A new audit revealed that the eastern North Carolina town of Belhaven failed to cut off utilities for 629 past-due accounts, leaving $429,888 in unpaid bills as of June 2015. Town officials say they inherited the problems from previous administrators, a contention challenged in the audit.
Belhaven Town Manager Woody Jarvis acknowledges that the town has had problems collecting utility bills, and said officials are trying to fix the problem.
“We’re working on it just as hard as we can,” Jarvis said. He said the town has new top managers trying to fix problems left by previous leaders.
“We have had a complete turnover in town manager and finance officer,” Woody said. “I can’t speak for what happened in 2013. I don’t know.”
What happened before Jarvis arrived at his job, according to a report released by State Auditor Beth Wood’s office on Thursday, was the refusal of the former town manager to follow the town’s utility cut-off policy when customers became delinquent on their utility bills.
Jarvis said the town sells electricity, water and sewer, and garbage pickup services to its residents and businesses. The former town manager was Guinn Leverett, he said.
“If the town manager does not follow the cut-off policy, delinquent balances will continue to increase, and the town’s utility fund may experience cash shortages and not be able to pay its obligations,” the audit report says. “Also, the town council may have to increase utility rates to cover lost revenue, which negatively affects local business owners and residents.”
The town didn’t enforce the utility cut-off policy because, according to the former town manager, “Some residents were financially depressed, and management tried to work with them and not disrupt utility service until the local economy rebounded,” the report says. It also says the town didn’t pursue payment because some residents had health issues and the town should show compassion by providing such customers more time to pay their bills.
The town’s mayor, Adam O’Neal, and the town council were aware of the large delinquent customer account balances, the report says.
In a letter from Jarvis to Wood, Jarvis disputed the claim that the mayor and council realized the magnitude of the problem.
“We contend that the mayor and town council were not aware of the large delinquent account balances in the Town of Belhaven Utility enterprises,” Jarvis wrote on Jan. 11. The letterhead still listed Leverett as the town manager.
The audit, however, referred to a Dec. 18, 2014, letter from the Local Government Commission to O’Neal pointing out that the town’s termination policy wasn’t enforced strictly.
“We strongly encourage the town to enforce its policy as a means of improving collections,” the Local Government Commission letter said.
The report showed that of 1,294 active accounts, 235 were past due with customers still receiving utility services, 136 accounts were delinquent by more than 90 days, and 77 past due accounts had balances greater than $1,000.
The report recommended that the town manager enforce the utility cut-off policy and that the town council provide proper oversight to make sure it is enforced. It also recommended for the town board tol seek legal counsel to evaluate the viability of collection proceedings on past-due accounts.
The town’s response to the audit also detailed a plan to work with delinquent customers to bring their accounts up to date. The plan requires those customers to pay current balances in full by the 15th of each month and make arrangements to begin repaying any delinquent amounts.
In addition, Jarvis notes in his letter to Wood that the town has a hardship committee that meets weekly, and that the manager and finance officer prepare payment plans for delinquent customers.
The audit also found that the town did not have a written travel policy, and that the former town manager and former finance officer failed to report accounts receivable correctly.
According to Jarvis’ letter, the town adopted a travel policy in January, and that town officials will work to report accounts receivable more accurately.