PRICHARD, Ala. — Prichard City Council members voted Friday to move toward a state audit of city finances after Council President Traci Hale told an emergency meeting that the city’s general fund bank account had slipped into the red after payroll.
Hale said the account showed a negative balance of $20,602.36 once pending wage payments were taken into account. She and other council members also questioned a series of transfers between city accounts in October, including $60,000 moved out of the city’s gas tax account and $95,000 moved from an account set up for stormwater work.
After a lengthy meeting and a closed-door executive session, the five-member council voted 5-0 to have its attorney, Moshae Donald-Walker, send letters to city attorneys Josh Briskman and Ricardo Woods seeking an explanation. If the administration does not respond by the close of business Monday, Nov. 9, the council’s attorney will ask the Alabama State Auditor’s Office for assistance.
Mayor Carletta Davis did not attend Friday’s meeting. Her office said she was unavailable for comment, and a spokeswoman did not immediately respond to a request for comment on the council’s concerns or the possible audit request. Davis has previously denied that the city has cash flow problems.
The council’s vote does not mean an audit has begun, and no finding of financial wrongdoing has been made.
A negative balance after payroll
Hale, who represents District 3, presented bank records at the meeting that she said showed the state of the general fund. According to Hale, the account held about $194,200 at the start of the day Thursday, Nov. 5. Three pending wage payments totaling about $214,800 pushed the balance below zero.
“As of right now today, the account balance, as you can see at the top, is negative $20,602.36,” Hale told council members.
Hale said the figure raised immediate questions about how the city will cover its next payroll in two weeks, and about how it will pay its bills through the end of the year, before business license renewals and tax payments arrive in January.
“So how do we operate for the rest of … into January when we know we’ll be getting money in, you know, for business licenses and taxes?” Hale asked. “So that’s my concern, the financial health of this city.”
“I’m not sure in the past if the accounts were negative like this, but it is now, and that’s a serious issue,” she said.
She said she had hoped to put those questions to the administration directly.
“I was hoping that administration would be here so that I can ask, ‘How are we looking to clear up this negative balance of 20,000?'” Hale said.
“Where’s the revenue?” she asked at another point. “It’s not about choosing sides or one person trying to be against the administration or against the council. It’s about doing right by the citizens.”
Questions over the $60,000 gas tax transfer
Friday’s emergency session came one day after a regular council meeting ended in a walkout over the same $60,000 gas tax transfer. At that Thursday meeting, council members asked whether the money had been used to cover payroll at a time when some employees said their usual Thursday pay deposits had not arrived.
The $60,000 was moved from the city’s 7-cent gasoline tax account to the general fund in two transfers of $50,000 and $10,000. Davis denied Thursday night that the money was used for payroll.
“There’s not any truth to that and there’s no story there,” Davis said Thursday. “We are fixing the bridge.”
The mayor said the money was for emergency repairs to a cave-in on Whistler Street. She said the city’s finance department had gone back to using QuickBooks accounting software and could not yet issue a check directly from the gas tax account through that system, so the money was moved to the general fund. The money was moved back into the gas tax account Thursday after council members questioned the transfers.
On Friday, Hale said the explanation did not match the records she had reviewed. She said the council approved a $23,250 expenditure for the Whistler Street work on Oct. 26, with that money coming from the gas tax account, and that she signed a check for that amount on Friday, Oct. 30. She said the check had not been confirmed as cashed as of Friday, and that the repair work was still underway.
“Why was the money moved? I’m not sure, but that would be a great question for the administration because we were told yesterday it was for the Whistler Street project,” Hale said. “We already paid for that project.”
“So saying that we were moving $60,000 to take care of that project is not true,” she said. “So that raises another red flag for me.”
Council members said they had not determined whether any other contractors or costs were tied to the Whistler Street repairs.
Why gas tax money matters
Alabama cities receive a share of state fuel tax revenue, and under state law that money is restricted to road and bridge purposes. It cannot legally be spent on general operating costs such as salaries.
Council members said Friday that they have two concerns. First, using gas tax money to pay city employees would violate the law. Second, even if the money was not ultimately misused, they said moving it into the general fund and mixing it with other taxpayer money is itself improper.
“I definitely think the audit is needed because if they’re commingling these funds, it needs to be audited,” Hale said.
A $95,000 stormwater transfer
Hale also raised questions about a separate transfer earlier in October. She said $95,000 was moved on Oct. 7 from a Commonwealth Bank account originally established for stormwater purposes into the general fund.
Council members said they were still trying to determine whether that money came with restrictions on how it could be spent. Donald-Walker said she had not been able to find documentation describing what restrictions, if any, apply to those funds.
No line of credit to fall back on
Council members also discussed whether the city still has a line of credit to get it through lean months, as it did in the past.
District 2 Councilwoman Stephani Johnson-Norwood said previous administrations relied on a line of credit during slower revenue months, and estimated that the city once had access to between $250,000 and $500,000. She said she doubts that option is still available.
“In the slow months of the year, we were able to supplement from that,” Johnson-Norwood said. “With this administration, we have such a hefty use of the credit card for all kind of vendor payments, entertainment, travel and so forth. I don’t believe we have a line of credit now.”
Hale said she was not aware of an active line of credit and could not see one through her limited access to the city’s accounts at Regions Bank.
“Not to my knowledge. It doesn’t show on the access that I have for Regions,” Hale said.
Council members acknowledged that the city has faced similar cash-flow problems under previous administrations, but said they question whether it has the resources to manage them now.
‘We have a cash flow problem’
Johnson-Norwood told reporters that the payroll shortfall is the latest sign of financial strain at City Hall.
“We have a cash flow problem,” she said.
She said that is why the council voted months ago to limit unnecessary spending and require council approval for any expenditure greater than $10,000. Davis challenged that move in court. In October, Mobile County Circuit Judge Jill Parrish Phillips agreed to decide the mayor-council dispute on the existing record, without further testimony. A ruling had not been issued as of Friday.
Johnson-Norwood also questioned the administration’s priorities. She noted that policing in Prichard has been handled by the Mobile County Sheriff’s Office since June, and said the city’s municipal insurance had been canceled.
“If you all are having limited funds, why are we having a Juneteenth (celebration)?” she said. “And there was the Red, White and Boom (Fourth of July event). And now we’re talking Christmas Extravaganza. And we don’t have insurance. We don’t have police. You just don’t do – we feel it’s reckless to do those kind of things.”
The $100,000 Christmas Extravaganza has divided city leaders since October. Davis said Thursday that the event’s budget will be covered by private donations, not taxpayer money.
Residents voice frustration
Several residents attended Friday’s meeting, and some said they were troubled by what they heard.
“I am appalled that the city is consistently negative and that her staff is around here saying that that is normal, or that any of the council people are saying it’s normal to be in the negative,” Prichard resident Ty Burden said. “It’s just not negative 20,000 dollars, the money being moved from one account to the other. All of that is inappropriate.”
Another woman who attended the meeting said, “It is not normal to be in the negative. It’s just not.” Asked about her confidence in city leadership, she said she believes the mayor should be impeached. No removal proceedings were discussed or announced at the meeting.
A deepening budget standoff
The financial questions come as Prichard remains without a newly adopted budget. Because no budget passed before the fiscal year began Oct. 1, the city has continued operating under its older spending plan, which state law allows to carry over. Davis has said the city has been operating under a $13.9 million budget while spending about $17 million a year.
Davis’ proposed budget projected $21.8 million in revenue, part of it tied to a planned data center on Telegraph Road that has not been built. Council members have pushed for a smaller plan of about $19 million, saying spending should not rest on revenue that has not arrived.
Earlier this week, Davis urged residents on social media to press the council to pass her budget, saying some Public Services employees had stopped working over pay and workload. Public Works employees described their action as a sit-in and filed grievances with the Mobile County Personnel Board, saying they are overworked, underpaid and lack proper equipment. The council has sent Davis a memo proposing changes, including reduced spending on the mayor’s office, travel and public relations and raises for public works employees. More on that dispute is available in our earlier coverage of the budget standoff.
Davis has said her administration inherited an unbalanced budget and unpaid bills from prior years, and in October said the city was managing its cash flow and paying bills as they come in.
What happens next
Donald-Walker said she would send the council’s letters to the administration’s attorneys on Friday.
“I will send the correspondence to the other attorneys today and then give them until Monday close of business to respond,” she said. “If they don’t respond by Monday close of business, then I’ll send the request for assistance to the state auditor’s office.”
“An audit is needed,” Hale said.
The city’s next payroll is due in two weeks. Residents who want to follow the issue can attend Prichard City Council meetings at City Hall or check the City of Prichard website for meeting notices.
