Ignoring Bond Requirement May Cost Jobs

All states and counties have their own rules and requirements in place when it comes to surety bonds. In Redford Township, Michigan a surety bond is required of the treasurer in order to collect taxes; the only problem is the current acting treasurer has been bondless for the past couple of years which may result in costing the Township both jobs and thousands of dollars.

Lily Cavanagh has been Redford’s treasurer for the past two years and one of the job qualifications requires her to obtain a surety bond in order for her to collect taxes which she hasn’t done. During a study session last week, Cavanagh stated she had done “nothing wrong” although she has been breaking state law for the past couple years. The primary job she was voted in to do, collect taxes, isn’t possible because she doesn’t have the required surety bond; she has been unable to obtain a bond because of her financial situation. Cavanagh ignored her responsibility to notify the town board of her inability to obtain a bond claiming she didn’t know of the requirement; and then later said she was following the instructions of the Wayne County Treasurer’s office, which misinformed her that she was included under a blanket surety bond. Redford Township can potentially lose $516,000 if Cavanagh isn’t able to acquire a bond. The township would be forced to take up the tax collection responsibilities which could potentially force the termination of public programs and jobs due to the large deficit.

There is good reason why Redford requires a surety bond of their treasurer. The required bonds main purpose is to protect the public money being handled; it guarantees that the individual managing the money will do so faithfully and accurately. Should the money be mismanaged, a claim will go out on the bond; then the surety company who issued the bond would cover the claim payment. Once the surety pays the claim, they will go to the individual who obtained the bond for reimbursement resulting from the claim. Without the treasurer bond requirement, public money is being threatened.

Surety bonds are primarily used to guarantee something. In this case, the surety bond required of the treasurer guarantees that public money will be handled responsibly. Redford has certain requirements in place for the good of the Township as a whole. Neglecting the surety bond rules in place is not a wise idea concerning the wellbeing of the Township; after all they are there for a reason.

Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog. He has held a range of different roles within the surety industry, from agent assistant to bond issuer, which gives him a unique insider perspective on surety related topics.

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