Auditor warns of municipal reporting delays; Tangier accepts review after missed payments and reporting gaps

Stacy Henshaw, Auditor of Public Accounts, told the commission that many Virginia localities missed statutory reporting deadlines for the APAs annual comparative local government report and that the office is actively monitoring local fiscal health.

Henshaw said the APA published a draft comparative report on Feb. 15 and the final in April, and that 30 localities remained missing as of the final draft. She described common reasons for late submissions including accounting vacancies and difficulty procuring auditors.

On fiscal distress monitoring, Henshaw explained APAs two‑part process (financial ratio analysis and qualitative assessment) and said the office has begun 2025 monitoring using FY 2024 data. She identified several localities that the APA continues to track, and described a specific case: Tangier.

Henshaw said Tangier had not had a full financial audit since February 2018, reported that a vendor had not been paid after DEQ had reimbursed the town for shoreline work, and that Tangier later missed a debt payment to the Virginia Resources Authority and had not submitted required COVID federal reporting. The town council later provided information to the APA and agreed to participate in the APAs voluntary review; Henshaw said Tangier has since paid the vendor and the debt payment, and that "we felt like this did qualify for an area of potential fiscal distress." She added the towns near‑term cash flow for these payments came in part from a loan from a local church.

Henshaw also noted media reports that Tangier and Virginia Beach would receive federal shoreline grants (a $10 million award was reported) and said the APA will seek to understand whether a state agency or the town itself will manage any large federal grants and to ensure the town has the fiscal capacity to manage them.

The APA told the commission it is required by law to receive audits when localities voluntarily have them and that small towns are not uniformly required to have audits. Henshaw urged better local reporting and said APA can consider limited, lower‑burden technical assistance or diagnostics but lacks authority to initiate audits of localities without JLARC approval in the narrow statutory circumstances that allow it.

Ending: APA staff said they will continue fiscal distress monitoring this summer, pursue voluntary assessments with flagged localities and notify the governor and relevant legislative committees if localities exceed statutory delay thresholds or meet distress criteria.