Commingled Funds Probed

Steve Harrison, a former chairman of McAlester’s audit and finance committee, told city officials last week that the city appears to have deposited up to $10 million of sales tax revenue dedicated to debt service into the general fund. The practice could have begun shortly after voters approved the tax in 1992, he said.

Voters extended the tax at elections in 1995, 1999, and 2002.

The City Council told city manager Mark Roath to amend the fiscal 2008 budget to deduct about $800,000 of the tax money collected since the beginning of the fiscal year from the general fund. Council members also ordered an audit to determine how much money was commingled since the sales tax was first approved.

The sales tax money was dedicated to supporting bonds, but when McAlester collected more than was necessary for debt service, the extra revenue was put into the general fund, according to Harrison.

Cities and counties are prohibited by Oklahoma’s constitution from spending tax money for any purpose other than what is specified, but Harrison said he had obtained different opinions from bond counsel on the city’s practice.

One attorney said McAlester did nothing wrong, but another said the excess revenue should not have been put into the general fund, Harrison said.

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