The employee was hired by the city in April 2013 as a part-time utility billing assistant and then named a full-time municipal court clerk in September 2013.
City attorney Ashford Taylor would not disclose the amount of money that was reported misappropriated or if the city would seek criminal charges against the employee.
Mayor Jay Harvey and councilman Ed Carter were both absent from Tuesday night's meeting. Taylor said he wants to meet with all the council members before considering criminal charges.
The council went into closed session to discuss the issue. Councilwoman Liz Holsey made the motion to immediately terminate the employee.
More on this story coming to mySouTex.com.