Kenly has almost depleted its savings, according to a state audit.

The town had just $2,700 in savings at the end of the last fiscal year, less than 1 percent of its budget, the audit found.

The town's savings should not be less than about $80,000, or 8 percent of its total budget, according to state guidelines. And the target for a town of Kenly's size is a million dollars in reserves.

The audit found that the town used up most of its savings because it underestimated the cost of several drainage and street projects.

"You can't drive a Cadillac when you only can afford a Ford," said Tom Lucas, who has lived in Kenly for 50 years and was once its mayor. "It bothers me because they spent all the money and didn't mind the store so to speak."

But the town's mayor pro tem defends the projects.

"Even though it costs quite a bit and it's probably gotten us in a bit of trouble with the state government, the town is actually I think in much better shape than it was several years ago," said Mayor Pro Tem Scott Turik.

The town also overestimated the amount of money that would come into its coffers, the audit said.

"Mismanagement, no," Turik said. "It is hard when you are budgeting one year to the next what your revenues will be. You make the best guess that you can based on your previous experience. And you just kind of hope and pray that it works out in the end. Last year it did not."

Now the town is looking for ways to cut expenses and increase revenue. Turik expects the town will raise taxes next fiscal year. That has senior citizens living on fixed incomes concerned.

"It's very difficult right now to realize that we are in the state that we are in, with the economy as it is," said 82-year-old resident Lulu Jolliff.

For more coverage, read the Kenly News.