By | August 28, 2021

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A state government commission would have power to dissolve cities that can’t manage their own budgets and debts under a proposed law the legislature passed unanimously earlier this month.

As it is now, the Local Government Commission, a group of state officials and political appointees, can only recommend to the legislature that a city or town lose its charter over financial management issues. The legislature must pass a law taking a charter away.

Under Senate bill 314, the commission could transfer the assets of cities deemed financially unstable to other municipalities and pass resolutions to dissolve those cities. To save a city from dissolution, the legislature would have to pass a law stopping it.

The bill also sets out ways that cities could bring about their own extinction, either through a local government resolution or a referendum.

The bill, which is sitting on Gov. Roy Cooper’s desk, comes as the Local Government Commission is warning more municipalities about financial missteps.

Earlier this year, the LGC recommended that the town of East Laurinburg lose its charter, NC Policy Watch reported. Legislators, however, have not passed a law dissolving the town.

The LGC already controls the finances of four towns and one sewer district, meaning it adopts their budgets and makes sure their bills get paid. State Treasurer Dale Folwell, who is the LGC chairman and whose staff monitors the financial health of local governments, has spoken in recent months about the time-consuming work involved in taking over towns’ finances and working with many others to get them to financial stability. “We’re running out of employees at the Treasurer’s Office to assign responsibilities to,” Folwell said in an interview.

State Treasurer Dale Folwell

The NC League of Municipalities and the NC Association of County Commissioners worked on the bill. The State Auditor’s Office said much of its substance comes from insights gained from investigative audits. State Auditor Beth Wood is an LGC member.

Many of the towns with troubled finances are in rural areas that are losing population. Towns with a declining tax base struggle to pay for government services and trained financial advisors. The state could see more towns in financial distress.  The latest US Census shows that while North Carolina’s population grew over the last decade, 51 counties have fewer people than they did in 2010, according to Carolina Demography.

“We don’t want to dissolve any town,” Folwell said, and the LGC doesn’t want to be responsible for their budgets.

“Things have only gotten worse, not better. The number one goal is to work with these towns, these water and sewer districts, and these counties,” he said.

“At the end of the day, after all the processes are followed, all the due diligence is done, and all the rules are in place, it does give the LGC the opportunity to take further action.”

Category: Government Legislature

About NC Policy Watch

Rob SchofieldDirector of NC Policy Watch, has three decades of experience as a lawyer, lobbyist, writer and commentator. At Policy Watch, Rob writes and edits daily online commentaries and handles numerous public speaking and electronic media appearances. He also delivers a radio commentary that’s broadcast weekdays on WRAL-FM and WCHL and hosts News and Views, a weekly radio news magazine that airs on multiple stations across North Carolina. rob@ncpolicywatch.com 919-861-2065