UPDATE 8/27/12 @ 7:10 p.m.
KANAWHA COUNTY, W.Va. (WSAZ) -- County commissioners are considering dissolving the town of Pratt after finding out it owes the IRS nearly $140,000.

The problems continue to mount as commissioners say they were never told about several tax liens against the town and its water plant.

"It's time to come clean at the town and let us know what you know owe and how much do you owe," Commissioner Dave Hardy said. "Because we can't make things happen there in a good way if we keep finding these hidden debts and hidden liabilities."

Commissioner Dave Hardy tells WSAZ.com that Pratt officials did not submit federal tax withholdings for employees over several years.

Pratt Mayor Gary Fields says the commission was well aware of the town's finances. He said off camera the debt problems were inherited and explained the town is on a path to slowly pay it down.

Earlier this month, commissioners learned Pratt leaders took money from the public employee retirement fund to pay other bills, forcing the town to lose another $37,000.

"Honestly, it just doesn't surprise me, the way this town is," resident Kody Hudnall said. "I think they could get the government here to do a better job."

Commissioner Hardy says this presents a major problem as the town tries to turn over its water system to West Virginia American Water.

The water system serves roughly 1,200 people in Pratt, Hansford and Paint Creek, including the nearby elementary school. However, with a town so far in debt, clean water could be at risk. But teachers at Pratt Elementary School fear dissolving Pratt could be bad.

"The police officers monitor our traffic," school Principal Julia Edwards said. "I talked with Mayor Fields about an issue we had last week with some trash being dumped in a dumpster and he took care of it. I would hope the town would have a chance to remedy the problem."

The county attorney is looking at options to get the town out of the mess which could include dissolving it completely.

"We have got to find out what the true financial picture of the water works and the town is at this point," Hardy said. "I am very disappointed that the situation has deteriorated to this level."

Commissioners say they will bring up the future of Pratt at the next county commission meeting.

It's not the first time a town in Kanawha County has been dissolved because of financial problems. Jefferson was dissolved in 2005.

The state auditor released a report that detailed 26 bookkeeping problems the town had before commissioners voted to dissolve Jefferson.

Keep clicking on WSAZ.com for the latest information.

The problems continue to mount as commissioners say they were never told about several tax liens against the town and its water plant.

Commissioner Dave Hardy tells WSAZ.com that Pratt officials did not submit federal tax withholdings for employees between the years 2008 and 2010.

Hardy says this presents a major problem as the town tries to turn over its water system to West Virginia American Water. He says it puts 450 residents of Pratt, neighboring Hansford and Paint Creek areas, and the children and teachers at Pratt Elementary School at risk.

The county attorney is looking at options to get the town out of the mess which could include dissolving it completely.

Earlier this month, county officials learned Pratt leaders took money from the public employee retirement fund to pay other bills. That caused the town to lose an additional $37,000.

Coming up on NewsChannel 3 at six, WSAZ's Brooks Jarosz will explain why county officials say it's time to make drastic changes.

Kanawha County commissioners say the plant is behind on bills to the state after taking retirement contributions from its employees' paychecks but never giving them to the government.

They say that leaves Pratt with a $37,000 bill.

"This should not have happened - the management of Pratt failed the people," Kent Carper, Kanawha County Commission president said.
"The state of West Virginia suing the town of Pratt is like suing the town of Mayberry...they just don't have anything."

Commissioners are trying to coordinate a takeover of the plant by West Virginia American Water, and Carper said they're worried that a lawsuit could jeopardize the deal.

Robert Wymer served on the Pratt Water Board back in the 1980s, and says the plant's problems were a long time in the making.

"They failed to give rate increases when they should have," Wymer said. "Our water bills in this town have been lower than surrounding towns in the valley forever, so I guess you get what you pay for."

The county commission is offering to pay $5,000 for the plant until a takeover is accomplished, when Carper said they would then be reimbursed.

But he says the state rejected that offer and continued asking for the payment in full.

Representatives from West Virginia American Water told WSAZ.com that a lawsuit could certainly complicate the takeover deal. But they say they'll continue working with the county and evaluating the plant.