The Lynch city council accepted the resignation of Mayor Ronnie Hampton on Thursday and appointed City Clerk Darlene Monhollen to finish his term.
Hampton had been the city's first African-American mayor, and Monhollen, who took office Friday, is the city's first female mayor.
Hampton, who was appointed last year during a financial crisis, hired Monhollen to replace a city clerk who was eventually convicted of stealing more than $100,000 from the city.
"We're still having a hard time. We're still behind on some bills," Monhollen said.
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But the city is getting ahead in some respects. Monhollen said Kentucky Utilities agreed to a plan that has allowed the city to pay more than two-thirds of its $77,000 debt to the company so far. The city owed money to the IRS and to various other vendors.
The city is regularly late on some bills, Monhollen said, but is staying on top of debt.
"We've come such a long way," she said.
Monhollen replaced former city clerk Kellie Maggard, who was convicted of theft and sentenced to 10 years in prison for stealing about $137,000 in cash and city checks, and letting city bills go unpaid.
Monhollen said she has no plans to run for election to the mayor's office but left open the possibility that she will "catch the mayor's bug."
She is the wife of a Cumberland preacher, she said, and before becoming city clerk had been a teacher at some Christian schools and spent a few years working for a Georgetown network marketing company.
Hampton, a former state mine inspector and a preacher, was appointed after the previous mayor resigned — and as the city foundered in debt.
Hampton sent letters to hundreds of people with ties to Lynch asking for donations to buoy city finances.
He was on the November ballot unopposed.
No one had filed to run as a write-in candidate as of Friday, Harlan County Deputy Clerk Donna Hoskins said. The deadline to file is Oct. 22.
Since Hampton withdrew, no votes for him will be counted, and notices will be posted at polling places on Nov. 2. If no write-in candidates are elected, the city council will appoint a mayor to fill Hampton's seat through December, and then until the election next November, Hoskins said.