LYNCH — This is a city in crisis.
It is in such debt — to the IRS and various vendors — that the new mayor sent out an appeal to former residents and benefactors for donations to keep its accounts solvent.
The city's former clerk, who has a drug record, is under investigation by Kentucky State Police, and bills totaling hundreds of thousands of dollars have gone unpaid.
The city council, wondering how finances got to this state right under its nose, has asked a state board to review the work of the city's private auditor.
Unfortunately, state officials say, some of these problems are not terribly uncommon, especially in the current economy. The worst outcome, though unlikely, for a city like Lynch is that it is dissolved altogether. The best outcome is that current debts are paid soon and the city continues to struggle against a difficult economy and declining population.
Lynch, in Harlan County, has a legendary sense of community. Founded in 1917 as a coal camp, it enjoys mutual solidarity and rivalry with the other two nearby "tri-cities," Cumberland and Benham.
"We hear often times the African proverb that it takes a village to raise a child. That really characterizes my memory of Lynch," said Lexington Urban League President P.G. Peeples. "The adults in the community all showed that they cared for the kids in the community."
That made Lynch a special place to grow up and be from, Peeples said, and as his generation moved away to college and careers, they have maintained ties with home through family or organizations like the East Kentucky Social Club, which has branches all over the country.
As the area's coal mines dried up or mechanized, the city started shrinking after reaching its peak in the 1960s and 1970s. Now holding fewer than 900 residents, Lynch, like many dwindling towns in Eastern Kentucky, is trying to cling to its identity with hometown spirit and tourism.
A project called "Portal 31," an underground mine tour in historic rail cars, has been years in the works but has yet to open. The city gets some money from an RV and camping park across the road. Nearby Benham has had a little more success, with a coal mining museum and historic inn recently opening.
There's talk of trying to capitalize on Harlan County's newly completed ATV trails and promise of tourism, but no one's sure how Lynch, about as isolated a place as there is in Kentucky, will take part in that.
Lynch is dependent on its shrinking tax base and water bills — relatively new signs posted in city hall announce an end to leniency for late payments. In the past five years, the city's general fund has dwindled, with larger and larger deficits.
The city can barely keep its offices open, said former mayor Bob Collier, who resigned in May after his doctor told him to reduce the stress in his life.
Since 2002, Collier said, the city had not paid its IRS bills — a fact discovered in 2007. Any money in the general fund went to pay down debts to vendors and payroll just to keep the city's offices open. In his two and a half years as mayor, Collier fired one city clerk who he says had been simply paying the most pressing bills and letting the tax bills go.
He said he restructured some of the city's accounts so that water bill payments and tax payments, for example, would remain separate. Collier hired a new clerk in April 2008, and early in 2009 pushed for and got a rate increase that added $15 to every resident's monthly water and sewage bill, something he says would have allowed the city to start paying down some debts to vendors.
But just a few months later, Collier received word that the city's electricity and oil and gas accounts were about to be cut off for non-payment, and one of his last acts as mayor was to suspend the city clerk, Kellie Maggard, and report suspicions of theft and forgery to state police.
Collier said his name was on checks that he didn't remember signing, and bills had gone unpaid for the entire year Maggard was clerk. Maggard did not respond to a Herald-Leader request for comment.
In one case, checks had been cut for city employees whose wages were supposed to be garnisheed to pay child support, but those checks were never sent, causing problems for the employees.
Collier resigned in May and moved to Bowling Green. The city council appointed former pastor, coal mine inspector and lifelong Lynch resident Ronnie Hampton to be the new mayor.
Reaction in Lynch to the missing money is surprise, disappointment and anger. Many people blame the clerk — Maggard was convicted in 2006 of possession of drug paraphernalia and sent to rehab. Investigations found city checks cashed at places like grocery stores and Wal-Mart, city officials said.
Collier said he didn't know of the drug charges when Maggard was hired; city council members say everyone in town knew, and Collier didn't listen to council members' objections.
Five-year council member Carl Collins said he has faced the fury of citizens who can't believe the council allowed the city's finances to get this bad. But, Collins said, city council members demanded answers for at least two years and were stonewalled by the mayor and clerk.
"The council responded and voted on what was presented to us. At no time were we shown" that the city was as behind on its bills as it is, Collins said.
Audits for the city's 2007 finances have not yet been completed, and the council has sent complaints about past audits to the state Board of Accountancy, which examines the credentials and practices of private auditors.
New mayor Ronnie Hampton said he was shocked when he accepted the job and was then told of the depth of trouble in the city's accounts.
"How could we let this happen?" Hampton said.
Investigations have revealed that around $147,000 is unaccounted for in the past year alone, Hampton said last week.
Last month, Hampton sent a letter to hundreds of people with ties to Lynch, asking for help. "The city and citizens of Lynch are in a state of shock and need your help," he wrote.
Donations to date: $7,662.