State authorities have seized control of Pikeville's finances after the Wayne County town racked up debt and had little cash on hand to pay for operations.
The Local Government Commission, which is part of the State Treasurer's Office, took the action last week in an effort to save Pikeville from financial ruin.
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State Treasurer Dale Folwell said rural towns across North Carolina have faced similar financial difficulties in recent years. The coronavirus pandemic only exacerbated problems that have built since the recession more than a decade ago, he said.
"Some people think this is an act of COVID; this is not an act of COVID. This is not a revolution; this has been an evolution," Folwell said. "This has been occurring over the last two decades, especially in rural North Carolina, especially in eastern North Carolina. It can be associated with a major industry that had been there for centuries leaving town, and, ultimately, that sets many of these communities on a spiral."
The Local Government Commission took control of the finances in Eureka, another Wayne County town, two years ago. It took over Robersonville, in Martin County, and Kingstown, in Cleveland County, last year.
"What we have to do as the Local Government Commission is figure out what’s right, get it right and keep it right, starting with making sure that the taxpayer money that these entities have been collecting are properly accounted for," Folwell said. "An even harder conversation is to determine if these communities are actually viable going forward."
Pikeville, which has 600 residents, has 65 days to pay off $158,071 in debts for essential services like water and sewer. It's unclear how long after that the state will retain control of the town's books.
Pikeville officials didn't respond Tuesday to WRAL News' requests for interviews, but Mayor Charles Hooks issued the following statement:
"At this time, the Town of Pikeville is currently being assisted by the NC State Auditor's Office to help with our 2020 audit and to assist/monitor our current staff. Pending this review of our financial records I am certain the the Town of Pikeville is in great shape financially and welcome the State Auditor's assistance in helping our town become more streamlined and transparent."
In the worst-case scenario, Folwell said, the state may have to dissolve the town's government and allow it to then be taken over by the county. But he said he and the Local Government Commission try to avoid that at all costs.