North Carolina’s Local Government Commission voted this week to return full control of all financial affairs to the town of Spring Lake, effective Aug. 1, or as soon as the town can appoint a finance officer.
The ruling — at the LGC’s regularly scheduled meeting on Tuesday — caught Spring Lake officials by surprise, albeit a pleasant one that had Mayor Kia Anthony expressing elation.
“I’m not an overly emotional person, but I cried,” Anthony said. “I was speechless. This has been a long time coming.”
The state assumed control of the town’s books back on Oct. 5, 2021, amid allegations of financial wrongdoing, missing money and budget deficits. An investigative audit released by the N.C. Auditor Beth Wood in March 2022 cited years of mismanagement and documented hundreds of thousands in missing dollars. It was the second investigative audit in less than 10 years, the first of which was conducted in 2016, both indicating misappropriation of public tax dollars by town staff.
In 2022, former finance director Gay Tucker was sentenced to four years in prison after embezzling nearly $570,000 over a five-year period. The audit also included an investigation into missing cars and undocumented credit card purchases.
In the last three years, in an effort to regain the state’s confidence, the town has hired a new permanent town manager, town clerk and town attorney, and an interim police chief. A balanced budget was presented and adopted by the Local Government Commission and endorsed by the town board. The 2022 audit is on track to be completed by December and the 2023 audit is also slated to begin through the contracted services of Raleigh-based accounting firm Cherry Bekaert.
The investigative audit released in 2016 said town employees and three members of the board had spent more than $120,000 on 1,448 credit card purchase unrelated to town business.
According to new Town Manager Jon Rorie, a new finance director and a new human resources manager have been hired, and are onboarding next week. He also said the town is interviewing for more financial staff as well to satisfy goals within the finance department.
These were all strategic goals in the Fiscal Accountability Agreement signed in April 2021 with the Local Government Commission for the town to improve its financial status and internal controls in order to be able to exit the LGC’s fiscal oversight.
The resolution the LGC passed Tuesday returning financial control back to the town says that “the deficiencies which led to the assumption of financial control had been addressed.” The commission staff will help facilitate the return of financial control to the town and continue to monitor the town’s compliance, according to the resolution.
Board response
The Spring Lake Board of Commissioners were given notice a few hours prior to the LGC’s Tuesday meeting that the resolution to release the town from financial control had been added to the commission’s meeting agenda.
“We had no idea until [Tuesday] that this was happening,” Mayor Kia Anthony told CityView. “It’s a great day for Spring Lake.”
Anthony said it was a day town administration and staff had been working toward since she and the majority of the board were first elected.
“We are finally sound and stable,” Anthony said. “We have solidified new practices and policies and never want to look back. It is now time to use what we’ve learned because our work is not finished. This is a new day in Spring Lake.”
Mayor Pro Tem Sona Cooper said she and her fellow board members had been working diligently in the last few years to correct past mismanagement and shore up the town’s fiscal practices. Cooper, who was elected in 2017, was the only board member who was re-elected in 2019; other current board members have each been elected since the LGC’s intervention.
“I started asking for LGC help in 2018, when a few of us knew things were not right,” Cooper said. “This has encompassed quite a bit of our time, but it has been worth it.”
Among the red flags she said town officials noted: audits weren’t being completed, line items were copied from one budget year to the next, and an instance when former Town Manager Daniel Gerald asked for a general fund transfer of about $500,000 to help balance the budget. It was not only a significant amount, but Cooper said it found her questioning why there was such a shortfall.
“There were so many issues, we had so many questions,” Cooper said. “We strategically would miss meetings so we could avoid passing the budget. We were sending so many emails to Sharon Edmundson, deputy treasurer and director of the State and Local Government Finance Division of the Department of the State Treasurer, and asking questions.”
The board, around that time, fired Gerald in a 3-2 vote and asked for a forensic audit, only to have a new board, assembled after the November 2019 election rehire him with promises of economic development projects. To this day, none of the economic development projects promised at the time have come to fruition.
When the state auditors stepped in to look into allegations of financial mismanagement and the town lost its financial control to the state, Cooper said she welcomed the LGC’s assistance.
“We had been asking for help,” Cooper said. “Now, we are better — both financially and policy wise.”
It was her goal to leave the town in better shape than she found it when first elected, she said.
“We now have a blueprint to leave behind,” Cooper said. “I’m so extremely proud of this group. We’ve turned a page.”
Town Commissioner Robyn Chadwick said the LGC’s release demonstrates what can be done when a good team works together.
“The hard work is manifesting,” Chadwick said. “We put our town first and I’m elated at this outcome.”
Fellow Commissioner Raul Palacios echoed this sentiment, highlighting the town’s growth.
“After a near three-year ride with the LGC, Spring Lake is back in the driver’s seat,” Palacios said. “This milestone marks a significant achievement in our efforts to stabilize and strengthen our town’s financial management.”
Without knowledge of the item on the LGC agenda Tuesday, Palacios and Commissioner Marvin Lackman each addressed residents at the meeting Monday night, speaking about the town’s financial progress.
Lackman told CityView that he didn’t realize at the time how timely his words were as he spoke on new hires for town manager, town clerk, town attorney and police chief, as well as a new finance director and human resources manager.
“I’d like to emphasize that progress is being made in our town,” Lackman said on Monday night. “You are seeing stability and honesty as we move forward. Spring Lake is on the right track.”
Palacios said he was thankful for the Spring Lake community for its confidence and support during this period and the interim town managers who helped before Rorie was hired, including Samantha Wullenwaber, Joe Durham and Jason Williams.
He also expressed gratitude to his fellow board members for spending long hours undergoing financial training, developing policies and procedures through the audit committee and staying on task.
“This was the key issue that caused me to run for public office,” Palacios said. “Thanks to our citizens and staff who reported financial concerns. And also to the LGC staff who demanded that our community take this seriously.”
Treasurer response
N.C. State Treasurer Dale Folwell, who serves as the chairperson of the LGC, said Wednesday that the commission had done everything statutorily it was required to do.
In the last three years, Folwell has helped the town navigate the financial crisis with a strong hand, at times disagreeing with decisions of town board members, including a 3-2 vote in October 2022 to hire Justine Jones as a town manager. Folwell at the time said that he didn’t believe she was the right fit for the town, and that Spring Lake needed a manager with more experience and a stronger financial background.
“The town has drowned twice in the last 10 years,’’ Folwell said at the time. “My passion is a representation coming from thinking of the low- and fixed-income residents in Spring Lake. Spring Lake needs to present an image that will attract top talent. There is no room for error anymore.”
He repeated through the years the town needed to learn to operate with the highest levels of transparency, competency and governance.
Anthony said now that Spring Lake had realized leadership to fill the roles needed in administration and finance, that staff can focus on projects including updated infrastructure, community activities and revitalizing Main Street.
“This is a new beginning for Spring Lake,” Anthony said. “We came together as a board and staff, stuck together, did it because we care for our town and community. Now, we can do more.”
