PER-2026-558

The audit found that the City of Rocky Mount (City) experienced severe financial distress between FY 2023 and FY 2025 driven by increased City employee compensation (27%) and capital purchases (153%) in FY 2024. This increased spending coincided with a 2% decrease in City revenues. During this time, the City’s cash and investment balances declined dramatically, from approximately $100 million in August 2023 to just $21.8 million by August 2025 (78% decrease).

The audit found that the City’s financial distress was caused by key breakdowns in City governance. The City Council and City Manager share responsibility for ensuring effective governance, fiscal integrity, and public trust. However, increased spending occurred without complete and thorough feasibility analyses, with  limited oversight from City Council, and with instability in financial leadership.

Specifically,

• Former City management was hired without due diligence, including the former City Manager and former Finance Director.
• City financial leadership instability. Since FY 2021, the Finance Department cycled through five directors, including individuals with limited local government finance experience.
• Overspending and loose budget practices. Spending was approved and occurred without thorough feasibility analyses. Additionally, the City Council approved budget amendments to match actual spending, masking excessive spending   and normalizing fiscal indiscipline.
• City Council oversight shortcomings. The City Council approved budgets without detailed financial data, missed statutory audit deadlines, and failed to hold City management accountable for lack of transparency.

The impact of the City’s financial distress has a direct and negative impact on both city services and the community, and time is needed to recover.

The audit includes several recommendations to strengthen future financial governance.

Details about each item are provided in the Findings and Recommendations section of the report.