(Raleigh, N.C.) – With a payroll looming and key positions to process employee checks unfilled, the Local Government Commission (LGC) voted at a special meeting (audio here) on Wednesday, March 23, to help the financially troubled town of Spring Lake avoid payment processing problems. The commission also was informed that Spring Lake attorney Jonathan Charleston had submitted his notice to resign earlier in the day.
The meeting was held a week after release of a state audit that found more than a half-million dollars in wrongful and questionable spending and missing money in the Cumberland County town of 12,000, which has a current budget of $13 million. The audit also exposed a failure to adequately conduct an inventory of municipal vehicles to determine if there has been theft or misuse, and revealed incomplete or missing minutes of Board of Aldermen meetings.
The LGC, chaired by State Treasurer Dale R. Folwell, CPA, and staffed by employees in the Department of State Treasurer’s State and Local Government Finance Division (SLGFD), assumed control of Spring Lake’s finances on Oct. 5, 2021, citing authority under N.C.G.S. Chapter 159 and LGC rules.
The commission has a statutory duty to monitor the financial well-being of more than 1,100 local government units. Commission members took the rare action to impound Spring Lake’s books and records, assume control of its finances and oversee and direct all its financial affairs due to concerns the town might be in danger of default on nearly a quarter-million dollars in November 2021 debt service payments.
“We are pleased that the Local Government Commission was able to assist Spring Lake in resolving this payment processing situation,” Treasurer Folwell said. “Employees, taxpayers and residents depend on their elected officials to find out what’s right, get it right and keep it right, and any time we can help a local government in that capacity we are ready and willing. Our only goal is to save Spring Lake and keep it from drowning.”
Samantha Wullenwaber, who had the support of the LGC as the town’s deputy finance officer and interim town manager, was terminated last Friday, State Auditor Beth Wood told fellow LGC members. Wullenwaber had authority to sign checks, and her abrupt dismissal left the town with limited options to perform that function. Wednesday’s LGC action should ensure checks go out on time.
Wullenwaber prepared a response to the state audit that met criteria Wood said were necessary to explain how the problems occurred, spell out action to address findings of the audit, identify who was responsible for the work and provide a timeline for completing the steps. The Board of Aldermen opted instead to submit a response from the town attorney that Wood said was vague and misleading, and did not provide essential answers.
The LGC voted Wednesday to retain David Erwin as town finance officer, and appointed Tiffany Anderson and Susan McCullen as deputy finance officers. All three are SLGFD employees. Erwin was retained as account signatory. Anderson and McCullen also were named as account signatories. Wullenwaber, former mayor Larry Dobbins and former mayor pro tem Taimoor Aziz were removed from the accounts since they are no longer in office.
In his letter to Spring Lake Mayor Kia Anthony on Wednesday, Charleston expressed appreciation for the opportunity to work with the Board of Aldermen, saying, “While we have worked with the Town through several challenges, we believe now is a good time to transition to new counsel.” His law firm has a contractual obligation to give a 30-day advance notice to terminate its agreement, but Charleston said “we can accommodate a sooner departure with the Town’s express consent.”
Spring Lake is one of eight local government units for which the LGC has assumed control of finances. The others are Kingstown (Cleveland County), Spencer Mountain (Gaston County), Robersonville (Martin County), Cliffside Sanitary District (Rutherford County), East Laurinburg (Scotland County) and Eureka and Pikeville (Wayne County).