Hope Mills Spent $1.2M More From Reserves Than It Budgeted
Summary
North Carolina's state auditor found that the Town of Hope Mills spent $1,734,825 from its reserve funds in fiscal year 2025 -- $1.2 million more than the $499,375 it had budgeted, and about $97 for every resident of the town. It was the town's first reserve-fund loss in five years. Investigators also found the town manager approved raises of up to 12% for some employees without the documentation the town's own personnel policy requires, while a state law lets the budget amendments that enabled the reserve draws pass without ever being published. The town has promised a fix, with a self-set deadline of July 1, 2026 -- a date that has already passed.
Amendments the public never sees
The overspending did not run through the town's normal annual budget process. It ran through budget amendments -- board-approved changes to an already-adopted budget, made mid-year. North Carolina law⧉ allows this: a budget ordinance can be amended at any time, and unlike the ordinance's original adoption, amendments carry no publication requirement at all. The auditor's report found that is exactly what happened in Hope Mills -- budget amendments that "do not appear during the Town's budget process or in the Town's annual financial statements," even as they authorized most of the extra reserve spending. Sixty percent of the town's FY2025 budget amendments went to the Police Department alone: new vehicles for school resource officers, a records server, overtime, insurance and fuel.
View data as table
| Typical annual draw | $500,000 | historical norm |
|---|---|---|
| FY2025 actual | $1,734,825 | +$1.2M over budget |
| FY2026 originally proposed | $1,561,675 | mayor's tax-cut plan |
| FY2026 as approved | $442,300 | tax rate raised instead |
A tax cut funded partly by a sale that never happened
The overspending did not stop after FY2025. Heading into FY2026, the mayor proposed cutting the property tax rate from 51 cents to 45 cents per $100 of assessed value -- a cut the town proposed to cover partly with $481,813 expected from the sale of a cell tower. That sale never closed. Altogether, the mayor's FY2026 proposal called for $1,561,675 in reserve draws -- more than three times the typical annual amount, for a second consecutive year. The town's Finance Director objected in writing and proposed a smaller cut instead. The Board split the difference: it adopted a 48-cent rate⧉ and cut planned reserve spending to $442,300 -- though it has since amended that budget upward by another $62,375.
View data as table
| School resource officer vehicles | 466,000 | |
|---|---|---|
| Records/evidence server | 296,250 | Replaced a service the Cumberland County Sheriff's Office had previously provided |
| Overtime & leased vehicles | 190,000 | |
| Insurance & fuel | 81,000 |
Raises without paperwork, while the cushion shrank
Separately, OSA substantiated an allegation that the town manager was improperly awarding salary increases. Investigators sampled 45 of the town's 228 employee files; 15 contained the personnel forms used to document raises, and 10 of those 15 lacked the documented justification the town's own Human Resources Policy Manual requires. Seven employees received raises 0.5 to 10 percentage points above the town's approved cost-of-living increase -- including an 11% raise for a town planner and 12% raises for a human resources specialist and a deputy town clerk. The town manager told auditors he can approve raises without additional signatures or justification; OSA found that contradicts the town's own pay-plan policy, which assigns that authority jointly to the town manager and the human resources director.
View data as table
| Parks and Recreation | 358% | $1,500 budgeted, $5,362.58 spent |
|---|---|---|
| Fire | 132% | $7,000 budgeted, $9,267.56 spent |
| Administration | 134% | $10,000 budgeted, $13,396.86 spent |
| Police Department | 111% | $20,000 budgeted, $22,261.78 spent |
| Governing Body | 129% | $17,500 budgeted, $22,582.78 spent |
A smaller version of the same pattern showed up in travel and training. The town's overall travel budget was overspent by just $622 for the year -- but five departments individually blew past their own travel budgets by more than $2,000 each, with Parks and Recreation spending 3.5 times its $1,500 allotment. The town covered the gap by shifting travel funds between departments, the same kind of internal transfer OSA flagged in the larger reserve-fund findings.
What the town promised, and by when
OSA issued 21 recommendations in all. The four addressing the reserve-fund findings -- setting a minimum reserve threshold, drafting a plan to rebuild what was lost, limiting reserve use to one-time capital projects, and budgeting new costs in advance instead of amending mid-year -- each carry the town's own self-set "Timetable For Completion: 1 July 2026." That date has already passed as of this article's publication, and the public record does not yet show whether the town met it. The recommendations tied to the undocumented raises carry a 90-day clock from the report's April 24, 2026 release date -- a deadline landing in late July 2026. The town's Finance Department has floated one option for rebuilding the reserves: earmarking a portion of the property tax rate for four to five years, potentially raising $1.5 million restricted specifically for refilling the fund balance.
- Hope Mills drew $1,734,825 from its reserves in FY2025 -- $1.2 million more than budgeted, and about $97 per resident, in the town's first reserve loss in five years.
- The overspending ran through budget amendments that state law does not require the town to publish -- 60% of them tied to the Police Department alone.
- A proposed FY2026 tax cut leaned on a cell-tower sale that never closed, part of a second straight year of reserve draws about three times the town's own norm before the Board scaled it back.
- The town manager approved raises up to 12% for some employees without the documentation town policy requires -- a finding OSA substantiated separately from the reserve-fund review.
OSA's $1,554,161 "fund balance reserve loss" and the $1,734,825 "reserve fund expenditures" figure describe two different measures in the same report -- the first is the town's net revenue-minus-expenditure shortfall for FY2025, the second is the total specifically drawn from reserve accounts. This piece keeps them separate and does not add or substitute one for the other. The salary-increase findings rest on a sample of 45 of the town's 228 employee records, not a full-population review. The $16,873 aggregate travel-and-training overage is OSA's own total; summing the five example departments in its table comes within about $1 of that figure, likely a rounding gap in the source table. OSA's "as early as FY2028" depletion warning is a conditional projection in the report itself, contingent on continued FY2025-level spending -- not restated here as a certainty.
Sources(3) ▾
- North Carolina Office of the State Auditor, Town of Hope Mills -- Investigative Report (NC Office of the State Auditor) (2026-04-24) — 56-page investigative report opened after tips to the State Auditor's Tipline alleging misuse of public funds and resources by the Town of Hope Mills (Cumberland County, NC, pop. ~17,800). Assesses the Town's financial health and rules on each allegation (substantiated / partially substantiated / unsubstantiated), with 21 numbered recommendations and the Town's own corrective-action responses and self-set completion timetables. Fetched directly as a PDF (7MB, 56 pages); read in full via the text layer (pdftotext -layout) after files.nc.gov intermittently 403'd the direct-fetch attempt (a working copy from an earlier successful fetch was used for the text extraction). files.nc.gov · original document
- Town of Hope Mills, North Carolina -- Board of Commissioners, Town of Hope Mills Budget Ordinance FY 2025-2026 (Ordinance 2025-006) (2025-06-16) — The Town's own adopted, signed, and sealed budget ordinance for fiscal year 2025-26 -- General Fund, Powell Bill Fund, and Stormwater Fund appropriations, the ad valorem tax levy, and the Budget Officer's transfer authority. Used to independently corroborate the FY2026 tax rate and General Fund total that the State Auditor's report also cites, and to give the reserve-fund figures a same-year budget scale. Fetched directly (3-page PDF) from the Town's CivicPlus-hosted document center. nc-hopemills.civicplus.com · original document
- North Carolina General Assembly, NC General Statutes Chapter 159, Article 3 -- The Local Government Budget and Fiscal Control Act (2026-04-17) — The enacted state law governing how every North Carolina municipality must budget, balance, and amend its budget ordinance -- cited by the OSA report's own recommendations (footnoted G.S. 159-8(a), 159-13, 159-15, 159-40). Used here for the normative baseline: what a balanced budget ordinance must include, the July 1 adoption deadline, and the statute's own exemption of budget-ordinance amendments from publication requirements. Fetched directly as a PDF (533KB) from the legislature's codification site. ncleg.gov · original document
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The Town of Hope Mills, North Carolina -- a town of about 17,800 people outside Fayetteville -- drew $1,734,825 from its cash reserves in fiscal year 2025, according to an investigative report⧉ from North Carolina's independent, constitutionally elected State Auditor. That is $1.2 million more than the $499,375 the town had actually budgeted to spend from savings, and it produced the town's first reserve-fund loss in five years. A reserve fund is a local government's rainy-day cushion -- cash set aside so a bad year, a broken water main, or a lawsuit does not force a mid-year tax hike or service cut. Hope Mills spent about 3.5 times its own typical annual draw -- then proposed doing it again the following year.