By Derek Spellman

dspellman@joplinglobe.com

NEOSHO, Mo. — Two members of the Neosho City Council will investigate whether the council has been fully informed of the city’s financial condition in recent months.

The probe comes after City Manager Jan Blase said the city had used a state loan reserved for new airport hangars to pay its bills.

The additional information will help the council determine whether disciplinary action is warranted with regard to a council employee or employees, Mayor Jeff Werneke said.

The council, which met behind closed doors Saturday morning, instructed Werneke and Mayor Pro Tem Richard Davidson to look into the matter and present their findings to the council, perhaps sometime next month.

“We are just the fact finders,” Werneke said.

No votes were taken during the closed session, which was invoked under personnel exemptions for the “hiring, firing, disciplining or promoting” of an employee. No votes were taken after the council came back into open session.

“It’s hard to address the personnel issue with something we don’t have,” he said.

Council members said they could not comment on the employee or employees who were talked about behind closed doors.

Blase said he had used the loan from the Missouri Department of Transportation to “make payroll and pay our bills.” He said he was “morally obligated” to do so.

Werneke said the use of the loan could be part of the inquiry, which also will entail an examination of the city’s overall fund balances over the past few months and the level of communication about those balances with the council. Council members have said the charter requires the city manager, for example, to keep the council apprised of city finances and “advised on the needs of the city.”

The information sought, Werneke said, will be “heavily on the financial side.” He said they plan to compare “what we have been told to what the reality is.”

He said the information they compile will be a closed personnel record, citing advice from City Attorney Steve Hays, on grounds that it is a personnel matter relating to finances.

“My hope is that ultimately out of this whole process a lot more information is available to the public,” he said.

Airport loan

Except for about $100,000 spent on site plans and designs, the balance of the $895,100 loan was mingled in with other city funds, which, in turn, were used to finance city operations, records show.

Part of the issue is that the loan money, which was received in 2008, was put into a general fund instead of a restricted fund. Cheryl Mosby, the city’s former finance director, said she believed the loan money was spent more than a year ago.

“That money was gone last September,” she said on Saturday. She cited an audit showing the city’s balance sheet as of Sept. 30, 2008.

Blase did not attend Saturday’s session. He could not be reached for comment Saturday.

Blase has defended the use of the loan money, citing the national recession and the city’s own budget crunch that culminated in layoffs and pay cuts earlier this year.

“I have had to pull out all of the stops to keep the city going forward,” he wrote in a statement released Friday. “These are desperate times and I have taken extraordinary measures, all within the definition of proper accounting practices, to keep our city moving forward.”

When asked how the loan could have been spent legally on payroll and bills when the city’s contract with the Missouri Department of Transportation restricted its use to construction of hangars, Blase said he was “no lawyer” and that he had “no other opinion other than it was the right thing to do.”

Hays, the city’s attorney, was asked on Saturday if he thought the use of the loan money violated the city’s contract with MoDOT. “I have no comment at all,” he said.

Werneke said he had been contacted by Pete Rahn, director of MoDOT, and that Rahn had told him the city has been making the payments on the loan, but that “MoDOT does expect us to build the hangars.”

Blase, in his statement, said the city would build the hangars and that the “only question is when.” No timetable has been set for that work.

Cash flow

Blase on Wednesday said the city was sometimes “scrambling” to make payroll.

Asked about the city’s financial condition Saturday, Werneke said, “Scrambling for payroll doesn’t mean we are missing payroll.” He said the city can pay its bills.

The city’s finances have been questioned by some, such as Mosby. While both Werneke and Davidson said they have been requesting more detailed financial information from city staff in recent months, they only just recently have been supplied with the information requested.

Mosby said Blase’s statement about “scrambling” to meet payroll comes after a number of measures have been taken to weather the budget crunch, including the use of the hangar money, the layoffs, the cut in pay to employees and the reduction of other expenses.

“I’m afraid it’s not over,” she said.

Blase, in his statement, said: “We are not out of the woods yet, but there is light at the end of the tunnel. Because of large debt-service payments on the golf course and other long-term commitments, I will again have to find cash to make the payments and possibly borrow money to meet city financial obligations this next fiscal year.”