money, they didn’t pay [the state and federal withholdings],” Jennings said. “So we paid a $179 penalty, $179 in other fees plus interest on those monthly withholdings. So $2,200 [owed] ended up being about $2,700.”

“That’s just one of the things we’ve absorbed,” Jennings said. “We’re broke. That’s one of the things I have to tell the world. We’re broke.”

In addition to the State withholdings, the town also has $48,230 of federal withholdings that have not been turned in since the third quarter of 2008. Local taxes have not been paid for the third quarter of 2008, either.

Jennings said that Argo not only has to pay penalties for filing late, but also for errors found in the paperwork when it was filled out.

Accounting for what went wrong while Argo was running up its debt is difficult for Jennings and city employees. The last completed audit for the town was in 2006.

When Jennings came into office in November of last year, there was a plan put forth an audit of the town’s finances. It has not yet been put into effect.

“There was a rough draft of an audit,” Jennings said, but added that the former mayor did not fill out paperwork to get the audit started. “It had been requested from Mayor Glenn several times and they never received it. Since I’ve been in here, the first order of business has been to request a state audit of the books because the one thing that I want to be very, very clear on is where the former administration ends and my administration begins. I don’t want confusion. And there’s already tons of confusion.”

Jennings, who served as mayor from 1996-2000, said that on his first day back in office that he was handed a stack of overdue bills totaling $354,000. “Some of [that] money has been earmarked and has been spent wrong,” he said.

St. Clair County has an ad valorem tax that is supposed to be used for collecting money to purchase equipment for fire departments. But Jennings charges that the previous administration mismanaged those funds. “This former administration took last year’s [ad valorem] money and put it in the general fund and used it for paying salaries. We’ve got two fire engines sitting out here that payments were supposed to have been made on that haven’t been.”

One of the fire trucks only has two payments that have not been met while the other has 10 outstanding payments that have not been made.

Jennings and other town officials have met with an official from the state’s Department of Examiners of Public Accountants office, but have so far not heard back on when an audit will be performed.

“Misappropriations”

On August 12, just days before the election, the previous administration transferred $25,000 out of the two-cent gas tax fund. “Anything that you tax gas for has to be spent on roads, Jennings explained. “They just put it in the general fund to pay the bills.”

At the beginning of September, $10,000 more was taken from that fund and again used to pay bills. There were also two transactions totaling $15,000 taken from the four-cent gas tax, $25,000 in “corrections” taken from other earmarked funds and put into the general fund and $12,000 was taken from the Fire Protection Fund and put into the general fund on July 29.

“There are several misappropriations of funds in this past year with the former administration,” Jennings said.

In another interesting accounting misappropriation, $ 13,000 was deposited into the Fire Department account from the Fire Protection Tax that should have gone to another department.

“If I did what they did as mayor of Argo, I would be sitting in jail because that’s illegal,” Jennings said. “But it appears that there’s not anything that is going to be done. But the people in the Town of Argo are going to be who bears the brunt of this foolishness that’s been done.”

Gas Bill

Argo used a BP credit account to purchase gasoline for its police cruisers. But with all of the unpaid bills piling up at the end of the prior administration, one that was left unpaid was an $11,253 balance on that BP credit line.

When that credit line was cut off, Argo had to switch to another account to be able to buy gas. Jennings said that the money to pay for on previous account was always available, but the bill was simply not paid.

Bingo

One source of revenue to stem the town’s bloodletting that is being looked into is electronic bingo. Last week the Argo Town Council voted to let an attorney look into the legality of allowing the town to gain revenue from electronic bingo machines.

The Town of Ashville is also looking into gaining revenue from bingo machines.

Though the Argo council is on record saying that they are not in favor of allowing the electronic bingo machines being used for moral reasons, it does eye the option for a revenue source.

At Monday’s mayor’s breakfast, Jennings said that the bingo vote is possibly the only way for the town to survive its financial nightmare. Jennings said that as of this coming spring, Argo would run out of funds for its police and fire department if funds were not provided.