Tryon eyes end to 2001 budget crisis

Published 5:54 pm Thursday, May 24, 2012

Peoples said hiring the right staff at the time, specifically former town manager Jim Fatland, helped Tryon come back financially, especially in terms of the amount of grants Tryon has been able to obtain.
Peoples said the town’s staff has been reduced from 46 employees at one time to 34 employees, and most of that reduction has been accomplished by not rehiring after employees retired or resigned. He commended the three different councils and town employees since 2001 for the town being in the position it is today.
“[Having gotten] from where we were and where we are now, by being frugal, is absolutely phenomenal,” Peoples said.
By the close of 2009-2010 (the latest audited fund balance number available), Tryon’s fund balance was $252,393, or almost 17 percent of its general fund expenditures.

Discovery of the budget shortfall
Tryon’s budget shortfall first came to light in 2001 when then councilman Warren Carson began investigating delays on an East Howard Street sewer project. The town had received a grant for up to $660,000 for the project and Carson began questioning why work had come to a halt. Tryon officials discovered that the contractors stopped working on the project because they weren’t getting paid.
Officials eventually discovered the town had spent approximately $100,000 of the grant money to cover operating expenses. Tryon later completed the project.

Cause of the crisis
At the close of 2002, Tryon’s annual audit report revealed the debt numbers had climbed to $1 million. Auditors said at the time that for close to 10 years the town had spent more than it had taken in. Tryon’s fund balance was in the negative from 1997 through 2002. The town’s fund balance dropped to as low as a negative 32 percent, or negative $525,951 in 2001.
The state requires a minimum of an 8-percent fund balance (reserves) for local governments and can take over financial operations of a town if it dips below that percentage for long.
Tryon’s woes did not lie just in owing itself money. The town at the time had misspent for operating expenses an estimated $252,626 of state Powell Bill money, designated to maintain streets, as well as approximately $100,000 in grant money from the N.C. Clean Water Management Trust Fund, designated for the sewer project along East Howard Street.
Tryon also spent $322,260 of fire department funding for general fund operating expenses. It also spent two $50,000 loans obtained by Draughn without council’s knowledge.
Draughn was sentenced for obtaining the two $50,000 loans without the authorization of council. He pled guilty in 2002 to a charge of willfully failing to discharge the duties of his office and was sentenced to one year unsupervised probation and a $500 fine.
Also included in the debt were unpaid bills for generators totaling approximately $240,000, as well as the bills for engineering fees for the generators.

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