By Derek Spellman

dspellman@joplinglobe.com

NEOSHO, Mo. — Neosho officials spent more than an hour and a half behind closed doors to discuss the findings of an investigation into how fully apprised the council has been about city finances Tuesday night before weighing a proposal to assume more than $1.8 million in additional debt amid a “cash-flow pinch.”

Originally scheduled to go into closed session at the conclusion of the meeting, Mayor Jeff Werneke moved the closed session ahead in the council agenda before a standing-room-only crowd. Werneke cited the “hiring, firing, disciplining or promoting” of employees as the reason for the exemption, although City Councilwoman Heather Bowers objected to the use of closed session, as she previously said she would.

“I don’t believe it’s justified,” she announced to the crowd.

Afterward, Werneke announced that one vote was taken, although he did not disclose on what or whom it concerned to the crowd. The meeting was still in session late Tuesday night.

Tuesday night’s meeting was the council’s first regular meeting since City Manager Jan Blase acknowledged that he used a state loan restricted to the construction of new airport hangars to pay the city’s bills and make payroll. The council met in a special emergency session last month to discuss a personnel issue, and afterward officials announced that Werneke and Mayor Pro Tem Richard Davidson would look into whether the council has been fully informed about the city finances before deciding whether any disciplinary action was warranted against any city employee or employees. The pair were to present those findings Tuesday night in closed session.

Where’s the report?

Only one resident, Doug Skaggs, publicly addressed the council. He asked the body to disclose the findings of the investigation by Werneke and Davidson.

“I believe we should get a copy of your investigation on the city finances,” Skaggs told the council. “I believe we should hear the findings.”

Blase last week told the Globe that he would seek council approval for a $1 million tax anticipation note, a debt borrowed against future tax revenues, to alleviate a cash-flow shortage. The proposal he advanced to the council Tuesday night called for a total of $1.845 million in special obligation bonds, to be repaid in two years, to pay for engineering designs for planned water system work authorized by voters earlier this year and for transportation projects that include work on a controversial railroad “quiet zone” approved by the previous council, the paving of La-Z-Boy Drive, and Highway 59.

Blase previously told the Globe that he took responsibility for a “lack of communication” to the council about the city’s financial condition, although he said he did not believe that communication lapse violated his duties as prescribed by the city charter or code of ordinances.

Blase statement

Reading from a prepared statement Tuesday night, Blase said: “There may have been a lack of communication for which I am responsible; however, one only has to look back to the July city manager’s newsletter to see the (prediction) that a day would come when money would have to be borrowed due to a decline in sales tax income.”

Blase said he tried to “build public trust in local government by open communication” through measures such as the city Web site, newsletters and public speaking, a statement that drew snickering from some in the crowd.

Departing from the statement, Blase said he believed “none of the ones chuckling has ever called me.”

Going back to the statement, he said: “I will admit that I was caught off guard by the cash-flow situation. I believe that recently instituted safeguards will alert the public, elected officials and the employees if this occurs in the future. As long as the city depends on sales tax, this is likely to be a reoccurring problem in a depressed and volatile economy.”

Some of those in the crowd told the Globe that they attended the meeting chiefly to find about the city’s financial situation.

Residents’ questions

Oren Raulston said he came to find out whether and how the city could pay back the $1.845 million in special bonds. Much of the bonds are to be repaid with future sales tax revenue.

“What happens if sales tax doesn’t go up?” he questioned in an interview. “I’d like to know.”

Cheryl Mosby, former city finance director, who had publicly questioned the council about the state hangar loan last month, said she wanted to know what guarantees there were that the city would use the bond money for the reasons Blase has cited.

She also told the Globe she questions why none of the city’s gathering financial issues — about cash flow, the tax anticipation note, and the use of the state hangar loan — were raised during the city’s budget sessions earlier this year.

“Why hasn’t it been public all along?” she said in an interview, contending that she and other members of the public have had to “dig out” financial information from the city.

City Finance Director Bob Blackwood previously told the Globe the city’s general revenue fund is “in the hole” and had been borrowing from the city’s water and sewer fund. The budget for the current fiscal year, approved in September to take effect Oct. 1, included layoffs and employee pay cuts amid declining sales tax revenue.