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Welcome to The Kicker from Carolina Public Press, a North Carolina news show bringing you conversations with journalists, sources and newsmakers from across the state.
In this episode, host Peter Kent talks with CPP legislative bureau chief Kirk Ross about the recent state takeover of the small Wayne County town of Eureka. State officials have said it could become a template for how to deal with dozens of towns across the state that are drowning in water-and-sewer debts. Kirk also talks about other recent legislative developments including rural broadband legislation and the ongoing impasse over the state budget.
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In North Carolina, local governments that invest in water-and-sewer infrastructure, incurring debt, must make payments on that debt out of a water and sewer fund. That fund derives only from water and sewer revenues and cannot be co-mingled with other funds. When populations decline or large industrial or commercial water customers move away, towns don’t sell as much water-and-sewer service and thus have lower revenues. Unfortunately, they still have to pay the water-and-sewer debt out of the dwindling water-and-sewer revenues. Raising rates can seem like an option, but if it drives consumers to use conserve water or prompts businesses to relocate to get better rates, such increases can backfire.
Due to these combined factors, dozens of communities across North Carolina, mostly small towns, find themselves struggling to pay their water debts.
In some cases, they also owe payments to adjacent service providers. As a result, if one small town has trouble paying its water and sewer bills to a nearby slightly bigger town that in turn owes some of those proceeds to a nearby city, a much greater ripple effect can occur, destabilizing the finances of several towns in a region. This happened in Wayne County, where Eureka owed payments to Fremont, which affected Fremont’s own contracts with the city of Goldsboro.
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As a result of this issue, legislators approved a measure earlier this year that would allow the NC Department of State Treasurer’s Local Government Commission to take over towns like Eureka. Following a public meeting in late July, this is precisely what the state did. The state is not trying to wipe Eureka off the map. In the words of one state official, they want to give Eureka “a fighting chance.” If the temporary state takeover of Eureka is successful, state officials hope it will lead to a template for how the state can handle similar situations in other struggling towns.
About The Kicker
The Kicker is a production of Carolina Public Press. It also airs weekly at 7 p.m. Wednesdays on WPVM radio 103.7 FM in Asheville. Send an email to email@example.com if you would like to contact the staff of Carolina Public Press about The Kicker.