Neosho City Manager Jan Blase says he takes responsibility for a “lack of communication” to the city council and city staff about the city’s financial condition and the use of a state loan reserved for construction of airport hangars to pay bills and make payroll.

But Blase, today, denied that he violated either the city charter or the city’s code of ordinances — which make provisions for the city manager to keep the council apprised of the city’s financial state. A member of the city council today said she was weighing whether to pursue a state audit of the city, while two others are investigating how much the city council has been told of the city finances in recent months.

Meanwhile, Blase said he plans to ask the council next week for authorization to take out a $1 million “tax anticipation note”, or loan, to alleviate the city’s “cash-flow shortage.”

Without that loan, he said, the city “Would be extremely short of cash.”

The plan, which must be approved by the city council next week, calls for the loan to be repaid with a mixture of money from the settlement of a cellular phone lawsuit tax, the money it will receive from the state and railroad companies for closing a series of railroad crossings, and future sales tax revenue.

“I believe it’s a solid plan,” he said.

But Cheryl Mosby, former city finance, who has publicly questioned the city finances, said that note would be one more loan the city would have to repay.

The city has already used the state loan for the airport hangars to make payroll and pay bills. On top of that, the city’s general revenue fund, which finances all city operations save water and sewer services and the golf course, has been borrowing money from the city’s water and sewer fund.

And on top of that, the city would have to repay the tax anticipation note, Mosby said.

Blase said he believes the city will be able to repay those loans with the plan he has put forward and with the cuts already made earlier this year, which entailed layoffs, pay cuts and general decrease in expenses.

“I believe that would be the case if sales tax doesn’t decrease any more,” he said.

City Councilwoman Heather Bowers, today, told the Globe that she had obtained the petition papers for a state audit into the city, and that she requested them a few weeks ago on a separate matter.

Bowers since has not collected signatures yet, but is now revisiting the issue in the wake of admissions by Blase that he used a state loan reserved for new airport hangars to pay the city’s bills and make payroll.

Part of the problem, she said, is that a state audit would cost the city between $35,000 and $50,000, and she had questions about whether the city could afford it in lights of its budget crunch.

Still, she acknowledged that the state hangar loan money might have changed things.

“From a public standpoint, I think we really need an audit,” she said.

The Neosho City Council met behind closed doors Saturday morning to the discuss the “hiring, firing, disciplining or promoting” of an employee. No action was taken, although Mayor Jeff Werneke announced afterward that both he and Mayor Pro Tem Richard Davidson will investigate whether the council has been fully informed of the city’s financial condition in recent months.

Both Werneke and other members of the council, including Bowers, have cited requirements in both the charter and the city’s code of ordinances mandating the city manager keep the city apprised of the city’s financial condition and needs.

City Finance Director Bob Blackwood, meanwhile, this morning told the Globe that the city’s general revenue fund is “in the hole,” although he had no concerns about its ability to pay its bills or make payroll in the coming months.

The general revenue fund has been borrowing money from the city’s water and wastewater fund for the last five or six months, and perhaps the last seven.

“It was not taken, it was borrowed,” Blackwood told the Globe.

Asked about the city’s overall financial condition, he replied, “The city is living on the edge financially, and has been living on the edge financially for a while.”

Blackwood attributed that condition wholly to the recession, and he said a number of other cities face the same situation.