About the Local Government Commission

In 1931 the North Carolina General Assembly established the Local Government Commission to help address the problems in local government finance caused by the depression. In 1933, 62 North Carolina counties, 152 cities and towns, and some 200 special districts were in default on the principal or the interest or both of outstanding obligations.

Currently, the State of North Carolina has a larger percentage units rated “AAA” by national bond rating agencies when compared to other states, and the debt of its local governments in general finds a significantly better reception on the national bond markets than the national average. Many attribute this favored credit status, in part, to the work of the Local Government Commission.

The Local Government Commission or LGC, established by G.S. 159-3, provides assistance to local governments and public authorities in North Carolina. It is staffed by the Department of State Treasurer and approves the issuance of debt for all units of local government and assists those units with fiscal management.

The primary mission of the LGC is focused in three areas of responsibility and authority.

First, a unit of government must seek LGC approval before it can borrow money. In reviewing each proposed borrowing, the LGC examines whether the amount being borrowed is adequate and reasonable for the projects and is an amount the unit can reasonably afford to repay.

Second, once a borrowing is approved, the LGC is responsible for selling the debt (or bonds) on the unit’s behalf. While state agencies in some other states are charged with approving local government debt, it is the combination of the power of approval with the power of sale that makes the LGC unique in the nation.

Third, the LGC staff oversees the annual independent auditing of local governments, monitors the fiscal health of local governments, and offers broad assistance in financial administration to local governments.

The Commission is composed of nine members: the State Treasurer, the Secretary of State, the State Auditor, the Secretary of Revenue, and five others by appointment (three by the Governor, one by the General Assembly upon the recommendation of the President Pro Tempore and one by the General Assembly upon the recommendation of the Speaker of the House). The State Treasurer serves as Chair and selects the Secretary of the Commission, who heads the administrative staff serving the Commission.