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New report released by State Auditor Scott Fitzpatrick details how the City of Dixon's financial condition has declined due to poor planning and significant budget deficits

Audit was initiated at the request of concerned citizens who submitted 242 valid signatures

04/08/2024 - Jefferson City, MO

A new report issued today by Missouri State Auditor Scott Fitzpatrick details how poor budgeting procedures and lacking oversight have produced a deficit balance in the General Fund in the tens of thousands of dollars and worsened the financial condition of the City of Dixon. The audit, which gives the city a rating of "poor," was initiated by concerned citizens who gathered and submitted 242 valid signatures to successfully petition the State Auditor's Office.

"I know many of the residents of the City of Dixon have concerns about the way the city is being run and our audit shows city officials have failed at one of their most essential duties - crafting a balanced budget," said Fitzpatrick. "City leadership has a lot of work to do to restore the city to a healthy financial status and regain the trust of the people who want to see their tax dollars used responsibly. I am encouraged the city is working to put our recommendations into place and I urge them to stay the course until they are operating in a way that is efficient, effective, and transparent."

The audit report shows how the city's General Fund balance has been quickly drained as it has declined from a balance of $94,714 on October 1, 2020, to negative $20,701 on September 30, 2022. The city projected the General Fund balance to decrease further based on the budgeted receipts and disbursements for the year ended September 30, 2023. The city has also placed itself at risk for a lawsuit by failing to comply with bond covenants as it transferred $100,000 from the Water Fund to the General Fund that was originally intended as a temporary loan to help maintain the cash balance of the General Fund.

The report also highlights the city's failure to have adequate procedures in place to prepare and monitor budgets. In addition to failing to include all the statutorily required elements in the city budgets prepared for the years ending September 30, 2023, and 2022, city officials budgeted for significant deficit balances for the General Fund for both of those years. When considering the beginning fund balance and the budgeted receipts and disbursements, the city projected ending fund balances for the General Fund of negative $116,776 and negative $61,843 for the years ending September 30, 2023, and 2022, respectively. Even with a budget amendment to the 2023 General Fund budget, the city still faced a projected ending deficit balance of negative $82,126.

Another finding in the audit details how the city has failed to establish policies for the selection of vendors providing professional services, and does not have a formal bidding process. A selection and test of 17 expenditures totaling $226,349 found the city did not solicit bids or proposals for 2 vehicles ($48,825), sewer maintenance ($8,760), office remodeling services ($6,630), police equipment ($4,014), street improvement services ($3,000), and legal services ($2,078). Additionally, the city did not obtain written contracts for sewer maintenance, office remodeling, street improvement, and legal services expenditures reviewed. The city also purchased a house and small lot for a price of $21,000 without obtaining an appraisal to ensure the city paid a reasonable and approximate fair market value for the property.

The audit report also found the city neglected to perform monthly reconciliations of gallons of water billed to gallons of water pumped. A comparison of reports of water usage to water pumped for March 2022 found an unidentified difference of approximately 39 percent more water pumped than billed. A comparison of September 2022 reports found the city had pumped 45 percent more water than it had billed. City officials responded by saying a significant amount of the water use was from the sewer plant and fire district, which aren't metered. The audit recommends all properties be metered and the city perform monthly reconciliations to ensure all water usage is properly billed. Additionally, the audit found the city violated state law by not obtaining annual audits of the water and sewer services.

Other findings in the report highlight how the city has failed to develop an annual maintenance plan for city streets, and how the Board of Aldermen has failed to consistently comply with the Sunshine Law requirements for closed meetings, has not filled a vacant alderman position, and members of the Board have not always filed financial disclosure statements as required by law.

The complete audit of the City of Dixon can be found here.