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by Carrie C. Causey
LOUISBURG — The Kerr-Tar Regional Council of Governments (COG) is “in its home stretch,” interim Executive Director Diane Cox said Tuesday, about convincing all of its members to agree to help pay back hundreds of thousands of dollars in deficit caused by mishandled budgets.
This week Franklinton and Louisburg town board added their stamp of approval to pay the requested $1.39 per capita fee. And after some discussion Monday night, so did Franklin County commissioners, who agreed to shell out more than $74,000 — the most of any of the other counties or municipalities because of its size — to meet the demand.
Danny Wright, COG board member and finance chairman, candidly spoke to county commissioners earlier this month about how an audit revealed there was money budgeted as revenue that never came in and was deemed uncollectible.
To make up the difference, money was inappropriately withdrawn from the COG’s Revolving Loan Fund, which is federal funding from the U.S. Economic Development Administration (EDA). According to the audit, the negative cash flow resulted in a discrepancy of $138,000. But the money being paid back by municipalities totals more than $300,000 in order to be able to return the EDA money in full to a separate account and still have operating funds.
After they learned of the error, members of the EDA demanded the money be paid back in full immediately to a separate fund or risk legal action.
As the COG board is comprised of representatives from municipalities and governing bodies from Granville, Vance, Warren and Person counties, it was decided the money would have to come from them, in addition to spending cutbacks which have already taken place.
Steps to prevent this from happening again include reducing expenses by not hiring a permanent executive director after the previous one stepped down and cutting back staff, having a separate finance committee for better checks and balances and making separate accounts.
Franklinton Mayor Elic Senter, a COG board member, told his commissioners Tuesday, that the COG began taking steps to rectify the problem immediately when discovered last fall, but it wasn’t until February that they truly realized “the pickle” they were in.
Even then, the problems weren’t made public to local boards until the COG began requesting money from them.
“We took the steps to fix the problem as we understood it at the time,” Senter said in a phone interview Wednesday, adding since they thought it was taken care of it wasn’t a “stop the presses” issue. “But when the EDA asked for a segregated account that brought on insurmountable hurdles.”
For some, it was an easy decision to pay the requested fund. Small towns like Youngsville and Franklinton, quickly came to the consensus that it would be better to pay a nominal fee, less than $3,000 out of each coffer, than risk losing the benefits of the COG.
The purpose of the entity is to help each of its members through funding opportunities, grant writing, technical assistance, advocacy and the ombudsman program.
Before the board passed it Tuesday night, Senter said the amount of money and staff it would take to fill in the gap if the COG was dissolved, would put the town’s tax rate over a dollar.
At the Louisburg Town Council Monday, Councilman Boyd Sturges didn’t hesitate to pay it, saying he was inclined to do it based on getting more out than they put in.
Councilwoman Emma Ruth Stewart agreed.
As a COG member, “we are in it for the good things, and we should have to be in it for the unexpected things,” she said.
Trust moving forward
But not everyone was ready to sign the check right away.
Franklin County commissioners had previously tabled discussions to look into the matter further. County Commissioner Don Lancaster said during the board’s last meeting that it was not their debt to incur, but changed his tune Monday, saying he now had better faith in the new COG finance committee and board.
Prior to motioning that Franklin County agree to pay it, Lancaster said the alternative of being part of the Kerr-Tar COG was being lumped in with another region, perhaps the one with Wake County, where he believed Franklin County would lose its voice, be overlooked and lose much of its funding and opportunities. Commissioner Sidney Dunston added that the EDA funding is only a small portion of the benefits offered by the COG.
But county Commissioner Harry Foy cast the lone dissenting vote, requesting further study of the problem and a conclusion to the COG’s own internal investigation.
“I strongly resent giving money to an entity that’s being investigated,” he said. “I don’t do that in my own business. That gives me the heebie-jeebies.”
He added there was “life before the COG” and the things they offer could still be provided “just a little differently” if something happened to it.
Cox said the internal investigation is ongoing as the COG continues to pick up the pieces and get their finances in place. However, they had been told it was not a criminal matter.
At the same time, it is unknown whether or not the EDA will still take the funding back even if it is all returned to the separate account, if the COG will lose other government subsidies because of it or if the COG will still be forced to dissolve. Even if everything continues as usual, there is no guarantee the municipalities will get their money back or how long it would take.
“Can I stand here and tell you that you will get back penny-for-penny in the next 10 years? No,” Cox said. “But we will do what we can to keep membership fees as low as possible.”
Two residents, Mary Ella Hutchison and Roger Lytle, also spoke at the county meeting Monday as they did previously, to criticize the county using tax money to pay for another entity’s mistakes.
Lytle went as far as to say if the county doesn’t get the money back, he would personally take action against the county for not doing their due diligence and looking out for the residents they serve.
In their vote to approve it, Lancaster asked that the Franklin County board adopt the same stipulations as Granville County: funds must be placed in a trust account pending approval by all member governments, the COG shall make a claim on the finance director’s bond and executive director’s bond if any, and any funds received shall be refunded back to the members pro rata based on percentage contributions.
Some of the governments said they would pay, pending approval of all member governments. There are three more that are left to vote: Bunn, Norlina and Macon.