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City Manager Peggy Smith (far right) speaks with Granite Shoals residents while the City Council convenes in executive session. Dozens of residents turned out for the council’s regular meeting on Sept. 26 after Mayor Kiel Arnone added an agenda item to discuss possibly firing Smith. The council ultimately decided to table the matter and discuss it again during an Oct. 3 special meeting. Staff photo by Dakota Morrissiey
A tumultuous Granite Shoals City Council meeting that included an agenda item to possibly fire City Manager Peggy Smith began with an executive session followed by a decision to table the matter until a special meeting at 4 p.m. Oct. 3 at City Hall. Nearly 100 residents attended in person and virtually, most in support of Smith.
The executive session was held at the request of Place 3 Councilor Judy Salvaggio, who expressed frustration with the lack of warning that the agenda would include a discussion of Smith’s job. Mayor Kiel Arnone added the item late in the day Sept. 22.
“All I want is time to review everything carefully before we just say, ‘We’re firing you,’” Salvaggio said. “I just want a little time to decide and to delve into this a little more and decide with all of the council what is best for this city.”
Councilors Salvaggio, Steve Hougen, Phil Ort, and Micheal Berg also said they were not aware of Arnone’s intention to include an agenda item concerning termination of Smith until they read a Sept. 22 DailyTrib.com story.
Smith’s potential firing was first made public in statements by Arnone to DailyTrib.com in that story. The mayor said he was frustrated with Smith’s management of city finances and the city’s fiscal year 2023-24 budgeting process.
Councilors Ron Munos and Kevin Flack and City Attorney Joshua Katz said they were made aware of Arnone’s intention to include the agenda item beforehand.
At the Tuesday meeting, Arnone read a prepared statement laying out a timeline of events in the city’s budget process and irregularities discovered by the city’s recently hired budget consultant, Marty Coursey. According to Arnone, all city officials were made aware of the financial issues uncovered by Coursey prior to Tuesday night’s meeting, but he had not provided the timeline.
“Over the past few weeks, a tremendous amount of information has come to light regarding our city’s finances,” Arnone read from the statement. “It is the city manager’s responsibility to manage the budget. Unfortunately, that has not occurred, resulting in numerous concerns about our current financial standing.”
Arnone presented a list of budget concerns since Smith was made interim city manager in June 2022 and city manager in March 2023. Both pooled cash and pooled investment reports are out of balance, and investment accounts have not been reconciled since July 2022, when the financial director left, Arnone said.
Maintenance of a TexPool investment account was allowed to lapse after June 2022, resulting in the loss of interest that could have accrued on $1.7 million, and the utility budget transfers for fiscal years 2021-22 and 2022-23 were not done at the end of the year, he continued.
Coursey, the finance consultant, told DailyTrib.com that the lack of reconciliations, budget reports, and regular transfers were similar to not balancing your own finances at home and not knowing how much money you have in the bank.
“Our taxes come during December and January, and after that, you’ve got to live on that so you can’t make mistakes with your cash,” Coursey said. “The city has got to plan. You can’t do that when you really don’t know how much money you have in the bank.”
Another criticism leveled at Smith is that Granite Shoals has been without a finance director for more than a year. As city manager, Smith is solely responsible for the hiring of city staff, including a finance director.
During public comment, five residents expressed outrage at Arnone’s handling of the matter, saying it was needlessly divisive.
One statement, read aloud by City Secretary Dawn Wright and submitted by resident Dave Frank, who provides cinematography services to the city, articulated the concerns of many of the residents who spoke.
“I wrote this with the knowledge that Granite Shoals has a long history of bad politics and public image that still lingers from decades of poor leadership, incompetence, corruption, and neglect,” the statement read. “I was hopeful your role as mayor would mark a new opportunity to create a positive image for the city. Sadly, what I’ve read (in the news) leaves me with grave concerns over how you choose to handle such a critical issue and turn it into a public news story, basically blindsiding the city manager and everyone she works with.”
One resident, Roman Archer, who ran for City Council in the last election, countered that he thought it was time for somebody new. He expressed the same concern when Smith was originally offered the job in March 2023, he said.
“It’s deja vu all over again,” he continued. “What I think is we need a proven, experienced, seasoned city manager that can take on some of the tasks and go outside and look for that position. Our city needs to start anew.”