The clerk and assistant clerk of Morecambe Town Council threatened to resign at a meeting last night which was described as 'shambolic' and 'an embarrassment' by councillors
One town councillor called for a full independent investigation into "potential fraud", while another said that if the officers resign, "What is the point in this council?"
Controversy surrounds Morecambe Town Council's budget for 2020/21, which was voted through at a meeting at Morecambe Town Hall on February 6.
The budget, proposed by the majority Morecambe Bay Independents (MBI) group, cuts funding for festivals in Morecambe by £23,000, while allocating £100,000 for "ward grants", to be spent in individual parish wards.
Cuts have also been made to funding for Christmas lights ( £6,000), toilets at the former Morecambe Dome site (£10,000), which councillors say will now close, and £15,000 for an extra Anti Social Behaviour team in the town.
Former town council chair Tricia Heath has stepped down, and has been replaced by Coun June Ashworth, following a previous vote of no confidence in Coun Heath.
Issues around exempt documents, standards committee meetings and financial irregularities within the council have all been raised by concerned councillors.
Liberal Democrat Morecambe Town Coun Jim Pilling, who put forward an alternative budget at the meeting, which was defeated, said: "The meeting was shambolic, it was an embarrassment.
"For every £1 that the council puts in to festival funding, the town benefits by £50.
"So last year the town benefited by £2.75m, with 100,000 visitors.
"Why on earth they even considered reducing the funding I don't know."
He said that "under pressure from festival organisers", the MBI group decided at the meeting to put another £10,000 in to festival funding, bringing the total spend to £30,000, compared to £53,000 for 2019/2020.
He added: "My heart goes out to those people who work hard to put on events for the benefit of Morecambe.
"They're all non-profit making, and yes, there's an argument to say they should be self-sustaining, but that's easier for some than others, and there are lots of factors to consider.
"They've also cut the funding for community grants."
Coun Pilling said that the potential resignations of Town Clerk Bob Bailey and Assistant Town Clerk Nicola Kitchen is "a damning indictment on the way the council is being run".
"We want a full independent audit to get to the bottom of the finances, and so that the public can have confidence in the council," he said.
"This is potential fraud that needs examining."
Coun Pilling's motion for this was defeated by the council, as was a request to create a line management structure within the council.
Town Coun Janice Hanson, who put forward a vote of no confidence in former chair Tricia Heath in January, said: "They (the town clerks) have resigned.
"But we're hoping that they don't mean it.
"I know Nicola has had enough. She's very upset about it all.
"The chair tried to stop her speaking, twice.
"I'd like to see us be able to meet up and move forward for the good of Morecambe, do things that we can all agree to, and get on.
"If Bob and Nicola go it's going to be very difficult. If they go, what is the point in this council? All we do is bicker.
"A ward budget of £100,000. What is that all about?
"We couldn't believe what we were seeing."
Town Clerk Bob Bailey declined to comment at this stage.
Coun Pilling said that the MBI group "didn't answer any questions on future funding", and refused to include a £10,000 allocation for a feasibility study into potentially buying the Frontierland site.
He said: "They didn't answer anything. In terms of the ward funding, that councillor allocated the money will make sure that money is spent, whether it needs to be spent or not.
"There could be a lot of waste in that spending.
"People deserve a higher standard but on the evidence of last night, the council has a long way to go."
He added: "The most worrying thing for me is that the budget uses £24,300 of council reserves to balance the books.
"This money is not intended to be spent on usual council funding of services.
"The reserves are now perilously low.
"During a recent audit it was reported that the Council needs to INCREASE it's reserves but last night the reserves were reduced from £87,300 to £63,000 in order to balance the books.
"The budget has an expenditure of £323,000 but a revenue of only £190,000.
"Very obviously this in not sustainable.
"MBIs will be able to claim in their election literature 'Due to prudent financial management we are able to freeze your Council precept'.
"The true financial picture is very different."
Morecambe Town Council chair June Ashworth has been contacted for comment.
Brendan Hughes, director of Morecambe Business Improvement District (BID), said: "You can't underestimate the economic impact that festivals and events have on Morecambe.
"We know that there is a direct benefit to Morecambe's economy from festivals and a study by Lancaster University students last year for Morecambe BID concluded that festivals and events are hugely important to local retailers and businesses.
"It's an interesting decision especially when Eden is on the horizon and we need to keep the impetus going".