McAlester may face $13M quandary
Council will address alleged misspending of excess tax revenues
BY RANDY ELLIS
Published: December 2, 2008
McAlester after an ice storm in January, 2007 - Photo by Jim Beckel
McALESTER — The McAlester City Council has scheduled a special meeting today to discuss a $13 million financial crisis created by 15 years of allegedly misappropriating excess sales tax revenues.
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Taxpayer suit possible
The council in February halted the questionable practice, retroactive to July 2007, and began setting aside new excess sales tax money in a separate account to be used to pay the bonds off early. More than $1.35 million has accumulated in that account, said Sherry Alessi, McAlester’s assistant finance director.
That leaves more than $13 million that may have been spent inappropriately.
If city officials don’t correct the situation, they could be hit with an expensive taxpayer lawsuit, said Harrison, a retired certified public accountant.
"It depends on how you interpret it,” McAlester Mayor Kevin Priddle said.
Priddle said some bond attorneys have agreed with Harrison’s position, while others have contended excess sales tax revenues can be spent for other needs.
"I’m anxious to see what our city attorney recommends,” Priddle said.
City attorney William J. Ervin did not return phone calls seeking comment.
If the city has to come up with $13 million, it would be quite a blow, since the city’s entire budget is less than $34 million.
It would take several years to set aside that much money, Priddle said.
Priddle said the council also will hear Ervin’s legal opinion on another audit that indicated the city may have misspent $3.2 million in economic development bond proceeds. Other auditors have placed the amount of misspent economic development bond funds at less than $900,000, he said.
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Related Topics:
Public Finance, Politics, Business, Economic Issues, Economic Development, Taxes, Sales Tax, National Economy, Local Politics


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