The state's Local Government Commission could soon take over the troubled finances of a small town in Robeson County. It's one of more than a dozen towns that faced financial scrutiny from the commission on Tuesday.
The town of Rowland is home to about 900 people along the South Carolina border. Its water and sewer system has been operating at a loss for four years, and it has more than $150,000 in unpaid bills. It’s been using grant money for purposes not allowed under the grant terms, such as payroll expenses.
An audit found that its “financial circumstances raised substantial doubt about its ability to continue as a going concern.”
Rowland Mayor Robert McDougald told the Local Government Commission Tuesday that he's hopeful growth from the nearby Lumbee Tribe's economic ventures will bring new revenue and help correct the problems.
"We’re looking at a major increase in housing, we’re looking at a major increase in industry that’s going to support the tribe in their endeavors," McDougald said. He added that the town has cut expenses, reducing its number of police officers from six to three, and he's considering increasing property tax and utility rates.
But commission secretary Denise Canada says she's not sure the town is financially viable.
"I don’t know that you have enough money to bridge yourself between now and the future you envision," she said.
The commission issued a warning to Rowland, and it could take control of the town at its meeting next month when it's asked town officials to return with more information and a corrective action plan. It took similar action with the town of Ronda in Wilkes County, which is considering a voter referendum to decide whether to disband the town.
"We collectively are tasked with making sure that no municipalities in North Carolina go bankrupt, and we're perilously close here," State Treasurer Brad Briner said of Ronda's predicament.
Canada says the problems were identified when Rowland and Ronda caught up on late audit reports reviewing their finances.
“It's not submitting the audits for the sake of the audit,” she said. “It's so we can assess the condition of the finances, and this is a case where we have the audits and we can assess the condition of the finances, and the finances are concerning.”
The commission voted to withhold sales tax revenue for 11 small towns that have fallen several years behind in submitting required audits. The revenue penalty was created by the legislature to punish local governments that don’t follow auditing rules.
The 11 towns are: Macclesfield (Edgecombe County), Littleton (Halifax County), Linden (Cumberland County), Dover (Craven County), Candor (Montgomery County), Autryville (Sampson County), Sims (Wilson County), Morven (Anson County), Robersonville (Martin County), Robbins (Moore County) and Aurora (Beaufort County).
A number of other towns with late audits got a temporary reprieve from losing sales tax money. The town of Colerain, in Bertie County, got a reprieve because the State Bureau of Investigation is looking into embezzlement allegations involving the mayor.
Another, the Northampton County town of Gaston, persuaded the commission that it’s making progress to catch up on audits.
One of the commissioners pointed out that the cost of audits are more than some of the state’s smallest towns can afford.
“What are alternative ways of reviewing the books of these units that can make sure that we're not lowering the standards, make sure that we are getting the information that we need, and the public and the taxpayers are getting the information they need to feel confident in the finances?” Canada said. “Can we do that with less than a full audit? We are testing out an idea that we believe we can.”
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