Gold Bar officials already reeling from one scandal are now considering disincorporation after voters rejected a tax levy to help pay legal bills.

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The tiny town of Gold Bar already was hurtling toward bankruptcy from mounting legal bills when a hidden camera recorded what appeared to be a city employee stuffing money into envelopes.

The videotape, investigators say, shows the employee returning $395 — money she allegedly had stolen earlier. As City Councilmember Davi Martin put it: “It’s called embezzlement even if you pay it back.”

Now Gold Bar voters have delivered a blow of their own to the community: They soundly rejected this month’s property-tax levy intended to save the Snohomish County town from financial collapse. If the city can’t afford to pay for services, it will have to rejoin Snohomish County.

City officials are meeting Tuesday night to see whether disincorporation is their only option.

Residents spoke passionately about Gold Bar when they packed the city’s council chambers back on July 17 to argue against dissolving the town. Gold Bar first incorporated as a timber town in 1910.

“I love my little city. I love my neighborhood. I don’t want it dissolved,” said Sharon Williams. She said she depends on the city snow plows and knows the workers who trim the blackberries. “You ain’t gonna have that if you got the county running everything. You ain’t gonna have jack.”

City officials say they can trace their financial problem back to three local women who run an online news site called the Gold Bar Reporter. Since 2009, they have filed six lawsuits, six petitions to recall elected officials, a tort claim and three complaints with the state Public Disclosure Commission.

Anne Block, Susan Forbes and Joan Amenn have usually lost, and they have usually filed appeals, prolonging litigation.

They have said they believe the city is hiding email to cover up past scandals.

Block’s voice mail was full Monday and she could not be reached. Forbes has defended the lawsuits and said the city was slow to respond to public-records requests.

Even if Gold Bar ultimately wins, it still has to pay its attorneys.

“We’re going broke being right,” said Martin, who said the women are “negative, nasty, and full of bile.” Martin would rather talk about the upcoming holiday tree-lighting, but the fact is: “There’s a lot of anger. Lots and lots and lots of anger.”

The city ended up borrowing $77,000 from its water department to pay 2012 legal bills, which totaled up to about $120,000 for the year. The entire city general fund is $500,000.

Gold Bar’s Proposition 1 asked for $11 a month from the average homeowner to pay off the city’s legal bills. It only got 43 percent of the vote.

Mayor Joe Beavers tries to shrug it off and keep moving forward.

Now that the employee theft case is before county prosecutors, Beavers has been dealt another crisis: After an arrest in Oregon, Clackamas County sheriff’s deputies discovered Gold Bar was a victim of a financial fraud ring. Hackers raided the city’s bank accounts and stole $450,000.

Beavers says he’s cooperating with the FBI investigation and he says the city has reclaimed about half the money, and it hopes to get the rest back.

“There’s serious attacks on the city,” Beavers said, “but at least I’ve been keeping busy.”

Emily Heffter: 206-464-8246 or On Twitter @EmilyHeffter.