Dozens of Arkansas municipalities will continue to go without certain monthly state funds because they haven’t submitted required audits of their water and sewer systems.
The Legislative Joint Auditing Committee on Friday rejected a proposal to reverse a July vote that directed the state treasurer to withhold “turnback funds” from 43 cities and towns with outstanding 2022 water and sewer audits. The vote was close: seven lawmakers supported the motion, eight opposed, and five were present but did not vote. Several committee members were absent.
The committee had previously allowed a grace period for 40 municipalities that had not submitted reports for fiscal years 2022 through 2024. Only five of the flagged cities have since filed their audits or provided engagement letters promising submission by Dec. 31.
An Attorney General opinion last week clarified that the treasurer cannot release withheld funds unless the committee expunges the original vote. Act 453 of 2023 allows lawmakers to withhold turnback funds if audits aren’t submitted within 18 months.
Some lawmakers wanted to reward municipalities showing effort to comply while continuing to withhold funds from those that haven’t. Sen. Kim Hammer, R-Benton, proposed releasing funds to cities actively working to submit audits but keeping them withheld from others. That motion was also rejected.
Most of the municipalities with delinquent audits have populations under 1,000. Rep. Jack Ladyman, R-Jonesboro, said the cost of audits$3,500 to $10,000 for very small townscombined with the withheld funds, makes compliance difficult for some cities.
Turnback funds come from both general revenue, supporting basic local services, and state highway revenue, which must be spent on local roads. Committee members emphasized that audits are essential to ensure municipalities are accountable for how the money is used.
Rep. Robin Lundstrum, R-Elm Springs, said, “If they have a water and sewer department and you don’t pay your water bill, what happens? You get your water cut off. At some point, they’ve got to be able to do an audit.”
For original reporting from the Arkansas Advocate, click here.
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