TEXAS TOWN FILES BANKRUPTCY
June 29, 2001
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Even towns can file bankruptcy. Kendleton, Texas, a small town southwest of Houston, filed for bankruptcy after state officials seized the town’s bank account and withdrew the remaining balance—about $18,600, according to the Associated Press. Kendleton Mayor Carolyn Jones said the Wednesday bankruptcy filing will not disrupt services to the city’s 700 residents.
The seizure was based on a 1997 court ruling that Kendleton owed the state $660,000 from traffic fines collected between 1990 and 1996.
Kendleton had a reputation as a speed trap along U.S. 59 until last summer, when the city abolished its 15-officer police force during an investigation of improprieties. A state law designed to deter towns from using police departments as speed-trap operators to generate revenue allows towns with populations of up to 5,000 to keep no more than 30 percent of the revenue from traffic fines. The remainder must be sent to the state.
Kendleton had been making monthly payments to erase the debt, but an attorney general’s office spokesman said it had gone two months without a payment. The state seized the account of $18,599 on June 19. A recent state audit showed Kendleton also owed about $1 million from traffic fines collected from 1996 to 1999.
