A pattern of financial missteps in Columbus County could lead to “serious consequences” for taxpayers, the state auditor’s office said in a new performance audit.
The county has a history of failing to meet state deadlines for submitting financial reports, its fund balance has decreased, and it has seen a drop in taxable property values, State Auditor Dave Boliek wrote in a report released Wednesday.
While the county is not in a “financial crisis,” Boliek wrote, the audit identifies “financial management issues.”
Columbus County submitted its 2024 financial audit to the state about two and a half months late, according to the report. When it was complete, it had errors in the reporting of millions of dollars in the county’s assets and opioid settlement funding, which officials had to correct.
The county has yet to complete and submit its financial statement audit for fiscal year 2025 that was due last October, the report says. The state can withhold a portion of the county’s sales tax distributions if the audit is not submitted within 12 months of the end of the fiscal year.
Brent Watts, chair of the Columbus County Board of Commissioners and interim county manager, agreed with the state’s findings in a response included in the audit. The county expects to finish the fiscal year 2025 audit by July 30, he wrote, attributing its tardiness to new software and the federal government shutdown.
“We have been working diligently the past year to update our policies and build year-end closeout procedures to reduce findings and provide timely submittal of audits,” Watts wrote.
Without fiscal year 2025 data, much of the state’s audit uses information from 2024 and earlier. Columbus County’s fund balance fell from about 44% of expenditures in 2022 to about 19% of expenditures in 2024. The Local Government Commission says the county should have maintained a fund balance of about 20%.
Reductions in state and federal dollars forced the county to use “a significant amount of our fund balance,” Watts wrote.
The county has also seen a drop in taxable property valuation. The figure dropped $328 million, or 7.5%, between 2024 and 2026, largely driven by International Paper’s closure of some operations in Riegelwood, the audit states.
In June, the Columbus County Board of Commissioners voted to keep the current property tax rate of 80.5 cents per $100 of assessed value as part of this year’s budget. That decision, combined with lower property values, will mean a loss of over $2.6 million in gross property tax revenues, according to the state audit.
Watts wrote that new housing developments in the eastern and southern areas of the county should increase property tax revenues. The county has seen an influx of development since 2024, including 133 new homes and commercial spaces approved a year ago in Bolton.
The county’s “best estimate of getting fully back on track” is by 2030, Watts wrote, so long as the state General Assembly does not limit its ability to regulate property taxes. Earlier this year, lawmakers paused property revaluations for several counties, not including Columbus.
“Until the next revaluation is completed, we are going to be very conservative with revenues and reduce expenditures as necessary,” Watts wrote. The county’s next revaluation is scheduled for 2029.
Like many poor counties in southeastern North Carolina, Columbus faces increased financial pressures amid decreasing revenues. In 2024, the state audit found, the county’s expenditures exceeded general fund revenues by $4.27 million. This year, county commissioners passed a lean budget to account for increased costs related to federal and state legislation and higher health insurance costs for employees.
Watts said there has been a lot of staff turnover in the county’s finance and other departments due to recent retirements and “the county’s limitation to compete with surrounding agencies’ salaries.” County employees haven’t gotten raises in the past two budget cycles.
Among the state’s recommendations is to create a workforce development strategy to improve staff retention. It also said the county should strengthen financial procedures, work to increase the general fund balance, and provide county commissioners with routine budget-to-actual finance reports.
In his response to the state, Watts said the audit’s recommendations “were not unexpected.” Columbus County has been on a list of counties monitored by the state for financial concerns since 2020.
Many of the steps to correct the audit’s findings are “on-going evaluations that will need to be adjusted based on the future needs of the county and our personnel changes,” Watts wrote.