Royse City residents to help clean up city after cash shortfall cuts services

Over 200 Royse City citizens are expected to show up this morning to help clean up Royse City, now that the million-dollar cash shortfall has caused the once fast-growing town to cut its services.

According to Mayor Jim Mellody, citizens are expected to meet for a free breakfast at the First United Methodist Church at about 8-8:30 am.

The citizens will then be organized into cleaning crews and start cleaning streets and yards until about 10:30 am or later if they wish to continue.

Mayor Mellody said he was really proud of Royse City citizens, who are turning a sudden and unexpected problem into a great community service project.

“We have great people here in Royse City and we’re going to prove it Saturday morning. This is the way people used to solve problems in the old days and we’re going to do it here again by all joining together,” he said.

He added that he expects to see many more community service projects during the next year and that anyone who would like to volunteer today or in the future should just contact City Hall for information.

Royse City’s cash shortfall now up to $1.9 million; Mayor fears layoffs

Royse City City Council members revealed in their Aug. 21 meeting that the City’s cash shortfall is actually $1.9 million – rather than the $1.3 million previously stated – plus that amount must be cut from its $8.5 million budget for the next fiscal year, which begins Oct. 1.

They also explained that the City has only enough money to pay employees for the next two pay periods.

Royse City Mayor Jim Mellody said he fears the City will have no choice but to begin laying off City employees, although no specific cuts were announced.

Most of the 50 people who attended the meeting were City employees who are worried about whether they still will have jobs and were seeking clues.

“We’re trying to figure out if we still have jobs,” said Travis Kimber, who works for the city’s water department.

The cash shortfall news was first reported at the City Council meeting Aug. , when City Manager Karen Philippi was suspended.

City officials said no money is missing, and that Philippi is not suspected of committing any crimes.

According to Jim Carbonies, a financial advisor for the City, she made revenue forecasts that fell short of expenses, based upon a lot of assumptions that Royse City would continue rapid growth, but she didn’t inform the City Council of the growing gap.

Royse City’s population more than tripled between 2000 and 2007.

“They predicted another 500-plus homes being built, but growth almost shut down.”

The shut down has resulted in significant drops in construction fees, fewer homes than expected on the tax rolls, plus a loss of water service fees because demand has decreased.

Mayor Mellody said new interim management now must complete the new City budget in one week, rather than the typical period of three months.

A budget presented to the council Thursday required issuing $1.2 million in tax notes – essentially a bank loan that the city must pay off within a year.

The modified budget also requires raising Royse City’s property tax rate from 49.45 to 65.86 cents per $100 valuation, the first increase since 1993.

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.