LITTLE ROCK — Helena-West Helena will start losing half of its state funds unless city officials provide records requested by the state Division of Legislative Audit within the next few months, the co-chairmen of the Legislative Joint Auditing Committee warn.
The division's staff reviewed the Helena-West Helena's accounting records that were available for last year and determined that the records mandated under state law haven't been maintained, said the cochairmen, Sen. Randy Laverty, D-Jasper, and Rep. J.R. Rogers, D-Walnut Ridge.
To avoid the withholding of the state "turnback" funds, the division's staff must receive the required accounting records from last year within 90 days, Laverty and Rogers said in a letter dated Oct. 15 to Mayor James Valley and several other Helena-West Helena officials.
Turnback is state aid to cities and counties. Cities as a group share $19.7 million this fiscal year and again next fiscal year, and counties as a group share $27.5 million a year. Cities and counties also are in line to share $4 million each year from the state's propertytax-relief fund. The cities and counties received $12 millionfrom the state's surplus in September.
"Continued noncompliance with the provisions of the municipal accounting law will ultimately result in the city becoming ineligible to receive any state turn back funds," Laverty and Rogers wrote.
Helena-West Helena received $950,404 in turnback last year and $780,447 in the first 10 months of this year, said Debbie Rogers, local government services manager for the state treasurer's office.
If the committee notifies the state treasurer's office to begin withholding turnback, she said the office would withhold half of the monthly payments to Helena-West Helena. This month, Helena-West Helena received about $74,000, accordingto state records.
Assistant Legislative Auditor Jerry Spratt said Monday that auditors have obtained the majority of the requested records from Helena-West Helena officials.
"We are missing records"such as some bank statements and reconciliations, receipts, journals, and a few canceled checks, he said.
"We are just doing a routine audit," Spratt said.
Helena and West Helena merged on Jan. 1, 2006.
Valley said Helena-West Helena's department heads have assured him that they provided the information requested by the auditors to the city clerk's office, where the auditors picked up the information.
There apparently was "some misunderstanding" about what information was requested by auditors and what information was provided by city officials, he said.
"It hasn't been a hostile situation where we declined to give documents," Valley said.
He said he has appointed deputy city clerk Diane Tyler to go through each item requested by auditors and each item provided to auditors, and he hopes to have that done by late November or early December.
"It's a serious matter," Valley said, and he wants auditors to get the information they requested.
Act 1062 of 2001 allows the state treasurer, upon receiving a notice of noncompliance about a city from the Legislative Joint Auditing Committee, to place half of a city's turnback in escrow until the committee reports that the city has substantially complied with the provisions of the law.
Upon notice of compliance, the treasurer "shall remit all turnback due to the municipality."
Spratt said the state has yet to withhold turnback from any city under this 6-year-old law.
The committee warned Jennette officials in 2003 that they would lose half of their turnback if they declined to provide requested documents to auditors, according to state records.
And a state auditor warned Gould officials in February of this year that their failure to provide all the requested documents would be reported to the committee if they didn't provide the documents within 30 days, state records show.
Spratt said Gould and Jennette officials ultimately provided the documents.
Arkansas, Pages 7, 14 on 10/30/2007