The Collin County Observer™

$1.9 million bill out of blue blindsides ex-boomtown Royse City

Monday, September 22, 2008
By JAY PARSONS / The Dallas Morning News

Only a few years ago, Royse City was experiencing better days as one of the region's fastest-growing places.

But the rapid growth has subsided, and the past few weeks have been so terrible that FBI agents have poked around. And in the middle of a packed City Council meeting last week, Mayor Jim Mellody got so fed up that he quit and walked out of the building to a standing ovation.

"It's a big mess," said Don Hallett, who owns a restaurant in the city.

Troubles surfaced last month, when City Council members became suspicious of City Manager Karen Philippi's budget presentations.

On Aug. 12, the council suspended Ms. Philippi. In the ensuing weeks, council members said, they were shocked to learn that Royse City was on the edge of financial ruin. The city owed $1.9 million and would have to cut $2 million from its $8.5 million budget.

The council then dismissed 27 employees – about a third of the staff.

The council passed a 33 percent property tax hike, the city's first since 1994, and took out $1.2 million in tax notes, essentially a loan that must be paid off in a year.

The sudden stream of bad news fed a firestorm. At several meetings, residents interrupted to berate council members.

"I was hurt," said 20-year resident Nell Bostick, whose husband, Doug, is a former council member. "I got past my anger. ... I'm just resigned to hoping and praying we have enough people who can step up to the plate to fix this problem."

Ms. Bostick is among many residents who admit they didn't pay much attention to the details of running the city until recently. But many hold the elected officials to a higher standard.

"They should have been watching, should have been looking at the financials, but they didn't do it," Mr. Hallett said.

A small group of residents plans to meet Thursday with acting District Attorney Craig Stoddart, who said his office will listen but has not launched an investigation.

An FBI spokesman would neither confirm nor deny that an investigation is occurring. Mr. Mellody said the city is complying with an FBI request for records. City officials have said Ms. Philippi – who declined to comment for this story – mismanaged funds but did nothing criminal.

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