The Local Government Commission called on Henderson on Monday, almost two months after the state agency put the city on notice that it must do something to boost its sagging fund balance.
Finance Director Traig Neal disclosed the phone call during Monday night’s budget session with the City Council. “They were just checking in to see how things were going,” Neal said. “They wanted to see if there’s anything we needed.”
“Write us a check,” council member Mike Rainey quipped.
The LGC is part of state Treasurer Richard Moore’s office. It is responsible for monitoring the finances of North Carolina’s counties and municipalities and must approve any move to take on local debt.
Henderson received a warning letter from the LGC in January 2004 after the annual city audit showed a fund balance that was continuing to decline and was in danger of falling below 10 percent. The letter the LGC’s Vance Holloman sent Feb. 21 this year was much sterner because the city’s audit showed that the general fund balance was less than half the 8 percent level that the LGC considers the minimum safe reserve.
The city heard little if anything from the LGC after that letter until Monday, but the state agency called with a useful suggestion, Neal said.
The LGC proposed that the city refinance some of the capital debt in the sewer system. Elsewhere, when the LGC has worked out such plans, Neal said, the town has received the same interest rate but stretched the payments over more years to lower the annual budget impact.
“You prolong the agony,” Rainey said.
“You make the agony less each year,” Neal said. “I was talking to the LGC, so I feel like it was a good idea if they were suggesting it.”
The idea is far from a final proposal for City Council consideration, but it’s a start.