A North Carolina city with tens of millions of dollars in outstanding debt is threatened with a state takeover because of what state officials call a precarious financial position.
The state's Local Government Commission gave the Rocky Mount city government a final warning Wednesday that if the city's finances decline further, the commission will take over operations of the city of about 54,500 people.
The city had $69.1 million of debt, including $29.4 million of special obligation bonds, outstanding as of June 30, 2024, according to its most recent
"I remain deeply concerned about your ability to make your upcoming debt service payments, which total nearly $8.7 million in fiscal year 2026-2027," said Denise Canada in a March 12 letter to the Rocky Mount City Council. Canada is deputy treasurer of the State and Local Government Finance Division in the North Carolina Treasurer's Department.
Since the letter, the city made budget cuts to save $1.8 million by June 30, voted to increase utility rates by 15% and revised its budget projections slightly upward, according to the LGC. The changes should be enough to address what had been a projected $3.4 million budget shortfall by the end of July, the LGC said.
Neither the city mayor nor the city manager immediately responded to a request for a comment.
"The actions and inactions of the Rocky Mount City Council are nothing short of financial malpractice," said North Carolina Treasurer Brad Briner. "It's been over 80 years since a city, county or special district has defaulted on a bond obligation in North Carolina. That long-standing record is going to remain intact while I am at the helm of the
In early March, State Auditor Dave Boliek
The commission told city officials on Wednesday that they are to provide the commission with a report on the city's financial condition and budgeting two times a month indefinitely.
"Actions taken in the past two weeks by the city council are now expected to keep the city solvent until the end of the 2026 calendar year, but by the slimmest of margins," the commission said after the meeting. "Should the budget numbers slip again, the LGC could move to take control of the city's finances," the commission said.
"Rocky Mount leaders have made progress in their massive deficit but are still avoiding making some tough decisions about overspending," Briner said.
Boliek in his statement accompanying his report said that "poor personnel decisions — including the hiring of a 'stretch candidate' as city manager — and significant overspending has led the city to the brink of financial collapse."
Fitch Ratings has an AA-minus rating for the city's issuer default rating and for the special obligation debt, both with negative outlooks. It downgraded the credit in November and assigned the negative outlook citing "a recent budgetary imbalance, including the use of nonrecurring resources for operational expenditure."
Moody's Ratings has an Aa2 issuer rating for the city and rates its special obligation bonds Aa2. No outlook is assigned. It upgraded the credit from Aa3 in 2024, after updating its methodology for city and county ratings.
In another development at Wednesday's LGC meeting, the body approved $619 million in conduit revenue bonds for the North Carolina Baptist Hospital, Wake Forest University Health Services and/or Wake Forest University Baptist Medical Center. The borrower will use the North Carolina Medical Care Commission to issue the bonds.
The bonds are expected to price by negotiation on May 5, with Bank of America as the lead underwriter. Jefferies Financial Group is the co-senior manager.
Robinson, Bradshaw & Hinson is the bond counsel and Hawkins Delafield & Wood is the underwriter's counsel.
The bonds are to be approximately 30 years with generally level debt service.
The bonds are rated Aa2 by Moody's Ratings, AA by S&P Global Ratings, and AA by Fitch Ratings.
