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  • The Affordable Care Act’s Employer Mandate: Will the U.S. Supreme Court Kill It?

    Authored by: on Wednesday, May 20th, 2015

    Under the Affordable Care Act, employers above a certain size are required to offer health insurance coverage to their employee or pay a substantial penalty. This requirement is commonly known as the “employer mandate.” King v. Burwell, a case pending in the United State Supreme Court right now, does not directly involve the employer mandate, but it nonetheless has the capacity to kill it in North Carolina and thirty-three other states. If the Court, in King v. Burwell, finds that the ACA authorizes the federal government to subsidize the purchase of health insurance only on state-run exchanges, and not on federally-run exchanges, the employer mandate will be unenforceable in the 34 states with federally-run exchanges. Read more »

  • Subdivision Performance Guarantees: A Little More Clarity

    Authored by: on Tuesday, May 19th, 2015

    In North Carolina, a developer can get final plat approval before he completes the required infrastructure—but only if the developer provides financial assurance to guarantee the infrastructure completion. North Carolina’s General Statutes allow cities and counties to permit these performance guarantees in conjunction with subdivision approvals.

    Two fairly recent cases provide some additional clarity about the scope and enforcement of performance guarantees. The key issues from these cases include:

    • Courts generally will enforce the terms of the performance guarantee and financial instruments.
    • The benefits of a performance bond may be assigned from a county to a municipality.
    • For enforcement, local governments may not be time-barred by the standard statute of limitations.

    This blog will consider each of these topics as they are addressed in Developers Surety & Indemnity Co. v. City of Durham and The Town of Black Mountain v Lexon Insurance Company.

    Read more »

  • Speeding: Local Ordinance Violation or State Law Infraction?

    Authored by: on Tuesday, May 19th, 2015

    [Note:  This post originally appeared here on the North Carolina Criminal Law blog.]

    Suppose a North Carolina city adopts an ordinance establishing a local speed limit of 25 miles per hour for all city streets that are not otherwise marked. Signs are posted on city streets reflecting the 25 mile per hour limit. Absent this ordinance, state law would provide for a speed limit of thirty-five miles per hour inside the municipal corporate limits. The city’s municipal code provides that violations of its provisions are not governed by G.S. 14-4, which otherwise would render the violation of a local ordinance regulating traffic an infraction. The municipal code also states that speeding on a city street is punishable by a civil penalty of $75 and requires that payment be made to the town hall. A local law enforcement officer stops a car that is traveling 40 miles per hour on a city street. May the officer issue a civil citation to the driver, requiring payment of the $75 penalty?  May the officer cite the driver for speeding in violation of state law, an infraction?  May the officer choose between these two methods of enforcement?

    Read more »

  • Notices and Public Participation in the Budgeting Process

    Authored by: on Monday, May 18th, 2015

    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 roll 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

    Authored by: on Friday, May 15th, 2015

    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

    Authored by: on Thursday, May 14th, 2015

    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 »

  • Board Members Delivering Prayers

    Authored by: on Friday, May 8th, 2015

    Last year the United States Supreme Court upheld a town’s practice of inviting representatives of local congregations to offer prayers at its council meetings, even though the prayers were almost exclusively Christian. The ruling in Town of Greece v. Galloway (summarized in my blog post here), makes clear that the mere fact that opening prayers are explicitly religious, or even predominately represent one particular religion, does not automatically mean that the practice is unconstitutional.

    But what if prayers that are clearly Christian are offered not by members of the community, but by members of the governing board itself? A federal judge in a North Carolina case—dealing with prayers offered by members of the board of commissioners of Rowan County—has held that when board members offer the prayers it makes a difference. The judge has ruled that the practice is unconstitutional and has ordered the commissioners to stop doing it. The case is Lund v. Rowan County and you can read the decision here.

    The judge’s opinion holds that when prayers are offered by board members who are all Christian, the effect is an endorsement of that religion. In addition, when prayers are offered by the board members the effect is more coercive on individuals attending meetings. The judge concluded that the practice of board members asking members of the audience to stand and join the board in prayer, as well as comments some members made to news media contributed to an unconstitutionally coercive environment. Read more »