News From Terre Haute, Indiana

January 27, 2013

Terre Haute audit advises councilmen file disclosures

Council members Mullican, Azar have done business with city

Arthur Foulkes
The Tribune-Star

TERRE HAUTE — Two Terre Haute City Councilmen were informed of the state’s conflict of interest law in a state audit published last week by the Indiana State Board of Accounts.

Councilmen John Mullican, D-6th, and George Azar, D-at large, were both informed by auditors that they must file written disclosure statements any time they sell goods or services to “the governmental entity” they serve.

Mullican, who owns Goetz Printing and Copy Center in Terre Haute, sold printing services to the city police and fire departments during 2011. Azar’s Saratoga Restaurant catered a “workshop” for the Terre Haute Wastewater Utility the same year.

Mullican’s sales to the city totaled $3,129, according to the audit. Azar’s catering bill for the workshop was $792, “of which about $125 was labor,” he stated in a response to the audit.

Both councilmen, speaking to the Tribune-Star on Thursday, said they were unaware they were required to file a disclosure before such sales, which the audit referred to as “immaterial transactions.”

“I never gave it a thought,” Azar said. “I just didn’t think it was any kind of a conflict.” Since learning of the audit, Azar said he has catered one city event, the firefighter’s ball, for which he filed the appropriate paperwork. That event was funded by donations and ticket sales, Azar noted.

Mullican said he has stopped doing business with the city in light of the audit. In a written response to the audit, Mullican also stated he did not believe the rule applied in his case.

As a councilmen, Mullican said he is part of the legislative branch of the city while the police and fire departments are part of the executive branch. However, in his written response, Mullican also stated he will comply with the State Board of Accounts “interpretation” of the law “so as to avoid any question or controversies in the future.”

Speaking Thursday to the Tribune-Star, Mullican said he has been doing printing jobs for the police and fire departments for many years, including years before he was elected to the Council in 2007.

“I was never a part of any decision making process for the police department or the fire department,” Mullican told the Tribune-Star. “Somebody calls me for a price quote and I give them a price.” Sometimes he gets the jobs, sometimes not, he added.

n As reported in Thursday’s Tribune-Star, the audit also showed a large negative balance in the city’s critical general fund. The audit, using an accrual accounting method, showed a $6.4 million deficit at the end of 2011 in the fund, which pays for much of the city’s day-to-day expenses. City officials, using a cash-flow accounting basis, have stated the general fund deficit was $4.5 million at the end of 2011.

The cash-flow basis is the more useful, said Mayor Duke Bennett, reached Friday. The $1.9 million in additional liabilities shown in the accrual figure included expenses covered in 2012, he said. The cash-flow basis allows city officials to keep tabs on immediate expenses and pay the city’s bills, he said.

“The cash fund tells us if we have enough money to pay all the bills,” Bennett said.

Bennett also called attention to another finding of the audit showing the city’s total assets increased by more than $6 million in 2011.

“The overall health of the city is good,” Bennett said. “We’ve made progress in 2012.”

To deal with the shortfall in the general fund, Bennett said the city is hoping to find new revenue sources, such as a potential food and beverage tax and a proposed fee for trash pickup. As far as potential budget cuts, he was not prepared to say what those might be.

“I don’t want higher taxes for anybody, but we have to pay for basic services,” Bennett said, adding that state lawmakers are proposing new cuts in revenue for cities and towns during the current legislative session.

n In the 2011 report, state auditors also called attention to promotional expenses incurred by the Terre Haute Fire Training facility, also known as the Vigo County Emergency Responder Training Academy, stating the city lacked the necessary ordinance governing the expenses.

In 2011, the training facility budget included $2,000 for promotional expenses. The expenses included a donation to the Terre Haute Children’s Museum for the “100 Men who Cook” event, the Terre Haute Fire Department to sponsor a golf team and the Terre Haute Police Department for a golf outing. A donation was also made to the Council on Domestic Abuse (CODA) for dinner tickets, according to the audit.

Several city department budgets include promotional expenses, including the Human Relations Commission, Fire Department, Police Department, Parks Department and the mayor’s office. The training facility opened in 2009.

In a written response to the audit, City Controller Leslie Ellis stated a city policy on promotional items does not exist but is being written and “will be approved by the Board of Public Works and Safety.” All departments allowed to make promotional expenses will follow the new policy, she stated.

Promotional line items in the city’s overall 2011 budget amounted to about $70,000. Some of those expenses are reimbursed by private donations, Ellis said.

Speaking Friday to the Tribune-Star, Mayor Bennett said he was pleased that the fire training facility, which came under criticism during the 2011 mayoral race, got an overall good financial review in the audit. State officials “reviewed that closely,” he said.



Reporter Arthur Foulkes can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.