Budget Deficit, Lack of Controls Cited
RALEIGH – After raising deep concerns over potential budget deficits, longstanding fiscal disarray and an investigation into missing money, members of the Local Government Commission (LGC) voted to warn Spring Lake that it faces potential state takeover of its financial affairs.
The LGC, chaired by State Treasurer Dale R. Folwell, CPA, and staffed by members of the Department of State Treasurer’s State and Local Government Finance Division, voted unanimously in an emergency meeting Tuesday, June 22, to send a notice of warning to the town of 12,000 residents.
“It is never our desire to have to get involved with local government finances. We would much prefer that government units all operate smoothly and without a wrinkle,” Treasurer Folwell said. “But the LGC was created to be a powerful resource to government units that occasionally need a helping hand to make necessary course corrections. That ensures proper stewardship of taxpayer resources is being provided.”
Spring Lake, a gateway community to Fort Bragg in Cumberland County, has accumulated a 2020-2021 fiscal year General Fund shortfall estimated at about $1.2 million, but the proposed budget funds only about $285,000 of that shortfall, LGC Secretary Sharon Edmundson said. It is one of two municipalities that voluntarily entered into a financial management agreement with the LGC to help the towns meet their obligations and duties under the Local Government Budget and Fiscal Control Act. One of the goals of the agreement with Spring Lake included the development of a “well thought-out FY2022 budget that is realistic in revenues and expenditure estimations.”
Town Manager Samantha Wullenwaber proposed a break-even budget that included some significant reductions, as well as some restoration of fund balance in the General Fund, but members of the Board of Aldermen want to restore the cuts with no way to pay for them.
“There’s no logistical reason this town should be in the shape that it’s in,” Edmundson said. It has the highest municipal tax rate in Cumberland County at 70 cents per $100 valuation. “This town cannot afford to continue spending the way they have been spending.”
State Auditor Beth Wood, a member of the LGC, defended the new town manager and said leadership is lacking from the aldermen. She urged the LGC to assume statutory control of the town’s finances.
“We are in there investigating and looking for missing money,” Wood said. “There’s a lot of things going on.”
Edmundson said the issue could come to a head when the Board of Aldermen meets Monday to adopt the budget. She said LGC staff will attend the session. If the board attempts to pass a budget that is not balanced or fiscally sound the LGC staff will recommend that the Commission step in to assume full control of the town’s finances.
The LGC passed a resolution to warn Spring Lake of that potential outcome if it fails to comply with the provisions of the resolution.
At a special meeting preceding the emergency meeting on Spring Lake, the LGC approved budgets for Cliffside Sanitary District (Rutherford County), Kingstown (Cleveland County), Pikeville (Wayne County) and Robersonville (Martin County). All four local government units are under the financial control of the LGC.
The Pikeville budget includes money to hire a town manager. The Robersonville budget allows the Robersonville Public Library to remain open on its current schedule after community concern was raised about possibly scaling back its operations.