Fishing, farming and forestry have historic foundations in our state. We also have a history of migration, moving from easternmost to increasingly westward locations.
Small towns sprang up as people needed to bring their harvests and products to markets. The main method of transportation was by muddy or dusty dirt roads or rivers. It was only natural that governments were incorporated to provide services to both the town and often for the county. There one could find the courts, official records, banking and commerce conducted. Churches were built for worship and community gatherings. Public services could include law enforcement, fire protection, street maintenance, parks, and public utilities, paid by levying taxes on residents.
Folks who lived in small towns loved the pace, the sense of community and friendliness of neighbors. In the 1940s or ‘50s, one could walk or ride a bicycle all around town, go to the dime store, take in a movie, visit the drug store and sit at the lunch counter to order a sandwich or an orangeade, milk shake, or fountain drink.
But migration began taking its toll. People moved to ever-larger towns and cities to get jobs in the mill, factory or larger businesses. Once bustling main streets began displaying empty storefronts. Government services were necessarily scaled back due to reduced revenues. And, despite concerted efforts for urban revitalization and economic development, the die was cast for many once-wonderful small towns. “The good old days” were vanishing.
Today there are roughly 1,000 local governments in North Carolina. Some are struggling to pay employees and provide services to residents. In some cases, mismanagement and fraud depleted town treasuries, but in most instances the diminishing tax bases and decreasing tax revenues create short- and long-term financial problems. Local governments often have few options, and most of them are not good.
The state doesn’t want to be in the business of managing local governmental units, but neither can it allow these local entities to default on their obligations. Fortunately, North Carolina has a mechanism to deal with these problems.
Back in the roaring ‘20s, times were exceptionally good, money was cheap and towns, big and small, spent large sums of money on buildings, public utilities and other infrastructure. Then came the Great Depression, and the boom quickly became bust. Many of these municipal governments found themselves unable to pay their debts. This wasn’t just a local problem. It also affected the state, since all cities, towns and counties are creations of and responsible directly to the state. Inevitably, the state’s credit worthiness was questioned.
North Carolina created the Local Government Commission (LGC), housed in the State Treasurer’s office. It is responsible for receiving audited financial statements from every governmental entity within our borders and the authority to step in if a governmental unit isn’t managing affairs responsibly. Before any local entity can borrow money, it must get approval, and the LGC oversees the borrowing. After many years of prudent LGC oversight, our state earned the coveted Triple-A credit rating from all rating agencies, meaning we can borrow money at the cheapest government rates. Debt is backed by the full faith and credit of our state.
Back to the present. Many small local governments are now struggling to pay their bills, and the LGC has stepped in help them manage finances or, as a last resort, take control from local officials and assume management until a permanent solution is found. Currently, the treasurer and LGC have seven small towns in which they are managing finances, including Spring Lake, Robersonville, Pikeville, Cliffside Sanitary District, Eureka, Kingstown and East Laurinburg. In some towns, the entire budget is as small as $75,000, but others are as high as $13 million. One has a population of 12,000, others little more than a handful.
LGC takeover is, at best, a bandage on a more serious wound. Many small towns need to face the reality they can no longer function as before and either need to find a nearby community or county as a merger partner, look for a private enterprise to take over providing services, or just turn in their charters and cease to exist. It’s painful, but an increasing reality.
This will be heresy to many, but while discussing the fate of small governmental units, perhaps we should consider some of our smaller counties, often struggling due to declining population and tax revenues. Once the county seat was essential and could be no more than a day’s horseback ride away, but modern transportation and communications no longer make the location of county seats so essential. Whether some of them want to admit it or not, the handwriting is on the wall. Let’s not let community pride, tradition or the romantic memories of a day gone prevent doing what is best for the people and our state.
Sometimes it’s heartbreaking but best to just say goodbye.
Tom Campbell is a former assistant N.C. State Treasurer and was the creator/host of N.C. SPIN, a weekly statewide television discussion of N.C. issues that aired on UNC-TV until 2020. Contact him at tomcamp@carolinabroadcasting.com.