SALADO, Texas — The Village of Salado is facing a financial crisis due to a mix-up with money in the City's general fund account, Salado Mayor Bert Henry told residents at a meeting on Aug. 6.
According to Henry, a $945,000 check was deposited into the City's general fund in January 2023. After that money was spent, it was revealed that it was actually escrow for a development, said Henry, and never belonged to the City.
Rocket Mortgage describes escrow as "a legal arrangement in which a third-party temporarily holds money or property until a particular condition has been met – such as the fulfillment of a purchase agreement."
Escrow money cannot "co-mingle" with regular funds, said Henry, which is what he says happened in this instance.
The Village of Salado is now at a budget deficit because of the misunderstanding, Henry stated in the meeting. Henry said Salado is projected to end the fiscal year at a $1.2-2.2 million deficit.
"From a budgetary standpoint, we're broke," Henry told residents. "I'm just going to be honest about it... The money we thought we had in our budget is not there."
According to Henry, he and other members of the Board of Aldermen were not aware of the check or situation until a few weeks before the meeting.
Henry said some projects around the City will have to be put on hold temporarily as the City does not have the money to pay for them at this time due to the situation.
Tax payers are also expected to see a tax increase.
Henry stated the issue is currently being investigated by the Salado Police Department and City auditors.
Henry said he does not believe this to be an intentional criminal act of embezzling or foul play, simply a misappropriation of funds, but said if anything criminal is found, it will be prosecuted "in the highest extent of the law."
The full meeting can be seen on the Salado 2K Facebook page at this link.
The next few meetings Henry encourages people to attend to ask any questions and get more information are happening Aug. 12, Aug. 15, Aug. 22 and Aug. 26 at 6 p.m. at the Salado Townhall.
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