Micro has financial problems but is improving

pseligson@newsobserver.comJuly 7, 2014 

From left, Mayor Jim Wiesner, Commissioner Laura Gray and Commissioner Johnny Dixon discuss Micro’s finances.

PAULA SELIGSON — pseligson@newsobserver.com

Micro is putting its financial house in order, but problems persist.

That’s the gist of three years of correspondence from the state, which has scolded the town for misappropriating money, overspending, depleting cash reserves and failing to timely deposit money.

A 2012 letter complimented Micro but called for continued diligence. “We note that there has been some improvement in the financial condition of the town’s General Fund, and the board, the staff and the town’s citizens are to be commended for that improvement,” the state wrote. “However, the town continues to have serious financial problems, which the town’s governing board must continue to address.”

The state’s correspondence, which followed yearly audits of the town’s finances, pointed to the following problems:

•  After the 2010-11 budget year, Micro had no cash reserves, which the state requires towns to keep in case of emergencies. In April 2011, a tornado struck Micro, destroying a number of homes and littering the town with debris. Cash reserves climbed to $10,000 in 2011-12 and $60,000 in 2012-13.

•  The town has routinely spent more money than it budgeted and has sometimes “misclassified” spending, meaning it didn’t spend the money on what town leaders said they were going to spend it on.

•  Micro hasn’t always deposited money daily, which state law requires when daily receipts exceed $250. In November 2011, an audit found, the town let $10,000 sit around for days before depositing it.

The latest state correspondence, received in May but referring to fiscal 2012-13, noted that Micro had improved its finances but needed to further bolster cash reserves. That year, savings stood at $60,000, or about 20 percent of town spending. The average cash reserve in towns the size of Micro is 95 percent of spending, the state noted.

Also, according to the May correspondence, Micro continues to spend more money than it budgets, especially in the water and sewer department.

The town’s auditor, Smithfield accountant Keith Peedin, said Micro improperly spent state dollars in 2010-11. Every year, Micro and other N.C. towns receive so-called Powell Bill dollars for street paving and repair. That year, Micro diverted about $3,000 in Powell Bill revenue to cover overspending in another budget category.

Former mayor Gene Hinton said the town wasn’t in the habit of diverting designated dollars to other uses. “Not unless it was transferring water and sewer funds for two weeks at a time or three weeks at a time when the other fund came short on making payroll and all that,” he said. “And then it was transferred right back at the end of the month when the bills were paid.” He said that happened a couple of times.

Current mayor Jim Wiesner, who took office in January, said he wasn’t in a position to comment on what Micro did in the past.

Brad Young, communications specialist for the Office of the State Treasurer, said in an email that Micro’s problems are common among smaller towns. “It is not unusual for small rural units of government to struggle with financial or internal control issues, particularly with water and sewer systems; the economic downturn was difficult for them, and recovery has been slow,” he said. “We will continue to work with town officials to see that positive changes are being made.”

Young said the problems were serious, but the town’s responses each year have satisfied the state. “If we are not satisfied with the action being taken by the town or if we feel we can provide useful assistance, we will arrange to visit with town staff and officials to talk through their issues,” he said.

Seligson: 919-836-5768

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