Leaders of the financially failing city of Rocky Mount told a state commission on Wednesday they have begun to implement their plan to restore the city to economic health through budget cuts, increased utility rates, and honest assessments of what the city can afford.
A couple of months ago, after years of questionable spending and warning signs, Rocky Mount officials realized the city would run out of cash around July or August. That led to demands from the Local Government Commission, an arm of the state Treasurer’s office, for city leaders to present their plan for balancing its budget so it can continue to pay its bills. The Local Government Commission watches out for city and county fiscal health.
The commission can vote to have the state take over a struggling town’s finances to make sure it does not default on its debt.
The commission did not go that far for Rocky Mount. Members voted instead for increased oversight of city finances with a requirement for twice-monthly reports. A state takeover would be the next step.
Some members of the commission delivered harsh assessments of the lack of budget oversight by Rocky Mount’s elected officials.
“I just see a failure of leadership,” said Secretary of State Elaine Marshall, a commission member. “I find the culture to be unworthy of the citizens of Rocky Mount. I do hope that’s changed.”
In a press release, North Carolina Treasurer Brad Briner said, “The actions and inactions of the Rocky Mount City Council are nothing short of financial malpractice.”
Rocky Mount leaders have made progress reducing its “massive deficit”, Briner added, “but are still avoiding making some tough decisions about overspending. It is not sustainable to ask citizens to shoulder the burden of budget mismanagement.”
Rocky Mount Mayor Sandy Roberson told the commission that the financial problems were embarrassing for the city.
“We have seen the light,” he said. “We have certainly gotten the memo. We certainly understand the seriousness of this.”
He acknowledged that the city has more work to do, but said there’s a good team in place and a commitment by the city council to move forward.
Rocky Mount’s former city manager and council responsible for financial crisis, Boliek says
In early March, state Auditor Dave Boliek released a report identifying increased spending combined with declining revenues as the cause of Rocky Mount’s money problems.
The combination led to a 78% drop in the city’s cash and investment balances, resulting in the loss of $80 million in two years, according to the audit.
Boliek said when the audit was released that lack of city council oversight and mismanagement by former city manager Keith Rogers Jr. were responsible for the financial crisis, NC Newsline reported.
The city laid off 100 of its full-time employees last year, or about 10% of its workforce. In late February, the city council made cuts to this year’s budget, said city finance director Cheryl Spivey.
Starting Wednesday, Rocky Mount residents saw a 15% rate increase for electricity, gas water, sewer, and trash collection. The additional revenue is meant to help the city climb out of its financial hole.
Before the changes, the city was projected to have been operating at a $3.4 million loss. Now projections are that the city will be able to pay its bills with $4.8 million to spare.
Rocky Mount has a new city manager, Elton Daniels. The city had not had a qualified finance director since 2001, Daniels told the commission. Hiring Spivey, someone with a long history in government finance who once worked for the Local Government Commission, is an example of the city’s commitment to do better, he said.
“I think we’re going in the right direction, even though we have a large mountain to climb,” Daniels said.
In its history, the Local Government Commission has moved a dozen times to take over local government finances. If it were to take over in Rocky Mount, that would be the largest municipality to lose control of its finances to state government.
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