Category Archives: Mayor Jim Mellody

Royse City facing $1.3 million cash shortfall; City Manager suspended

The City of Royse City is facing a one million dollar cash shortfall and perhaps as much as $1.3 million, it was revealed last week by one of the city’s new interim co-managers Larry Lott, who is also the director of the Royse City Economic Development Corporation.

He and City attorney Jason Day were appointed co-city managers by the Council last Tuesday after they suspended City Manager Karen Philippi from her position as City Manager.

In a hastily-called City Council meeting Aug. 16 to discuss the unexpected financial crisis which is suddenly facing the City, Lott outlined the shortfall facing the City.

“I think that $1.3 million is the greatest shortfall we will see,” he said, noting that the city currently has enough funds available to make payroll for the next two week period. Most of the current shortfall is vendor-related debt, he explined.

The amount is even larger than the City Council suspected at the Aug. 12 meeting , according to Royse City Mayor Jim Mellody,

“All I can tell you is that it was never reported to the city council the way it is,” Mellody said.

“As far as my personal feelings, I can tell you I’ve never been more embarrassed in my whole life. I feel like I’ve really let my citizens down, but this is not something we can’t overcome.”

At the Saturday meeting, Mayor Mellody told the Council that he, Lott and city staff have been working overtime since last Tuesday to learn how severe of a financial crisis the city is facing. He added that the research was ongoing and that the full documentation on the issue would be presented as soon as possible.

“The recovery from this is not going to be easy and we’re continuing to work on this,” he said.

According to Lott, the city faced default on two bonds if payments totaling $810,385 were not made by Friday. He explained that the city was able to utilize three non-encumbered bonds to make the payment in the emergency situation.

He added that the City will attempt to arrange a special emergency bond option through the Texas attorney general’s office. If accepted, the bond would cover the $1.3 million discrepancy, but would be issued at a higher rate of interest, would be tax exempt and would have to be repaid within 365 days.

The City is going to have to take a two-part approach to solving the current dilemma, he concluded.

“We’ve simply got to cut our budget as thin as we can and then we’ve got to have a tax increase,” Lott said. “We’re basically going to have to set an amount for these different department heads and they’re going to have to work within that budget. It’s not going to be easy, and it’s not going to be very popular but our options are very limited.”

The council also voted unanimously Saturday to hold investigative hearings to learn whether Philippi broke her contract.

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