Richwood’s financial problems are bigger than purchasing card woes

CHARLESTON, W.VA. — Local leaders in Richwood are concerned that the town’s financial problems go far beyond the disputed purchases on the mayor’s state-issued purchasing card.

“I want you to leave with this. It’s not $100 on a pcard. We are in massive financial trouble,” Councilman Chuck Toussieng told members of the community during a Nov. 30 council meeting.

“I wish it were that. I wish it were a couple thousand dollars on the purchase card. We wouldn’t be here. We wouldn’t be in the newspaper. We wouldn’t be on Facebook. We wouldn’t be having our name sullied. It’s much bigger than that, and we are hoping to survive it.”

Council members were voting to start impeachment proceedings against Mayor Bob Henry Baber when they began discussing hundreds of thousands of payroll taxes owed to state and federal government.

The current liability to the city, they said, is $87,000 owed to state government and $500,000 to the Internal Revenue Service.

A citizen arose and asked how long it had taken to rack up that much debt.

Council members said the taxes went unpaid from June 30 until city officials were informed two weeks before the meeting.

The taxes went unpaid as the town was still dealing with the catastrophic flooding of the summer of 2016.

“Part of the reason the taxes got so big so quickly is we went from having 26 city employees to 87 W-2 city employees after the flood,” Toussieng said. “We had a payroll of $202,000 in July, which is 20 times what we would normally have. So when that happens, your tax liability goes up.”

Now Richwood continues to rebuild from the flooding and also has a mountain of tax debt among its worries.

Council member Glen Weiler explained that the city found out about the debt the hard way.

Grants had been flowing to the town for a local water project. That money was intercepted by the state, which meant the city was then liable to the U.S. Army Corps of Engineers.

“That’s when the state notified us they had a lien on us. They said it’s $57,800. We immediately contacted them and said ‘How do we deal with this?’ Weiler said.

The city has worked out a payment schedule over the next 72 months, Weiler said.

With penalties and interest, the baseline debt to the state of $57,800 grows to about $87,000, city leaders said.

“So as we’re doing that we’re going holy cow. Then the IRS walked in and said by the way, you owe us $311,807 — and we’re going ‘Say what? How can we possibly have that?’”

Similarly, that base debt grows to about $500,000 when interest and penalties are applied, city leaders said.

“So when we started looking into it, that’s when we realized things are not the way we understood it. So we’re still trying to wrap our arms around it,” Weiler said.

Richwood is a mountain town of about 2,000 people. During the early 19th and 20th centuries, it was a booming coal and timber town. In recent years, it’s been striving to become an artisan community and technical center.

The town was among the worst hit during the 2016 flood, which caused heavy damage to Richwood high and middle schools. Residents have been in a fight for months over rebuilding the schools rather than constructing consolidated schools elsewhere in the county.

Nicholas County Commission President Ken Altizer is among those expressing concern about Richwood’s mounting troubles, particularly the latest tax debt.

“I do know there are some problems. We’re concerned,” Altizer said. “The only thing that would happen is if they would dissolve as a city, which I don’t have any clue that they’re going to.

“We don’t get involved too much in Summersville or Richwood unless they ask for our support or help. So far they haven’t asked, and we’ve offered on several occasions.”

Hints of Richwood’s financial problems started to appear in September when Baber was asked to resign and then placed on paid administrative leave through a vote of council. Baber was asked to account for thousands of dollars on his state-issued purchasing card.

After Baber openly discussed on Facebook an investigation of the state Auditor’s office, the Auditor confirmed the investigation.

The investigation has gone beyond the purchasing card, though. Members of the auditor’s staff for several weeks have been going through Richwood’s financial records over the past few years.

One of the stated reasons for starting impeachment proceedings against Baber was the payroll tax debt that has accumulated in recent months.

From his seat in the crowd, Baber stood up and said he’s not at fault.

“A lot of these charges are completely bogus and fake. I would never direct somebody to not pay taxes,” Baber said.

He continued, “I would never direct someone to not pay taxes. That’s one of the first things you do and you always do.”

Toussieng and other council members said they are not out to get Baber. During the meeting, they told community members they are trying to take precautions to preserve the city’s financial integrity.

“What we’re saying is this is a small business, this small business needs someone to run it,” Toussieng said. “I’m not saying Bob is a bad person. He’s just not good at running this small thing.”

Toussieng went on to emphasize again that Richwood has enormous financial problems for a town its size.

“What we’re doing here tonight is a small part of our problem,” Toussieng told community members. “We have a massive problem. We are a small business with a ridiculously massive debt. It’s going to be difficult to overcome. I can’t stress that enough. We had no idea what the scope was until we started looking at what’s owed. It’s going to be a lot of work.

“If you truly care about the city and aren’t picking tribes, we have to work and support each other and the city to figure out how to get through it.”

More News

Justice says school preparations are meant to provide in-class or virtual options for families
Justice describes color-coded map of how virus affects school districts; wireless hotspots for students.
August 6, 2020 - 11:30 am
MetroNews This Morning 8-6-20
August 6, 2020 - 6:57 am
Justice concerned about reduction in National Guard assistance
An extension regarding National Guard units' responses to the coronavirus pandemic includes a funding cut to deployments except in Texas and Florida
August 5, 2020 - 9:14 pm
Marshall officials provide more details on fall courses
The institution announced last week freshmen, some graduate and most professional students will take part in some face-to-face courses.
August 5, 2020 - 8:22 pm