When I served on the Charlotte City Council between 2007 and 2013, one of the issues some of my constituents regularly brought up was Charlotte’s financial future. More specifically, they asserted that Charlotte was headed down the same path as other failed or failing American cities. At the time, Detroit was most frequently cited as a comparison. Given that Detroit was in such bad shape that its population dropped from 945,297 in 2000 to 713,777 in 2010, I could understand why anyone would be concerned. While Detroit’s contraction was not solely caused by financial concerns, they certainly played a role.
However, at the risk of frustrating some of those constituents, I could not agree with them. The recent release of the nonprofit organization Truth in Accounting’s annual “Financial State of the Cities” report reminded me that those concerns remain unsupported. Neither Charlotte nor any other large city in North Carolina is likely to suffer the fiscal challenges faced by cities such as Detroit, Chicago, and New York City. In spite of what local elected officials may try, there are structural roadblocks in North Carolina law that serve to protect taxpayers.
Because Truth in Accounting’s reports emphasize the impact of debt, let’s begin there. One of the many significant government bodies in North Carolina that tend not to attract much attention is the Local Government Commission (LGC). The LGC is a division of the Department of the State Treasurer. Its nine members include the treasurer, the state auditor, the secretary of state, the secretary of revenue, and five appointed members divided among the governor, the president pro tempore of the Senate, and the speaker of the House of Representatives.
Established in 1931 during the Great Depression, the LGC’s responsibilities include evaluating the ability of local governments to issue general obligation bonds, revenue bonds, special obligation bonds, or project development financing bonds. Thus, in order to take on long-term debt, a local government needs more than just a vote of its citizens and/or of its governing body. It also has to demonstrate to the LGC that it will be able to pay back that debt.
Therefore, unlike most large cities in other parts of the country, North Carolina’s cities must obtain prior approval for their bonds from a state oversight body, dramatically reducing the ability of local debt to get out of control. This is one reason why all four of North Carolina’s largest cities — Charlotte, Raleigh, Greensboro, and Durham — routinely receive AAA ratings for their general obligation bonds. In contrast, Detroit’s debt finally reached investment grade two years ago, nearly 10 years after it emerged from bankruptcy, and Fitch Ratings recently downgraded Chicago to BBB+.
Another major topic that Truth in Accounting’s reports track is pension obligations. Here, too, there are state safeguards on local actions. Members of neither Charlotte’s City Council nor any other local governing body can easily gain votes of municipal employees by promising bigger pensions. Instead, the pensions of most local government employees are managed by the state treasurer in the Local Government Employees’ Retirement System. The fact that Charlotte’s firefighters have a separate retirement system is not a significant exception to this rule, as a separate board, not the City Council, directly manages that system in accordance with state law, not city ordinance.
Related to the subject of pension plans is the influence of labor unions. Municipal employee unions play significant roles in the politics of other large cities in the country. It isn’t difficult to understand how elected officials who win with union support will treat those unions while in office. In North Carolina, however, state law prohibits local governments from making contracts with public employee unions. Therefore, local governments here do not face the same kind of union influence found elsewhere.
Another factor to consider is how both state law and the LGC impose budgetary discipline on cities. At the simplest level, state law requires that city budgets must be balanced. In addition, the LGC encourages cities to adopt policies regarding maintaining a minimum fund balance in their budgets. Among the largest cities, fund balance policies range from 9% in Greensboro to 33.33% in Cary. Furthermore, the LGC monitors fund balances and uses them to determine what local governments to place on its Unit Assistance List, which covers the local government entities with the most fiscal concerns.
The last structural issue I’ll address involves the form of government. Two-thirds of the 30 largest cities in the country have strong mayors — that is, mayors who, after their election, directly lead the administration of city government with the power to set administrative policy and hire and fire city employees. But North Carolina law does not include the option of strong mayors. Instead, our largest cities have a council-manager form of government, in which the lead administrative role is filled by a city manager appointed by a majority of the city council. North Carolina mayors in council-manager cities cannot hire or fire any city employee on their own, nor can the council hire or fire anyone except the city manager, city attorney, and, in some cases, the city clerk.
To sum up the fiscal differences with another reference to Chicago, consider that Truth in Accounting’s 2026 report showed that “Chicago has reported losses in 10 of the past 12 years, despite a balanced budget requirement,” and Chicago’s pension systems have “only 25 cents saved for every dollar of earned and promised benefits.” The Civic Federation, a Chicago-based research organization, noted that the city’s FY26 budget included $166 million in debt “to cover back pay for firefighters under a recently approved collective bargaining agreement.”
So long as North Carolina’s laws and institutions regulating municipalities remain as they are, strong roadblocks are in place to prevent all those choices: no issuance of long-term debt to balance operating budgets, no local pension plans vulnerable to poor management, no political promises to unions fulfilled through collective bargaining, and no administrative authority vested in only one elected official. Historically, you are more likely to find fiscal difficulties, albeit of different kinds, in North Carolina’s smaller towns than its big cities.
There are certainly other issues that can lead to trouble in cities, such as public safety, inadequate transportation infrastructure, and planning policies that get in the way of keeping up with growth. However, fears that Charlotte, Raleigh, and other large cities in the state will follow the financial follies of cities across the country are unfounded and should not keep anyone awake at night.