New School Construction Lease Authority

The 2018 legislative session brought about several significant changes to public school funding, including school capital projects funded with lottery proceeds.  Section 5.3(e2) of the 2018 Appropriations Act (S.L. 2018-5) authorizes counties (not local school boards) that receive Needs-Based Public School Building Grant funds from the Department of Public Instruction [DPI] to enter into a capital lease for construction of school facilities. Only counties designated by the NC Department of Commerce as development tier one or tier two areas are eligible to receive funds from the Needs-Based Public School Building Grant program (for more information about this program, see Kara Millonzi’s blog post here).  If your county is eligible for and receives one of these grants, how do you go about entering into a capital lease agreement under this new authorization?

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The General Assembly Adjourns Until November

This past Friday, the NC General Assembly adjourned for several months.  According to the adjournment resolution, the plan is for the legislators to return to Raleigh on November 27. Unlike many previous adjournment resolutions (see S.L. 2017-12 for example), this one does not place any limitations on the types of issues and bills that may be considered when they return. It appears that the door will be wide open for consideration of any and all matters of legislative interest at that time.

Note that the November session will not be considered a special or extra session.  Rather, it will be a continuation of the current regular session (the one we have historically referred to as the “short session” of the biennium).  See this post from last year discussing the different types of legislative sessions. Even though the short session is not technically over, we thought it would still be helpful to offer our annual Local Government Legislative Review Webinar this summer. Read on for more webinar details.  Read more »

Needs-Based Public School Capital Fund

In 1987, the legislature enacted the School Facilities Act, which created the Public School Building Capital Fund (PSBCF). The PSBCF was established to provide aid to all counties for school construction projects. It is currently funded with state lottery proceeds. Since 2013, the legislature has appropriated a sum certain amount of lottery proceeds for this purpose, which is then apportioned among all counties based on their respective average daily membership (ADM) numbers. A county and its local school administrative unit(s) jointly apply to the Department of Public Instruction for a distribution of the moneys “to fund school construction projects and to retire indebtedness incurred for school construction projects.”  No county matching funds are required. For the past several years, including FY 2018–19, the legislature has appropriated $100 million to the fund.

In 2017, the General Assembly established a second public school capital fund, known as the Needs-Based Public School Capital Fund (NBPSCF). This post details the purpose of the new fund and highlights 2018 legislative changes. Read more »

Changes to County / School Dispute Resolution Process

As detailed here and here, if a local school board believes that it has not received sufficient funding from the county for the fiscal year, for either capital or operating expenses, the local school board may initiate a dispute resolution process. For many years, the process has had three stages—joint meeting of the two governing boards; mediation; and litigation. The General Assembly has replaced the litigation stage with a mandated funding formula for operating expense funding disputes. See S.L. 2018-83. Litigation will continue as the third stage for capital funding disputes. This post summaries the new dispute resolution process. Read more »

2018 System Development Fee Law Changes

In the 2017 legislative session, the General Assembly specifically authorized all local government utility providers to charge upfront fees for water and wastewater services. The legislation, however, limited the types of upfront charges that could be assessed on new development within the unit’s territorial boundaries. A prior post summarized the new law and detailed the new procedural requirements for adopting upfront water or wastewater charges. This post details changes the legislature made to the law during the 2018 legislative session. These changes do not address all of the ambiguities in the SDF law but do clarify certain aspects of calculating, collecting, and administering the fees. Read more »

North Carolina Municipalities Authorized to Fund Schools

In North Carolina, the majority of funding (approximately 63 percent in aggregate, according to the 2018 Highlights of the North Carolina Public School Budget) for public school operations derives from the state income tax and sales tax proceeds, as appropriated by the state legislature. County governments supplement the state’s operational funding and provide the majority of capital funding for schools, from a combination of property tax and local sales tax proceeds. Municipalities, however, have had no statutory authority under general law to fund schools.

Effective July 1, 2018, the legislature has altered the public school funding scheme by authorizing a municipality to make appropriations to “supplement funding for elementary and secondary public education” that benefit the residents of the municipality. See Sec. 38.8 of S.L. 2018-5, as amended by Sec. 11.1 of S.L. 2018-97. In some respects, this newly granted authority is broader than that afforded to county governments. It comes with some limitations, though. Read more »

Discovering Erroneous Exemptions

When property tax geeks like me hear the term “discovery,” our minds don’t usually leap to Marie Curie and the theory of radioactivity or Indiana Jones and the Ark of the Covenant. No, we property tax geeks  dream about more mundane discoveries: the boat that was never listed for taxes by the New Jersey transplant after retiring to Wilmington or the new garage and bonus room that was added to the house down the street by the folks who moved in last year.

As I describe in this post, property tax discoveries usually involve property like that boat or new addition that was never listed by the taxpayer.  But that’s not the only type of situation where discovery comes into play.  Tax officials must also use the discovery process when confronted with property that received an exclusion or an exemption for which it was not eligible.

Consider this common scenario.  Grandma Gertie passes away after receiving the 50% elderly and disabled exclusion for many years.  Grandson Greg inherits the house.  Greg isn’t eligible for the elderly and disabled exclusion.  But the tax office doesn’t learn of Gertie’s death for several years and continues to apply that exclusion to Greg’s house.

How can we solve this problem? Discovery.  Read more »