By Polly Keary, Editor
Gold Bar is a city between a rock and a hard place.
The cost of a large and ongoing number of legal challenges and public records requests have consumed an amount almost equal to 20 percent of the general fund balance for the whole city.
The public outcry against even considering the possibility of disincorporating the city and letting the financial liabilities pass to the county was such that the council declined to put it on the ballot.
So instead, they put out a levy that would have raised $100,000 to help pay back what has been spent on legal expenses so far.
Tuesday, voters shot that down.
Now Gold Bar Mayor Joe Beavers said he’s not sure what the city will do to survive.
In June, the city decided to set up a separate city fund to deal with litigation, since it was eating up such a chunk of the city’s money. That way, they could budget the rest of the city’s expenses independently.
They took $35,000 they had already budgeted for litigation and put that in the new fund. Then, estimating that legal expenses would top $100,000 in 2012, they borrowed $77,000 from the water fund.
The levy was intended to pay back that loan and replenish the litigation fund against future legal costs.
Now, the money to repay that loan will have to come from the general fund over the course of the next two years, Beavers said.
If the amount is repaid in two years, it will take a significant chunk out of an already-lean general fund budget; next year’s budget is projected at $546,000. But that’s not the town’s biggest worry, said Beavers.
“Repaying the loan is the easy part,” he said. “It’s how many lawsuits are going to show up.”
So far, Gold Bar has not lost any of the more than one dozen legal actions brought against it, but the cost of defense has been high.
A recent lawsuit against the city of Sultan that was dismissed cost that city $10,000. That is typical, said Beavers.
“That’s the minimum ante,” he said. “Next year if there’s $100,000 in litigation, we don’t have $100,000 next year to defend against lawsuits.”
Further lawsuits are not improbable.
Among Gold Bar’s residents are a handful who suspect officials of hiding secrets to protect themselves and a previous mayor.
They have requested thousands of public records, but remain concerned that within that small percentage held back by the city is the evidence they seek.
The withheld records were exempted, the city says, because they fall under the legal definition of records that don’t have to be released, or for reasons of privacy or legal privilege should not be released.
So far an in camera review, in which a judge goes through the withheld records and verifies the legality of their protection, has not been done.
Beavers said he wasn’t emotionally invested in the outcome of the levy.
“It was going to be a decision of the citizens, and on one hand I think we described well what the problems were with not passing it. But it was not for something physical they could see, like a levy for repairing Lewis Street, or a fire truck,” he said.
The city will start working on how to deal with the legal fund expenses over the next two months.
Beavers said that a city bankruptcy or a disincorporation are “still on the table.”
“There’s a lot of numbers to crunch and a lot of things to look at,” he said.