Local Government Commission votes to take control of Spring Lake finances

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NC State Treasurer Dale Folwell

RALEIGH, N.C. – The State Treasury’s Local Government Commission has voted to assume full control of all finances of Spring Lake if, among other actions, the Board of Aldermen impedes an investigation by the Office of State Auditor into questionable financial activities or withholds information from the commission.

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, passed a resolution in an emergency meeting Monday, July 26, empowering LGC Secretary Sharon Edmundson to take that action if conditions warrant.

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“As the chair of the Local Government Commission I felt it was necessary to pass the resolution in order to send the strongest possible message to the Spring Lake elected officials that the Fiscal Accountability Agreement they agreed to is serious,” Treasurer Folwell said. “Any second spent trying to get between the work of the LGC, the Auditor’s Office and the team on the ground is a second that can never be spent on getting it right and keeping it right on behalf of taxpayers and getting Town Hall open again.”

The Town Hall was closed to foot traffic and employees were sent home on July 15 at the direction of State Auditor Beth Wood, though drive-up and drop box service remained available.

Spring Lake, a Cumberland County town of 12,000 residents near Fort Bragg, is one of two municipalities that voluntarily entered into a Fiscal Accountability Agreement with the LGC to help them meet their obligations and duties under the Local Government Budget and Fiscal Control Act. State statutes require that local governments establish and maintain an accounting system designed to show in detail liabilities, equities, revenues and expenditures. Staff at the LGC determined the town’s system does not meet those criteria, though current staff is not implicated in that deficiency.

The Board of Aldermen meets in regular session tonight. A closed meeting is on the agenda at which legal matters will be discussed.

Monday’s resolution authorizes Edmundson, when she deems necessary:

  1. To impound the books and records of the town, assume control of the finances of the town and oversee and direct all its financial affairs as set out in N.C.G.S. Chapter 159 and the rules of the commission; and
  2. To deliver to the town, its officers, and Board of Aldermen the resolution from the commission pursuant to the provisions of N.C.G.S. Chapter 159; and
  3. To report to the commission on the matters listed and on the town’s readiness to comply with the requirements of N.C.G.S. Chapter 159 in order to provide a recommendation and time schedule for restoring the town to fiscal health and returning to the town control of its financial affairs.

Monday’s vote follows LGC action at a June 22 emergency meeting during which a vote was taken to send a notice of warning to the town that the commission would assume control of the town’s finances if it didn’t pass a responsible budget with reasonable expenditure and revenue estimates. That vote was preceded by discussion about deep concerns over potential budget deficits, longstanding fiscal disarray and an investigation into missing money.

At that meeting Wood 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. There’s a lot of things going on,” Wood said at the time. “They’ve got a not-for-profit out there that some of them started, and it’s gotten them in a financial situation that’s just terrible.”

The Local Government Commission provides resources, guidance and oversight to more than 1,300 units of local government on topics ranging from annual budgets, internal controls and debt management to pension and other post-employment benefits such as health care. The State and Local Government Finance Division handles the sale and delivery of all state and local debt and monitors the repayment of state and local government debt. More information can be found here.