NASHVILLE (AP) — Tennessee's top leaders only began increasing scrutiny over a small town's finances after a predominantly Black administration took over key positions, a move that attorneys on Wednesday argued strays significantly from how the state has treated white-majority jurisdictions.

Earlier this year, Comptroller Jason Mumpower raised eyebrows when he announced the state would take over financial supervision of Mason, a town located near the site of a future Ford electric pickup truck factory, because of ongoing years of mismanagement. Mumpower made the decision after initially asking Mason's town leaders to surrender their charter, which they refused to do.

Days after the takeover was announced, Mumpower added that the state could scale back its financial oversight if Mason met certain goals by this summer.

Town leaders have since filed a lawsuit seeking to stop the takeover and challenge the state's legal standing to require that Mason get approval to spend more than $100. They argue that the state is treating Mason's majority-Black leaders differently than they have white administrators who were struggling with finances, and allege that the pending Ford plant has sparked extra scrutiny.

Both sides presented their arguments Wednesday in Nashville before Davidson County Chancery Court Judge Anne Martin.

"If the comptroller was serious about this, why not come in seven years ago and ask for the charter to be relinquished?" attorney Van Turner Jr., president of the NAACP Memphis branch who is representing Mason's town leaders, said during a hearing Wednesday. "We think there is an aspect of discriminatory treatment in this case."

The state's attorneys argued that a corrective plan formulated by the comptroller's office will help Mason finally balance its budget without having to improperly dip into other funds.

"The town will not be harmed; it stands to benefit," argued JP Urban with the Tennessee Attorney General's office. "This is the best way to prevent matters from getting worse."

Turner countered that while the state has previously taken over other towns' finances, it did so without asking for a local jurisdiction to first give up its charter. He also argued that the state overreached its authority by demanding approval of any expenditures above $100.

The state's attorney defended the strict expenditure limit, saying it was based on "historical data" provided by Mason officials, but the judge remarked that $100 is "a small amount for anyone to run a business."

Martin later asked if the state gave Mason a "no-win choice" by asking it to give up its charter or face heightened financial scrutiny.

"It's a very difficult choice, something that had to be done," Urban replied.

Martin said she will issue a decision sometime later next week.

Located in Tipton County, Mason is not far from the planned, $5.6 billion Ford factory in neighboring Haywood County. Officials say the plant, which will produce electric pickup trucks, will boost West Tennessee's economy. Ford plans to employ about 5,600 workers at the plant, and construction of the factory will create thousands more jobs.

News of Tennessee's plan to take over Mason's finances sparked criticism from many of the state's Black and Democratic leaders. Republican Gov. Bill Lee told reporters last month that he had not spoken to Mumpower about the decision. However, his office acknowledged in mid-March that "Ford is a bit spun up over this" in an email provided to The Associated Press through a public records request.

The 2020 Census shows Mason's population at about 1,330. But that fell to less than 800 after a prison closed recently.

Mason has not submitted its annual audit on time since the 2001 fiscal year and financial statements from 2004 to 2016 "were essentially un-auditable," the comptroller's office has said. Budget deficits have mounted, from $126,659 in the 2016 fiscal year to $481,620 in 2020.

Mason has already voted to use about $227,000 of the federal pandemic funds it received to pay back part of the nearly $598,000 the town owes its water and sewer funds.