Helena council confronts audit warning, treasurer flags 'going concern'; mayor orders spending review

Helena City Council members and staff spent most of a budget workshop examining a legislative audit and near-term cash shortfalls, with the city treasurer and a council member warning the council faces a structural gap and the mayor promising a rapid spending review.

The discussion centered on a state legislative audit and the city’s first-quarter financial reports. Councilmember Ditz summarized the treasurer’s numbers and said the combination of rising payroll liabilities and lower-than-expected revenues pointed to an immediate budget problem. “If we continue like this, this is the road to bankruptcy,” Ditz said.

The council reviewed figures from the treasurer’s March report: payroll liabilities rising from roughly $1.8 million to $2.4 million; first-quarter (January–March) operating revenue (excluding water, landfill principal/interest accounting and certain other enterprise funds) at about $1,330,756.50; and a general-fund inflow that, when combined with transfers, totaled $11,955,474.04 in the period discussed. Ditz summarized that payroll (excluding water) totaled $1,317,652.85 for the same period and that the arithmetic suggested a recurring monthly shortfall on the order of about $200,000 before other liabilities were counted.

The treasurer warned the council the audit included language about a “going concern” and emphasized limits on what the treasurer can unilaterally control. The treasurer told the council that the mayor holds spending authority and that the treasurer must defer to the mayor about spending decisions: “The mayor has exclusive authority to spend and so I have to defer to him,” the treasurer said.

Council members pressed for explanations and remedies. The audit review noted an instance of expenditures exceeding appropriations. Councilors said that overspending and unpaid liabilities — including payroll taxes and vendor debts identified in emails from finance staff — required immediate remedies. The treasurer and staff confirmed many outstanding accounts payable remain unresolved and that some payroll-related liabilities had not been paid.

The council discussed specific revenue and transfer items that affect the city’s cash picture. The landfill debt-service accounting was identified as a major conduit of sales tax receipts: the city sales tax that funds landfill debt service showed transfers of roughly $624,000 into the general fund in the reported period after principal/interest amounts were removed. Council members pointed out that reductions in sales tax and missing sanitation fees have reduced revenues compared with prior years.

Overtime and personnel costs drew sustained attention. The treasurer’s and staff’s reports showed overtime across multiple departments; excluding police and fire, one tally showed roughly $58,000 in overtime for the nonpublic-safety departments during the quarter, with additional overtime in police and fire. Ditz highlighted individual payroll entries that implied implausible hours over the 90‑day quarter and urged stricter schedule oversight and time-sheet review.

Mayor (name not specified) responded that the administration will draft specific cuts and operational changes. The mayor said department heads and city leadership would meet immediately: “We will come up with the cuts. Me and the chief of staff will figure it out. We will bring back to you all the plan on what we will do,” the mayor said, and ordered a first‑thing‑tomorrow meeting with the clerk, treasurer and chief of staff to begin implementing changes. The mayor also announced a temporary restriction on overtime, saying departments will need to justify any necessary overtime as the administration finalizes a plan.

Legal counsel and staff flagged pending and threatened claims against the city and asked for a consolidated list of legal risks. Council members requested a written inventory of outstanding liabilities and vendor claims; the city attorney (name not specified) said many matters are threatened rather than active lawsuits but that counsel will provide more detail on pending claims and threatened litigation.

Procedural action taken during the workshop: the council moved and seconded to approve minutes for an earlier meeting. Roll call recorded Councilmember Davis voting yes; Mr. Saint Columbia voting no; Mr. Messina voting no; Mr. Adelie voting yes; and Ms. Miller voting yes. The motion carried on that tally (3 yes, 2 no; 1 absence had been recorded earlier in the meeting).

The council directed staff to produce follow-up materials — a detailed list of outstanding debts and threatened claims, department-level financial overviews (vendors, recurring operating costs, and inventories), and proposed specific spending reductions and implementation timelines. The mayor said the administration will present a plan and cut recommendations to the council after the leadership meeting the next morning.

The workshop closed with council and staff agreeing to continue the budget review at the next scheduled meeting and to prioritize payroll liabilities, vendor payables, and department-level overtime controls as the immediate items for action.