The Laurel City Council will place in escrow money that it had collected before formally approving a bond issue to build softball fields.

In addition, the city council voted this week to abandon the sportsplex project and rescind the four-mill property tax levy passed to pay off the bonds.

State Auditor Stacey Pickering had suggested to council members this week that since the money was collected before the bond issue was in place, the funds should be placed in escrow.

In the meantime, Pickering said his office would work with the city to correct the problem.

The city council in January approved the sale of $6.4 million in bonds to finance the construction of the eight softball fields. The council also approved the four-mill tax. One mill is equal to $1 of tax on every $1,000 of a property’s assessed value.

However, city officials discovered that before the council vote was taken in January, residents were already paying the higher taxes in anticipation of the project.

When the city council levied the taxes for the 2008 fiscal year when it met last September, the four mill increase was included in anticipation of the bond issue. Some residents complained recently after the council discussed using the four-mill levy to pay off other debts and drop the sportsplex project.

Pickering said the city of Laurel’s case is the first of its kind where a governmental entity has collected money for bonds that are not being issued.

Gary Suddith, the city’s chief administrative officer, told council members that “bonds have been done like this in other places in the state. This is the first time the bonds have not been issued. That’s what makes this situation unique.”

Officials expect about $547,000 will be collected for this purpose by the end of the city’s fiscal year this fall.

Pickering said putting the money in escrow “would allow us time to take a look at exactly what options are available” to the city council.

After hearing from Pickering, the city council voted not to pursue the issuance of the bonds, said it would reduce the tax levy for fiscal year 2009 in the debt service fund by four mills and the money collected this year would be held in an escrow account.