A new bill introduced this month in the General Assembly is designed to give more teeth to audits of local governments such as the audit that was released in 2020 about the City of Rocky Mount.
The primary sponsors of SB 473, also known as the “Enhance Local Government Transparency Bill,” include state Sens. Lisa Stone Barnes, R-Nash; Norman Sanderson, R-Pamlico; and Chuck Edwards, R-Henderson.
“Government transparency is critical to the success of our democracy. My goal in creating this bill is to strengthen the public’s trust and preserve the integrity of local government while avoiding wrongdoing and conflicts of interest,” Barnes said Friday in an interview.
The bill, in its current draft form, has four main purposes.
The first is to provide stronger consequences for city and county governments investigated by the state auditor’s office. If the bill is passed, the state auditor would be required to notify the Local Government Commission of negative findings about local governments. At that point, the LGC may decide to choose a certified public accountant who will conduct local audits for the next three years and report all findings to the LGC.
“We sought input from the state auditor and the Local Government Commission when writing this bill,” Barnes said. “Currently, the state auditor just makes recommendations. This bill would be an attempt to give more teeth to the investigations that the state auditor is spending so much money to produce.”
The second purpose of the bill would be to require garnishment of money owed in certain circumstances when city or county officials misuse funds or use their influence to avoid money owed.
“In addition to any other enforcement available, the finance officer of the city shall garnish compensation paid under G.S. 160A-64 to any mayor or council member to collect any unpaid monies due to the city for city services until such debt is paid in full using the procedure for attachment and garnishment set forth in G.S. 105-368 as if unpaid monies due to the city for city services were delinquent taxes and that finance officer were the tax collector,” the bill states in its current form.
The third effect of the bill would be to criminalize the misuse of an elected office for personal financial gain.
“No elected officer shall solicit or receive personal financial gain from the political subdivision for which that elected officer serves by means of intimidation, undue influence or misuse of the employees of that political subdivision,” the bill states.
Violation of this statute would be a Class H felony under the current form of the bill. In North Carolina, this is the same category as first-degree forgery and can carry a prison sentence of four to 25 months.
The fourth purpose of the bill is to prevent self-dealing by local government officials who also serve on boards of nonprofit agencies. The section would more closely define and govern situations where a public official serves, for instance, as a city council member and on the board of the OIC.
In an interview Friday, Barnes said she was motivated to sponsor the bill in the aftermath of the publication of the state auditor’s report on the City of Rocky Mount in May 2020.
“At that time, I was serving in the state House of Representatives. I had a lot of people calling me asking me to do something about the situation,” Barnes said.
Barnes said she is sympathetic to such concerns.
“There was a definite outcry from constituents demanding action after the release of the auditor’s findings last year. The report itself indicated there were 213 complaints received through the hotline. It is very alarming when government officials receive blatant preferential treatment and fail to follow proper procedures, wasting taxpayer money and public resources,” Barnes told the Telegram.
According to the summary of that report posted by the State Auditor’s Office, the results of the investigation revealed that, among several other infractions, “multiple City of Rocky Mount officials prevented the Business Services Center from adhering to its utility customer service policy resulting in a $47,704 write-off of a city council member’s utility account.”
That council member was subsequently identified as Councilman Andre Knight.
The audit of the city also revealed the “City of Rocky Mount Downtown Development Managers failed to follow program guidelines for the downtown roof replacement and building assistance programs resulting in uncollected loan payments of $32,452 and inappropriately awarded grants totaling $28,000. The City of Rocky Mount Engineering Division violated the City’s Code of Ordinances by not collecting on a letter of credit as required after two years resulting in potential costs of $31,000 to complete subdivision improvements. The City Manager failed to comply with the City of Rocky Mount’s travel policy resulting in $1,575 in unallowable travel expenses” and “The City of Rocky Mount failed to designate an American with Disabilities Act coordinator since 2010 as required by federal law.”
While much of the law can apply to situations presented in the Rocky Mount audit, it will apply to other situations across the state that may affect city and county governments in the future. Some of the measures in the bill also are retroactive to audit situations since July 2018.
“Rocky Mount is not the only place that has been audited and had negative findings,” Barnes said.
According to the state auditor’s website, investigations of several other local government entities have uncovered evidence of financial misdealing by government officials or employees.
In May 2019, the state auditor’s investigation of the Town of Robbinsville determined that town officials and employees spent more than $34,000 on credit card purchases and more than $30,000 on fuel purchases without adequate documentation to support a business purpose. In addition, town officials and employees received over $15,900 in fringe benefits that were excluded from income, according to the state auditor’s summary.
In December 2019, an investigation of the Town of Manteo showed that a town commissioner derived a direct benefit of $12,500 from a contract related to the Doughs Creek Canal dredging project.
In April 2020, an investigation by the State Auditor’s Office into Greene County showed that county employees spent $95,660 on credit card transactions without adequate supporting documentation or proper review and approval.
No other state auditor investigations concerning city or county governments have been published since the Rocky Mount report in May 2020.
The bill is in the early stages of passage and is in its draft form. On Monday, it passed the first reading and was referred to the Committee on Rules and Operations of the Senate.
Barnes said she hopes the bill is passed.
“We don’t have anything in North Carolina now that really addressees these issues,” Barnes said. “I hope this will be the beginning of a local government ethics act like many other states have.”
She said she feels the issue is important because such issues affect the relationship between local residents and government.
“When people don’t trust their government, they either get angry or they get apathic and refuse to participate in elections. We need to try to preserve the integrity and increase the accountability of these local government institutions so that citizens will trust the people who are governing them,” Barnes said.
As she seeks to address issues of transparency and ethics in government, Barnes said she invites comment from the community.
“I welcome feedback from the public on their level of confidence in their local government and whether or not they support this type of legislation,” she said.
The full text of the bill can be viewed at https://webservices.ncleg.gov/ViewBillDocument/2021/2293/0/DRS35210-ST-20.