A growing number of state officials are supporting a takeover of Elizabeth City's finances.
State Treasurer Dale Folwell first raised concerns in a letter to the city council dated March 14 about major delays in submitting various financial reports, including two years' worth of overdue audits. Elizabeth City has since submitted its audit for the 2020-2021 fiscal year, which showed deficiencies in financial oversight. The city has yet to finish its audit for the fiscal year ending in 2022.
In his March letter, Folwell said Elizabeth City’s leaders should request that the state take control of their finances. Elizabeth City Mayor Kirk Rivers turned down that proposal.
"This council has set the course. Policies have been set in place and now we just have to let those policies go," Rivers told WUNC in April. "By no means would I ask the state treasurer to take over the city of Elizabeth City."
The State Treasurer's office oversees the Local Government Commission, which monitors the finances of more than 1,100 local governments in North Carolina.
In the commission's most recent meeting, State Auditor Beth Wood said the board should start the process of state takeover.
"If you've got leadership in there that is going to run it the way they want to run it and you've got financial people that aren't capable or don't have the competencies to do the job, I don't know that your situation isn't just going to keep going downhill," Wood said.
The Local Government Commission can take control of a city's finances by force if it defaults on its debt or board members determine it will default if its financial policies remain in place.
But Wood pushed for a state intervention, citing a law that outlines the duties of local finance officers. It includes maintaining city accounts in accordance with generally accepted accounting principles.
"And your finance officer there cannot do those things, so they're already severely non-compliant," Wood said.
City Manager Montre Freeman has administrative oversight of Elizabeth City's finance officer. He did not respond to WUNC's requests for comment.
Two other commission members also said they should consider intervening, but the board did not take any action. Its next meeting is Aug. 1.