Letter to the Editor - Oct. 16

What Smear Campaign?

In response to the letter by Hot Springs resident, Shirley Kontos (who was not in attendance at the town council meetings), I would like to submit the following:

I am unaware of any smear campaign going on in the current election against Mayor Woods, Councilpersons Smith and Adams, or the challenger Ed Persico.

I was serving on the Hot Springs City Council at the time of the road grader incident. I questioned the mayor about his personal use of the town road grader and he informed me that he did not use it but in fact used his skidsteer. I went back to the people who reported it to me and they told me they saw it with their own eyes and Mayor Woods did in fact use the town grader on his personal property out of city limits. I then took an experienced equipment operator to the site and asked him what piece of equipment was used to do the work on the road in question. Immediately the answer was a road grader. I went back to the next council meeting and questioned the mayor again. He told me I was wrong and didn’t know what I was talking about. For three months running, Mayor Woods said he did not use the town road grader on his property but used his personal skidsteer. The fourth month he said he used the town grader because he was “practicing” for some work that needed to be done on other town roads. If he was “practicing” why did he not say so in the first place? This leaves questions on everything we, the people of the Town of Hot Springs, have been told by the current mayor.

While serving on Town Council under Mayor Woods, the town budget was going over the allotted amounts and negative balances for the first time since I had served on council, particularly to Spring Street Auto, a business owned by Mayor Woods. I presented a resolution to the council requesting a line-item veto on approving the monthly financial statements for the town. The council passed the resolution but it was vetoed by Mayor Woods. At the time, council did not know they could have passed the resolution anyway with a two-thirds vote. The resolution failed and the budget has continued to be in the red sometimes by six figures, to my knowledge, the first time in town history. I repeatedly asked for copies of the invoices to back up the financial statements but my requests were denied.

We went to the state auditor’s office to get a copy of the last two audits and the town was reprimanded on its spending, accounting procedures, etc. We did not pass with flying colors as a council person stated in the debate on October 7th. There are some serious issues that need to be addressed. To quote from Nicole M. Noonan, C.P.A., P.C. dated November 1, 2012, to the Mayor and Town Council, “In planning and performing my audit of the financial statements of the Town of Hot Springs, Montana for the years ended June 30, 2011 and 2011, I considered its internal control in order to determine my auditing procedures for the purpose of expressing my opinions on the financial statements and not to provide assurance on the internal control (emphasis mine) ... In accordance in MCA 7-6-4005, local governments may not make disbursements in excess of total appropriations for a fund. In fiscal year 2010, the Gas Tax, Water, and Sewer funds expenditures/expenses were in excess of appropriations by $4,804, $109,753, and $34,643 respectively. In addition, the Parks and Recreation and CDBG funds had budget amendments that were not approved by resolution in the amounts of $5,000 and $8,295, respectively. In fiscal year 2011, the HB645 Stimulus and Water fund expenditures/expenses were in excess of appropriations by $4,045 and $96,788, respectively. Therefore, the Town was out of compliance with state statutes ... Revenue bonds in the Water fund have reserve account covenants that require $54,328 in reserves at June 30, 2011. The water fund had only $25,852 in debt service reserves at June 30, 2011 due to a cash advance of $28,033 to the General fund. This advance of cash resulted in the Water fund being out of compliance with this covenant. In addition, the water fund does not have adequate operating cash for emergencies or significant repair projects. Subsequent to fiscal year 2011, the advance has been repaid and the Town has raised water rates. In the future, the Town should not advance funds that are required for reserves ... During fiscal years 2010 and 2011, costs were not allocated on a reasonable and consistent basis. For example, the Town charted the Water and Sewer funds rent in varying amounts in both fiscal years. ... During the audit it was noted that wages were only approved as part of the budget and that an accurate listing of wages by position was not maintained. This results in difficulty determining that wages paid are those approved by the council. ... Prior period adjustments should be corrections of prior period activities. During fiscal year 2010 and 2010, the town had a prior period adjustment of $3,828 and $3,166, respectively, in the sewer fund for delinquent utility accounts. When the utility billing software writes off an account it is a reduction in the accounts receivable and revenue ... The accounting software the Town utilizes has claims and payroll clearing funds to accumulate cash for warrants written. Currently, the cash and warrants payable balances in these funds do not equal the actual warrants that are outstanding. In fiscal year 2010 and 2011, the claims clearing fund cash and warrants payable were overstated by $447 and the payroll clearing fund cash and warrants payable were understated by $2,604 ... Monthly reconciliations will ensure that any future discrepancies are found and corrected in a timely manner ... “

The town attorney told the council the conflict of interest issue with the mayor deciding what work needed to be done, performing repairs, etc., at his business was okay. Citizens have requested invoices from and payments to Spring Street Auto but have been informed they must pay $15.00 an hour for the clerk’s time in digging them out plus 25 cents per copy. I believe all receipts and expenditures should be public information without cost to the public.

Karen Evans,

Hot Springs