What happens when NC takes over a town like Spring Lake?

Hundreds of cities and towns dot the North Carolina landscape, from Charlotte and its nearly 900,000 people to Dellview, population 6.

Almost all elect mayors and other city leaders responsible for funding local services like the police or parks and recreation. And while there are often disagreements over exactly how the city’s money should be spent, the state government generally stays away and lets each community make its own decisions.

Sometimes, however, things get so out of control that the state has to intervene.

That’s what happened in Spring Lake and East Laurinburg in late 2021, when a group called the Local Government Commission announced it was taking control of those two towns’ finances. Led by NC Treasurer Dale Folwell, it’s the type of state commission whose attention is rarely a good sign.

Spring Lake, about 80 km south of Raleigh and in the suburb of Fayetteville at the northern end of Fort Bragg, is notable for being by far the largest city whose finances have been taken over by the state. It has a population of approximately 12,000 people and a budget of $13 million. Most of the other places the state has supported, on the other hand, have budgets under $200,000.

Was there embezzlement or anything criminal?

In the two recent cases, investigators working for NC Auditor Beth Wood accused city officials — who had the power to write checks on behalf of their cities — of abusing that power and using public funds as their own personal bank account.

The former East Laurinburg CFO is accused of taking about $11,000, and the former Spring Lake CFO is accused of taking about half a million dollars.

In either case, this missing money along with other more general mismanagement has left each town with fiscal problems serious enough to warrant the attention not only of Wood, but also of Folwell, the city’s chief financial officer. ‘State. So the Local Government Commission added Spring Lake and East Laurinburg to the list of local governments not trusted to make their own financial decisions.

The News & Observer previously reported that in Spring Lake, for example, the city has no record of dozens of vehicles that DMV records show it owns. No one can tell if the cars are missing, stolen, accounted for or have already been sold or otherwise disposed of.

How many cities are taken over by the State?

It’s a short list.

Of more than 1,000 local government units in the state, only seven are currently under state control. Another, Spencer Mountain in Gaston County, ceased to exist after the 2020 census showed its population had fallen to zero.

And a few others have already been taken over but then regained the right to control their own money. These are Enfield in Halifax County, East Spencer in Rowan County and Princeville in Edgecombe County, which have come under state financial control not once but twice. .

Princeville, the nation’s oldest black charter city, was recently the subject of a News & Observer article that focused on its long history of flooding and rebuilding during increasingly severe natural disasters.

What happens after the takeover of North Carolina?

For some cities, when they lose financial control, they risk ceasing to exist altogether. The state revokes the city’s charter and all services the city provided to its residents would end or be taken over by someone else, such as a private company or the county government.

That’s what will happen to East Laurinburg this summer, when it ceases to be a city in June. The town was created in the early 20th century, The N&O reported last year, specifically to allow a textile factory to pay lower property taxes. But the factory closed a long time ago and the town has only 281 inhabitants, one employee and few services.

But this is considered an option of last resort. Rather, the LGC wants to help local leaders get their cities back on their feet and show themselves capable of taking back responsibility for their own financial decisions.

Frank Lester, spokesman for Folwell, told The News & Observer that “the goal is to regain control as soon as possible and feasible” but that cities will not automatically regain control of their spending decisions.

“There’s no minimum time involved,” Lester said. “The time required will vary depending on the specific circumstances of the local government. LGC staff are actively involved in both the day-to-day financial operations of local government and working with local councils or boards.

But if local leaders show they can work with the commission to meet financial targets and other requirements, he said, then the LGC will vote to return control to them. The main objective, he said, is to “ensure that the local government has taken the necessary steps to maintain its financial stability and is on the path to sound fiscal management”.

What types of cities tend to be under state control?

Usually very small projects, where budgets are so rudimentary that even minor errors – or thefts – can account for a substantial percentage of the budget. They are also usually in rural areas.

Spring Lake is a notable exception on both counts. It is located in one of the largest counties in the state and has a budget nearly 10 times that of the next largest city to be taken over by the state.

Here is a list of the seven local governments currently under state control, and their most recent budget information from Folwell’s office. Six are towns and one is a “health district”. Many cities have special tax districts, such as fire districts or health districts, which collect additional taxes within that district’s boundaries for a specific purpose, such as funding firefighters or sewage systems.

Spring Lake (Cumberland County): $13 million annual budget

Robersonville (Martin County): annual budget of $1.45 million

Pikeville (Wayne County): annual budget of $688,379

Cliffside Sanitary District (Rutherford County): annual budget of $194,486

Eureka (Wayne County): annual budget of $176,507

Kingstown (Cleveland County): annual budget of $171,440

East Laurinburg (County of Scotland): annual budget of $75,000

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Will Doran reports on North Carolina politics, particularly the state legislature. In 2016 he started PolitiFact NC, and before that he reported on local issues in several cities and towns. Contact him at [email protected] or (919) 836-2858.

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