As the City of Palestine, Texas is weighing next fiscal year’s budget, residents’ frustrations over the city’s mismanagement and questionable practices are growing louder.

In a recent video uploaded by a local activist, the city’s Economic Development Director Gayle Cooper is seen talking about the city’s proposed 2019 property tax rate and how it might affect businesses. “[If] they don’t like it, they don’t have to come,” she said.

A shocking comment from someone tasked with luring business to Palestine, but Cooper continued. “To pull in businesses the trick is to make sure you’re looking at the right businesses that are going to benefit the community properly … and find ways to incentivize them.”

In other words, she means using tax dollars in the form of handouts or other breaks to convince businesses to come.

While it’s bad enough dolling out tax dollars to hand-picked businesses, it’s even worse to hear the EDC Director publicly proclaiming only the “right businesses” should benefit. “I don’t think the new businesses coming in will see it as a big deal, a few cents property tax increase,” Cooper concluded. “That’s my professional opinion.”

The overall burden won’t be just a few cents, though.

In the city’s proposed 2019 budget, Palestine is considering various ways to increase its revenue. The city is facing a general fund deficit exceeding $1 million and wants to assess a new $4-per-month water fee as well as increase property taxes. Palestine is also considering working with the Texas Municipal League next legislative session to lobby for an internet sales tax, since the mayor claims the city loses $900,000 annually in sales taxes from online purchases. The mayor also reportedly spoke to State Rep. Byron Cook (R-Corsicana) and State Sen. Robert Nichols (R-Jacksonville) about the issue, though it’s unlikely Cook will be much help as he isn’t returning to the legislature.

In response to the new onslaught of taxes, Thelma Holland, a Palestine resident, voiced her concern. “A tax increase for me is always a problem,” she said. “Until I see a better accounting of spending from the city, I will not support a tax increase.”

Many residents share Holland’s concern for the city’s accounting. The lack of transparency and mismanagement with the city finances has spurred local taxpayers to begin taking action.

Palestine’s most recent audit is mired with problems and, but for a local watchdog, they would have gone unnoticed to the public. At an audit work session in June, it was announced the city’s audit was over 60 days past the statutory deadline, despite the contracted auditors having sixteen months to complete it. The accounts payable was six months behind, and some accounts had no money at all.

“I just think that the taxpayers, and the council, and the city managers need to have accurate, timely, financial information every month,” one official said during the audit meeting. “I can point out decisions: the sanitation fund doesn’t have any money, but y’all spent $400,000 buying equipment out there. I’m sure someone told y’all that there was money in there and there’s no money in there.”

In an even more illuminating discussion, Palestine Mayor Steve Presley said it’s pointless to have budget meetings until they have reconciliation on their accounts, because they have no clue how much money they actually have. “How can we make a budget decision if we don’t know where we are?” he said. The city manager replied without reassurance. “I see what you’re saying, but I don’t know if we’re going to get it.”

It is alarming, to say the least, that the city is nearing the end of the fiscal year and is about to adopt a new tax rate, yet local officials have no idea about their actual financial condition.

At another point during the session, the council and mayor learned they were incorrectly spending money from restricted funds. “We’re not supposed to be doing that, but we’re actually making money by doing it that way,” the mayor said, “But we shouldn’t do it.”

The lack of grasp on the city’s finances is only made worse by the fact that they are currently on their fifth finance director in six years. The last was fired seemingly without just cause: he was abruptly terminated after receiving a positive performance review.

From a cursory view, it looks like Palestine is flying blind with little to no direction on how to get the city’s fiscal affairs in order. Until recently, Presley even fought to do away with a citizen’s financial oversight committee until its existence was reaffirmed by a city attorney opinion.

Taxpayers in Palestine need to question whether their local officials have been blissfully unaware of the state of their city or if there is something more nefarious going on.

Charles Blain

Charles Blain is the president of Urban Reform and Urban Reform Institute. A native of New Jersey, he is based in Houston and writes on municipal finance and other urban issues.