State agency failed to notify cities of their addition to list, spokesperson says

ROCKINGHAM — The Local Government Commission added five Richmond County municipalities to its unit assistance list, which helps the agency track the progress of local governments with financial concerns, on May 26, 2020 but failed to notify the leaders of these municipalities due to an internal error, a spokesperson for the commission confirmed Monday.

The sixth municipality, Ellerbe, was added to the unit assistance list (UAL) on Aug. 19, 2020 after it submitted its budget on Aug. 5. Richmond County was added to the UAL on April 2, 2020 due to “concerns in the general fund.”

The Local Government Commission (LGC) on Thursday sent emails to Richmond County and all six municipalities requesting that they submit their proposed budget for the fiscal year beginning July 1, 2021 prior to their respective councils approving it — with a deadline of May 17 to give LGC staff time to review it and resolve issues — as well as the current year’s budget as it currently stands, including any year-to-date amendments and a current year’s budget versus actual variance report, in order to draw comparisons.

Of the recipients, at least Richmond County Board of Commissioners Chair Jeff Smart (who was not on the board until November 2020) and Hamlet City Manager Matthew Christian were unaware that their governments were on the list.

Dan Way, communications manager for the Department of State Treasurer, said in an email Monday that the municipalities weren’t told they has been added to the UAL due to an “oversight” by the LGC.

“Due to an oversight, the LGC did not notify the units they were being placed on the UAL,” Way said.

Each of these municipalities were given a rating of “high risk” for their general funds, meaning the LGC would devote more staff resources to assisting them as they work their way out of their poor standing.

Sharon Edmundson, director of the State and Local Government Finance Division of the Department of State Treasurer and secretary of the LGC, told Christian in an email Friday that she added the municipalities to the UAL after learning of the county voting on April 6, 2020 to change from a per capita sales tax distribution method to an ad valorem method without giving the municipalities prior notice, a decision which redirected large percentages of sales tax revenue out of each of their budgets into the county’s.

“In April 2020, when we learned of the change in distribution method for sales tax, I decided to put all the towns in Richmond County on the list as a precaution because I knew the negative impact such a change could have on your revenues.” Entities are typically added to the list in March and they are then notified, but because the change to ad valorem occurred in April, Richmond County’s municipalities were not added until later and thus not notified in that first round, Edmundson told Christian.

Being added to the list is not a punishment, but rather it is used to help focus LGC staff resources where they are most needed, according to Edmundson.

The municipalities are currently in budget negotiations, and are in the early stages of working with the county on a revenue sharing plan to resolve the dispute over the sales tax distribution. If an agreement can’t be reached, Rockingham and Hamlet will move forward on a lawsuit against the county for allegedly breaching a contract the cities signed with the county in 2015 which stipulated that the cities would not be asked to contribute to funding the new 9-1-1 Center.

The cities charge that County Manager Bryan Land violated this agreement by citing a lack of support from the cities on funding the 9-1-1 Center as a reason why the change to ad valorem was needed prior to the commissioners voting on it on April 6, 2020.