Newport group's city finance claims spur election season council fightCampaign trail tensions exploded into full public view Thursday at a Newport City Council meeting as elected officials and candidates sparred over a report by a citizens’ group that alleges sloppy financial record-keeping at City Hall.
Campaign trail tensions exploded into full public view Thursday at a Newport City Council meeting as elected officials and candidates sparred over a report by a citizens’ group that alleges sloppy financial record-keeping at City Hall.
Based on reams of data requested from city staff over a months-long period, the Newport Citizens’ group, or NEWCO — a coalition of residents that earlier this year sought to form a financial advisory commission similar to the city's planning commission — presented a report at the group’s meeting last week they say shows, among other findings, that the city is missing receipts for thousands of dollars in purchases made using city credit cards in recent years.
Mayor Tim Geraghty disputed the findings. He angrily defended the city’s accounting practices and confronted council candidate Dan Flood, who cited the group’s report in a campaign email to supporters this week. Meanwhile, council member Tom Ingemann, who is seeking re-election, read a lengthy statement that attacked opponents of the council and called out fellow council member Steven Gallagher, who is challenging Geraghty for mayor in the Nov. 6 election.
Geraghty alleged that NEWCO purposefully released the report deep into campaign season, and did so “at the time when the city has the best financial record it’s ever had and [then] this garbage is being thrown out there.”
Newport’s bond rating has improved over the past four years, its cost of borrowing has fallen and the city has built a healthy fund reserve, Geraghty, Ingemann and council member Bill Sumner, also seeking re-election, have said repeatedly during the campaign.
“And you guys are throwing out there stuff about missing receipts and blah, blah, blah,” the longtime mayor said.
The report, and its allegations of missing receipts, emerged amid increasingly sharp exchanges between council and mayoral candidates at televised debates in recent weeks.
That discord bled into regular city business Thursday after council members unanimously passed an update to the city’s internal controls procedure outlining a requirement that receipts be filed for purchases made by staff with a city credit card, city charge account or petty cash. City Administrator Brian Anderson said that there had been no such policy in place.
The new policy came on the heels of NEWCO’s report, which began circulating among council members, candidates and citizens last week.
The group — including some members with accounting backgrounds — says it reviewed hundreds of documents obtained from City Hall. It alleges a lack of proper documentation for numerous expenditures made using city credit cards, including at Menard’s home improvement stores across the metro, a fabrics store, Carbone’s Pizzeria, Target and Walmart in amounts ranging from $5 to $1,000. It also alleges a lack of monthly bank reconciliations and the absence of appropriate segregation of financial duties at City Hall.
A NEWCO representative said in an email Thursday the group had forwarded its findings to the state auditor’s office.
“There are some other things in the report that are worth taking a look at,” said council member Tracy Rahm, the lone Newport elected official not seeking office this fall.
In an interview, Anderson said he was not aware of missing credit card receipts and could not comment on the group’s allegations.
The city is now reconciling its monthly expenditures against its fund balance, Anderson said. The months in which it did not were during a period which saw the city’s accountant resign while city staff installed an updated computerized fiscal record-keeping system. He called it “a perfect storm.”
An annual audit delivered to the city in March gave Newport’s finances a generally positive review with one exception: the city’s small staff doesn’t allow it to divvy up accounting tasks among employees as widely as preferred, according to the report conducted by auditing firm MMKR.
It is a finding common among small cities, the audit said, and one that audits of Newport’s books in previous years had found as well in a city where administrative support staff shrunk from three employees to two last year as officials sought to cut personnel costs.
Already a politically-charged issue after the council voted 3-2 in April to kill the citizen group’s proposed financial advisory commission, the subject of Newport’s fiscal oversight disintegrated into election season political theater Thursday. Geraghty confronted Flood, who was sitting in the council chamber’s gallery, over his campaign email that the mayor called “misleading.”
Geraghty, Ingemann and Sumner in April voted to reject the informally proposed finance commission, saying it was a politically motivated plan from a politically motivated group opposed to the mayor.
NEWCO’s membership includes former council opponents of Geraghty, including former council member Pauline Schottmuller and former mayor Kevin Chapdelaine.
Gallagher — Geraghty’s opponent this fall — and Rahm supported further exploration of the proposal. Gallagher proposed a motion Thursday to examine the city’s records for the missing receipts. It passed unanimously.
“What’s wrong with seeing them?” Gallagher said of the city’s financial records and credit card receipts. “And, if we don’t have them, we don’t have them — and we’ll tell the citizens.”
Soon after, Geraghty challenged Flood. Following that exchange, during which Geraghty pressed for the data from which the report drew its conclusions, Gallagher asked that the meeting be adjourned, saying it had “become a campaign piece.”
Geraghty, however, allowed Ingemann, who had remained mostly quiet during the increasing tumult, to read a statement that defended recently approved, long-delayed raises for the city’s part-time volunteer firefighters -- of which he is one -- and other city spending before turning on Gallagher.
“You can pick up the phone and give me a call,” Gallagher shot back at Ingemann as he continued his statement over shouts from the audience. “You don’t have to be stupid.”
Anderson, the city’s administrator, said after the meeting city officials would examine the documents requested by NEWCO in recent months to vet the group’s conclusions and examine any record-keeping issues.
“That’s the only way we can respond to that,” Anderson said.