State oversight officials tell Rocky Mount council its finances are 'dire,' urge immediate cuts

Denise Canada, secretary of the North Carolina Local Government Commission and director of the state and local government finance division at the Department of State Treasurer, told Rocky Mount city leaders their financial position is urgent and requires immediate action. “I cannot be clear enough with you that your financial situation is dire,” she said during a council retreat presentation.

Canada showed cash-flow estimates prepared by city staff that, she said, project the city could run out of cash at the end of July if the expected revenues and expenditures hold. She called on the council to focus on expense reductions in the short term because “there’s not any way that you can increase your revenue enough” before the July shortfall.

Sharon Edmondson, director of finance for the North Carolina League of Municipalities and a former LGC staffer, echoed Canada’s assessment, telling the council the immediate problem is cash flow and that revenue measures such as property tax-rate changes do not provide relief soon enough. “You run out of money in July,” Edmondson said, and the board must decide whether to make large, urgent cuts.

Both officials underscored the LGC’s statutory authority to oversee local finances and, in extreme cases, to impound books and assume financial control. Canada said the LGC does not want to take over Rocky Mount and that state oversight typically happens because of sustained leadership or staffing failures, not to punish officials. “If the LGC steps in and takes over the finances, it will be because there has been a failure of board leadership,” she said, adding the commission is prepared to work with the city.

Council members asked for concrete next steps. Canada recommended the council adopt a budget amendment in March, before the Local Government Commission’s April meeting, and provide updated cash-flow projections showing the city can meet debt-service obligations. “You have about $8,600,000 due next year in various payments,” she said when describing upcoming obligations the city must be able to cover.

Council members and staff agreed to present revised projections and a set of proposed cuts at a council priority session. Staff said capital projects already classified as 'frozen' under the revised budget will be provided to the council and that they can run additional cash-to-actual reports in Munis. Officials also discussed options such as suspending nonessential capital outlays, selling unpledged assets, and, as a last-resort short-term measure, furloughs.

Edmondson and Canada warned the council to be transparent with residents about suspended services and emphasized that some revenue streams are restricted by grant or statute and cannot be used for general operations. They also noted there is no state-level operating fund available to plug municipal operating deficits; state assistance, they said, generally cannot be used to correct operating shortfalls.

Council members who spoke during the session acknowledged past disagreements and said they will work collectively to adopt a plan. The mayor pro tem recessed the meeting until the council’s next session and asked staff to deliver the requested updated cash-flow estimates and a list of frozen projects for a March 23 meeting so the council can consider an amended budget before the LGC meets in April.

The council did not take any formal votes during the session; staff and outside officials agreed to continue technical assistance and training opportunities while the council prepares its amended budget.