By Miles Layton

EDENTON — The Edenton Town Council’s meeting on Tuesday was dominated by a detailed review of the town’s fiscal year 2025 audit, with auditors and town officials emphasizing that while the town received a clean opinion, millions of dollars in interfund borrowing continue to affect its financial picture.

Thompson, Price, Scott, and Adams conducted the audit for the town, with Greg Adams of that firm presenting the year-end June 30, 2025, audit, outlining required communications and key financial indicators.

“We are required to design the audit to provide reasonable assurance that the financial statements are free of material errors and in compliance with government regulations,” Adams said. “That was accomplished; there were no material errors noted.”

He added that auditors had full access to town records and staff and encountered no limitations in their work.

“Our work was not limited in any way by the town,” Adams said.

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Adams reported that the town implemented a new accounting standard, GASB 101, which requires governments to accrue sick leave liabilities.

“This year, we implemented GASB one hundred and one, which involves sick leave, the accrual and accounting for sick leave,” he said. “So, we had a prior period adjustment to get those balances on the financials that involved sick leave.”

He said the town’s accounting estimates, including depreciation and allowance for doubtful accounts, were reasonable.

“There were none” regarding significant audit adjustments or disagreements with management, Adams said. “We had an unmodified opinion, that’s the highest level of opinion.”

He also reported no irregularities or illegal acts.

“We did not discover any irregularities and or illegal acts,” Adams said.

General Fund Deficit and Fund Balance

Adams said the town recorded $8.65 million in total revenues and $8.95 million in expenditures during fiscal year 2025, resulting in a net loss of $297,783.

“The unassigned fund balance was negative three hundred and four thousand six hundred and forty nine dollars,” he said.

He explained that the Local Government Commission recommends municipalities maintain an unassigned fund balance equal to about 34 percent of expenditures.

“That number would be three million forty, three thousand five hundred and seventeen,” Adams said. “So you can see we’re way off.”

Fund balance available as a percentage of expenditures stood at minus 3 percent.

Adams noted that while the figure appears alarming, it is largely the result of money owed to the general fund by other town funds.

“Our total fund balance… is three million four hundred, seventy, one thousand, seven hundred, sixty six dollars,” he said. “So that’s why we have an unassigned fund balance that is in the negative.”

He explained that state law requires the town to restrict funds tied to receivables between departments.

“If other funds… are running a negative cash, then the cash has to come from somewhere,” Adams said. “It’s coming from the general fund.”

Those transfers are treated as receivables that must be restricted.

“You cannot spend or appropriate monies that you do not have,” he said.

Mayor Hack High asked for clarification.

“Do I understand your comments to be that a large majority of the unassigned fund balance is money, basically that the town owes itself from itself?” High asked.

“Yes, sir. That’s correct,” Adams replied. “Three million two hundred eight thousand two hundred and twenty dollars.”

Adams said if those funds were repaid, the town’s financial position would look much stronger.

“If the other funds paid back the general fund today, this would look completely different,” he said.

Electric and Airport Funds

Adams said two enterprise funds account for most of the interfund debt.

“The electric fund owes the general fund one million thirty thousand eight hundred sixty five dollars,” he said. “With the airport fund owing the general fund, two million twenty five thousand, two hundred and thirty six dollars.”

Mayor High asked if that totaled more than $3 million.

“Yes sir,” Adams said.

He added that the amount accumulated over roughly four years.

“That’s correct, yes, sir,” Adams said.

He said that if those funds were repaid to the general fund, the town could approach or exceed the 34 percent target.

“We would be in much better shape if not above the thirty-four percent,” Adams said.

For the electric fund, Adams reported $13.59 million in operating revenue and $14.76 million in expenses, resulting in a loss of $1.17 million. After transfers and other items, the fund posted a net loss of $1.54 million.

However, operating cash flow remained positive.

“Our operating cash provided was six hundred and seventy seven thousand seven hundred and eleven dollars positive,” Adams said.

The airport fund showed a slight operating loss of about $1,000 but received more than $6.5 million in capital contributions.

Water and Sewer and Non-Major Funds

Adams said the water and sewer fund generated $2.95 million in revenue and $3.4 million in expenses, but received $4.76 million in grants.

“The net change… was a positive four million, two hundred, twenty one thousand two hundred and fifty three dollars,” he said.

Non-major funds, largely tied to grants, ended the year with $42,342 in fund balance.

“The timing of when the grant monies come in and when the grant monies are spent,” Adams said, explains fluctuations.

Cash Position and Deficiencies

Adams reported that total cash at year’s end was $3.99 million.

The audit identified one significant deficiency related to budgeting.

“We had a small over budget in a special revenue fund, and then a larger over budget in the electric fund,” Adams said.

He said budget amendments were not completed before June 30.

“We just got to make sure by June thirtieth we’re looking at the budget to actual,” he said.

Town Manager Corey Gooden said town staff had already begun working through the issues.

“As of December 10th… it looks like we’ve received an additional $878,550 back to the general fund,” High said.

He said that represented about 16.5 percent of the fund balance.

Gooden also reported total reimbursements of about $1.19 million.

“That excludes the two due from due to accounts that we’ve really got to kind of dig into,” he said.

Adams said the town must respond to the Local Government Commission’s financial performance indicators within 60 days.

“That’s the only thing that the board is required to do now,” he said.

Explaining the Numbers to the Public

Several council members emphasized the importance of explaining the audit to residents.

Mayor High much of the negative appearance reflects grant-funded projects.

“We are the bank until we’re reimbursed,” High said. “Grants are good… you don’t get that grant money when you are awarded it.”

He cited ARPA and other infrastructure projects that require the town to front costs.

“That’s what a lot of what appears to be negative actually is,” he said.

He added that the town had received nearly $1.2 million in reimbursements by December.

“We always want to seek grants. We always want to think big,” High said.

Public Comment on MLK Day

During public comment, George Lewis urged the town to take a more unified approach to Martin Luther King Jr. Day celebrations.

“I am here tonight simply as a caring neighbor who loves this community,” Lewis said.

He said he had participated in MLK events since 1986 and was concerned about recent programming.

“This is an appeal for a unified commitment,” he said, “to come together to make sure that how we celebrate Doctor King… honors what he stood for.”

Lewis criticized divisive language.

“When words that divide or demean come from an MLK Day stage, something deep inside… feels off,” he said.

He encouraged collaboration with community groups. To read more about Lewis’ remarks, see the end and/or click here for an op-ed he wrote.

Weather Response Praise

JD Grant thanked town employees for their response to winter weather.

“I just want to express my appreciation,” Grant said. “A fantastic job that our public works department did.”

He also praised police.

“I also want to thank the chief of police and his staff,” he said.

Other Updates

Town Manager Gooden summarized written public comments regarding a historic house relocation and trash receptacles.

He said any historic project would go through proper review.

“The project will be vetted,” he said.

On recycling and trash, Gooden said staff would review existing locations.

Council also received updates on infrastructure projects — Provalus and the parking garage on Court Street.

Goodn said construction was on schedule.

“Everything’s on schedule, if not a little bit ahead,” he said.

A new downtown facility is targeting an early October opening.

Later in the meeting, council approved sending four representatives to the National Main Street Conference in Tulsa, Oklahoma, in April.

The cost was estimated at about $1,750 per attendee.

Council approved a $37,204 ARPA budget amendment reallocating housing funds to complete neighborhood park projects and ADA improvements.

“The reallocation will allow public works… to finalize neighborhood parks,” High said.

He said additional ADA requirements were necessary to close out a grant.

Lewis’ Remarks

My name is George Lewis, and I’m I am a resident of Chelan County. I am here tonight simply as a caring neighbor who loves this community and wants to see us at our best. I’ve spent more than forty years in public service, always nonpartisan, and I’ve been part of MLK Day celebrations since that very first one in 1986.

Those experiences have taught me how powerful this day can be when it truly reflects Doctor King’s message of unity, dignity, and love. I come before you regarding my observance of a keynote speech during this year’s MLK birthday celebration and the resultant op-ed that I submitted to the Albemarle Observer and the Chilhowie Herald.

To be clear, this is not a condemnation of those who contributed to the celebration, but this is an appeal for a unified commitment from this town council, our county commissioners, and our citizens to come together to make sure that how we celebrate Doctor King from this day forward honors what he stood for.

Building bridges, not walls, and leaving no one feeling excluded in their own community. You serve at the front door of Edenton. What happens in our public spaces, our parades, ceremonies, and gatherings sets the tone for how we treat one another every day. That’s why MLK Day matters so much here at home. This day wasn’t meant to be a holiday or just a few familiar quotes. It clearly was not intended to be a politically divisive, polarizing, or degrading activity. Dr. King gave us a challenge to look closely at how we speak, how we listen, and how we live together. When words that divide or demean come from an M L K Day stage, Something deep inside, many of us feels off because that’s not who he was, and it’s not who we want to be. Doctor King taught that character, not color, should define us.

And that using shame or humiliation to make a point, only weakens the cause of justice. When language like that goes uncorrected, it sends a quiet message that we will tolerate, And I don’t think that’s the message any of us want to leave our children. But here is the good news: this isn’t a crisis; this is an opportunity.

We can make Edenton and Chowan’s MLK Day stronger and more unifying than ever. Picture a morning where folks across town are doing acts of service together. An afternoon filled with music, art, storytelling, and an evening where everyone leaves feeling proud of what we built together. That takes leadership, and I believe this council can help set the tone.

My ask: why I’m standing here this evening, partnering with the county, our schools, and maybe the NAACP, the Boys and Girls Club, the Fannie A. Parker Club, churches, service organizations, businesses or others to create a shared plan.

One that’s clear, inclusive, and grounded in dignity. Doctor King reminded us that the arc of the moral universe bends towards justice, but only because people bend it. You have a chance to do that here, not with speeches alone, but with action and heart. Thank you all for your time for the work you do for this community. Let us stand together as Doctor King urged, knowing that darkness cannot drive out darkness; only light can do that. And may Edenton choose always to be in that light. Thank you.