Audit panel requires Town of Daisy to repay 10% of general fund to street fund or face withholding of turnback funds

The Legislative Joint Auditing Committee voted to require the Town of Daisy to repay 10% of its unrestricted general fund revenues to the street fund under state statute and to withhold turnback (street fund) revenues if the town fails to make the payments.

Auditor staff told the committee that audit workpapers show Daisy spent $25,731 on a fire truck and $17,000 on construction of a fire station in 2021–22 from street fund money that the auditors determined was not authorized for those expenditures, leaving a balance of $42,731. The report also notes two $2,000 payments in 2023 and 2024 to a nonprofit, Daisy Community, without a contract, which auditors flagged as noncompliant with Article 12, Section 5 of the Arkansas Constitution.

The action followed public testimony from Mayor Lisa Cogburn, who said she has repeatedly presented a repayment plan to her council but the council has not approved it, arguing the audit amount is incorrect. "They think the amount is wrong," Cogburn said, adding she planned to ask the committee if the repayment requirement could be reduced to 5% to secure local approval. Committee members repeatedly emphasized that the auditors’ calculation is the basis for the committee’s action.

Committee members discussed enforcement options. Auditor staff explained the statutory framework: the 10% repayment requirement is based on 10% of annual unrestricted general fund revenues (typically broken down into monthly payments for budgeting, but tested on an annual basis). Staff estimated that 10% for Daisy would be about $2,283 per year (roughly $228 a month) and said the committee can approve alternative payment schedules so long as the annual total equals 10%. Staff also said if a scheduled percentage less than 10% is set and not met, the full balance becomes due within 12 months and the committee has authority to withhold turnback funds until the balance is repaid.

Representative Dolby moved that the committee "require the 10% repayment of the turnback funds as pursuant to statute and upon failure to pay the 10% that we withhold the turnback funds, the street fund." The motion was seconded and passed by voice vote.

The chair invited Mayor Cogburn to work with staff to sort implementation details and thanked her for attending. The committee also filed the related audit report for the record.

Next procedural steps identified by staff included documenting the payment schedule, ensuring the town provides supporting receipts if it claims prior street-related expenses, and auditing the town’s accounts on the annual cycle to verify compliance. The committee did not record a roll-call tally; the voice vote resulted in the motion being announced as passed.