At a meeting Monday night, Spring Lake Finance Director James Overton presented town commissioners with several important updates regarding the town’s financial standing.
The meeting marked Spring Lake commissioners’ first official convening since the town was sanctioned by the state for being late on annual audits from the last three fiscal years.
The North Carolina Local Government Commission voted on Sept. 9 to withhold portions of Spring Lake’s sales tax revenue — $37,500 in total — for the late audits. The withheld money will be returned to the town after the audits are submitted. Town officials expect the late audits to be completed by the end of the year.
General fund balance
Overton primarily focused Monday’s presentation on an overview of the town’s general fund from the last five years.
In late 2021, the Local Government Commission took control of Spring Lake’s finances following years of major financial mismanagement. A 2022 investigative audit found that the town’s former finance director embezzled nearly $570,000.
A town’s general fund includes both restricted and unassigned money. Restricted funds are those that have been earmarked to pay for specific predetermined expenses.
Overton told CityView that unassigned funds are determined by the cash that the town has in its accounts — which includes a cash checking account — minus any liabilities or expenses the town may have. Unassigned funds are essentially a town’s operational cash flow, and are used to cover daily expenses, meet payroll or pay bills.
In 2021, the general fund’s cash checking account was $360,790 in the negative, Overton said. The general fund should have also contained $726,292 in restricted funds, he said. The town had to borrow over $1 million from the water & sewer fund to cover the shortfall. Overton said the town was left with just $225 in petty cash.
After the LGC took control of the town’s finances, the unassigned general fund balance saw significant improvement. In 2022, the unassigned fund balance was about $550,000 in the negative, and now totals $2,601,706.
The LGC took several actions to restore the town’s cash and fund balance before their oversight ended in summer 2024. They delayed almost all capital outlay projects, decreased repairs made to buildings, equipment and infrastructure and transferred the town’s recreation department to Cumberland County and the City of Fayetteville’s control. During these transitions, an accounting firm was hired to assess and fix the town’s financial books at a cost of nearly $1.7 million.
Tardy audits
At the meeting, Overton also spoke about several past-due annual audits from the last three fiscal years.
Overton explained that financial records were so poorly handled by previous finance department staff that the LGC waived the requirement to submit an audit in 2021, but that corrections had to be made to several years of audits — back to fiscal year 2019 — to perform audits for subsequent years. The audits are expected to be finished by the end of the year.
The next Spring Lake Board of Commissioner meeting will be held at 6 p.m. on Monday, Oct. 13 at Spring Lake Town Hall, 300 Ruth St.
