After raising concerns over potential budget deficits, longstanding fiscal disarray and an investigation into missing money, members of the state's Local Government Commission on Tuesday warned Spring Lake officials that they face a possible state takeover.
The commission, which is led by State Treasurer Dale Folwell, provides resources, guidance and oversight to more than 1,300 local government units statewide on topics ranging from annual budgets, internal controls and debt management to pensions and health care. The commission seized control of the Wayne County town of Pikeville's finances in April.
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“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,” Folwell said in a statement. “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 has an estimated budget deficit of $1.2 million, but the town's proposed budget funds only $285,000 of that shortfall, state officials said.
Town Manager Samantha Wullenwaber proposed a break-even budget that included some significant reductions, as well as restoring a bit of a balance, but members of the Board of Aldermen want to restore the cuts with no way to pay for them, officials said.
“There’s no logistical reason this town should be in the shape that it’s in,” LGC Secretary Sharon Edmundson said in a statement, noting that Spring Lake 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," Edmundson said.
Troy McDuffie, who retired in May as Spring Lake's police chief, said town officials froze six positions in the police department – one-fifth of the force – and were discussing possible furloughs and salary cuts. He said the cuts jeopardized the safety of Spring Lake's 12,000 residents.
State Auditor Beth Wood, an LGC member, defended Wullenwaber and said leadership is lacking from the aldermen. She urged the commission 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."
The Board of Aldermen are scheduled to adopt the town's 2021-22 budget next Monday. If the board attempts to pass a budget that isn't balanced or fiscally sound, Edmundson said LGC staff attending the meeting will recommend that the commission step in to assume full control of the town’s finances.