ST. LOUIS – Lanagan is a southwest Missouri town found to have $333 in the bank and $171,000 in debt.
The town was supposed to send the state auditor an annual financial statement.
It last filed one in 2007.
State law requires Missouri municipalities to prepare those annual financial reports, but the recent audit of Lanagan shows the requirement doesn’t have much of a bite.
Spence Jackson, a spokesman for the office, said no penalties are assessed for failing to file, and Lanagan’s finances spiraled out of control in the years since its latest report.
Lanagan is far from alone.
A state auditor count of delinquent reports prepared for Missouri Watchdog on Thursday lists 787 government entities that haven’t filed, including 232 municipalities.
Statutes prevent the state auditor from making regular checkups because municipalities can be examined only if residents request a visit.
The latest report shows a town massively in debt and with lax accounting standards. Tens of thousands of dollars have gone missing in recent years, Watchdog reported Friday.
Many Missouri municipalities use the Comprehensive Annual Financial Report standard developed by the Government Finance Officers Association, which requires an independent auditor’s report and generally accepted accounting principles.
Lanagan’s attorney, Bill Weber, told Watchdog the town couldn’t afford to hire outside help.
“They’ve got no money to work with and a history of people with bad accounting practices,” he said.
Weber said former City Clerk Peggy Gilliam quit and left with some of the city records when state auditors first visited in 2011. A former mayor also resigned. Most of Lanagan’s board of aldermen has left office and replaced since the financial problems began.
The city’s two police officers were charged with felonies, accused of forging tickets and filing false reports to the attorney general’s office so Lanagan could keep all the money for traffic violations on the state highway, which runs through town.
Lanagan now employs two people – City Clerk Monica Blue and Court Clerk Tammy Moore – who work 24 hours a week, Weber said.
Jackson said the auditor’s office examined Lanagan’s records after 67 residents of the McDonald County town signed a petition requesting the audit.
About 450 people live there.
Absent the petition, the state auditor would not have visited Lanagan. State law authorizes the office to examine state agencies, executive departments, courts, public schools and counties that don’t elect an auditor. Any other public audits come at the request of residents or as a directive from the governor.
Jackson said he doesn’t know the date of Lanagan’s latest audit before Schweich began investigating in 2011.
Rep. Bill Reiboldt, R-Neosho, whose district includes part of McDonald County, said he doubts the state auditor would have the
resources to regularly audit each municipality in Missouri, even if law allowed it.
“I’m sure it’s a budget issue,” he said.
Rep. Bill Lant, R-Joplin, and Sen. Jack Goodman, R-Mt. Vernon, who represent Lanagan in the Missouri General Assembly, did not return calls or emails for comment.
Weber said he welcomed the examinations because Lanagan’s leaders didn’t realize the scope of their fiscal dismay, but said Schweich’s office should offer more than criticism.
“Why wouldn’t the auditor offer some QuickBooks training?” Weber asked. “It’s just jab, jab, jab, but no hands out offering any help.”
Jackson said the role of the office is to make detailed recommendations so that entities being audited can clearly understand how to correct problems.
“We don’t have the staff or funding to go into the municipalities to balance the books,” he said. “Our role is to complete the audit as thoroughly as possible so the city can move forward.”
The second audit says Lanagan has only fully implemented five of 30 recommendations from auditors in 2011, and 18 have not been implemented at all.
Schweich’s audit reports describe the category “not implemented” as “auditee has not implemented the recommendations and indicates it will not do so.”
Weber said such a description is misleading.
“Most of the stuff they say were not implemented had to do with making payments,” he said. “It’s going to be hard to make payments without operating revenue.
“They’re doing everything they can with what they’ve got.”
Weber, a lifelong resident of McDonald County, said Lanagan was a “whistle stop” town in the 1920s, but is now largely a ghost town with a bank as its only business, and promises that a restaurant will soon open. That eatery would be Lanagan’s only source of sales tax revenue.