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I ! Report to ~e Association of County Commissioners Md I~ague MuniciI~tities on the of the Results and l~ffects of th~ Wayne Coun~ Case i William H. McBride Hunton & W/ll/ams March 6, 1991 I On l~nuary 10, 1990, the North Carolina Stipreme Courl issued its opinion in the case of Wayne CounW Citizens Association for Be~er Tax Conlrol. et. gl, v, Wayne County I }~k~-d of Commissioners. et.al., (I,/.C. 242PAg0-Wayne). V,:'/thout dissent the Court affirmed the dec/s/on of the Superior Court of Wayne County holding the ins~Elment sale finance slatute, N.C.G.S. Section 160A-20, to be constitutional and Wayne County's use of I it to financ~ cormin court, administrative and jail facilities to be within the terms of the stalute. The decision, which seems cerlain to unleash the bacldog of delayed le-~,'/purchase t~.nsactions of all types in North Carolina~ is of obvious significanco to North Carolina local I governments. This report will give some further analysis of it and its likely effects on North Carolina finance. I In its l~-page opirgon written by ~'ustice Meyer, the COurt (a) reviewed the facts and procedural historY of the case, (b) noted the langu~e of the ins~tlmeot sale contract which provides '... the Board cannot be forced to appropriate amounts for payment of the I contract...'I (c) cited cases calling for the presumpiion of constitutionality in reviewing slatutes, (d) read Article ¥, Section 4 of the North Carolina Constilution to prohibit nonvoted debts s~cured by a pledge of the laxing power bul not all non¥oted debts, (e) lefuted the I plainliff's argument ll~t the use.of ~x revenues to pay the contract is improper ('... the possibility that appropriations which might include income from lax revenues will be used to repay the indebtedness under the contract is not a constitutionally significant factor,.. I the legislative intent evidenced in Section 160A-20 to installment sale (0 praised conlracts to the 'rigorous scn~tiny' of the ~ Government Commission, ~g) found that the .contract does not allow ~.nyo_,2e to com~.l Wz)~e Coun.')' to Ie;~ ~.xes for its pa),'-nent and I contract not by a pledge taxing power', and (h) accordingly therefore the is of the found for the County affmning the lower court decision. Significantly, the Court did not feel the need to discuss prior North Carolina case law on the constitutional point or the I historY belfirat the 1971 amendments which put Article V, Section 4 in its current form. Even though that language had not been consmied by the Court since its adoption (and only itw/co by other courts), the opinion admits no hesilafion in its interpretation. Such certa/~ty was not to~ally unespecled ~ at one point during oral argument before the Court in November, one justice a~ked plaintiff's counsel subslanffslly the following question: ! !