NEOSHO, Mo. (AP) - After almost two years of financial struggles that led to the replacement of nearly all of its city administration, Neosho has changed the way it does business and begun what will be a long process of recovery, city officials said.
In a public hearing earlier this week, State Auditor Tom Schweich gave the city's finances the lowest possible rating for financial performance and said its financial condition was "among the worst we've seen" in his six months as state auditor.
City council members had been briefed on the audit months ago and said they have implemented many changes that Schweich had suggested, The Joplin Globe reported.
Schweich said the city got into trouble because of declining sales tax revenue, low cash reserves resulting from real estate purchases, cost overruns on renovation projects, subsidies for the golf course, and failure to follow city policy and state law.
Neosho's problems became public in 2009 when former City Manager Jan Blase and former Finance Director Bob Blackwood acknowledged the city had paid bills and made payroll by borrowing from several restricted funds and a state loan reserved for the construction of airplane hangars.
By the end of fiscal 2010, city officials anticipated a budget shortfall of nearly $1 million. About half of the police and fire department staffs were eliminated in the summer and fall of 2010 and city employees took a pay cut. The city avoided insolvency by agreeing to borrow $1.3 million.
Blase and Blackwood were fired and fined for misdemeanor official misconduct. A new council and mayor were elected and they hired a new city manager and finance director.
Councilman Charles Collinsworth said Tuesday he cannot understand previous administrations' actions.
"None of us could imagine running our personal finances like that," he said. "Why should we think that we can run a city like that? Once they started down the slippery slope, it just snowballed and got out of control."
Earlier this year, a federal grant allowed the fire department to fill its eliminated positions. And one of the council's immediate goals is to get law enforcement and emergency services back to full strength, said Councilman David Ruth.
That will have to be accomplished even as the city's revenues continue to decline. Mayor Richard Davidson said city leaders will have to be creative and diversify Neosho's tax structure. And he said taxpayers will have to shoulder more of the burden.
"I hope people will support the council as it makes tough decisions," Hart said.
Past plans to boost revenue haven't worked. Voters in August 2010 soundly defeated a proposed property tax that would have generated an estimated $1.15 million annually.
Collinsworth said the answer is to cut spending.
"We have got to scale back," he said. "We are overextended, and the way you deal with that is a retraction."
Council members said the city's residents need to take a more active role in the city's efforts.
"I'd like to see more people get involved and vote, because I don't want to see another council like the last one," Hart said.