By Dan Ehl - Managing editor
Former mayor of Rathbun Joe Todey says he is taking responsibility for the financial mess the city is now. Part of it, he says, was not by overseeing former city clerk Brenda Anderson’s bookkeeping. He says he trusted Anderson’s verbal reports on city business when he should have asked to see actual documents.
“But it’s been that way for years and things got done,” he said of the small town’s way of doing business.
But according to a special audit by the Office of the Iowa Auditor of State, things weren’t getting done. The special audit found that $10,623.29 of Road Use Tax (RUT) funds were not received by the city because Anderson did not submit state mandated financial reports for fiscal years 2006 and 2007. Iowa Auditor of State David Vaudt reported that Rathbun spent $6,975.99 of RUT funds received from previous years for unallowable purposes, such as salaries, fire protection and supplies - which may have to be paid back to the state.
New Rathbun Mayor David Coffin said the special audit is being passed on to the Iowa Department of Transportation and it will be up to them whether that money will have to be paid back.
Permit fees
The special audit also found that existing city financial records did not indicate Anderson had paid the city for her business’s cigarette and alcohol permits totaling $775, nor was an estimated undeposited $900 to $1,500 in donations for city fireworks accounted for.
Todey said he never knew the city had not been collecting property taxes and that the city’s operating expenses were coming illegally from Road Use Tax funds. To collect property taxes, city councils must set a levy and approve and submit a yearly budget to the state - something the Rathbun City Council has not done for at least 10 years.
Anderson, who became the city clerk in March 2003, agrees with Todey that the city workings have been done that way for years - which included not holding regular meetings and not doing yearly budgets - long before she took the post.
Until the most recent city election, it was difficult to find anyone in Rathbun who even wanted to be on the City Council. Come election time, it was not uncommon to have most or all the council seats filled by write-in balloting.
Anderson said she walked into the job with no training and did the best she could. She admitted she was often late with making city deposits - which is why the special audit said it appeared she hadn’t been paying her business’s cigarette and alcohol permit fees to the city.
The special audit found that there were no deposits made to Rathbun’s checking account near the time period the permits were issued, nor were there any deposits during that time period for the amount of the permits. The undeposited liquor and cigarette permit fees for the former city clerk’s and husband Tom Anderson’s business, Tackle This, totaled $775. At that time, Tom Anderson was also a city council member.
The special audit stated that according to the former mayor, Anderson told the mayor that she had paid the fees when she brought him the permits to sign. The special audit continued that Anderson told the auditors that she paid the fees each year in cash and did not issue receipts to show payment of the fees.
“Based on the auditors review of the available records and the statements Anderson made to the new owners of Tackle This,” the report concluded, “it does not appear the city received payment for the cigarette permits issued to the former clerk for her business.”
Anderson told the Daily Iowegian that she would deposit the permit payments months later along with donations to the annual July 4 fireworks. And though she didn’t itemize when she deposited the funds at the bank, she did have the funds broken down in a check registry she passed on to the City Council when she officially resigned last summer.
Fireworks
Karen Poolman was given the city records after being appointed Rathbun city clerk during a July 2007 meeting. She said there was no check registry, only “scribbles” on the back of check books that gave no account balances nor itemization.
As for the 2007 July 4 fireworks donations, Anderson said she quit leading the fundraising drive after the 2006 celebration and did not have a donation can at Tackle This (a cafe/tackle and bait shop) before or after she closed the business through the winter months. She added that the donation can had never collected the majority of each year’s fireworks funds, but that the money had mainly come from fundraising activities such as raffles and individual donations.
Richard Glovas, a former City Council member, says Anderson told him after the 2006 fireworks that she was not going to continue collecting money for the event. He added that he did not see a collection container in Tackle This after the 2006 fireworks up to the time it was sold in 2007.
Steve Wright, whose land was used for the annual fireworks, says he definitely remembers a donation can for fireworks after the 2006 fireworks and before Tackle This closed for the winter. He doesn’t recall if there was a donation can still there when the store opened again in April 2007.
He added that Anderson had first assured him that the City of Rathbun had liability insurance to cover the fireworks, then later said that she and her husband, Dan Anderson, were paying out-of-pocket for the insurance. Wright said he learned later that neither was true.
Rathbun resident Greg Kauzlarich says after the 2006 fireworks display, Anderson told him they had more than $1,000 leftover for the next year’s event. He also remembers a fireworks donation can at Tackle This before the bait shop/cafe closed for the 2006-07 winter.
Mayor David Coffin says he was involved with fundraising for the fireworks and says he had no knowledge of fundraising efforts for 2007. He added that his work schedule prevented him from going to Tackle This in the latter part of 2006, and later as a recycling customer, he saw no fireworks collection container in the store from when it reopened in April 2007 to when it was sold.
“I find it difficult to speculate who may or may not have committed wrong doing concerning fireworks fundraising without taking one person’s word over another,” Coffin said in a written statement.
In the state’s special audit, it was stated that the new owners of Tackle This remember seeing the jar for donations on the counter when they were looking at purchasing the business in either April or May of 2007. When they took possession of the store, the jar had been removed.
Poolman said that before she was replaced by the new City Council in January, she’d personally paid for the materials she used since the town was broke. She also did not take any pay.
As for Anderson not being able to perform the city clerk duties because she’d received no training, Poolman noted that neither had she, but with the help of state officials, she had filed the papers needed to regain Road Use Taxes.
During a July Rathbun City Council meeting, Anderson said she tried four times to get the state to accept the city’s financial filings - and each time she was told something was wrong. Anderson said she informed the mayor and council members about the problem, but received no support.
Steve Ford is with the Iowa Department of Management and agreed that Rathbun hadn’t gotten any state funds for two years - and before that it hadn’t filed a proposed budget or financial report for an additional eight years. It was recent legislation that mandated his office stop transferring funds when a municipality is not in compliance.
Which means for at least 10 years, Ford said, the City of Rathbun had been in violation of state law.
When asked if filing the proposed financial papers was a difficult process, Ford noted many towns smaller than Rathbun did it every year - such as Beaconsville with a population of 11.
Coffin said it will be an uphill battle for the new City Council to get Rathbun on its feet, but they are now working on a 2008-09 budget and holding regular council meetings. The town will not be able to property taxes until 2009-2010.
As a council member in 2004 and 2005, Coffin said the past mistakes made were through ignorance and not on purpose.
The mayor said he had has now attended workshops by the Iowa League of Municipalities, along with council member Tom Anderson, on how to better perform their duties. Anderson had resigned when his wife did last year, but ran again and was elected in November.
“I believe that the only thing that the council can do now is to consider all the recommendations made by the audit and move forward in an attempt to get this matter behind us,” Coffin concluded.
