One of Utah’s smallest and newest towns is having a rough year.

A state audit recently slammed Cedar Highlands, located about five miles from Cedar City in southwestern Utah, for a lack of transparency and compliance with state requirements.

And the town is scrambling to appoint a new leader after Mayor Steven Swann’s abrupt resignation last month, when he called out in an email “a rogue town council that continually, foolishly and ignorantly rejects and ignores sound legal and business counsel and training.”

Swann says his decision to step down was largely prompted by the council’s recent move to cut funding for the town’s clerk, attorney and treasurer (who each work a few hours per week) in favor of unpaid volunteers. He contends that choice has “placed the town in a risky operational and legal situation” that may lead to “serious financial, operational and legal complications.”

Town Councilwoman Beth Gaines, who is running council meetings in Swann’s absence, dismissed those assertions, noting that the four-member council had made a fiscally conservative choice in an effort to improve financial stability and increase access to staff.

And she believes the town is on the right track moving forward.

“The council now, and I’m sure that with getting a new mayor on board, we will be really vigilant about following state statute in all matters — particularly financial,” she said in a phone interview Monday, referencing the state’s recent evaluation. “And I think with better accessibility to the clerk and treasurer, we will be able to do that.”

The town is accepting applications for mayor, and the council expects to appoint someone to fill out the rest of Swann’s term, which expires at the end of 2021, in the next few weeks.

State auditors began looking into Cedar Highlands’ 2018 policies and procedures after receiving “several complaints” about the town’s financial activities and questions about its adherence to state law.

Their evaluation found “statutory noncompliance, weak internal control, and diversion from best practices,” auditors wrote in an April 4 report. “Correcting these issues will improve Town operations and transparency and help protect public funds.”

The state noted a lack of documentation of the council’s approval of town spending before January 2019; that meeting minutes lacked required detail (including the date, time, and place of the meeting, votes of council members and the substance of matters discussed or decided by the council); and that the council had not provided justification for closed meetings.

Additionally, auditors found Cedar Highlands had not submitted required reports and information to the state, had not uploaded its financial information to the Utah Transparency website and had failed to provide documentation of the council’s official appointment of statutory officers, like treasurer and clerk.

“The problems listed above are likely due, at least in part, to the fact that the Town was incorporated fairly recently (January 1, 2018),” auditors acknowledged. “We understand the inherent difficulties that exist with the creation of a new government entity. However, the Town must comply with state statute.”

Residents approved Cedar Highlands’ incorporation with a 79-44 vote in November 2016.

In a response tacked onto the audit, Swann went line by line through the state’s findings and outlined the changes the town would make to address each concern. Cedar Highlands has since created an ordinance to ensure the town clerk submits an expenditure list at each meeting, he noted, has contracted with an outside firm to create financial reports for the council and has corrected past meeting minutes.

“As a new town, we have been struggling to first obtain Information and training on the myriad of processes and procedures that need to be set up for a new town and then to find the staff and funding to actually establish them,” he wrote. “We appreciate your help and input to address all of these issues.”

Swann and Gaines contend that no government funds were put at risk under the council’s previous procedures and point out that the audit unveiled no mismanagement. But Gaines said she does believe the council could have been more transparent with residents.

“It took time to get a clerk and treasurer on board and so prior to that, things were… I mean, it developed really slowly,” she said. “And we weren’t always... let’s just say we weren’t always in the loop.”

Jim Byler, a Cedar Highlands resident who helps run a community website detailing what he perceives as Swann’s missteps as mayor, said the town "has not been run in a transparent and financially transparent and honest and ethical manner.”

And while those on the inside may point to the challenges in creating a new municipality, the retired police lieutenant from California argues that’s misleading.

“Some of the things that were being done were just counter to obvious financial practices that are appropriate,” said Byler, who now plans to run for the mayor’s seat. “That has nothing to do with being a new town; that’s just common sense. You don’t run public money that way.”