State takes control of Spring Lake's finances
State officials on Tuesday took control of Spring Lake's finances, citing concerns that the town on the Cumberland-Harnett county line could default on its debt in the coming weeks.
The Local Government Commission, which has a statutory duty to monitor the financial well-being of more than 1,100 local government units, voted unanimously in favor of the move, two months after the commission warned Spring Lake officials that they needed to get their budget and fiscal practices in order.
“This is not an agenda item we ever desire. But we have to continue on behalf of the taxpayers to find out what’s right, get it right and keep it right,” State Treasurer Dale Folwell said.
Spring Lake has an estimated budget deficit of $1.2 million, and $221,385 in debt service payments are due in November.
Town officials entered into an agreement with the LGC in June to take steps to get local financial operations in order. But a month later, the commission said the town didn't detail assets, liabilities, revenue and expenditures in its accounts, as required by state law.
Spring Lake officials have repeatedly permitted spending that wasn't part of the annual budget, allowing the town's general fund to fall into a deficit, according to state officials. LGC staff recently learned, for example, that town officials failed to seek or obtain required LGC approval of a $1 million loan on Oct. 28, 2020, from the South River Electric Membership Corporation to build a fire station.
Spring Lake's Board of Aldermen passed a resolution at an emergency meeting Tuesday in support of the financial takeover.
The beleaguered town of 12,000 residents near Fort Bragg also has been under investigation by State Auditor Beth Wood, forcing a temporary closure of Town Hall in mid-July while auditors examined records.
Spring Lake becomes the sixth local government unit under financial control of the LGC. The others are Eureka and Pikeville, both in Wayne County, Kingstown in Cleveland County, Robersonville in Martin County and the Cliffside Sanitary District in Rutherford County.
