A new state audit is raising questions about money given away by one central Indiana town.

According to the audit by the State Board of Accounts, the Atlanta Town Council in Hamilton County gave $35,000 from its Destination Grant Fund, along with $4,050 from its Festival Fund, to the Atlanta Women's League, 6News' Kara Kenney reported.

The money went toward the Atlanta Mercantile Building, a struggling business venture that the town had hoped to make a tourist attraction, but it shut down this spring.

Atlanta Town Council President Andy Emmert told 6News via phone that the town has donated tens of thousands of dollars to different organizations, such as Little League, in order to help the town thrive.

He said while festival funds can be used for just about anything, including infrastructure, police and fire, he did not think the money would make a dent in paving roads or sidewalks, projects which require hundreds of thousands of dollars.

Still, the audit took issue with the donations.

"Governmental funds should not be donated or given to other organizations, individuals or governmental unite unless specifically authorized by statute," the audit reads. "(The $35,000 payment) was made without a contract. Payments made or received for contractual services should be supported by a written contract."

Records show the $35,000 grant came from the Hamilton County Convention and Visitor's Bureau.

"Those funds are innkeepers' tax dollars. They're not resident funds," said Executive Brenda Myers.

But some taxpayers said they don't believe the town should be giving that much away before basic needs are met.

"I'm thinking they need to reassess where they're giving their money to," said longtime resident Christie Spurling.

"It's a small place. I love it, but it could be better," said Donna Mercado. "The park could have something added, it could be painted."

Paul Joyce, deputy examiner with the State Board of Accounts said it's up to taxpayers to raise concerns because donating government funds is currently not illegal.

Town officials told 6News they have no plans to quit the practice.

The Atlanta Women's League and the town's clerk treasurer told 6News they were too busy to meet Thursday.

More Information: State Board of Accounts Audit