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In Spring Lake, disagreements over progress, fiscal health leave state agency miffed

Relationship with State Treasurer Dale Folwell, who says town is ‘drowning,’ turns sour


State Treasurer Dale Folwell has made it clear: almost three years into the state’s takeover of the town of Spring Lake’s finances, he’s still unhappy with what he sees.

“I’m concerned about their ongoing ability to fulfill their financial promises,” he told CityView.

Mayor Kia Anthony, meanwhile, believes the treasurer’s harsh words only serve to distract from the positive changes and accomplishments Spring Lake has made. 

“There’s always going to be workplace discrepancies,” Anthony told CityView Wednesday. “What needs to be discussed is the progress that we’ve made and the progress that we’re continuing to make. Not once has anything that’s happened in the town stopped us — this administration, the staff, the on-site LGC [Local Government Commission] staff and our contracted finance staff — from rectifying the issues that we find and moving forward.” 

Back in October, a staffer with the Local Government Commission sang Spring Lake’s praises, noting positive financial reports and continued work by officials to progress. So what’s changed since?

What’s the Local Government Commission?

The Local Government Commission oversees and provides guidance to local government units in North Carolina, according to its webpage. Folwell, who’s been state treasurer since 2017, serves as the chairman of the LGC. In extreme cases, when a local government unit is no longer able to fulfill its financial responsibilities, the LGC will take over management of that unit’s financial affairs. 

That’s what happened in Spring Lake when the commission voted to take control of the town’s financial affairs Oct. 5, 2021, according to the LGC’s website. The move stemmed from years of financial mismanagement, including an embarrassing embezzlement case. Former finance director Gay Cameron Tucker was sentenced in 2022 to four years in prison after stealing nearly $570,000 from the town, CityView reported. Besides Spring Lake, three other units are currently under LGC control — Kingstown, Cliffside Sanitary District and Eureka.

The Local Government Commission has four ex-officio members, meaning they are automatically appointed because of their office — Folwell, Secretary of State Elaine Marshall, Secretary of Revenue Ronald Penny and State Auditor Jessica Holmes. Three other members are appointed by the governor, and the speaker of the N.C. House of Representatives and the president pro tem of the state senate each appoint one person, the commission’s website states.

Those five current members of the commission are:

  • Vida Harvey of Charlotte, appointed by the governor
  • John Burns of Raleigh, appointed by the governor
  • Nancy Hoffmann of Greensboro, appointed by the governor
  • Paul Butler Jr., of White Lake, appointed by the president pro tem
  • Michael Philbeck of Shelby, appointed by the speaker

The commission meets once a month in Raleigh to hear updates and requests from local government units.

Tension at recent meeting

Signs of trouble emerged at the April 2 Local Government Commission meeting during a discussion about Spring Lake’s request for approval of a 20% pay raise for the town’s police officers and the elimination of “sleep pay” for firefighters. Spring Lake’s Board of Aldermen voted March 11 to approve the two changes, but under town policy, any pay raises over 5% must be approved by the governing board, which, for the time being, continues to be the Local Government Commission.

As commission members discussed the request — questioning why they received information on the item the day of the meeting — Folwell said, “I would add to that that there’s been a tremendous amount of drama regarding a relationship with Spring Lake and public board meetings and things that were said or left unsaid.”

He went on to tell commission members that he worried about a continued “breakdown of communications” between LGC staff and Spring Lake officials and staff. 

“Trying to save Spring Lake from drowning has been a very tiring thing for us, and [it’s] sad to say that, but I think that’s accurate,” Folwell said.

Anthony, who joined the LGC meeting via telephone, rebutted some of Folwell’s claims. 

“I am unsure about the drama that Treasurer Folwell is speaking of, but I mean, as with any group of people who are going to work together, there’s going to be times where there’s a bit of tension,” she said. “I wouldn’t go as far as calling it drama. We’ve worked together for the past two years with some bumps in the road, but I do believe it’s been very cohesive.” 

Anthony told the commission she was tired of “the constant public slamming” of Spring Lake.

“Treasurer Folwell, I think it’s time to stop that narrative because we’ve been working very, very hard, staff and elected [officials] alike, to, as you say, ‘keep Spring Lake from drowning,’” she said at the meeting. 

Anthony said contracted finance staff working with the town had informed the board the police pay increase and firefighter sleep pay change were projected to be financially sustainable for the town. 

Folwell ended the discussion on a fiery note. 

“I just want to tell the mayor, I’ll stop using the word drama when you stop creating it,” he said. “The police chief’s been relieved of duties. We’re being asked to vote for pay raises for police chiefs. We’ve had tremendous drama out of your general counsels [the] last four years. 

“We know what has happened as far as the audits; they’re still not in, and all kinds of concerns,” he continued. “We know, as LGC members, the letters that were sent to us by [aldermen] recently about how they’re fed up, which included clips of videos from your [Board of Aldermen] meetings. So I’ll stop using the word drama when you stop creating it, not when you tell me to.” 

Anthony simply replied, “No problem, sir. Carry on.” 

The commission ultimately approved the town’s request.

‘I don’t know what else we’re supposed to do’

In an interview with CityView this week, Folwell expressed further frustrations about the LGC’s relationship with the town of Spring Lake. 

“When we first got involved, the full focus was on keeping Spring Lake from drowning,” he said. “Since that time, there’s been tremendous amounts of drama with the embezzlement, with the city manager, with the hiring of the city manager, with the difficulty getting finance officers, reconciling the books, getting audits done.” 

Back in October 2022, Folwell refused to approve the town’s request to hire Justine Jones as town manager, CityView previously reported. Jones had been fired from her role as town manager of Kenly the previous summer. Spring Lake’s town administration operated without a permanent town manager until last month, when it hired Jonathan “Jon” Rorie to start May 1.

Folwell said his staff spends a disproportionate amount of time on Spring Lake. 

“We have over 100 units that are in trouble,” he said. “And we’re probably spending 30% of our time on this one.” 

He noted the recent resignation of Police Chief Dysoaneik Spellman as a particular area of concern. Folwell said he was unhappy that Spring Lake officials did not provide LGC staff with further details beyond the matter being a “personnel issue.” 

Folwell also said his staff has struggled to establish clear and adequate communication with Spring Lake. 

“When my staff comes back and says, ‘They’re not responding to emails,’ or, ‘They’re not responding to questions,’ I don’t know what else we’re supposed to do,” he said. 

Folwell remains concerned about Spring Lake’s future and its financial outlook. 

“I’m concerned about their ability to make promises that the city is going to be able to afford not just today, but a year from now and two years from now,” he said.

Mayor responds

Anthony told CityView her staff has consistently overcome the challenges thrown at it and deserves more recognition. 

“We’re basically rebuilding all of the processes and systems in Spring Lake, so that’s going to require some hard choices, some back-and-forth, some dialogue,” she said. “Sometimes it’s not going to be pretty, but the point is, we’re getting it done.” 

Anthony said Spring Lake officials are legally bound not to discuss Spellman’s resignation under North Carolina personnel law. 

“Chief Spellman submitted his letter of resignation involving a personnel matter that is legally, by general statute, not allowed to be discussed. That’s it,” she said, laughing in disbelief. “If [Folwell] wants to break the law and keep digging into what happened with Chief Spellman’s resignation, that is completely up to him.” 

CityView reported initially that Spellman was initially fired, based on comments from Interim Town Manager Jason Williams, but he later submitted a letter of resignation.

Spellman’s letter of resignation and the town’s statement on his departure are public record, “and that’s as far as it goes,” Anthony added. A copy of Spellman’s letter of resignation provided to CityView did not explain why he left.

Despite the tension and differing opinions on the town’s progress, Anthony said she wants to focus on the positives coming out of Spring Lake. 

“Employee morale has been so much better,” she said. “When we took over the town, our employees were holding this place together with duct tape, it seems.”

Before the town’s current Board of Aldermen took office in December 2021, for example, town employees were contending with town vehicles that were 20 years old and town policies that hadn’t been updated for just as long, Anthony said. 

“Spring Lake turned around because of the employees in Spring Lake,” she said. “They’re the ones keeping Spring Lake afloat. We’re not drowning; they are swimming, and they’ve been swimming. And now we’re rebuilding.” 

Where things stand

According to the N.C. Treasurer’s Office, the commission can waive financial audit requirements for units under its control with missing audits. This includes Spring Lake, which is no longer required to turn in its audit for fiscal year 2021, the website states.

The 2023 fiscal accountability agreement between the town and the commission, which is posted on the town’s website, highlighted a number of problems: 

  • Spring Lake’s failure to submit audits on time for five fiscal years in a row, with the fiscal year 2020 audit being three months late, the fiscal year 2019 audit being 10 months late and the fiscal year 2018 audit being 18 months late.
  • “Significant internal control deficiencies” 
  • Lack of experienced accounting staff
  • Overspending during specific budget years, including 11% overspending in fiscal year 2019 and 23% overspending in fiscal year 2020
  • “Lack of financial reporting to the board”

Anthony said the town has overcome a major challenge in finally being able to hire Rorie as town manager. 

“What I would want the residents to know is to hang in there,” she said. “We’re getting closer. Government works slow, and I completely understand why; it’s because every matter that we deal with directly affects the quality of life of our residents. We can’t make haphazard decisions.”

Folwell, on the other hand, wants Spring Lake residents to know the LGC will look out for them. 

“We’re going to protect their interests and their tax dollars in every way that we possibly can,” he said.

And the LGC will do just that, Folwell said, by encouraging Spring Lake to follow the same formula the commission tells all governments to use. 

“Transparency, competency, good government, lack of conflicts of interest,” he said.

Reporter Lexi Solomon can be reached at lsolomon@cityviewnc.com or 910-423-6500.

This story was made possible by contributions to CityView News Fund, a 501c3 charitable organization committed to an informed democracy.

Spring Lake, Local Government Commission, Dale Folwell, finances, Spring Lake Board of Aldermen, Kia Anthony