Citrus Connection's advisory board voted 4-to-1 to demand county officials pay up Polk's quarterly contribution of $382,000 for public bus service within the next 15 days.

LAKELAND — Lakeland transit officials have accused Polk County of breaking its contract for public bus services by withholding approximately $382,000 in funding. If unpaid, it could have rippling impact on the agency's funding and ability to serve riders.

Citrus Connection's advisory board voted 4-to-1 Wednesday to demand county officials pay Polk's quarterly contribution for public bus service within the next 15 days. The funds are more than 30 days past due.

“There's been an independent, capricious decision to make a withholding of payment for services in light of three years of prior operations that is inexcusable,” Mayor Bill Mutz, who sits on the transit board, said. “The money is owed. That money needs to be paid.”

David Persaud, chief financial officer for Citrus Connection, said the majority of the funds owed, or roughly $327,000, is needed to cover operational costs for county bus routes that service residents in areas such as Bartow, Winter Haven and Auburndale. Without the money, Persaud warned the transit agency may be unable to come up with the matching funds needed to be eligible for nearly $1 million in federal and state grants.

“If we don't get those grants, it would put us in a very serious financial position,” he warned.

Michael Craig, the county's attorney, said the reason Polk County didn't make the July payment is that county management is concerned the funds may not serve “a valid public purpose.”

“We have a fundamental disagreement on how the funds are used that are provided by the county,” he said.

A debate between Citrus Connection and Polk's elected officials over best accounting practices has been quietly brewing over several months. But this is the first time the county has withheld money over the issue.

The county's staff under Clerk of Courts Stacy Butterfield has repeatedly asked the Lakeland transit agency to stop billing for its accrued pension liability under the Florida Retirement System.

When Polk County, Winter Haven and Lakeland merged their transit networks in 2015, all the employees were enrolled in the state's pension program. Each year a report is run on Citrus Connection's accrued liability, according to Persaud, and any difference between its current funds deposited in the state treasury and the total assessed liability is split between its three branches based on percentage of payroll and then billed.

Craig said the county's position is laying out cash to cover the transit agency's pension liability is unnecessary, and it is owed a nearly half-million dollar refund.

“The county's position is we can account for the FRS liability without putting dollars in the account, the [transit] district's position is, 'No, you have to have dollars in the account'," he said. “So we essentially have drawn two lines in the sand and a $460,000 gap in between.”

Tim Darby, Citrus Connection's attorney, agreed, “We are at an impasse."

Tom Phillips, Citrus Connection's executive director, said as of Wednesday morning he had still not received an official notice that the county didn't plan to pay.

A string of emails between the transit agency and the county show ongoing funding has been a concern, some alleging it's being used to apply pressure.

An email sent to the county's Clerk of Courts on July 10 shows Citrus Connection's attorney, Darby, said his client's main concerns included, “ensuring that the July Payment (due 7/12) as well as another payment due based on contracted services” would continue to be made.

“I assure you that once my office receives that request we will promptly process payment,” Butterfield responded on July 12.

A follow-up email between Darby and Butterfield dated July 18 shows Citrus Connection's invoice to the county for bus service still hadn't been paid. Butterfield suggested the transit agency “contact the County Manager's office to discuss the payment and position.”

Polk County Commission Chairman George Lindsey said the county board did not direct the withholding of transit funding, and said if Butterfield did, that she “is an elected official who has exclusive authority, beyond our authority, to pay whatever bills she deems appropriate that serve a public purpose.” Butterfield told The Ledger on Wednesday that she never received a directive from the County Manager's office to pay the invoice.

Jim Freeman, Polk County's manager in July and has since retired, said he deferred comment to his predecessor Bill Beasley, who confirmed the pension liability funding was the reason.

“Until we can communicate and resolve opinions about that, this office decided to withhold the quarterly payment,” he said.

When informed of the Citrus Connection board's 15-day notice to the county, Beasley said he wouldn't want the money to negatively affect public bus service. Roughly 57% of Citrus Connection riders use it as a primary means of getting to and from work, according to Phillips, including some county employees.

When a suggestion was thrown out of terminating bus service along county routes for this financial breach, Phillips rejected the idea. He would not consider it, saying the transit agency would pay for the service from its reserves if needed.

Beasley said he plans to immediately address the issue in his new role as county manager.

“We will expedite a mutual beneficial resolution to that,” he said. “I will take the lead or point to ensure that.”

Sara-Megan Walsh can be reached at swalsh@theledger.com or 863-802-7545.