While not out of the woods yet, the city of Rocky Mount has reported making “steady” progress on getting its finances back on track at a NC Local Government Commission meeting this month.
The city has been in hot water since a scathing report from State Auditor Dave Boliek was released in March, detailing a lack of oversight that arguably led to the mismanagement of millions of dollars in city funds.
The LGC warned the city in April that no further budget slip-ups would be tolerated, or else the city would risk a financial takeover.
Since the audit, Rocky Mount has been working diligently to rectify its finances. At the city’s latest LGC meeting appearance on June 9, city officials said they recently submitted their fiscal year 2025 audit and drafted a budget for fiscal year 2027, which was just awaiting a vote. While the outcome on Monday night was close, the council approved the budget 4-3.
Cornelius Jordan, assistant city manager and public information officer for the city of Rocky Mount, told Carolina Public Press that the city has made “significant progress” in stabilizing its finances, though keeping that momentum will require “continued focus, discipline and sound financial management.”
The city’s work has not gone unnoticed by LGC members, who said during their meeting that the city’s progress is “tracking and trending in the right direction.”
Denise Canada, secretary of the LGC and deputy treasurer of the State and Local Government Finance Division, said she hopes Rocky Mount can serve as an example to other struggling municipalities working to remedy their financial situations.
Progress made in Rocky Mount
The city recently submitted its fiscal year 2025 audit on May 22, according to LGC audit submission records.
In May, city officials announced during the LGC meeting that coming out of April, they were reconciled and up-to-date on all of their accounts, putting their summer month projections at $1.7 million. In June, they reported having exceeded their own expectations, finding themselves $8 million above their projections at the close of May.
Elton Daniels, city manager for Rocky Mount, said in May that while the city’s biggest issue is still cash flow, and its accounts need to continue being closely monitored, the fiscal year 2027 budget is looking promising.
Once passed, the fiscal year 2027 budget would reduce spending by roughly $16 million compared to last year’s revised fiscal budget, Jordan said last month, prior to the budget’s passage this week.
Daniels had previously described the city as taking an “all-hands-on-deck” approach to solving the city’s financial troubles, saying all ideas were being considered no matter who or where they came from, CPP previously reported.
Kimberly Leonard, the city’s new chief budget and strategy officer hired in April, has played a crucial role in helping the city get back on its feet. Her input on the city’s finances has been valuable, Jordan said.
“Since joining the City, her impact has been particularly valuable in strengthening revenue forecasting, which is critical to aligning expenditures with anticipated revenues, identifying potential financial challenges early, and supporting informed budget decisions,” Jordan said.
“Her extensive experience in local government budgeting and operational performance has provided additional expertise as the city continues implementing corrective actions and building a more sustainable financial foundation.”
Help also came from the North Carolina League of Municipalities, which Jordan said has provided training opportunities for staff and city officials at next to no cost or no cost at all.
At one point the city had been expected to run out of money as early as next month, but due to measures including less spending, operational adjustments and more oversight, projections show that finances will stay afloat through the end of the calendar year, Jordan said.
“Just as important, the city has shifted its focus toward aligning recurring expenditures with sustainable revenues and rebuilding a stronger financial foundation for the future,” Jordan said.
In addition to regular updates to the LGC, all of these efforts have been instrumental in stabilizing the city’s financial footing and improving its long-term financial management, Jordan said.
Canada said the LGC is “pleased” that current city staff have recognized the challenges that were carried over from the former administration and noted the city’s cash position has also improved since March.
Difficult decisions
Getting to this point hasn’t been easy though. Difficult decisions have been made to help get the city back on track, including getting rid of “nonessential” programs, one of which was a summer camp for community kids, Daniels said in this month’s meeting.
“From a financial standpoint and operating standpoint, it was just money that we were not seeing the best return on with regard to a balance sheet, things that are very important to the community,” he said. “But you all charged us with making difficult decisions, and so that’s some of the difficult decisions that we had to do.”
Other difficult choices included getting rid of and freezing vacant positions, suspending certain employee benefits, reducing travel and operational expenses and more, Jordan said. However, Daniels told the LGC in May that the city has been able to avoid pay cuts for employees.
While Daniels didn’t recommend any pay raises in the new budget, he said in May that he’d like to resume the city’s merit program for employees at some point, which rewards them with pay increases based on an annual performance review.
“I don’t want to go too many years without reimplementing that program, as well as some type of form of longevity, because you have to reward employees, because the inflationary costs around us continue to go up,” Daniels said.
“Even if we remain static, if prices outside go up, in essence, we are losing money.”
Despite the reduction in the workforce, the city is still providing its core services. But maintaining the same level of service as before has meant longer working hours for the city’s remaining employees, which Daniels said they think is “something we have to do before we start adding back.”
Remaining issues for Rocky Mount
One remaining issue that was brought up in May and in this month’s LGC meeting was the negative balance in the transit fund, which city officials reported as having a $3 million deficit in May. But the city has plans to address that issue, Daniels said.
“We are looking at multiple ways to offer that service, possibly change routes, reduce in some areas, but because federal funds are tied to those, we can’t make those decisions unilaterally,” Daniels said.
“We have to reach out to the federal government and our state partners, but we’re also looking at adjusting rates and fees as well, so a combination of different things, but we do plan to address that in the near future.”
Daniels pointed out that transit isn’t really profitable anywhere.
“It’s one of those quality-of-life things that you deal with,” Daniels said. “It’s so similar to parks and recreation, it’s something that you put in and you don’t expect to have a full return.”
Even so, Jordan said the city is not considering getting rid of transit services, since many residents rely on them.
Another possible challenge is Senate Bill 1076, which has the potential to restrict the city’s financial flexibility when it comes to transfers between the city’s electric and general funds, Jordan said. The measure would apply to just two cities, Rocky Mount and Louisburg.
Sandy Roberson, mayor of Rocky Mount, said during this month’s meeting that the bill has passed the Senate and is currently waiting in the House, though it could also face a veto from the governor.
If it became law, the new legislation would essentially prevent the city from transferring funds from its electric and gas funds to other municipal funds “as a reasonable return on the city’s investment in these utility operations,” even though these kinds of transfers are currently allowed under state law and other municipalities do them, Jordan said.
These restrictions would make the city’s recovery efforts more challenging as they take away a “critical financial management tool,” and would be like “pouring salt into an open wound,” Jordan said.
“The city supports accountability, transparency, and responsible utility management. However, major policy decisions affecting local governments should be based on complete financial analysis, operational realities, and direct engagement with local leadership,” Jordan said.
“The city remains concerned that the legislation does not fully recognize the corrective actions already underway and could create unintended consequences for long-term planning, infrastructure investment, and municipal services.”
The city stopped electric fund transfers after December and the new budget doesn’t rely on them for any general fund operations, Jordan said.
Next steps
One of the city’s top priorities is implementing its fiscal year 2027 budget once it passes. While reductions in spending and other operational adjustments have been worked in, other changes by the City Council are possible during the review process, Jordan said.
The city’s fiscal year 2026 audit is still in the “early stages,” with the end of the fiscal year coming up on June 30. After that date, the city will proceed with its year-end financial closing process and other preparations, as the audit will be due on Dec. 31, Jordan said.
The LGC previously told CPP that the city is in its current predicament partly due to overspending. When CPP asked how the city would ensure this doesn’t happen again moving forward, Jordan said certain measures are already underway.
“These efforts include enhanced financial reporting, operational efficiency initiatives, strengthened budget development practices, increased management review of expenditures, and continued focus on aligning recurring expenditures with sustainable revenues,” Jordan said.
“The city has also expanded financial leadership capacity, and established reporting practices that provide greater visibility into the city’s financial position. These measures are intended to support better decision-making and long-term financial stability.”
In May, Daniels told the LGC that it would likely be months before the city could move out of crisis mode. Once the new budget was adopted, he could give a better timeline, he said at that time.
“I do feel like from a financial standpoint, it’ll be years before we can build back the amount of fund balance that we previously had, because I think we were north of $80 million, so we can’t do that over the course of one or two fiscal years,” Daniels told the LGC. “But I think that the path that we are on, we will be out of crisis mode within the next … 24 months, even sooner depending on the next couple of months.”
City officials have been asked to return in July to update the LGC on city finances and what the budget for fiscal year 2026-2027 looks like, Canada said. She and the rest of the commission wanted to see that it’s “balanced without any use of fund balance in any fund” and “has reduced many of the revenue budgets that historically had been budgeted unrealistically high.”
Canada said she hopes that the lesson other local governments take away from Rocky Mount’s situation is that financial crises “are almost always fixable.”
“Although we’ve received many requests from citizens that we take over Rocky Mount’s finances, the LGC assuming financial control is rarely warranted,” Canada said.
“The same tools that are available to us are available to local leaders. Locals just need to be willing to make the hard choices necessary to right the ship.”
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