Reeling from a state audit last month that highlighted financial mismanagement, the city of Rocky Mount now faces a potential takeover of finances by the Local Government Commission should the city’s budget “slip” again.
City leaders met with the Local Government Commission on April 1 to discuss the current state of finances and how they plan to move forward, according to a press release from the State Treasurer.
“It almost never gets this bad,” State Treasurer Brad Briner said in the meeting. “When it does, it’s usually because it’s terminal. It’s usually because a business has moved or a large population base has left and it’s not going to be fixed. This is not that. This is simply a failure of will, and we are here to help impose that will today.”
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The commission issued an official notice and warning to the city during the meeting, which is the highest level of warning the commission can give to a municipality.
If leaders are unable to keep a handle on city finances, the LGC has threatened to take over, potentially making it the commission’s largest financial takeover of a municipality to date, according to the press release. During its 94 years of operation, the LGC has taken over finances for 12 towns in the state, according to its website.
Current situation and changes made so far
Initially, the city was projecting cash flow through June to the end of the fiscal year, but upon closer inspection, noticed there would be no cash left by the end of July if changes weren’t made, said Cheryl Spivey, finance director for Rocky Mount, during the meeting.
The city has started making those changes. In February, the City Council adopted an ordinance to revise the budget for fiscal year 2026 by cutting appropriations by $29.6 million. This cut included a 10% layoff of full-time employees, Spivey said in the meeting. Earlier this month, she said they also increased utility rates on electricity, gas, water and more. Daniels noted improvements in account reconciliations as well.
Cornelius Jordan, assistant city manager and public information officer for Rocky Mount, said the city is also providing regular financial updates to the LGC twice a month.
Elton Daniels, city manager for Rocky Mount, said the hiring of Spivey as the new finance director has helped immensely. She’s not the only addition the city has made to its finance staff. On Thursday, the city announced the appointment of Kimberly Leonard as its new chief budget and strategy officer, a position that will focus on developing the annual budget and improving efficiency and sustainability.
“Kimberly brings exceptional local government experience, strong fiscal judgment, and a proven ability to align strategy with execution,” Daniels said in the press release.
“At a time when disciplined planning, accountability, and thoughtful resource allocation are more important than ever, this position will play a critical role in strengthening how the City develops its budget, evaluates priorities, and measures results.”
Concerns arose during the meeting about how the city plans to ensure the accuracy of revenue projections moving forward, given the inaccuracy of past ones. While Daniels can’t speak to the years prior, since he wasn’t overseeing the budget then, he said, they’re now trying to be more conservative on revenue projections and look at the previous year actuals.
“I have a multi-pronged approach with regard to the budget projections,” Daniels said during the meeting. “Before, I think it was the responsibility of possibly one individual. Now, I have multiple people involved in that step, including myself, and that’s just not within the organization. I have experts outside the organization that’s also been willing to assist us, including big organizations like the League of Municipalities.”
To increase revenue, the city is considering raising taxes, Daniels said. Questions were raised during the meeting about how city officials would explain these tax increases to Rocky Mount citizens, since they would primarily be due to the city’s own “poor management.”
Sandy Roberson, mayor of Rocky Mount, said they would just need to be honest with citizens, and that a tax increase wouldn’t be the only option.
“We just have to be honest, we just have to tell the truth,” Roberson said. “The auditor’s report has outlined that very well. … It has been as clear as you can possibly make it. This has been mismanagement. This is where the money’s gone. It’s gone for stuff, and it’s gone for people.”
What would LGC takeover look like?
Should the LGC be forced to take over Rocky Mount, the state commission would essentially become the city’s governing body as it relates to finances, LGC staff said. According to NCGS 159-181(c), the commission would be “vested with all of the powers of the governing board as to the levy of taxes, expenditure of money, adoption of budgets, and all other financial powers conferred upon the governing board by law.”
Every takeover is different, LGC staff said.
“A unit’s financial conditions can change quickly,” LGC staff said. “That’s especially true with a unit like Rocky Mount whose problems are primarily caused by budget failures. If the LGC were to take control of Rocky Mount’s finances, staff would assess the condition of the City’s financial management at that point in time, and the Secretary and staff would act quickly as needed to stabilize the unit and ensure that debt service payments are able to be made.”
Staff said Rocky Mount is unique because while most other towns in trouble struggle with finance issues, this city is plagued with budget issues and has simply spent too much money.
“Typically, the LGC avoids telling units to make specific spending decisions; rather, we point to the overall trend (expenditures greater than revenue, in this case) and direct the unit to make its own decisions about what to cut,” LGC staff said. “Regardless of what expenditures the City cuts or what revenue streams it chooses to increase, the City’s delay in taking aggressive enough action led the City to this point.”
If events force the LGC to come in and take control of city finances, State Auditor Dave Boliek said he would consider it a failure of city leadership.
“You (have) got to make these tough decisions,” Boliek said during the meeting. “It’s not easy, I know, but you know what you signed up to do … People elected you to make those decisions. We also don’t want a precedent on this board, when a municipality gets into financial trouble, they run to the LGC, and then the LGC has to make the tough decisions on finances, when we weren’t specifically elected to make those decisions for the members of the public in that town.”
However, Daniels stressed that they find themselves in this situation now partly because of prior unqualified finance personnel. The state auditor’s report last month highlighted high turnover in the finance department, with the city having gone through five finance directors since fiscal year 2021. Now that the city has hired Spivey as their new finance director, Daniels said he feels “100% confident” in her ability.
“We are going in the right direction, even though we have a large mountain to climb,” Daniels said in the meeting. “But I think step one was having someone that’s qualified in that position.”
Next steps for Rocky Mount
Despite the current financial situation, city leaders are still “confident” that they will make it to the end of the fiscal year due to the work that’s already been done with the fiscal year 2026 budget.
“We haven’t really got into the fiscal year ‘27 budget, which I anticipate will have further cuts, reductions across the board, including a restructure of the entire organization, which could easily save the city anywhere on the low end from $1.5 million on up,” Daniels said in the meeting.
Overall, Daniels said the city has adopted an “all-hands-on-deck” approach.
“Forget about titles. We have to fix this together,” Daniels said in the meeting. “Ideas don’t just come from the top, they come from the bottom, they come from the side, they come from the public. And we try to put something together that we understand is not going to be popular to everybody, but we understand that it’s what it’s going to take to get us out of this current situation.”
The city is still working on the financial audit from fiscal year 2025, which was originally due on Dec. 31, according to the press release from the State Treasurer, Jordan said, adding that they plan to finish it in the coming days.
The top priority for the commission right now is making sure the city will have enough cash for debt-service payments, which amount to more than $3.3 million for the remainder of fiscal year 2025-2026 and $8.7 million for fiscal year 2026-2027, according to the commission’s notice and warning. Other concerns involve being able to pay staff and crafting a “responsible” budget for fiscal year 2026-2027, LGC staff said.
“If we saw concerning trends on any of these items, this could necessitate the LGC taking further action,” they said.
When asked by Carolina Public Press what actions would be necessary from the town to remove the threat of a financial takeover, LGC staff said: “If the city were to take the actions summarized in the Notice and Warning, the city would be on much stronger financial footing. The commission and staff will continue to assess the financial condition and will notify the city when the commission feels the risk of immediate takeover has passed.”
The city’s next scheduled meeting with the LGC is May 5, when city leaders will return to discuss further progress they’ve made, Jordan said. City officials will also submit a draft of their fiscal year 2026-2027 budget in May, according to the commission’s notice and warning. An updated draft will be submitted in June before the City Council officially adopts it, and the commission has asked city officials to attend the June 9 meeting as well.
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