Effective October 1, 2015, local governments, public authorities, and school units are subject to new preaudit and disbursement processes. In S.L. 2015-246, the legislature modified G.S. 159-28 (applicable to local governments and public authorities) and G.S. 115C-441 (applicable to school units) to address common issues faced by local units in implementing the preaudit and disbursement requirements, particularly with respect to electronic transactions. (The changes do not apply to ABC Boards, which will continue to be subject to the existing preaudit and disbursement requirements under G.S. 18B-702.)

This post summarizes the changes to the disbursement process. Click here for a discussion of the new preaudit provisions.

In Executive Medical Transportation, Inc. v Jones County Department of Social Services, 735 S.E.2d 352 (NC Ct. App. 2012), disc. rev. den’d, 737 S.E.2d 378 (N.C. 2013), the North Carolina Court of Appeals held that an oral agreement between a medical transport company and the county was void because the agreement did not include a written preaudit certificate. As I discussed here, the court interpreted G.S. 159-28(a) (commonly referred to as the preaudit requirement) to require that all contractual agreements that obligate a local government or public authority to pay money within the current fiscal year include a preaudit certificate. This holding effectively requires that all such contracts be in writing. The Court of Appeals recently reaffirmed this interpretation of the preaudit requirement in Howard v. County of Durham, No. COA12-1484 (May 7, 2013). This post summarizes the Howard case and then provides a brief overview of when the preaudit statute is triggered, and what it requires, in light of these recent court of appeals cases.

UPDATE August 2013: The Court of Appeals reaffirmed this new interpretation in May 2013. Click here for more details.

In July 2008, the Jones County Department of Social Services (JCDSS) entered into an oral services contract with a medical transportation services company. The contract was for one year. It was renewed annually in July of 2009, 2010, and 2011. JCDSS terminated the contract in November 2011. The company sued for breach of contract. JCDSS subsequently filed motions to dismiss the case, arguing that no valid contract existed. The trial court denied the motions. On appeal, however, the North Carolina Court of Appeals reversed the trial court, holding that there was not a valid contract between JCDSS and the company because the provisions of G.S. 159-28(a), known as the preaudit requirement, were not properly followed. Exec. Med. Transp., Inc. v. Jones Cnty Dep’t. of Soc. Servs, No. COA12-573 (Nov. 6, 2012). Specifically, the court determined that the lack of a preaudit certificate rendered the contract void.

So the county granted initial approval for a large residential subdivision.  Now, after completing some (but not all) of the roads and infrastructure, the developer wants final plat approval so she can close on the first round of lot sales.  This may be practical—the cash flow from early lots may support the subsequent infrastructure—but it relies upon a developer’s promise to follow through with adequate remaining improvements.  What if the improvements are not built to standard? What if the economy tumbles and the developer goes bankrupt?  What becomes of those expensive infrastructure needs?

[UPDATES:

June 2023: H347 is signed into law by Governor Cooper, authorizing on-line sports gambling to begin within 1 year and levying an 18% tax on gambling revenue.

March 2023: a sports gambling bill was filed in the NC House that would charge license fees of $1 million every five years and a 14% tax on gambling revenues.

June 2022: A bill to legalize on-line sports gambling in North Carolina failed by a single vote.  Sponsors of the bill promise to revisit the issue in the General Assembly’s next session.]

Just three years ago, sports betting was legal in just three states.  Today you can bet legally in 33 states and the District of Columbia. The trigger for this nationwide gambling expansion was a 2018 U.S. Supreme Court decision striking down a federal law that had prevented states from legalizing sporting betting.

UPDATE September 2013:  The North Carolina supreme court subsequently ruled that counties do not have statutory authority to impose school impact fees. That 2012 case is discussed here.

The population of Partition County has grown dramatically over the past several decades. The county has struggled to keep up with provision of public facilities to serve this growth. While the rate of growth has slowed in the past few years, the schools are still substantially overcrowded in the northern half of the county, where most of the growth has occurred. The schools there have modular temporary classrooms on site and most of these are projected to remain at least another five or six years. The county is in the midst of an expensive ten-year school construction program largely funded by a bond program. The county board has concluded it is not feasible to raise taxes or issue more bonds for school construction in the next few years. Other public facilities, including roads, water, sewer, and emergency services, have also been stretched uncomfortably thin in this part of the county.

Given the dire economic news of late, it’s no surprise that the General Assembly and local governments are trying to get creative with local property taxes.  Consider the suggestion from one county to levy a more progressive property tax, with one rate for real property valued less than $1,000,000 and a much higher rate for more valuable properties.  How about a property tax exclusion available only in larger counties that might more easily absorb the reduction in tax revenues?

In response to COVID-19, the legislature adopted two comprehensive bills that touch on a variety of areas, including a few local government finance-related issues. One of those issues is the annual budget ordinance adoption process. This post explains the normal process and details the recent (limited) legislative changes.

UPDATE August 2013: For more information on capital reserve funds, click here.

Blight City has fallen on hard times. Its population has declined significantly since the 1990s, due in large part to the shuttering of two large manufacturing plants. Emblematic of the city’s decline is its central downtown area. Once a vibrant community center, it is now comprised mainly of run-down, vacant buildings. Recently, however, a mid-sized micro-brewed root beer company purchased one of the old manufacturing plants (located just outside the city’s downtown) and began operations. It employs 200 people and plans to double its workforce over the next two years. The company wants to capitalize on a recent resurgence in root beer “connoisseurs” by expanding the plant to include a tasting facility. And the company has expressed interest in opening a restaurant and root beer bar in the city’s downtown. City leaders want to support the company’s efforts. They view the company’s investment in the city as a cornerstone for the city’s resurgence.

On September 1, the state’s Tag & Tax Together program formally launches statewide.  All N.C. vehicle owners will be required to pay property taxes owed on their vehicles at the same time they register those vehicles each year with the Division of Motor Vehicles. The joint payment system actually went live in July, meaning vehicle owners with September renewals can already pay their taxes and registration fees simultaneously via the DMV website.