ROCKINGHAM — City leaders are hoping a recent clean bill of financial health from its annual audit report is enough to get the county seat off the Local Government Commission’s “watch list.”
Ken Anderson, CPA from Anderson, Smith and Wike, told council members that the city did well during the most recent fiscal year, with a Fund Balance increase “in spite of” the loss of sales tax revenue from a decision made in March 2020 by the Richmond County Board of Commissioners.
Anderson said that although the city suffered a $675,000 loss compared to the previous year, sales tax, overall, increased significantly. That, combined with the funding from the interlocal agreement in June, resulted in a loss of only about $300,000, he added.
The city’s decisions to raise property taxes and defer capital outlay expenses also helped secure the coffers.
One of those deferments, City Manager Monty Crump said, was the new engine purchased for the Rockingham Fire Department, which was paid for with funds from the American Rescue Plan.
“Nevertheless, I think the city did a very good job of managing in this situation,” Anderson said.
The city’s tax collection rate is also at 99.3%, which Anderson said was higher than the state average.
“It’s really hard to do a lot better as far as tax collections than you guys do,” Anderson said.
The city’s revenues exceeded expenditures by around $150,000 in the General Fund and $97,000 in the Water/Sewer Fund, according to Anderson.
The accountant went on to say that the city’s debt decreased “substantially” from $8.9 million to $6.1 million, mostly due to paying down on the Richmond Community College downtown campus project.
Monty Crump said “that project was designed to do that.”
“We were getting money from the foundations on a yearly basis, and, at the end of it, we had projected that that would exceed construction costs … and we actually got an additional year of funding from the foundations … that we had originally planned to finance, but instead we had that cash available to apply to the debt service,” Crump said.
“I think you had a good year and made a lot of good decisions,” Anderson told city leaders.
All six Richmond County municipalities are on the LGC’s “watch list,” officially known as the Unit Assistance List — which Crump said Rockingham “didn’t deserve to be on.”
Rockingham, Hamlet, Dobbins Heights and Norman are all listed as being at moderate risk with financial issues with the General fund, based on figures from the fiscal year ending June 30, 2020. The previous year, all of those towns plus Hoffman were at high risk in that category.
In 2019, Ellerbe was at moderate risk with its General Fund and Water/Sewer Fund and high risk for its internal controls. However, the 2020 ranking shows internal controls and the General Fund at moderate and the Water/Sewer Fund in red.
The LGC also listed the factor that the cities and towns were facing shortfalls as a result of the sales tax distribution change under “other concerns.”
“We were under the gun to respond to that and to make necessary corrections to show that we could establish financial stability without the revenue,” Crump said.
“I think we’ve done a pretty good job, based on what you had just said and what this audit says, to make a case to the LGC that we shouldn’t be on the watch list anymore,” Crump said to Anderson. “Because there is a negative connotation to that … I think we’ve definitely demonstrated that we’re on a path to recover from (the sales tax change).”
Anderson suggested the city contact the LGC and summarize the steps taken, note the audit and request to come off the list.
According to Anderson, it’s also recommended that Hamlet be removed, as well.
“That would be a very positive thing for Rockingham to get off that list,” Crump said. “It doesn’t really matter why you’re on the list, you’re on the list.”
Anderson also said the city made a good choice in hiring Jennifer Lambeth as finance director.
