Recent Blog Posts

  • 2018 Property Tax Prepayments

    Authored by: on Thursday, December 28th, 2017

    The recent federal tax bill signed by the president last week caps the deductions for state and local taxes at $10,000 beginning with the 2018 tax year. This major change is prompting many North Carolina taxpayers to prepay their 2018 local property taxes in 2017 so that they may (hopefully) deduct those payments on their 2017 federal income tax returns.  Guilford County, for example, has already received $1.2 million in 2018 prepayments, double what they received in prepayments for 2017 all last year.

    While this early influx of cash is a nice holiday present for local governments, new guidance issued by the IRS yesterday suggests that the 2018 prepayments may not produce the federal income tax deductions taxpayers expect.  Here’s a quick Q&A on the issue for local tax offices: Read more »

  • Mediation of Public Records Disputes is Jurisdictional

    Authored by: on Friday, December 22nd, 2017

    You’ve requested copies of city documents that you believe to be public records. The city has refused to provide them, saying that they are confidential. You file a lawsuit under G.S. 132-9 to obtain access to the records. You are not aware that state law (G.S. 7A-38.3E) requires mediation of public records disputes. The litigation proceeds and the court orders the city to produce the records. The city appeals. What happens? According to a recent North Carolina Court of Appeals case, the court order will be vacated. The statutory public records mediation requirement must be met in order for a court to have subject matter jurisdiction over any case regarding access to public records. Read more »

  • Extra, Special, Veto, and Reconvened Legislative Sessions: What’s the Difference?

    Authored by: on Friday, December 22nd, 2017

    [The primary author of this post is Christine Wunsche, the Director of the School of Government’s Legislative Reporting Service.]

    When teaching or writing about the schedule of the North Carolina General Assembly (NCGA), we used to explain that a typical biennium session included “long” and “short” sessions, with a few extra or special sessions sprinkled in on occasion. Over the last several years, the legislature has changed things up a bit. As a result, it is much more difficult to predict how the biennium will unfold.  Christine Wunsche, the director of the School of Government’s Legislative Reporting Service, explored this topic a bit and we put together this overview. In this post, we describe the different types of legislative sessions: what are the sessions called, who can call legislators into session, and what topics can be considered during those sessions? We also provide a brief review of the actions taken during the reconvened sessions in 2017 and offer a short preview of the upcoming session in January. Read more »

  • Statutory Internal Controls

    Authored by: on Wednesday, December 20th, 2017

    Recent high-profile examples of alleged misappropriation and embezzlement of public funds, and other fraudulent activity, by local government officials across the state should prompt all local governments to examine their internal control systems. Internal controls are processes designed to safeguard the assets of the unit. Although the exact nature of internal controls will vary significantly from government to government, due to differences in size, resources, and organizational structure, all local government entities need to take steps to ensure the proper safeguard of public funds. And that duty should take precedence over the efficiency and expediency of business processes. Internal controls introduce redundancies and, to the frustration of local government officials, may cause administrative delays of even routine transactions. They serve an invaluable function, though, to ensure that monies are managed and spent appropriately, according to clear budget directives by the governing board. That is a necessary trade-off in the public sector.

    Internal controls fall roughly into two categories—preventative (policies and procedures that do not allow certain events to occur) and detective (backup procedures to ensure that primary internal controls operate as intended). A local government needs to incorporate both into its financial operations. Perhaps the most common internal control is segregation of duties—so that no employee or official handles an entire transaction from start to finish. Other controls include providing oversight of financial activity by supervisors and board members, periodically rotating staff duties, doing a thorough and accurate audit of all receipts and claims, requiring that adequate records be maintained and presented for intermittent inspection by an internal audit committee, responding to deficiencies identified through the yearly external audit, educating employees and officials about detecting red flags of potential fraudulent activity, and even mandating that employees use all of their vacation time each year.

    Employees and officials at all levels of local government must implement, monitor, and periodically re-evaluate the sufficiency of controls relating to the collection, management, obligation, and disbursement of public funds. Not sure where to start? The Local Government Budget and Fiscal Control Act is a good place. It sets the minimum internal controls required by law. Basic legal compliance could go a long way toward preventing fiscal malfeasance, but many local governments are not currently in full compliance. Below is a summary of the minimum statutory requirements. Read more »

  • Local Government Owners of Historic Property Asked to Convey Property by End of 2017: What Public Officials Should Know

    Authored by: on Friday, December 15th, 2017

    Federal tax reform is likely to be enacted before the end of the year. While the final form of the bill has not been determined, it is nearly certain that federal historic preservation tax credits—an important financing mechanism for preservation of historic properties—will be significantly affected. In fact, most observers anticipate that the value of the tax credits will be diminished by tax reform, thereby making historic preservation projects more difficult to finance and complete. For that reason, some real estate developers have asked local government owners of historic properties to convey those properties to new ownership before the end of the 2017 tax year (December 31, 2017) in order to “grandfather” those projects under the older, more favorable rules. This post briefly describes how federal tax reform could affect historic rehabilitation projects and offers some guidance for North Carolina public officials who wish to respond (on a very tight deadline) to a request to transfer historic properties owned by local governments. Read more »

  • Satellite Area Boundaries are Corporate Limits, But Not for Purposes of Contiguous Annexation or ETJ.

    Authored by: on Thursday, December 14th, 2017

    North Carolina annexation law allows non-contiguous, “satellite” annexation by petition, subject to several requirements regarding the size and location of the property to be annexed. Once annexed, these areas are, for almost all purposes, considered to be part of the city: “From and after the effective date of the annexation ordinance, the annexed area and its citizens and property are subject to all debts, laws, ordinances and regulations of the annexing city, and are entitled to the same privileges and benefits as other parts of the city.”  G.S. 160A-58.3.  For two purposes, however—annexation and extraterritorial regulatory jurisdiction—satellite areas are not considered to be part of the municipal corporate limits. Read more »

  • The 2018 Property Tax Calendar Q&A

    Authored by: on Wednesday, December 6th, 2017

    Suffering from insomnia? I recommend keeping a copy of our newly released 2018 Property Tax Calendar on your nightstand.  I’ll admit the calendar is soporific (hey, you try making dates and deadlines read like a Grisham thriller!), but it does provide lots of helpful information for local tax officials.  The calendar is also a great tool for highlighting important features of the Machinery Act.  Here are answers to some of the more common questions about those features that I get every year after releasing the new calendar. Read more »