July 12, 2018 500 AM
$800,000 and counting
PRESIDIO – The city of Presidio has dipped into its general fund to pay the Internal Revenue Service about $800,000 in back taxes, penalties, and interest.
That was information disseminated at a June 27 city council meeting, and the city thought it had made its fiscal amends to the federal tax collector.
But two days after the council meeting, city administrator Jose “Joe” Portillo Jr. said the IRS presented the border community with an additional bill for $68,000 in penalties.
“I thought we were done (with the IRS),” he said. “And now we have a new letter from them.”
The almost-million-dollar tax bill stems from the four years – 2013-2016 – the city didn’t perform the required outside fiscal audits. Only earlier this year did the council accept and adopt the delinquent audits, all that came with adverse opinions, which amounts to an “F” in generally accepted accounting practices. Those audit findings revealed a history of undocumented expenses and a lack of administrative oversight. Problems actually surfaced in 2012 when the city accepted an adverse opinion audit.
The city did have the option to appeal the IRS bill, but an email from a city consultant obtained by The Presidio International in an open records request notes that there are little or no records to support an appeal.
The IRS “gives us the process to appeal the assessment, but keep in mind, no one was terminated or received any type of disciplinary action . . . in reference to these shortcomings,” according to the consultant’s email. “Those lack of issues will not assist in the understanding by the IRS of our sincerity to the errors and the simple responsibility of employees.”
The email continued, “Our city problem is, we do not have the documents available to appeal.”
Portillo said the city received 137 notices from the IRS to pay its tax bill that were never acted upon.
“The citizens of this community do not deserve this issue,” the consultant wrote, “nor does the city administrator.”
The IRS taxes should have been paid at least on a monthly basis and reported by filling a report (941 report) to IRS every three months of each year. The taxes are the federal withholding plus Social Security and Medicare withholding from employee’ checks and the portion of matching Social Security and Medicare by the City of Presidio.
When the delinquent audits were finally accepted earlier this year, the council authorized an expense to conduct a forensic audit by an Austin firm. A forensic audit is an examination and evaluation of a firm’s or individual’s financial information for use as evidence in court. A forensic audit can be conducted in order to prosecute a party for fraud, embezzlement or other financial claims.
But council has been reticent to assign blame in the matter, perhaps because they feel a bit complicit, since they sat on their hands for four years as the city’s financial standing deteriorated. Chief of Police Marco Baeza was the city’s administrator during this period. Portillo said the forensic audit should be completed soon and presented to the council and public.
He said the city’s financial woes have been an albatross around his neck since he took the city administrator’s post in 2016. But until he’s restored the city’s financial health, other pressing matters must be prioritized.
“I don’t want the city to go broke like I inherited it,” Portillo said. “But I’m going to be very deliberate.”
The city needs new heavy equipment, and a storm water drainage plan, and so much more, he said. “But until we get this behind us . . .” There has been some success. The city has purchased a new accounting system and staff are trained to use it. About 60-70 percent of the problems areas identified in the audits have been addressed. To help ease the load, Portillo has asked council for a deputy city administrator.
There’s a city Planning and Capacity Building grant to create a Comprehensive Plan that will create a vision for the future of Presidio. A local firm, Kleinman Consultants, will work alongside city staff, council, and a newly constituted Planning and Zoning Commission to engage the public on issues such as water, wastewater infrastructure, flooding, parks, housing and streets.
Council appointed Alma Martin, Juan Jose Muñiz, Juan Saenz, Jose Saenz, and Janet Van Zee to the Planning and Zoning board. Vicky Carrasco, of Kleinman, explained that the grant will help assess community issues and needs and create a plan to guide the future of the city. The Comprehensive Plan will help the city work on some of these socioeconomic issues through public participation to come up with sustainable solutions. The last plan was developed in 1988.
Work has stated on the expansion of the international bridge, and work has been approved to rebuild the international train bridge, which burned twice in arson incidents. No one has ever been arrested in the matter.
And the Texas Department of Transportation has embarked on a plan to upgrade U.S. 67, Presidio’s main link to the outside world. As far as economic development goes, a concrete plant will be opening soon and a Burkes Outlet, which is similar to TJ Maxx and Marshalls, is interested in coming to town.