State Auditor Stacey Pickering has issued the City of Laurel a written opinion concerning the money collected for an anticipated bond to construct the Laurel Sportsplex.

City Clerk Mary Ann Hess said the city received the written opinion from the state auditor about a week ago.

Pickering appeared before the Laurel City Council in April where he recommended the council put the money collected for an anticipated bond in escrow.

His written letter, dated July 29, 2008, officially documents that recommendation.

“The purpose of this letter is to document our position with regard to the funds collected from the taxes levied to pay for a recent proposed bond issue,” Pickering writes. “It is our position that, for the reasons cited below, the city should hold these collections in escrow for the current year, and then reduce the next year’s tax levy by the amount collected.”

The Laurel City Council in January voted to approve the sale of $6.4 million in bonds to finance the construction of eight potential softball fields at the Laurel Sportsplex. Because of this, four mills were assessed to taxpayers in anticipation of the issuance of the bonds.

However, before the City Council vote was taken in January, residents were levied a four mill tax increase in anticipation of this project.

Then, residents signed a petition calling for a vote on the bond. City officials then decided to abandon the project.

In April, city officials announced during a budget committee meeting that they were exploring the possibilities of spending the approximate half a million dollars collected for the proposed bond project that was being abandoned on an existing general obligation debt.

Pickering told the council that was not a wise decision and recommended that the funds be placed in escrow.

The state auditor said while the city’s process for issuing bonds was not unusual, the City of Laurel’s case is the first of its kind where a governmental entity has collected money for bonds that are not being issued.

When the city council levied the taxes for the 2008 fiscal year during its first meeting in September, the four mill increase was included in anticipation of the bond issue.

Following Pickering’s recommendation in April, the City Council passed a resolution that it was the intent of the mayor and city council to reduce the tax levy for fiscal year 2009 in the debt service fund by four mills and the money collected in fiscal year 2008 would be held in an escrow account.

Some residents have questioned whether the city is handling the matter properly.

However, Pickering in his letter states that, “we feel that the appropriate procedure for handling the monies in question is the one authorized in Mississippi Code Section 27-105-367, specifically paragraph (3)(b).”