Clifton officials report progress on financial cleanup, consider changes to hotel tax funding process
Clifton city staff reported progress in correcting accounting and financial reporting issues during the May 26 meeting of the Clifton City Council, while aldermen also began discussing changes to how the city distributes Hotel Occupancy Tax revenues to local organizations and events.
The city’s new finance manager Cassie Williams provided, as she put it, a mid-year financial update, highlighting several revenue categories that had been inaccurately reported due to accounting and system-transfer issues occurring previous to her term.
“The money has always been there,” Williams told the aldermen. “It just wasn’t being transferred from one system to the other.”
According to Williams, property tax collections that previously appeared to be at 46 percent of budget are now reported at 91 percent. Sales tax revenues improved from 40 percent to 86 percent, while water revenue increased from 8 percent to 55 percent after corrections were made between the utility billing and finance systems.
“We were receiving the money on the utility side,” Williams said. “We were not documenting it on the finance side.”
Williams said she has spent much of her time reviewing accounts for irregularities and correcting entries that caused revenues to appear lower than they actually were.
“We should be at 50 percent or above on all of our revenues, ” Williams said. “We are halfway through the year, so that’s kind of what I was looking at when I was going through things, seeing what we were in the red on.”
Clifton mayor Damaris Neelley emphasized that the city’s finances were not missing money but rather suffering from reporting and accounting problems.
“The money’s there,” Neelley said. “It just didn’t look that way in our budget because it wasn’t transferred in right.”
The council also heard from community and economic development manager at the Heart of Texas Council of Governments Dorthy Jackson, who the city has contracted to temporarily assist the new front office staff with financial and administrative operations. Jackson recounted a series of events that contributed to the city’s accounting challenges, including staffing changes, software transitions and banking changes as she described as a “kind of a perfect storm.”
“Changing financial software can be a heartache, changing your banks three times and the loss of staff, of course, can lead up to an audit slowdown,” Jackson said.
Jackson also updated the council on payroll tax issues involving the Internal Revenue Service. Jackson said the city had received notices indicating taxes were owed, but subsequent reviews showed the city had actually overpaid payroll taxes in prior years. The city recently received refund checks totaling roughly $93,000.
“You are up to date on your payroll taxes,” Jackson told the council.
Jackson praised both Williams and new city secretary Taylor Zuehlke for their work in restoring administrative and financial controls.
“They’re doing a great job; they really are,” Jackson said.
Jackson further reported she had been helping train and mentor both new employees, while specifically enrolling Zuehlke in the municipal secretary certification program and connecting her with professional support networks.
“I wanted [Zuehlke] to get in, get those manuals, and get all that, and so she’s set up for success,” Jackson said, referring to the certification process.
The meeting also marked the beginning of new terms for several city aldermen. Zuehlke administered the statements and oaths of office to newly elected aldermen William Murdoch, Leslie Perry and Richard Bergman, who officially took their seats on the council following the May municipal election.
Mayor Neelley welcomed the new members and encouraged all council members to attend upcoming Texas Municipal League training sessions designed to help local officials understand budgeting, taxation, public meetings law and other responsibilities of municipal government.
Later in the meeting, the aldermen discussed a proposal to create a standardized annual application process for organizations seeking Hotel Occupancy Tax funding.
Clifton city administrator David McDowell said the proposal would require organizations to submit requests annually so city officials can better forecast expenditures and prepare the budget.
“I know a few of y’all have asked to do a one-year sign up,” McDowell said. “At the first of the year, you tell us exactly what you’re going to do for the year, so we know how to budget properly for this.”
The proposal also included a suggested annual cap of $10,000 per organization. McDowell said city officials are attempting to balance support for tourism-related events with responsible financial planning.
“We would like to put a cap on it, just because we don’t want to overspend our funds,” McDowell said.
McDowell reported that the city’s HOT account currently contains approximately $141,000. The city collected about $72,000 in HOT revenue last year while spending about $31,000. This year, the city has already spent more than $30,000 with several months remaining in the fiscal year.
Aldermen discussed whether all requests should be submitted at the same time each year, how special projects should be handled and whether exceptions should be allowed for new events.
Clifton mayor pro tem Kathryn Kennedy said reviewing all requests together could help council members make more informed decisions.
“We might approve just $4,000 for everybody if we see it all at once,” Kennedy said.
Alderman Rustin Qualls expressed support for a $10,000 cap but worried organizations might automatically request the maximum amount.
“My concern would just be that everybody’s going to come for $10,000,” Qualls said.
Clifton Chamber of Commerce president Paige Key noted that organizations in the past had submitted annual requests tied to the city’s budgeting cycle.
“We would line item and tell them how much we needed for each event,” Key said.
The council ultimately voted to table the proposal until a future meeting for additional review and possible revisions.
Following the meeting, Neelley and McDowell told the Clifton Record Tribune that short-term rental properties, such as Airbnb and VRBO rentals, are subject to local hotel occupancy taxes. Both officials said property owners are responsible for complying with registration and tax-remittance requirements and indicated the city has the resources to identify unregistered short-term rental properties operating within Clifton’s city limits.
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