AG 2002 08 19 (Regular) - Laserfiche WebLink

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ALIG, 16, 2002 12:49PM 60YCE & iSLEY PLLC N0,589 P, 4 Our Constitution, of course, requires that State goverrunent be operated on a balanced budget. Laws of the state require all cities, towns and counties to operate on a balanced budget. The state operates on a bienneal (two year)., budget. Local ,governments estimate their expenses and revenues by enacting a yearly budget beginning each July 1"~. Both governments have a duty to' reasonably estimate their peoples' needs, tax accordingly and spend wisely within a balanced fiscal framework. Leaders in Raleigh delayed taking any substantive action on the state budget until last February when the shortage appeared to have arisen in excess of $1,500,000,000. At that time, the Governor choSe to balance the state budget by un-balancing the budgets of 541 cities and towns and the 100 counties of North Carolina. On February 9th of this 'year, the Secretary of Revenue' was ordered to withhold payment of $334 million in local tax funds that belong to the cities, towns and' counties - $209 million to cities and towns and $125 million to counties. State government got itself into a badly unbalanced budget situation because of overspending or poor estimating of revenue belonging to the State and dilatory corrective action. The Legislature reconvened in May. A bill with' numerous sponsors was introduced that made clear the previous legislative intent: certain tax revenues are the property of the citizens and taxpayers of the respective local governments. HB has not since progressed in the General Assembly. It is now up to the Court to interpret as to city, town and county tax revenue the law as it existed up to'and through FY 2001-2002 and also determine how ~he law will be enforced in FY 2002-2003 if the General Assemably adjourns without further action in the matter. The past Fiscal Year is closed and no one believes the confiscated revenue will be returned voluntarily. There' is a real threat that if FY 2002-2003 and maybe beyond local governments will lose out again. Future relief is in the hands of those who make our laws and, if the Legislative Branch does clarify the law, the Judicial Branch is there to interpret it. The law appears clear. The Secretary of Revenue ~MUST" (the pertinent laws also say ~SHALL") distribute local ~ax money to the people to whom it belongs - the cities, towns and counties'~ Tax on utilities and beer and wine under the law definitely belong to the local people (and perhaps homestead and intangibles tax) A different legal theorY, not a~ favorable to county government exists as to inventory tax. That tax was surrendered by local .government to the State in 1989 and