Folwell: City Not Cooperating With LGC

Folwell: City not cooperating with LGC
By Paul Nielsen The Daily Advance Staff Writer Mar 2, 2023

State Treasurer Dale Folwell said this week that Gov. Roy Cooper needs to get involved in the state’s effort to get Elizabeth City’s financial matters in order.

Folwell also said the state’s Local Government Commission is disappointed with the city’s cooperation in complying with a financial accountability agreement the LGC and the city agreed to last October. The LGC is part of the state Treasurer’s Office.

Folwell, a Republican who plans to run for governor in 2024, made his remarks via Zoom at a meeting of the conservative Pasquotank Political Action Committee Tuesday night.

Elizabeth City is on the LGC’s Unit Assistance List mainly because the city still has not filed with the state its required audits for the fiscal years 2020-21 and 2021-22. City officials said last week that they have submitted the city’s financial data for the first past-due audit to outside auditor PB Mares and are awaiting the results.

After the financial agreement was signed LGC staff directed the city to update a water and sewer rate study and revamp its utility billing policy. City Council has taken no official action on either item.

“This is a serious issue and I think that the governor needs to get involved,” Folwell said. “You can’t have this happen to a regional hub that is as important as Elizabeth City.”

Asked how Cooper could get involved, Folwell responded by saying, “stay tuned.”

Folwell said the city is making financial decisions that “don’t make mathematical sense” while ignoring advice offered by the LGC. Folwell has previously stated that one option the state has is to take over the city’s finances.

“I am as highly concerned about Elizabeth City as I am any city in North Carolina right now,” Folwell said. “We don’t want to take over anything. So far, all the suggestions we have made, specific suggestions with specific deadlines, they have had no interest in putting any of those in place.”

In attempt to speed up completion of the past-due audits and get the city’s books reconciled, City Council hired the outside accounting firm Greg Isley to help with the process. The firm was hired in October 2021 as part of a corrective action plan the city filed with the LGC after being placed on the Unit Assistance List.

When Isley was hired the city had not reconciled its books for 16 months, dating back to June 2020.

There have been discussions by city officials of reducing or ending its contract with Greg Isley and Folwell said that would be a mistake.

“It’s a terrible idea and I think it would accelerate the downward spiral of Elizabeth City,” Folwell said. “The only reason Greg Isley is there is because they (city officials) couldn’t do it themselves. It’s important that the elected leaders of Elizabeth City be willing to have the discipline and the strategy to do what it takes to get Elizabeth City out of the financial situation they are in, both budgetarily and in terms of their water and sewer division.”

Folwell said considerable state resources have been spent trying to help the city.

“We have been stepping in for months,” Folwell said. “We have committed more people hours to try and rescue Elizabeth City than any community in the 70 years of the Local Government Commission.”

First Ward Councilor Johnson Biggs watched Folwell’s remarks to the PAC remotely and said Wednesday that he appreciates the help the LGC has provided in the past and looks forward to the agency’s continued support in the future.

“The LGC staff has provided a lot of great guidance that for myself as a newly elected council member has been extremely valuable,” Biggs said. “The treasurer and LGC staff have committed a wealth of resources to Elizabeth City in the last several months. I hope as a governing board that we follow their recommendations.”

A message sent to Governor Cooper’s office was not immediately returned Thursday. Mayor Kirk Rivers and City Manager Montre Freeman also didn’t immediately respond to requests for comment.

While the LGC board has not discussed the situation in the city at one of its monthly meetings Folwell said the nine-person board is aware of the situation.

The board is comprised of Folwell, Secretary of State Elaine Marshall, State Auditor Beth Wood, state Secretary of Revenue Ronald Penny — a former Elizabeth City resident — and five other appointees, three by Governor Cooper and two by the General Assembly. Folwell is the chairman.

“Everybody on the board is familiar with the stress that is going on in Elizabeth City,” Folwell said. “We can’t care more about Elizabeth City than the city leaders do.’’

Folwell spokesperson Dan Way said in an email Wednesday that the nine-member Local Government Commission is the authority that votes to assume financial control of a local government unit.

“A simple majority vote is all that is required,” Way said.