SPRING LAKE - The Spring Lake Board of Aldermen on Monday night heard a status report on the town’s finances from officials with the Local Government Commission and officially appointed Joe Durham as the interim town manager.
Mayor Kia Anthony began the meeting with a moment of privilege to address the letter the town received from State Treasurer Dale Folwell last week.
“We are working on the response,’’ Anthony said. “There were a few discrepancies that we want to address in the letter, but that letter will be published once it is sent off to the state treasurer.”
In the letter sent to the town, the Local Government Commission raised concerns about several issues, including the board’s violations of the state’s Open Meetings Law, the lack of compliance with the Local Government Budget and Fiscal Control Act and whether the board was willing to work collaboratively with its staff.
The commission, which took over the town’s finances in October, has asked that the town respond by April 13.
During Monday’s meeting, the board heard from Local Government Commission staff member David Erwin, who is serving as the town’s finance officer. He gave a financial summary to the board and allowed for questions throughout his presentation.
Erwin, who said the town was two-thirds through the budget year, reported a positive revenue over expenditures as of the end of February.
“January was usually the high point of cash for the general fund so right now it looks good right now, but it will be necessary to get us through June,’’ Ewin said. “From here on out expenditures will exceed revenue, if things go as anticipated, but that is not unusual for municipalities.”
Other discussion points included the water and sewer fund. The town transferred nearly $1.9 million from the water and sewer fund to the general fund over four years starting in 2014 to support its general fund operations.
Alderman Raul Palacios asked whether the town would need to pay back what was transferred from the water and sewer fund.
Erwin said the transfers were addressed in the state audit released March 17. Although the transfer itself was not illegal, if the town wanted to use state funds, the money would need to be replenished. He added that his staff was working on something that might help the town in that effort. He said he would bring that to the board sometime later.
Palacios also asked about Powell Bill allocations and whether the town could receive those allotments every year. The State Street-Aid (Powell Bill) program designates funds for municipalities to help with street resurfacing, construction and maintenance of roads and drainage systems.
“I will be talking to Joe (Durham) about that,’’ Erwin said. “You use them, but I don’t know if they are properly documented and it’s very specific how they can be used.”
Erwin said the town would be working on ways to better document how the money is used because it does use the funds otherwise on an annual basis.
There was also a discussion on American Rescue Plan Act funds, which the Local Government Commission staff said they had been trained on Monday. Erwin also said the town needs to stay within its means to continue toward replenishing the general fund and getting out of the negative.
“As we work towards a 2023 budget, it will not differ much from the existing budget in terms of Spring Lake’s basic operating revenues and expenditures,’’ Erwin said. “The town needs to continue to live within its current resources while also budgeting for the eventual elimination of the budget deficit. We will help you all we can in that, but it’s a steep climb right now.”
Anthony asked how far along the town was on an exit strategy, which had been brought up in the January financial presentation to the board.
Erwin said the town was not far along in that process.
“The biggest hurdle right now is staff,’’ Ewrin said. “The town doesn’t have any financial staff.”
Aldermen Marvin Lackman and Palacios said after the meeting that they were glad that the staff was able to come to the meeting to explain the numbers in greater detail and to answer their questions, even if it was delayed by a couple of weeks. The commission had been scheduled to present the financial report at the March 28 meeting but it was removed from the agenda.
“We were able to take the time to look through the report and ask the questions, which is important for us to be able to do,” Lackman said. “It helps us as we plan for the future.”
Hiring of interim town manager
In other action, the board appointed Durham as the interim town manager with a unanimous vote. The appointment is subject to the approval of the contract by the Local Government Commission. The contract has not been finalized, Palacios said.
Durham, who was sworn in at the March 28 meeting and has been working for the town for the last couple of weeks, said he would be scheduling budget work sessions shortly, working with Erwin and the Local Government Commission staff.
“Staff has and will continue to work with the LGC staff on all issues before us as it relates to the audit and those findings,’’ Durham said. “That cooperation has been good and hopefully will continue to work in an effective manner.”
Durham said in February that hiring financial staff would be one of the issues he would be addressing in his time as interim town manager.
The board also appointed the interim town manager and the executive assistant in the town inspections department as the administrative officer for the town to review non-residential site plans in compliance with Chapter 160D of the N.C. General Statutes and the Chapter 42 zoning ordinance for the town.
The board went into closed session for one hour citing the general statute for personnel and adjourned with no action taken.
Jami McLaughlin covers Spring Lake for CityView TODAY. She can be reached at jmclaughlin@cityviewnc.com. Have a news tip? Email news@CityViewTODAY.com.
