TECHNICALITIES
A QUESTIONS AND ANSWERS

Technicalities is a monthly publication of Office of the State Auditor, Department of Technical Assistance. The purpose of this newsletter is to communicate information concerning inquiries to the Office of the State Auditor. The interpretations herein are those of the Department of Technical Assistance.

This is a compilation of the questions and answers found in the issues of Technicalities that are available online.

January | February | March | April | May | June | July | August | September | October | November | December


January 2008

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Q: When must a municipality set up a separate fund to account for a source of revenue?
A: When state law requires the expenditure of the revenue to be limited to certain purposes [see page II-A3, Municipal Audit and Accounting Guide (MAAG)].

Q: Must a municipality maintain a separate bank account for each fund?
A: No. Separate bank accounts for funds should only be used when there is a contractual obligation (debt, grant, donation, etc.), the account is used for a petty cash fund (page III-B1, MAAG), or it is required by reasonable municipal policy.

Q: Must a municipality advertise for and thereafter hold a public sale to sell personal property (surplus equipment, materials, software, etc.)?
A: No. Section 21-17-1 allows municipal governing authorities to sell personal property, but does not mandate procedures. The governing authorities may determine their own procedures, such as public sales or negotiations. Reasonable judgment should assure fair value is received. Care should also be taken that ethics laws are not violated due to purchases by municipal employees, etc. (Section 25-4-105).

Q: Is the county responsible for maintenance of municipal streets?
A: No. However, the county may contract to maintain city streets in lieu of having to pay the municipality one half of the road maintenance ad valorem taxes it collects from taxpayers residing within the municipal limits (Section 65-15-21). The county may (within their discretion) work on municipal streets under Section 65-7-85.

Q: Who is responsible for issuing and accounting for traffic tickets?
A: Section 63-9-21 requires the municipal court clerk to issue uniform and DUI traffic ticket books to municipal police officers. These tickets must conform to the regulations prescribed by the State Auditor and the Attorney General.

Q: Who makes refunds of over payments in municipal court?
A: The municipal clerk (city clerk). The municipal court clerk has no authority to issue a refund check.

Q: Does the municipal clerk need a board order to make a refund for the municipal court?
A: Only if the refund involves a fund budgeted by the board (General Fund, Local Assessment Fund, etc.). Clearing funds (State Assessments, County Law Library, etc.) do not require board orders.

Q: How does a municipal clerk justify a refund?
A: All refunds must be supported by a "Certificate of Eligibility" [Section 99-19-73 (10)]. The certificate must be written, signed, include the date, case number, payee, amount due and reason for the refund. A copy must be given to the payee and copies filed with and maintained by the court clerk and the municipal clerk.


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Q: May a municipality display the name of a donor on the front and rear bumper of a police vehicle?
A: A small recognition of the donation may be placed on the rear of the vehicle. (Attorney General´s Opinion to Tucker dated January 28, 2008)

Q: May city board of alderman members vote on appointments to the municipal school district board when the aldermen or their spouses do business with the district or are employed by or receive compensation from the district?
A: Yes. The public policy codified in Section 25-4-101 must be balanced against the greater public interest of filling vacancies on the school board. In this case, the aldermen must participate in appointments to the school district. (Mississippi Ethics Commission Advisory Opinion No. 08-008-E dated February 8, 2008)

Q: Must a municipal board approve the claims for purchases made by a municipal park commission?
A: No. Section 21-37-37 provides the commission with full jurisdiction over its funds.

Q: What should a municipality do if one of its elected officials resigns or dies?
A: Section 23-15-857 states if there are more than six months left in the unexpired term of the vacate office a special election should be held. This law also provides the timing, notice, qualification and certification procedures. If there are six months or less left in the term, the vacancy shall be filled by appointment.

Q: Do municipalities have a special option when marking their vehicles?
A: Yes. Section 25-1-87 allows a twelve inch permanent decal or design on the sides of the vehicles in lieu of the three inch letter. The one and one-half inch letters are required on the rear of the vehicle even if this option is selected.

Q: Should a municipality charge a person with a late fee if the date of a payment receipt is past the due date, but the United States Post Office mail mark date is before the past due date?
A: No. Section 25-1-107 requires payments to municipalities to be considered received on the post mark date.

Q: How may a municipality compensate its planning commission members?
A: Section 17-1-11 allows planning commission members a per diem set by the municipality for each day (or portion of) in the performance of their duties. However, a member may not be paid more than $120.00 in a single month. (Attorney General´s Opinion to Dye dated December 7, 2007)


March 2008

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Q: May a municipality enter into an “energy performance contract” or “energy services contract” whereby it uses increased revenue from the water and sewer system to pay for the energy services procured?
A: A municipality may enter into an “energy performance contract” for the installation of an automated meter reading system and pay for such installation through savings guaranteed by the contractor; or, alternatively, may enter into an “energy services contract” for such installation and pay for the installation from revenue generated by the water/sewer system. There are procurement procedures mandated for these types of contracts in Section 31-7-14. Water and sewer rates may be set to cover costs of the system but may not be set in such a manner as to generate profits. (Attorney General´s Opinion to Myers dated February 1, 2008)

Q: May a municipality pay a municipal police officer for unused leave at the end of a fiscal year?
A: Yes. The municipality must have previously adopted a policy which authorizes such payments and the payments have been lawfully budgeted. However, in determining unused leave for creditable service under the Public Employees´ Retirement System, such municipal policies may not exceed the accrual rates and limitations provided for in Section 25-3-91, et seq. and Section 25-11-103(i). Also, Constitutional Section 96 prohibits the retroactive application of such a policy. (Attorney General´s Opinion to Smith dated March 14, 2008)

Q: May municipalities pay for the costs of its officers and employees to register and attend the Mississippi Municipal League´s 77th Annual Conference scheduled for June 23 through June 26 ( http://www.mmlonline.com/conferencenew.asp )?
A: Yes. The travel may be authorized for any such event provided the board or its designee authorizes the travel, the money to pay the costs is in the budget, and the conference is beneficial to the performance of the employees´ duties. (See Section. 25-3-41)

Q: May a municipality give its officers and employees cash advances to cover the costs of official travel?
A: Yes. The board or its designee must authorize the travel advance and comply with the State Auditor´s regulations on page III-A1 of the Municipal Audit and Accounting Guide (http://www.osa.ms.gov/downloads.htm ).

Q: May municipalities pay the premiums on official bonds of its officers and employees if the laws requiring the bonds do not address how they are paid?
A: Yes. (See Section 25-1-33)

Q: Does a municipality have to receive bids for purchases during business hours?
A: No. Section 31-7-13(c)(i)(3) requires the advertisement to solicit bids state the time and place at which bids shall be received. Further, state law sets business hours for state agencies and counties. (See Sections 25-1-98 & 25-1-99) However, state law does not set municipal business hours. Municipal business hours should be set by municipal policy. (See Section 21-17-5)


April 2008

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Q: How does a municipality appropriate money to an organization such as a planning and development district (PDD)?
A: Sections 21-17-7 and 21-13-3 provide that appropriations shall be by board order (ordinance, order or resolution). Such order should cite the legal authority for the appropriation (such as Section 17-19-1 for a PDD) to demonstrate compliance with donation prohibitions set forth in Miss. Const. Section 66 and Section 21-17-5.

Q: May a municipality obtain credit cards to be used for official travel by its officers and employees when on official travel?
A: Yes. Section 21-39-27 authorizes travel credit cards and explains the accountability requirements.

Q: Is the Vending and Amusement Machine Tax (Sec. 27-27-5) charged on pool tables in a pool hall?
A: Not if sales taxes are paid on the gross collections from the pool tables (Sec. 27-27-11).

Q: May a city contribute to the funding of a public defender for the drug court established within the Circuit Court of the county?
A: No. There is no authority for a city to contribute to the funding of a public defender for a drug court established within the Circuit Court of the county. However, if the drug court has been established as a unified drug court available to municipal offenders and has been certified as such by the Administrative Office of Courts under Section 9-23-1, et seq., then the city may contribute funding thereto for a public defender or otherwise. (Attorney General´s Opinion to Littleton dated February 29, 2008)..

Q: Can a municipal public service commission legally transfer a portion of its estimated surplus to the city?
A: Section 21-27-19 allows a municipal public utility commission to transfer, at any time, any surplus funds to the governing authority of the city, provided that it has determined that a true surplus exists. Whether the funds are truly surplus is a factual determination to be made by the public utility commission. (Attorney General´s Opinion to Neeld dated March 28, 2008)

Q: May a city vacate unimproved streets, not in use, without having to follow the requirements of Section 21-17-1 when such streets have never been used and accept a “like kind” exchange for any such unimproved streets for improved streets in a new development?
A: Pursuant to Section 21-37-7, a city may close or vacate a street without complying with the mandates of Section 21-17-1, as title to the property would automatically revert to the owners of the underlying fee, i.e., abutting owners. There is no authority for a city to exchange unimproved dedicated streets with improved non-dedicated streets. (Attorney General´s Opinion to Stockton dated March 21, 2008)

Q: Is a city authorized to invest in a certificate of deposit for a state depository´s branch bank located in the Commonwealth of Virginia?
A: No. A city may only invest in a certificate of deposit with or through its municipal depository or a State depository located within the city. (Attorney General´s Opinion to Welch dated April 18, 2008)


May 2008

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Q: May a mayor solicit donations without the approval of the board of aldermen?
A: Yes. Such donations should be submitted to the city clerk for deposit within a reasonable amount of time. (Attorney General´s Opinion to Polk dated April 11, 2008)

Q: May a municipality pass ordinances to regulate public health within its corporate limits?
A: Yes. Section 21-19-1 and 41-3-57 allows such ordinances. However, such regulations may not be inconsistent with state board of health rules and regulations.

Q: May a board of aldermen appoint the city clerk´s spouse to the municipal election commission?
A: Yes. The nepotism statute would not prohibit a board of aldermen from appointing the spouse of the city clerk to the municipal election commission. (Attorney General´s Opinion to Boren dated May 2, 2008)

Q: Are TIF bonds included in a municipality´s calculation of the maximum outstanding bonded indebtedness and the maximum outstanding general obligation indebtedness, both bonded and floating?
A: No. TIF bonds are not included in a municipality´s calculation of the maximum outstanding bonded indebtedness or the maximum outstanding general obligation indebtedness as provided in Section 21-33-303. (Attorney General´s Opinion to Hess dated May 9, 2008)

Q: Can a county tax collector collect cleaning assessments on behalf of a city, pursuant to an interlocal agreement under Section 21-41-2, for property cleaned by the city?
A: Yes. During the 2008 legislative session, Section 27-41-2 was amended by H. B. 572, which becomes effective July 1, 2008, to expressly allow the county tax collector to include unpaid clean-up special assessments in unified tax sales on behalf of cities. (Attorney General´s Opinion to Baker dated May 9, 2008)

Q: May a city governing authority remove a sitting municipal judge?
A: Yes. A board of aldermen in a code charter municipality and a council in a special charter municipality may remove or discharge a municipal judge. (Attorney General´s Opinion to Alexander dated May 9, 2008)


June 2008

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Q: Does a violation of the separation of powers doctrine exist when an alderman, who has also been appointed as the mayor pro tempore, also serves as a member of the state legislature?
A: While simultaneously serving as a member of a board of aldermen and a member of the state legislature is not violative of the separation of powers doctrine found at Art. 1, Sec. 2, of the Mississippi Constitution, once a mayor pro tempore, who is also a member of the state legislature, serves in the pro tempore capacity, such pro tempore service does results in a violation of the separation of powers doctrine. Thus, to the extent that a mayor pro tempore has not served in that capacity, while simultaneously serving as a state legislator, a violation of the separation of powers doctrine has not yet occurred. (Attorney General´s Opinion to Collins dated May 30, 2008)

Q: May a newly elected councilman who owns a company that contracts with the municipality or contracts with other companies contracting with the municipality maintain those contracts?
A: No. Miss. Constitutional Section 109, and its statutory parallel, Section 25-4-105(2) prohibit a member of a public board from having any direct or indirect interest in a contract with the government authorized by that board during his or her term or for one year thereafter. (Mississippi Ethics Commission Advisory Opinion No. 08-060-E dated June 6, 2008)

Q: May a councilman be employed by a cable television company which receives a franchise from the city?
A: No. Miss. Constructional Section 109, and its statutory parallel, Section 25-4-105(2) prohibit a member of a public board from having any direct or indirect interest in a contract with the government authorized by that board during his or her term or for one thereafter. (Mississippi Ethics Commission Advisory Opinion No. 08-061-E dated June 6, 2008)

Q: Has there been a change in the law controlling how municipalities use Insurance Rebate Funds?
A: Yes. House Bill 1465, effective 7/1/08 revised Section 83-1-37 to allow the Commissioner of Insurance to regulate how municipal Insurance Rebate Funds may be expended. Currently, Industry Information Bulletin Number 2005-5 (at the Commissioner of Insurances´ web site http://www.doi.state.ms.us/htm_files/bulletins.htm) provides for how this money may be spent.


July 2008

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Q: Does a new law allow municipalities to include cleaning property liens in their contract with the county to collect its taxes?
A: Yes. House Bill 572, effective July 1, 2008 revised Sections 27-41-2 and 17-13-9 to allow Section 21-19-11 cleaning property special assessment liens to be included in a municipal contract with a county to collect ad valorem taxes.

Q: Does a new law make clear the legislative status of code charter boards of aldermen?
A: Yes. Senate Bill 2781, effective July 1, 2008 revised Section 21-3-5 to clarify the executive status of the mayor and the legislative status of the board.

Q: When should a municipality adopt it ad valorem tax levy and budget?
A: September 15 is the deadline for adopting the budget and tax levy (Section 21-35-5 and 21-33-45).

Q: Must a municipality hold a public budget hearing?
A: Yes. Section 21-35-5 requires a public budget hearing one week prior to adoption of the budget. This hearing must be outside normal work hours and with an advertised public notice for municipalities with a population of 1500 or more; municipalities with a population under 1500 may post the public notice.


August 2008

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Q: Must a municipality publish its finally adopted budget?
A: Yes. Section 21-35-5 requires the budget as finally adopted by the board to be published in a newspaper in the municipality (in the county if none in the municipality). If the population of the municipality is less than 1500, the budget may be posted in three public places in lieu of publication.

Q: Who must the municipal clerk send certified copies of the Ad Valorem tax levy to after it is adopted by the board/council and recorded on the minutes?
A: The State Tax Commission, the State Auditor´s Office, the County Tax Collector and the municipal tax collector (if there is one). Sections 21-33-45 and 21-33-47.

Q: May expenditures of a municipality paid within 30 days after the end of the year (by October 30) be charged back to the previous year´s budget?
A: Yes. Section 21-35-23 allows obligations incurred during the fiscal year and paid within 30 days of the end of the fiscal year to be charged back. If such obligations are not paid within 30 days, they must be provided for in the current year´s budget.

Q: May a municipality budget money for a saving account for a future construction project?
A: Not if it will require the levy of ad valorem taxes. Section 21-35-5 lists the content of the budget to only include expenditures for the year and a working cash balance.

Q: May a municipality budget money for a reserve fund?
A: Yes. Section 21-35-22 authorizes a reserve for unanticipated expenditure (during the fiscal year).

Q: May a municipality make an ad valorem tax anticipation loan if it has insufficient cash to pay budgeted and approved expenditures?
A: Yes. Section 21-33-325 allows a loan from any available source (including other funds) of up to 50 % of anticipated ad valorem taxes. This type loan must be repaid by March 15.

Q: When must a municipality contract to have its annual audit done?
A: Section 21-35-31 requires a municipality to have its audit done within the year following the year to be audited. This means the fiscal year that ended on September 30, 2007 should be completed by September 30, 2008 and the audit for the fiscal year ending on September 30, 2008 should be contracted soon.


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Q: Must municipalities conduct an inventory at the end of the fiscal year (during October 2008)?
A: Yes. Page II-C14 of the Municipal Audit and Accounting Guide (MAAG) requires a complete inventory of all of the municipality´s assets. This is particularly important in the last year of a term of office.

Q: How should the annual municipal inventory be conducted?
A: Each department head should be given a supply of the Exhibit A form following page II-C14 of the MAAG. The form should be completed and returned to the municipal clerk for reconciliation with the municipality´s property records. The inventory should also verify that property is properly marked and number tagged.

Q: Should a municipality´s auditor be consulted when an inventory of municipal property is conducted?
A: Yes. Page II-C14 of the MAAG also requires this notice.

Q: Should governing authorities of municipalities in their last year of a term of office pay particular attention to the planning of this year´s projects?
A: Yes. Section 21-35-27 limits expenditures during April, May and March to one fourth of the budget for services and salaries unless there is a seasonal justification (parks, etc.). This means bigger projects should be conducted between October and March.


October 2008

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Q: May a municipal check be signed for payment of a claim without a board order approving the claim?
A: No, except in very limited circumstances (see following questions). Section 21-39-17 imposes criminal penalties and provides for removal from office if checks are issued without proper authority.

Q: May a municipal tax collector make a refund of overpaid taxes without a board order?
A: Yes. A municipal tax collector (city clerk if the position is combined, Section 21-3-3) collects taxes in the same manner as a county tax collector (Sec. 21-33-55, 27-41-5, etc.). Section 27-73-7 authorizes a tax collector to refund erroneously paid taxes (ad valorem, privilege taxes, voided tax sales, etc.). Documentation (as determined by the tax collector) must be maintained to justify each refund. Board orders voiding tax sales, double receipts and assessment roll errors, etc., are examples of overpayment evidence. The refund should be from current money collected for the same purpose, and for the same taxing district that was overpaid, and credit should be taken on the next settlement report.

Q: Is there special authority to write checks to pay fixed salaries and hourly wages to municipal employees prior to a board order approving the payment?
A: Yes, provided the board has authorized the procedure required by law. Section 21-39-7 requires the board establish the procedure on the minutes. Board orders should clearly set the salaries and hourly wages so there is no confusion about the amount payable. The total of the wages paid must be entered upon the claims docket each month.

Q: Is there special authority to write checks to pay refunds of utility deposits to customers without a board order approving the payment?
A: Yes, provided the board has authorized the procedure required by law. Section 21-39-13 allows the board (on its minutes) to allow the municipal clerk to make these refunds after it is determined the customer´s debt for services and other obligations are satisfied. Records must be maintained by the municipal clerk to justify each refund. It is recommended that a report of refunds be made to the board each month for budget and procedural purposes.

Q: May a municipality borrow money in anticipation of ad valorem taxes?
A: Yes. Section 21-33-325 allows loans up to 50 % of anticipated ad valorem tax revenue from any source. This loan may be made starting in October and must be repaid by March 15 of the same fiscal year.


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Q: May a county work on municipal streets without charging the municipality?
A: Yes. Section 65-7-85 grants boards of supervisors authority to spend money for and work on municipal streets. Section 65-7-79, 65-7-81, and 65-7-83 also provide for specific limited county work on municipal streets.

Q: When must a county work on municipal streets?
A: When the county and municipality have entered into a contract for the county to maintain the municipal streets in lieu of giving the municipality one half of the county road maintenance ad valorem taxes collected on property within the municipal limits as required under Sections 65-15-21 and 65-15-23.

Q: May municipalities and counties borrow or rent equipment and equipment operators from each other?
A: Yes. Section 17-5-15 allows such lending for public projects only. Each board must record the details of the agreement on its minutes.

Q: May a municipality borrow money if it has a budget emergency?
A: Yes. Sections 21-35-19 and 21-35-21 allow money to be borrowed when there is a budget emergency as defined in Section 21-35-19. To make this type loan and spend the proceeds for the emergency, a unanimous vote of all members present at the board meeting must approve the emergency finding and document the facts on the minutes.

Q: May a municipality borrow money in anticipation of a federal or state grant or loan?
A: Yes. Sec. 21-33-326 authorizes board ordered loans from any source for the purpose of the anticipated loan or grant. The loan must be repaid from the federal/state grant/loan proceeds within a reasonable time after its receipt.


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Q: May a municipality close city hall on days that are not weekends or holidays?
A: Yes, reasonable business hours must be established by board policy or municipal ordinance. State law only mandates office hours for counties and state offices under Sections 25-1-98 and 25-1-99.

Q: What must a municipality do to change its office hour policy?
A: Board order policies may be changed by a new board order. If a policy is adopted by ordinance, an ordinance change will take 30 days (Section 21-13-11).

Q: May a municipality pay its employees for days when the city hall is closed?
A: An employee may only be paid for time worked and legal holidays adopted by the municipality. (Section 3-3-7 and Section 96 of the Miss. Constitution of 1890).

Q: May a municipality purchase lights and decorations to be used on the municipal streets and grounds during the holiday season?
A: Yes, subject to routine purchasing procedures (Sections 21-37-3 and 31-7-13).

Q: May a law enforcement agency spend money confiscated in a drug raid?
A: No. Confiscated money is evidence. If the money is forfeited as provided by administrative forfeiture as set forth in Section 41-29-176 or a court order; it may then be distributed as directed by the court under Section 41-29-181. After forfeiture, confiscated money must be budgeted to the law enforcement agency before it may be spent as required by Section 41-29-185.

Q: When may a taxpayer of a municipality inspect the accounting records of a municipality?
A: Section 21-15-21 provides for such an inspection any time during business hours.

Q: Does everyone have the right to inspect the records of the municipality?
A: Yes. Section 25-61-5 requires availability of most records within twenty four hours. The board may adopt reasonable policies, such as a written request and necessary time for availability up to fourteen working days. Also, charges of costs are allowed.

Q: May a municipality hire an attorney to represent an employee who is sued for damages resulting from actions taken in the performance of his/her duties?
A: Yes. Section 25-1-47 allows a board, within its discretion, to pay such costs. This law also allows the municipality to pay related investigative costs, judgments and negotiated settlements.

 

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