(CNN) — The tug of war between a majority-Black town in Tennessee and state officials is intensifying as the state comptroller’s office has given the town an ultimatum: Fix the town’s financial troubles or the county will take over.

The state’s comptroller has pledged to restructure the town’s financial supervision and pushed officials in Mason, Tennessee, to give up their charter if they cannot pay off their debt.

Although Mason, a small town about 40 miles away from Memphis, has had a history of late audits and has not submitted its annual audit on time since 2001, the town’s leadership says the state is now concerned because the area is welcoming a $5.8 billion Ford Motor Company plant in 2025 called BlueOval City. The plant would be about 10 miles away from Mason.

Last week, Mason’s Board of Alderman voted to use the first half of its American Rescue Plan allocation to repay some of the money the town borrowed from its Water and Sewer funds over the past couple of years. The town currently owes more than $597,500 to its Water and Sewer fund, according to Tennessee’s Comptroller of the Treasury Jason Mumpower. Once town officials transfer the money, Mumpower’s office will work with the town on its financial plan, his office told CNN.

Last month, Mumpower, who has authority over incoming and outgoing funds for the state, sent a letter to Mason residents calling on them to push for the town to relinquish its charter. Mumpower gave them two options: allow the comptroller’s office to take control or forfeit their city charter, ceding control to Tipton County.

Town officials say the comptroller office’s actions are racially biased because the state only intervened once the plant was coming to the area and has helped majority-White towns with their finances without pushing them to relinquish their charter. Mumpower denies bias and told CNN he does not want Mason to be left out of the financial benefits of the Ford plant. Yet town officials are still skeptical about what the comptroller will do next.

“All of these years and now they want to come in and take over,” Vice Mayor Virginia Rivers told CNN. “They just want to push us out the way.”

Mayor Emmit Gooden drew a contrast to the way the comptroller’s office helped another town in Tennessee. Jellico had worse financial issues than Mason including declining revenues, excessive spending and stolen money, according to Gooden. In 2013, the comptroller’s office required the town to submit weekly spending requests to him for approval and worked with them to develop a balanced budget.

“By the end of our enhanced supervision in 2018, Jellico was financially stable and had improved its practices,” John Dunn, spokesman for Comptroller Mumpower, told CNN.

While Jellico has a population of about 2,100 people with about 95 percent White people and one percent Black people, Mason has a population of less than 1,500 people with about 23 percent White people and 72 percent Black people.

The comptroller’s office never asked residents of the city of Jellico to convince their town to give up its charter, according to Vice Mayor Rivers.

“I definitely think race plays a factor in the comptroller’s actions because we’re the only city they have come in to force the finances and demand our charter,” Rivers said. “They didn’t come in and offer us any assistance like they did with the city of Jellico.”

The comptroller’s office has also said it will scale back its supervision over the town’s financial operations as long as Mason can produce a balanced budget for the upcoming fiscal year by July and complete all its audits by August.

“Once the fiscal year 2021 audit is received and the fiscal year 2023 budget is approved, the Town will no longer be subject to heightened financial supervision,” the comptroller’s office said in a letter to Mason town officials.

“We will continue to work with the Town to ensure the budget stays balanced and the Water and Sewer bank account is restored.”

Although the Comptroller’s Office has never pushed another town to give up its charter, they have provided enhanced supervision over a town’s finances three times in the past 10 years: Jellico, Van Buren County and soon to be the city of Mason, according to Dunn.

Seven out of eight Mason officials are Black, which differs from the racial makeup seven years ago, in which all elected officials were White. Residents are also frustrated and believe if the town was majority-White, the comptroller’s office would have acted differently from the beginning.

Comptroller Mumpower said he is concerned Mason’s debt will cause the town to “be left out” of benefiting from the project’s economic development.

Mayor Gooden said the town would suffer a tremendous financial blow if it surrendered its 153-year-old charter because all the estimated funds from the new project would go to Tipton County instead of directly to the town.

The Ford plant is expected to build electric vehicles and advanced batteries. The 3,600-acre campus will bring about 6,000 new jobs to the area, according to the Ford Motor Company.

The Ford Motor Company told CNN they are aware of the tension between the town of Mason and the comptroller’s office but have not been directly involved.

“We have reached out to state and local community leaders to express concern and learn more,” Ford officials said. “Ford is absolutely committed to being a good neighbor and providing inclusive and equitable opportunities for West Tennesseans, including the residents of Mason.”

Rivers said she immediately thought the open letter was an all-time low for the comptroller.

History of mismanagement and fiscal issues

Just like most of its residents, Mason’s town officials are predominantly Black. Before the town’s first Black mayor, Gwen Kilpatrick, took office in 2015, the town was led solely by White elected officials for more than a century.

Seven years ago, allegations of fraud and mismanagement led to the resignations of nearly all City Hall officials. Starting with the Kilpatrick administration, it has been difficult for town officials to repair the damage caused.

“People and companies will not invest their money in a poorly run town,” the comptroller’s letter to the people of Mason read.

Even though Black leaders have been elected since, Rivers said town officials are trying to do the best they can with the debt previous administrations left them in and the resources they currently have. Some of the plans Mason was looking at prior to the comptroller’s interference included hiring a city manager and possibly cutting salaries.

Financial highlights show the town has had a history of late audits and has not submitted its annual audit on time since 2001. The comptroller’s office has also been unable to approve their budget since 2019, and there has been a consistent fund deficit.

When Gooden’s administration took over in 2018, Mason had a deficit of more than $600,000, according to the mayor. At the end of 2019, the town had a total debt outstanding of $901,000.

Mayor Gooden said when he assumed leadership in 2018, the 2014 and 2015 audits had yet to be approved by the comptroller. His administration then had to complete the 2016, 2017 and 2018 audits and then submitted them between 2019 and 2020, causing them to fall behind in managing the town’s finances.

The small town of Mason is also missing necessities, as there isn’t a gas station or a supermarket in the area, according to Rivers.

“I’m determined to keep fighting for our town and the citizens of Mason because this is home,” Rivers said. “We got a history here, and we can’t just let them come in and take over like that. If we gave up our charter, we wouldn’t have a say. We would just be here.”

What comes next after the ultimatum

Beginning next week, the comptroller’s office will have to approve the town’s spending of any taxpayer or ratepayer money weekly.

“Our role will be to make sure the town is operating on a balanced budget and ensure there is money in the bank to pay for the town’s expenses,” Dunn told CNN. “The town will still decide how it wants to spend its funds, but we will ensure they are operating within the town budget.”

If the town does not make the payments to the town’s Water and Sewer funds, the comptroller’s financial takeover would potentially give Mumpower veto power over any expense of $100 or more. This would limit the authority of elected town officials to continue their plans to improve infrastructure and hire a codes enforcer.

Although the comptroller’s office has scaled back its supervision, Rivers said they still have the power, and they can change their decision at any point in time.

“My concern is that they are setting us up to fail,” Rivers told CNN.

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