(Raleigh, N.C.) – In a sweeping success story for local governments around the state, the Local Government Commission (LGC) has removed 38 entities from its Unit Assistance List (UAL), a monitoring device that flags and tracks local governments and public authorities battling financial and governance challenges.
The LGC, which is chaired by State Treasurer Dale R. Folwell, CPA, and staffed by the Department of State Treasurer (DST), recently announced that the 27 towns, eight counties and three utility districts had made such significant improvements that they were no longer included on the list.
“This is incredibly good news for those local governments because it brings stability to their operations. By enhancing governance, transparency and stewardship of the money entrusted to them, these units have demonstrated a path forward that others can model,” Treasurer Folwell said.
“This was not an easy or quick turn of events. Some of these issues evolved over many years due to internal and external circumstances. Determining what’s right, getting it right and keeping it right was a deliberate and painstaking effort to achieve the necessary improvements, and all of these officials deserve our gratitude for stepping up to the challenge,” Treasurer Folwell said. “Through their resolve, they have provided much needed certainty to the taxpayers and businesses that local affairs are in good shape.”
The Hertford County town of Ahoskie is a prime example of that turnabout. By 2017 it had accumulated more than $21.2 million in debt and was struggling to get its affairs in order. That’s when town officials decided to change course, and have since reduced town debt from 21 to 12 accounts totaling $17.8 million. The 26-point plan was so successful that the UNC Environmental Finance Center produced a short video about Ahoskie’s cost-cutting overhaul.
“The Town of Ahoskie is thankful to the Local Government Commission for its technical assistance during this time,” said Town Manager Kerry McDuffie. “Any local government that really wants to make a meaningful difference for its citizens can. There are plenty of resources in North Carolina to help, which include the Local Government Commission, The North Carolina League of Municipalities, UNC School of Government, North Carolina Rural Water Association and other jurisdictions. If I can assist any other towns, they are welcome to call me.”
McDuffie said the hardest part to fixing financial problems is getting everyone to agree that there is a problem.
“The Ahoskie Town Council was unanimous and adamant about improving the financial situation. That made improving the financial situation easy for me,” he said. “I appreciate the Ahoskie Council allowing me to be a part of improving the financial position of the town. It has been challenging, fun and exciting to work for a town that truly wants to operate as efficiently and effectively as possible for the citizens.”
“Removing 38 units from the UAL is a significant measure of success,” Treasurer Folwell said. “It is one of our largest, if not the largest, clearances at one time.”
While Treasurer Folwell thanked LGC staff members for the yeoman’s work they have been providing, he acknowledged much remains to be done.
“The problems are many, but the staff is few,” he said, noting that 132 municipalities, 17 counties and nine utility districts remain on the UAL under LGC vigilance, and the number in need of help continues to grow.
With that in mind, Treasurer Folwell thanked Gov. Roy Cooper for recently signing Senate Bill 314 and the legislators who shepherded it to passage. The legislation contains a “tool kit” to expand the LGC’s ability to help local governments in difficult circumstances. It also includes provisions for the voluntary and involuntary surrender of municipal charters in financial distress.
The General Assembly established the LGC in 1931 to help address the problems in local government finance caused by the Great 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.
As a direct result of that history, local units of government in North Carolina usually must seek the commission’s approval before they can borrow money. In reviewing each proposed borrowing, the commission examines whether the amount being borrowed is adequate and reasonable for the projects and is an amount the unit can reasonably afford to repay. Because of this approach, the LGC has helped North Carolina maintain a stellar reputation for fiscal responsibility among states.
The State and Local Government Finance Division (SLGFD) staffs the LGC. It oversees the finances of local governments and public authorities in North Carolina and manages the sale and delivery of most state and local debt. The entities subject to this oversight are a diverse group of over 1,100 municipalities, counties, boards of education, public hospitals, utility districts, mental health agencies, housing authorities, universities, airport authorities and other public authorities. This oversight includes ensuring that each unique entity is:
- following industry best practices with regards to their financial operations;
- complying with the North Carolina Local Government (or School) Budget and Fiscal Control Act;
- following all governmental accounting standards as set by the national Governmental Accounting Standards Board; and
- ensuring that all debt is properly issued and serviced in accordance with debt agreements as approved by the Local Government Commission.
The SLGFD markets and sells bonded debt on behalf of issuing local governments and the state. The division also serves as staff to the state of North Carolina and the North Carolina Capital Facilities Finance Agency in fulfilling their respective statutory functions and responsibilities.
Government units removed from the UAL were: