Audit recommends better monitoring of funds used for incentives, increased transparency measures for city operations

JEFFERSON CITY, Mo (December 17, 2020) — Missouri State Auditor Nicole Galloway today released an audit of the City of Raytown, located in Jackson County. The audit was completed after citizens petitioned for a review of the city’s finances and operations. In response to the audit, the city has committed to making changes to address the findings.  

“Citizens requested this audit for a thorough and independent review of their city government. We found several areas in which improvements can be made to increase transparency and ensure the city is managed effectively,” said Auditor Galloway. “I appreciate city officials’ commitment to make positive change in response to our recommendations.” 

The audit found the city needs to better monitor the use of restricted funds as they relate to Tax Increment Financing (TIF) for the Raytown Live Redevelopment Area. The $40 million TIF project included transportation and stormwater improvements, and a variety of capital improvements. With a TIF project, costs are funded through a portion of property taxes generated in a redeveloped area, as well as taxes generated through increased economic activity in the area. These taxes are then diverted from local taxing districts to go toward project costs.

The city has contributed several restricted sales taxes, including those for capital improvements, transportation and stormwater, to help pay down the TIF debt. However, the city cannot ensure the restricted funds are being used appropriately because it has not tracked the actual outstanding costs. The city also needs to better account for the sales taxes diverted from the city to ensure transparency in how the city’s portion of these funds are budgeted and reported in the financial statements.

The report discussed concerns with severance agreements made with nine police department employees in 2017. The city made severance payments to two officers, six detention personnel and one member of administrative staff, but none of the individuals had employment contracts requiring these payments. Additionally, one agreement was not approved by the Board of Aldermen. Later in the year, 17 police officers resigned and the city hired back four of the former employees who had previously received severance payments.

The audit also found the city did not always comply with the Sunshine Law. The Board of Aldermen and Park Board did not maintain meeting minutes for all closed meetings in fiscal years 2018 and 2019. Additionally, both boards did not always properly report or limit the topics discussed in closed meetings.

In November, after audit fieldwork had concluded, the State Auditor’s Office received a whistleblower complaint related to potential bonus payments for Raytown city employees during the current year. While the audit is now complete, the allegation is being reviewed by the office’s Public Corruption and Fraud Division.

The complete audit report is available here.