(The Center Square) – What happens when a city doesn’t pay its payroll taxes and hundreds of thousands of dollars of taxpayer money go missing?
In the east Texas city of Point, the first decision was to lay off the entire police department.
Residents have expressed fear about the situation, asking who will answer 911 calls.
The Rains County Sheriff’s Office told residents not to panic.
“The Rains County Sheriff’s Office wants residents to know that we remain committed to serving the citizens of Rains County and will continue to do so. The Sheriff’s Office is the only agency in the county that provides 24-hour, 7-days-a-week coverage,” it said.
“Citizens of Point, please know that if you need law enforcement assistance, we are here to help. If you have any emergency, please call 911. For non-emergency situations, please call 903-473-3181.”
The entire police department was let go on March 6 after Mayor Angela Nelson notified city personnel of an ongoing budget crisis.
The financial “situation has become so dire that the city will not be able to meet all of its current payroll obligations this past week,” she wrote in a letter. That was on March 6. The same day, everyone in the Point Police Department, including reserve officers, the chief of police and staff, were let go.
They were also ordered to return their vehicles because they may be impounded by the IRS. The Texas Commission on Law Enforcement has launched an investigation into the police office’s closure.
The IRS has also launched a formal investigation into what appears to be the former city secretary’s gross mismanagement of taxpayer money. The mayor says the city is complying with the investigation.
The former city secretary was removed from office and from city bank accounts last December. This was after it was discovered that city payroll tax obligations had not been consistently paid to the IRS since 2018. The city has so far incurred penalties and interest in excess of $300,000.
In addition, taxpayer funds were misappropriated, moved around and depleted in order to temporarily make payroll, the mayor said. The budget maneuvering was “actively concealed” and city council members didn’t know this happened, she said. Regardless, “these sums are substantial and now do not exist inside the general fund,” she said.
Additionally, the city owes the state comptroller at least $200,000 in taxes, which “is not the extent of the debt” owed. A forensic audit would determine how much money is missing “in the event it can be afforded,” she said.
She made the announcement three months after three city council members resigned. Last December, the city’s mismanagement of funds and the city secretary’s removal were agenda items on the city council’s meeting.
City council members for places 1, 2 and 4, resigned after the Dec. 9 meeting, stating they were resigning because it had become clear that “they didn’t agree with the way the city is moving forward,” and the current members and city attorney “have a totally different agenda which I do not approve and will not be a part of.”
An election is scheduled for May to elect new members. In the meantime, the city doesn’t have a full government. It also doesn’t have a complete budget.
The city’s 2025-2026 budget is “incomplete” because the budget for payroll didn’t include tax obligations per employee among other issues. “This means that there has been a significant difference in the projected budget and the actual cost to employ” staff, the mayor said.
After the city pays retirement, health insurance, life insurance and the city’s risk pool insurance, they “will barely be able to cover utilities this month,” she said. This is after there have been repeated water issues, boil notices, and internet failures, according to the city website and sheriff’s office.
The mayor’s decision to lay off the entire police department was because she had to prioritize personnel needed for daily operations and police functions could be absorbed by the sheriff’s office. They might be able to reapply to get their jobs back in May, if the city has any money to pay them.
It’s unclear if the city government will be able to function next month.
The city has a population of 855. The county has a population of slightly more than 12,000.
