The town of Melville has 45 days to come up with a plan to deal with its dire fiscal situation.
The state’s Fiscal Review Committee met today to talk about the financial problems the town has, and to consider placing the town under fiscal administration. The committee recently placed Jeanerette under fiscal administration; when that happens the mayor and council are removed from decision-making positions by a judge and an appointed person comes in to run the town’s finances and make all decisions.
Bradley Cryer, Director of Local Government Audit Services for the Legislative Auditor, told the committee that the town currently has about $20,000 in the bank, but owes $200,000 in bills. The majority of those bills, about $150,000, are overdue by more than 60 days, Cryer said. The town also has no sinking fund as required by the terms of its utility bonds, Cryer said.
Another big problem is the town’s water system, which has no meters and just charges a flat rate. The town’s records aren’t sufficient to determine if everyone on the line is paying, Cyer said. And if they aren’t, some of the lines are so old that one customer can’t be turned off without all customers losing water, so there’s no way to enforce payment. Also, the town’s well was determined three years ago to be in "deplorable" condition, but nothing has been done to replace it and indeed the town council recently voted unanimously against a proposal to connect to the Krotz Springs water system.
The only other Louisiana town placed under fiscal administration in recent years was the town of St. Joseph – which was taken over because of problems with its water system.
It was clear that the committee members were leaning toward appointing a fiscal administrator; Legislative Auditor Daryl Purpera said he already had found someone who was willing to take on the job.
But Mayor Erana Mayes pleaded for time.
"From where we came from, we’ve moved mountains, we really have," she said. "I know it doesn’t sound like it, when you hear those numbers, but we really have been working hard, and we would like the opportunity to continue to do so."
Mayor Pro-Tempore Velma Hendrix added her entreaties to those of Mayes.
"We would appreciate your giving us one more chance," Hendrix said.
In the end, committee member Ron J.Henson, First Assistant State Treasurer, agreed.
"We appreciate your testimony, Mayor Mayes, and Ms. Hendrix, we appreciate yours as well. You’ve asked for another chance. I’m going to suggest to the committee that we step back for 45 days and see what progress you’re able to make," Henson said. "We’ll take a look and see where we are at that time. Before that time is up we will be in touch and ask you to come back and report.
"I appreciate your dedication and your hard work and I really hope you’re successful," Henson continued. "But at the same time from our perspective, if some of these dominoes start to fall I don’t think you’re going to be able to get in the way of them. If things have not changed, my vote is going to be to give you some assistance with a fiscal administrator."
Purpera said there needs to be some significant positive change in the next 45 days.
"We will be looking for real plans, positive change," he said. "We’re going to need to see a real, positive plan for the future."
It was clear that the committee did not think much of the council’s rejection of the Krotz Springs plan. But they also acknowledged that, when she took office in 2015, Mayes inherited "a mess." Several committee members remarked that they found Mayes to be sincere and acknowledged that she’s been working hard to try to solve the town’s problems.
But, they also made it clear they don’t know if she can do that; Henson made a reference to "miracles."
"I don’t see a way you’re going to be able to work out of this situation," Henson told the mayor during the discussion. "I know you’re working as hard as you can, and I remember your previous testimony, and I found you to be very sincere, and I appreciate that. But it sounds to me that you still need our help, and if that’s the case we want to do that."
Mayes told the committee she’s been working with Congressman Ralph Abraham, who is trying to help her, as well as the USDA and other agencies, to look for grant funds and other assistance. She said her auditor, who once served as a fiscal administrator himself, has been available for questions and guidance and she is calling on him frequently.
The town’s most recent audit, which you can read by scrolling down, listed several problems in addition to those discussed at today’s meeting.
"The town’s staff responsible for preparation of the financial statements….in accordance with generally accepted accounting principals lacks the resources and/or knowledge necessary to internally complete the reporting requirements," auditors wrote.
The effect of this, the auditors wrote, is that Melville "is unable to prepare or assist in the preparation of external financial statements" and the town also is "unable to meet the required standards to ensure completeness of external financial statements…"
The audit also found that purchase orders couldn’t be provided for some checks written on the town’s account, and some purchase orders that were provided were post-dated. The town couldn’t provide contracts for people who were paid as contractors, and wasn’t making sure that there was a current list of town assets (like equipment), including the location of town assets.
Some of the issues noted go back years, and have only been partially resolved since they were first cited, according to the audit.
The auditor also included a "disclaimer" in his report, which means he can’t verify that the numbers reported are correct because of problems with the town’s records and past audits.
Here’s the most recent audit: