Notices and Public Participation in the Budgeting Process

Budget season is in full swing for most local governments across the state. Managers, budget officers, department heads, and others are busy compiling expenditure requests and identifying potential revenue sources to balance the budget for the fiscal year that begins on July 1. Elected officials in many jurisdictions have been actively involved in setting policy and funding priorities for the unit. They are preparing to make difficult choices as to which projects and services to undertake, and which initiatives to postpone or even abandon. Board members also are determining the mix of revenue mechanisms that will be used to fund the projects and services, and deciding whether changes will be made to tax rates and fees. But what role does the public play in this process?

The answer to that question varies significantly among jurisdictions and even from year-to-year within a jurisdiction. The Local Government Budget and Fiscal Control Act, G.S. Ch. 159, Art. 3, prescribes the minimum process requirements that a unit must follow to provide notice to the public of the proposed budget and afford citizens an opportunity to comment. Many jurisdictions go well beyond the minimum requirements in order to facilitate meaningful citizen participation in the budget process. These additional public outreach efforts serve a valuable purpose, but they do not relieve a local unit from complying with the statutory requirements.

This post summarizes the statutory notice and public input provisions. It also highlights resources available to help local units better integrate public participation in the budget process. Read more »

Public School Funding Dispute Resolution Process Revisited

In Union County Board of Education vs. Union County Board of Commissioners, ___ N.C. App. ___, No. COA14-633 (Apr. 7, 2015), the North Carolina Court of Appeals reversed a trial court judgment in favor of the Union County Board of Education in the amount of $91,157,139, holding that the trial court judge erred in allowing evidence of the local school unit’s needs beyond its specific budget request. In so holding, the court clarified that G.S. 115C-431, commonly referred to as the dispute resolution statute, authorizes an “expedited process to resolve budget disputes between a board of education and a board of county commissioners when the board of education’s proposed budget [for the upcoming fiscal year] is not fully funded.” In other words, the dispute resolution process applies to funding disputes between a local school board and a county board of commissioners over the school unit’s upcoming fiscal year’s needs only. The court also confirmed that a county’s funding responsibility for public school capital and operating expense extends only to providing the amount that is “legally necessary” to enable the local school unit to meet its constitutional obligation to provide all students with the opportunity to receive a sound basic education. Read more »

Property Tax Foreclosures: Attorneys’ Fees and Interest

Foreclosure is a powerful collection remedy of last resort for property taxes that are a lien on real property.  Because property tax liens generally have super-priority, local governments almost always get paid first from the proceeds of a foreclosure sale. That preferred priority for tax liens also means the mere threat of a foreclosure action will often prompt mortgage lenders to pay the delinquent taxes because their (usually much larger) mortgage liens will be extinguished by a foreclosure sale.

Foreclosure can be very effective, but local governments must remember that once a foreclosure action begins—meaning once a complaint is filed or a judgment is docketed—the local government loses all other collection remedies for the taxes included in the foreclosure. G.S. 105-366(b).  If a foreclosure sale fails to produce enough funds to satisfy the delinquent taxes, interest and costs included in the foreclosure, the unpaid amounts will never be collected.  With this limitation in mind, tax collectors need to pick their foreclosure targets wisely and avoid properties that are unlikely to produce sufficient sale proceeds.

I’ve previously blogged about the tax foreclosure process in general (here and here), about what taxes should be included in a foreclosure, and about setting opening bids. Today I focus on two issues that continue to generate lots of questions: when and how attorneys’ fees and interest should be collected in property tax foreclosures. Read more »

Should a Local Government Be a HIPAA Hybrid Entity?

The federal HIPAA regulations apply directly to certain types of entities and individuals, referred to as “covered entities” and “business associates.” These regulations govern standardization of electronic healthcare transactions and identifiers, as well as the privacy and security of health information. Depending on the services provided and the relationships that exist, a local government may be a covered entity or a business associate that is subject to these federal regulations.

If a local government concludes that it a HIPAA covered entity, it may want to have only some of its functions, services, or staff members comply with HIPAA. It may want to limit the amount of training and compliance duties, as well as its liability exposure. Can the local government do that? Why, yes! It can. But in order to do so, it must take affirmative steps to designate itself a “hybrid entity.” This post briefly discusses how a local government can determine whether it is a covered entity and explores the concept of hybrid entity designations. It does not provide any discussion of the other substantive requirements of the HIPAA regulations, such as when use and disclosure of protected health information is allowed. We will save those discussions for another time.

Adoptions and Sperm Donors

This post was co-authored by Meredith Smith, Assistant Professor of Public Law and Government, UNC-CH School of Government

Since our blog post, Same-Sex Marriage and Adoptions of a Minor by a Stepparent, we have received several inquiries about the role of a sperm donor in an adoption proceeding. Although General Synod of the United Church of Christ v. Resinger, 12 F. Supp. 3d 790 (W.D.N.C. 2014) and Fisher-Borne v. Smith, 14 F.Supp. 3d 695 (M.D.N.C. 2014) held NC’s ban on same-sex marriage is unconstitutional, they did not specifically address parentage when a child is conceived or born during a same-sex marriage. And, although artificial reproductive technology has advanced in the last 20 years, the laws in NC have not fully addressed these advances and how they impact parentage. Read more »

Allocating Tax Payments

Suppose Billy Blue Devil owes $2,000 in delinquent taxes for 2012, 2013 and 2014. Billy mails the tax office a check for $500 with no note or instructions about what taxes he is paying. What should the tax office do with that check?

Cash it, of course. But after that, how should the tax office allocate the $500 among the various taxes Billy owes? This is a very popular question, one that the Machinery Act doesn’t answer.

Read more »

Donating Property: Beware of Constitutional Constraints

The old school administration building has been renovated and there is furniture and shelving that can be sold as surplus property. A board member has raised the possibility of donating them to the local arts council. She notes that G.S. 160A-280 authorizes donations to nonprofit organizations. Can the school make this donation? The answer is no. The North Carolina constitution constrains local government authority to make donations. Read more »