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We start off this morning in Rocky Mount. We've been covering the municipality there over the last couple of months. A couple of different reports out from state auditor Dave Bollick's group over at the auditor's office has highlighted some major financial concerns within the city as the previous city manager drained their reserve accounts way down.
Some big-time financial issues moving forward. This morning, however, we've got an informal system audit regarding the city of Rocky Mount's utility billing system that has been completed by the North Carolina office of the state auditor after residents in that area reached out to the auditor's office and raised concerns about being billed twice after receiving two separate utility bills back in the month of December. The auditor's office releasing this report on Wednesday, according to the report, thousands of Rocky Mountain utility customers unexpectedly received two utility bills, raising concerns that the city was improperly charging. Residents. Auditors found that the delivery of two utility bills to customers occurred because the city was attempting to fix a long-running gap in billing timeliness.
From at least January through December of 2025, so all of last year, Rocky Mounts business and collection service departments was printing bills late, sometimes up to 30 days after it had performed utility meter readings. This created a gap between when the city provided utility services to customers and when it billed those services to them. The department's director made the decision to eliminate the gap by sending utility customers an additional bill in either December or January. The auditor's office concluded that the city's actions to correct billing delays did not cause customers to be double billed, but were an attempt to eliminate said gap. After a thorough review, the North Carolina Office of the State Auditor determined that the cause of the billing delay was unauthorized and undetected modifications to the city's meter reading and billing schedule due to insufficient management, monitoring, and process control.
Additionally, during the audit process, it was discovered that city council members Charles Robinson and T.J. Walker, these are members sitting on the government in Rocky Mount, had accumulated unpaid utility bills. For council member Robertson had 30 accounts totaling more than $27,000 owed to Rocky Mount, and TJ Walker had one. Account with a total of over $3,000. Both men continued to receive utility services with unpaid balances, mostly in excess of 60 days and extending up to 120 days.
Auditors say that no penalties were assessed because the city paused late fees following the utility billing issue. It wasn't until the North Carolina Auditor's Office sent the city a draft report for its response that the bills were paid.
So between the two council members, talking about over $30,000 in utility bills not being given to the city. They also said they had found a similar issue in a 2020 finding by their office, which had noted that previous city managers and a former finance director prevented disconnections for non-payment for city council members at the time, Andre Knight, and wrote off $47,704 in utility bills that council members owed.
Some big-time money there in Rocky Mount. In his transmittal letter, state auditor Dave Bollick said that this audit points to an immediate need for those changes with fiscal leadership in the city of Rocky Mount. Highlighting that those on council should set an example for responsible fiscal management, especially as the city navigates its ongoing financial crisis. The state auditor said in a press release, this new report details mistakes made by the city's billing department that led to confusion regarding bills received by the public. It also shines a light on Rocky Mount officials who had delinquent bills.
Rocky Mount continues to face financial and personnel issues that need to be addressed, and the state auditor's office will not stop providing much-needed transparency to the people of Rocky Mount so that they can make informed, educated decisions on what's best for their community. Auditors recommended protecting the meter reading and billing schedules from unauthorized modification using available functionality, implementing user access and security controls to ensure that future system changes to billing processes are only made by authorized personnel, as well as any changes made being logged and monitored. They also recommended developing and implementing change control processes and monitoring the impact of changes, combining the meter reading schedule and billing schedule into a single workbook, and engaging with CIS Infinity Billing System, their vendor, to automate the billing schedule process to protect it against... further unauthorized modification. City manager Elton Daniels said that the city agreed with the findings and the recommendations from the auditor's office.
Financial concerns, as I highlighted at the open, are nothing new for Rocky Mount, as this was the second audit released just this year by Dave Bollock's office. In March, a 257-page performance audit pointed out mismanagement of millions of dollars under the former city manager. According to the state auditor, it all could have been avoided if the Rocky Mount City Council vetted its pick for the city manager that they hired in 2023. At the time, the city hired an executive firm and spent $38,000 to recruit the former city manager without conducting any reference checks. State Auditor Dave Bollick said at the time, what we found was red flag after red flag, including the fact that he, referring to the former city manager, previously had been the town manager.
Of Dumfries, Virginia. And during that time, we found recurring issues of poor management and poor decision-making, including a pattern of unqualified IRS questionable salary increases without council approval, inadequate segregation of duties, and structurally unsound budgeting. Those deficiencies in Virginia ultimately resulted in a $1 million overspend by the city manager. Yet Rocky Mount City Council voted unanimously to hire him. The former city manager was left unchecked from his hiring in August of 2023 for two years until August of 2025.
During that time, the city's cash and investment balances declined by approximately $80 million, falling from about $100 million to $21.8 million, a 78% drop in its balance sheet in the span of just 24 months.
So some big-time financial issues that Rocky Mount is still trying to. To dig out of the hole on. In addition to the audits, some legislation has been moving through and did move through the North Carolina General Assembly in recent weeks trying to clean some of this up. Senate Bill 1076, known as the Rocky Mount Lewisburg Utility Rev slash advisory, became law on July the 2nd. The bill introduced by Republican senators blocks Rocky Mount from using revenue generated from its electric utility to support other parts of its municipal government.
Legislators cited concerns about financial mismanagement and unfair costs imposed on out-of-town customers. That being individuals that receive their water and sewer service from the city of Rocky Mount but do not live in the city, meaning they are not eligible to vote in city council elections. It requires all revenue from Rocky Mount's electric system to be used strictly for utility-related purposes, including Operations, maintenance, capital improvements, and debt services. Any excess funds would have to be used to lower electric rates or pay down system debt. The bill would limit the city's ability to transfer electric utility revenues into its general fund, a practice used by municipalities to supplement other services.
Under the proposal, Rocky Mount could only make a capped transfer based on a formula tied to the utility's assets or revenues, and no other transfers would be allowed unless explicitly authorized by law.
So that is a change now that is in effect that law or that bill becoming a law back on July the 2nd. The city did receive some good news this week after attending the local government commission meeting on July the 7th. CJ Jordan, deputy city manager for Rocky Mount, told Commission members that the city's cash picture has continued to improve. City leaders reported that Rocky Mount's cash balance had improved to $22.9 million at the end of June, $14.6 million higher than the city's previous forecast. Officials said that the improvement was due in part to a utility rate increase that had gone into effect.
Commission members praised city officials for taking the bull by the horns by making appropriate personnel changes and remaining responsive to the commission's concern. As a result, the commission said that city leaders will not be required to appear before the commission's August meeting, and despite the Progress Rocky Mount must continue responding to LGC staff, sharing cash reports, and cooperating as the commission determines whether the city should be placed on the utility assistance list. This update comes after Rocky Mountain narrowly avoided a state takeover earlier this year of all of its operations and its finances during an April meeting of the local government commission. They declined to assume control of the city's finances, but left open the possibility for future intervention if major and dramatic changes were not made in the city of Rocky Mountain.
Some big-time financial headaches, some big-time financial issues. You can read this most recent report. It's over on our website this morning, CarolinaJournal.com. Look for the story with the headline, Rocky Mount Audit, No Double Billing, Unpaid Officials' Bills. You're great at protecting your data, but lots of places could still expose you to identity theft.
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We are continuing our coverage of the state budget here this morning, continuing to dive into details on the more than 630-page budget approved by lawmakers last week, signed earlier this week by Democrat Governor Josh Stein. The new budget has repealed a key sales tax exemption for electricity used by data centers, which is a significant shift in how the state taxes the industry's energy consumption. The provision included in the final budget agreement ends the sale and use tax exemption for electricity used by data centers. It does not, however, repeal the full suite of data center tax breaks. Instead, lawmakers targeted the electricity exemption while leaving other incentives tied to support equipment, software, and certain business properties intact.
Governor Stein said during a bill signing earlier this week, the legislature agreed to remove the data center sales tax exemption for electricity, so you and I will no longer be subsidizing their energy consumption. The change would subject that electricity to the state's combined general sales tax rate, generating an estimated $21.4 million in additional general fund revenue in the 26-27 fiscal year, according to legislative fiscal analysis. By 2030-31, that fiscal year, the estimate rises to $28.6 million.
So some pretty significant cash there for the state of North Carolina. The budget provision makes a partial victory for critics of North Carolina's data center incentive structure, but stops short of broader legislation filed earlier this year that sought to repeal several sales and use tax exemptions tied to the industry. Going through a couple of those, House Bill 1213 called the Protect Taxpayers and Consumer Act was filed in April by a bipartisan group of lawmakers that would have eliminated major tax exemptions for data centers amid growing concerns over the cost of subsidizing the rapidly expanding artificial intelligence and cloud computing industry. The bill followed Stein's request from his Energy Policy Task Force to examine whether North Carolina's existing data center tax incentives should be repealed or modified. Stein's administration began reviewing the exemptions earlier this year, citing concerns that rapid data center expansion could increase electricity demand and potentially raise costs for residents and small business ratepayers.
That proposal drew attention from lawmakers and industry leaders who questioned the process, the available data, and the level of legislative involvement. Supporters of maintaining the incentives have argued that the exemptions help North Carolina remain competitive with other states seeking major technological investments. According to Patrick Riley, speaking on behalf of the board of the North Carolina Blockchain and AI Initiative back in April, he told the Carolina Journal, North Carolina didn't become a destination for companies like Apple, Google, and Microsoft by accident. The Blockchain and AI Initiative is a technology advocacy coalition focused on promoting AI, blockchain technology and data center development in the state. Riley went on to say, it took deliberative policy decisions that made this state competitive.
Eliminating the data center tax incentives that attract that investment sends the wrong signal at exactly the wrong moment. AI infrastructure runs on compute, and compute runs on data centers. If North Carolina wants to be where the next generation of AI is built and deployed, we need to preserve the policy environment that makes that possible. According to previous estimates from the Department of Commerce, North Carolina currently provides roughly $50 million in annual sales tax exemptions on electricity and replacement equipment used by data centers. The department warned that the figure could grow substantially as more data center projects come online, particularly with the rise of artificial intelligence and cloud computing infrastructure.
The budget action also comes after a separate debate over whether large data centers should face additional regulations to protect ratepayers, water resources, and electrical grid reliability. Earlier this session, House lawmakers advanced the Ratepayer Protection Act, which would impose new limits on large data centers while adding safeguards to shield residents and businesses from higher utility costs. That measure passed the House in a 104 to 7 vote. Representative Matthew Winslow, the Republican from Franklin County, said when the proposal was announced, data centers bring economic opportunities, but they must not come at the expense of our ratepayers, our water resources or our energy reliability. Winslow added that the measure was intended to prevent the cost of data center expansion from falling on households and small businesses that are already facing higher costs.
Representative Winslow said North Carolinians are already feeling the pinch of higher electricity bills, and we cannot allow massive data centers and unrealistic green energy mandates to make it worse. The Ratepayer Protection Act puts people over profits by ensuring that data centers pay their fair share. Protecting our drinking water, safeguarding our local communities, and keeping reliable, affordable power flowing to our homes and businesses. The issue comes amid growing concerns over energy demand of data centers used for artificial intelligence. Nearly four-fifths of voters, 78.2%, agreed that new data center facilities should have to provide for their own energy generation.
That's according to one of our more recent Carolina Journal poll. Of those surveyed, 59.8% strongly supported the measure, while fewer than 10% opposed raising data centers, requiring data centers to provide their own electricity. John Sanders, the director of the John Locke Foundation Center for Food, Power, and Life, said that the idea is worth considering as lawmakers look for ways to protect ratepayers from costs associated with new data center demand. Sanders said in part, this is an idea worth exploring in order to keep other customers from shouldering the costs of constructing new power plants to meet new demands, specifically from data centers. That said, changing the law to allow data centers voluntarily to supply or contract for their own power independent from the grid would shield other customers from the risks without requiring special contracts and terms with utilities.
Amid rising debate over their impact, data centers are drawing increased attention from both state leaders and local communities across North Carolina. Dozens of local governments to this point have moved to pause or slow data center development through temporary moratoriums, with residents and local officials raising concerns about electricity demand, water use, noise, land use, and the pressure large projects could place on local infrastructure. This topic and this discussion likely not going anywhere here in North Carolina and so many other states. You can read some continuing coverage this morning over on our website, CarolinaJournal.com. Look for this story with the headline: NC Budget Scales Back Data Center Tax Break.
It's 5:37. Welcome back to the Carolina Journal News Hour, Charlotte's FM News Talk, 107.9 FM, WBT. I'm Nick Craig. Good Friday morning to you. We are tracking an interesting split decision out of the U.S.
Fourth Circuit Court of Appeals as it deals with a case surrounding the Charlotte Mecklenburg Police Department and an arrest back in 2022. To walk us through the latest this morning, Mitch Kokai from the John Locke Foundation joins us on the Carolina Journal News Hour. Mitch, this is a story that happened back a couple of years ago. It's been working through the court system. What's the gist of this legal challenge at the start of everything?
Well, the most interesting piece of this case, Nick, is the fact that the 4th U.S. Circuit Court of Appeals has thrown out the conviction of the defendant, Kevin Damon Williams, and basically said that Charlotte Mecklenburg police officers seized him. By the fact that they parked their cars in a certain way in an apartment complex parking lot.
So basically, the story of this case was: there's an apartment complex, there's a pool, some people are parked in the parking lot by the pool. An anonymous caller called 911 and said, it looks like there's a drug deal going on in our parking lot. And so Charlotte Mecklenburg Police dispatched a couple of officers to the scene. They arrived, they parked their cars. They didn't park in parking spaces.
They parked in the middle of the lot. And it was unclear how easy or difficult it would be for the cars that were parked there to get out. But at least one car was able to get out at one point after the officers got out of their vehicles. The officers did get out of their vehicles and within moments, Smelled marijuana. And so they went to the car where they spelled the marijuana.
They talked to this defendant Williams and the other people who were with him. Williams admitted they were smoking marijuana, so that enabled a search. And once they did a search, they found a gun. And that was the charge that Williams ended up being charged with in federal court: having a firearm possession by a felon.
So that was what led to his conviction. He challenged the conviction and basically. challenged the search that led to the gun because he said that officers arrived on the scene and parked their cars the way they did that that was under the Fourth Amendment a seizure. and that there was a seizure, that in and of itself was a problem, and then there was no probable cause for them to go forward with that seizure and then also the search that led to the gun.
Well, the trial judge in this case didn't buy it, threw out the motion to suppress that evidence. But the Fourth Circuit Court of Appeals, in a decision this week, reversed that decision by a 2-1 vote.
So the two-member majority said that yes. The way that the Charlotte Mecklenburg police park their cars. Making it not very clear whether the car of Williams could get out or not, or and whether a reasonable person would believe that he'd be allowed to leave, that that in and of itself was a seizure. And then there wasn't a justification. For the seizure in a search, because the 911 call was not a strong enough piece of evidence.
And the fact that this was a high crime area was also not enough evidence to go forward with the search.
So the whole search is thrown out. The case gets thrown back to the trial judge.
Now, interestingly enough, this was, as I said, a 2-1 split. The two judges who said that this seizure happened with the way that the cops parked their cars were both Democratic president appointees, one by Obama, one by Biden. The dissenting judge was a Republican appointee, Judge Allison Jones Rushing, who said, wait a minute. There was no seizure in the two seconds between the time the guys parked, the cops parked their car and then they got out of the car and smelled marijuana. As soon as they smelled the marijuana, they had a reason to go forward with the investigation and eventually the search.
This is no seizure. And rushing in her descent also made the point that. The majority standard now could set a bad precedent for the future because basically it says that not only Do the police have to park it such a way that a reasonable person would think they would be able to leave if they wanted to, but it has to be crystal clear that that's true. And Judge Rushing says nothing within previous precedents has said that. That basically the cops didn't do anything wrong.
They parked their cars as they would expect.
Soon as they open the door, they smell the marijuana. That gives them the probable cause to search. There is no seizure just by the fact that they parked their cars in a certain way. It's an interesting one, Mitch. We've actually got a copy from one of the police cruisers.
They still photo from one of those police cruisers. It is the title image over on the story at our website, CarolinaJournal.com, for folks looking for that. The headline there: Fourth Circuit rules: CMPD sees defendant by parking near him. And as I looked at that picture, Mitch, and going back to some of the comments about the precedent that this sets, for anybody that has ever seen any sort of police activity take place in a parking lot where this would be a similar situation, this is always how I've seen multiple law enforcement vehicles park. They typically do not pull into a spot.
They're in some cases kind of in the roadway or they've got a kind of parking maybe a little bit diagonally, depending on the situation and what exactly is going on. This is a very interesting thing. And in this case, in particular, looking at the image, the two police cars are going in parallel. They're following the normal route of traffic, at least based on some of the images there. It's a very odd situation and an odd ruling.
from the Fourth Circuit Court of Appeals. It is, and there's another piece of this. It's actually not in the story just because of time constraints and length constraints, but there was another car in the lot. That was parked and was affected by the way the police were parked. But once it was clear that officers We're not dealing with that car.
The person in that car drove away, didn't have to do anything special, didn't have to run into the police car. And basically, one of the arguments from the federal government, which was prosecuting Williams in this case, was that had Williams and the folks in his car wanted to drive away, they could have. They weren't hemmed in, they weren't blocked in. The majority opinion says a reasonable person would have expected that they were not. Able to leave.
But the federal government's argument was: no, they could have pulled out. There would have been nothing special.
Now, they might not have been able to do a normal exit that they would have expected, but they had room and they could have left at any time. And officers during the course of the trial of this case said, had The car driven away, they wouldn't have stopped him. If they had parked and the car had driven away, they had no reason to stop him and they would not have stopped him. That's what they said at the trial. The the whole reason that Williams and his car were targeted was because the the police stopped.
Opened their doors, got out of their car, and smelled marijuana. And as soon as they did, that's when they zeroed in on this particular car. And Mitch, that's not too dissimilar from other stories and other situations where law enforcement smells alcohol. If there's somebody that's pulled over, or in this case, we're talking about the odor of marijuana, as I understand it, and I'm not a lawyer. That is opening up the ability there for law enforcement to begin asking some additional questions.
And you mentioned the defendant in this case. You said he admitted to law enforcement that he and the party he was with were, in fact, smoking pot when law enforcement questioned him on the odor and the smell? Yes, exactly. They never said anything about not having smoked the marijuana. Basically, the officers said, Hey, you know, we smell marijuana, and he admitted that he did.
And of course, the charges in this case don't have anything to do with the drugs. The charge in this case is about the gun and the way you get to the gun. Was the search. And so the reason for calling for a violation of the Fourth Amendment rights was that the lawyer working for the defendant in this case is trying to get the evidence Of the gun thrown out, the only way you get the evidence of the gun thrown out is if you get the search thrown out, and the only way you get the search thrown out is to say that rights had been violated. And so that's why they came up with this idea that by the very way that they parked their cars, That that was a seizure under the Fourth Amendment.
And so once that happened, there had to be some sort of reasonable suspicion. And the argument, and the Fourth Circuit majority bought this, was that the 911 call that brought the police to that apartment complex in the first place, and the fact that it was a high crime area, neither of those two factors together. combine to give the police probable cause. And so by the fact of the matter that they parked their cars the way they did, that was an unconstitutional seizure and the conviction needs to be thrown out.
So as we've been talking about where do we go from here in a case like this, again, especially with some of the precedent set here, I would presume, I guess, the next level and the next challenge level here, Mitch, would be the United States Supreme Court. As you and I were talking here before the interview, the likelihood of the Supreme Court taking up a case like this probably isn't that high. But again, I would imagine, Mitch, that throughout basic law enforcement training, all throughout the United States, some of law enforcement officers are taught how to park in parking lots and how to go through this process. I mean, you're talking about a major ripple effect across the entire Fourth Circuit, depending on what ends up happening here. Yeah, that's certainly true.
So there could be an appeal to the U.S. Supreme Court, and the Supreme Court only takes several dozen cases every year. And typically, on a case like this, they probably wouldn't take it unless they see an incredibly egregious violation, or if there's what you call a circuit split, where one circuit has looked at a case like this and ruled one way, and another circuit has ruled another way. The Fourth Circuit, which covers North Carolina and some surrounding states, if it is ruled differently, that a different circuit, then the Supreme Court might take some interest in this case. But if not, If this case, U.S.
versus Williams, remains a precedent in North Carolina, it's going to make it tougher on law enforcement agencies in North Carolina, South Carolina, West Virginia, Virginia, Maryland, all of the states that are in the Fourth Circuit. It's going to make it tougher for them to be able to know when it's okay to park your car. And not have it be exactly clear whether people who people who are parked near you are able easily to get away because, based on this precedent, if it's allowed to stand, the Fourth Circuit may decide: well, no, you were too close, and as soon as you parked there, that was a seizure, and so you violated rights by parking the way that you did. I think, as Judge Rushing noted in the dissent, this really opens up a Pandora's box that's going to make it tougher for law enforcement if this type of decision is allowed to stand as a precedent. Yeah, and of course, one of the stories that we're talking about consistently here on the Carolina Journal News Hour and over on our website, CarolinaJournal.com, Mitch, is some of the concerns as it relates to public safety that consistently is at the top of our list when we're doing our Carolina Journal polls, now making it even tougher for potentially law enforcement to do some of their jobs based on how they're parking their cars.
I would imagine is not going to make communities any safer across the state of North Carolina. You can read some additional story, some additional details on this story over on our website this morning. CarolinaJournal.com. We appreciate the update. Mitch Coke I from the John Locke Foundation joins us on the Carolina Journal News Hour.
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This change comes after the office of the state auditor has completed its transition efforts, including the appointment of new chairs for all 100 county board of elections and assistance in helping them transition into their election administration roles. According to a state auditor spokesperson, now that we are more than a year past appointments and board chairs have settled into their roles, having worked through the municipal elections. Primary elections and most of the local boards have passed early voting plans for the general election. The auditor's office has discontinued the election liaison role. The election liaison was established because the auditor's office gained new responsibilities.
The position was not meant to be permanent. It comes amid Democratic criticism that Woodhouse, the former executive director of the North Carolina Republican Party, brought partisan influence to county election administration. His appointment followed the General Assembly's transfer of the North Carolina State Board of Election oversight authority from the Democrat-controlled governor's office to the Republican-led office of the state auditor. Current state of elections board member Stacey Foragers said, I appreciate the good relationship that we have with the auditor's office and Mr. Woodhouse, who was very helpful in facilitating the transition and orientation of our 100 county board chairs.
I've enjoyed working with him, and it's a good time for a transition. I wish him well in his new post. Concerns about political influence in election administration are not new. Critics point to actions during former Democrat Governor Roy Cooper's administration as evidence that politics has long played a role in the state board of elections and leadership decisions. In 2019, selection of the state board executive director was reported to Lee reportedly from WRAL News reported that a Democrat board member consulted Cooper's political team during the search when then Chairman Bob Cordell said he wanted to know whether his preferred candidate would be acceptable.
Cooper, however, insisted that he did not participate in the decision. This has always been a very interesting discussion as it relates to the state board of elections, previously under the Democrat governor, now under the Republican-led state officials. Auditor's Office. You can read some more coverage of that this morning over on our website, CarolinaJournal.com. Look for the story with the headline: Bolick reassigns election liaison, citing county chair efforts winding down.
That's going to do it for a Friday edition of the Carolina Journal News Hour. WBT News is next, followed by Good Morning BT. We're back to you tomorrow morning or back with you Monday morning, I should say, 5 to 6, right here on Charlotte's FM News Talk, 107.9 FM, WBT. Queen Carvania stood haloed by the morning sun. An army hung on her every word.
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