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Spring Lake emerging from financial mismanagement, Board of Aldermen told

Increases in water and sewer fees likely as budget is negotiated


SPRING LAKE — The Spring Lake Board of Aldermen discussed preparing for a shortfall in sales tax revenue while hearing good news about the state of the town’s finances during a budget meeting on Wednesday night.

David Erwin, the town’s finance officer and a financial management adviser with the N.C. Department of the State Treasurer, presented the $8,087,053 budget along with interim Town Manager Jason Williams, contracted financial staff and town department heads.

The general fund is in better shape than it was, said Erwin.

The state took financial control of the town in 2020 amid concerns about budget deficits, fiscal disarray and an investigation of missing money.

Board members were pleased when members of the finance staff told them that the financial problems that had plagued the town are coming to an end.

Debra Mack, a consultant with Greg Isley CPA, said the general fund will show that the town has worked through some of the more hidden issues that it has worked to correct.

“Unfortunately, even though the town had auditors reviewing and signing off on audits all the way through 2020, we found significant problems dating back to 2012 and 2014. There were grants that the town let lapse and didn’t get reimbursed for and issues with loans. And at the end of the day through all of that, the general fund is having to settle up and get all of that old stuff cleared off the books and reconciled,” said Mack.

Mack said she believes most of the outstanding problems have been resolved, giving most of the credit to Sylvia Blinson, also of Greg Isley CPA, who has been working behind the scenes to go through records and correct past wrongs.

Erwin added that now that the cleanup is done, the town will get look a look at real numbers in September or October once adjustments have been made.

Preparing for a sales tax shortfall

The board also discussed concerns about a shortfall in sales tax revenue coming in the next two years because of the Cumberland County Board of Commissioners’ move to change the sales tax collection method from per capita, or a flat rate, to ad valorem, or based on property value. With the new method, the town is positioned to lose $1.1 million in annual sales tax revenue.

Erwin said there is an opportunity to work further with the county, including looking at costs associated with the second fire station in Spring Lake, which helps provide services to county residents.  He also said that the transfer of the parks and recreation department to the county will help the bottom line.

Raising water and sewer fees

One previously discussed issue is raising water and sewer rates to cover required upgrades to the utility systems.

The rate increase was recommended in a study by MacConnell and Associates in May 2020.

“The rate increase is to comply with the rate study,” said Erwin.

Mayor Kia Anthony added that because costs are going up, the rates have to also increase.

“This is inflation. This is growth. Our water and sewer fund is a business,” said Anthony.

The town also is in the process of a study that will help determine the status of the water distribution system, wastewater collection system and wastewater treatment plant.

Adding jobs

The town is adding employees in the budget, including a building inspector, fire inspector, a enforcement officer in the Police Department, police administrative lieutenant, and an administrative assistant in the Public Works Department.

“I think we are one of the only municipalities that are adding jobs to the budget,” said Alderman Raul Palacios.

In addition, the town is considering contracting with a new company made up of retired police officers who will work with the town staff and residents to address beautification, code enforcement and other compliance issues.

According to Patricia Hickmon, the town zoning administrative officer, they will address zoning violations, nuisance code violations, junk vehicles and some unsafe building violations.

Currently, the town is working with a contracted code enforcement officer who charges $73 an hour and is available one day a week. The new company would cut that rate to $40 an hour and be available as many as three times a week.

“Several of their clients have said they have made a great impact in their communities,” said Anthony, who was introduced to the company at a municipal conference.

Anthony said company officials impressed her as having empathy and compassion.

“They don’t believe people want to be in violation. They want to help,” said Anthony.

Next steps

The budget will be presented at a Local Government Commission public hearing at 7 p.m. Monday during the regular board meeting. The board is expected to endorse the budget before the Local Government Commission approves a final budget at a meeting at 1:30 p.m. June 26.

Spring Lake, budget, financial mismanagement, Board of Aldermen