Recent Blog Posts

  • American Rescue Plan Act of 2021: Local Government Authority to Expend their Allocations

    Authored by: on Monday, April 5th, 2021

    UPDATED June 29, 2021: For updated information on ARP Funds, see here and here.

    UPDATED May 13, 2021: The US Treasury issued its Interim Final Rule on allowable ARP fund expenditures. A link to that guidance and discussion of some of the highlights are available here.

    UPDATED May 11, 2021: Counties and entitlement municipalities (over 50K population) may now apply for ARP funds here. For non-entitlement municipalities (all other municipalities), NC PRO provides pre-contracting guidance here

    Updated: April 25, 2021: The federal government has put out pre-award guidance for local governments. It is available here

    On March 11, 2021, the federal American Rescue Plan Act of 2021 (ARP) became law. There is still a lot to be deciphered in this $1.9 trillion stimulus package; the third such major relief act since the onset of the COVID-19 pandemic. We do know that the law includes substantial aid for state and local governments. With respect to local governments, some monies will be distributed directly to them (specifically, allocations to counties and municipalities with populations over 50,000). Other monies will be allocated to the State for distribution to qualifying local governments (all other municipalities). See Part 8, Subtitle M—Coronavirus State and Local Fiscal Recovery Funds of H.R. 1319 American Rescue Plan Act of 2021. The monies will be distributed in tranches, with the first payment made within 60 days’ of the law’s enactment. The second tranche will be distributed a year after the first. The monies may be used for costs incurred by December 31, 2024.

    Aside from their expected allocation amount, local government officials want to know the purposes for which the monies may be spent and whether or not the grant of funds from the federal government is sufficient to provide North Carolina local governments expenditure authority. This blog post addresses these two issues. As a caveat, this post is based on interpretations of the federal law and current state law. There may be different interpretations promulgated by the agencies charged with implementing the aid to local governments and there may be changes to state law to facilitate the receipt and expenditure of funds by local governments. I will update this post as more information becomes available, particularly guidance on reporting and accountability measures.

    Note also that this post only deals with monies allocated directly to local governments by the ARP. The General Assembly may appropriate additional monies from the State’s ARP allocation to local governments, and to certain special districts and public authorities, and will set the expenditure parameters for those funds. And the ARP provides funding for many other programs, services, activities, and projects, that will directly aid a local government’s citizens, utility customers, community groups, businesses, nonprofits, and other government entities. (For a brief overview of key provisions of the ARP, see this National Conference of State Legislatures’ summary.) Local government officials will want to understand how all of this targeted relief will impact their communities as they make their own appropriation decisions.

    Turning back to the purpose of this post, let’s look at local government authority to spend ARP allocations for the specified purposes. Read more »

  • Revenue-Neutral Rate Calculations for Multi-County Municipalities

    Authored by: on Thursday, April 1st, 2021

    Time for a North Carolina geography quiz!

    In which counties are these cities located: Chapel Hill, Durham, and Raleigh?

    If you said Orange County, Durham County, and Wake County, you are . . . only partially correct.  Each of those cities lies in two counties.  These municipalities and the many others in North Carolina that cross county lines face a variety of challenges relating to property taxes.  For starters, these cities need to work with multiple county assessors to determine their tax bases.  If they don’t collect their own property taxes, these cities need to contract with multiple county tax collectors for that service.  Individual real property parcels that are in the city but lie in two counties create additional assessment and collection headaches.

    Today’s post focuses on another potential property tax difficulty faced by multi-county municipalities: calculating the revenue-neutral property tax rate (“RN rate”).  Read more »

  • Give UNC: Support the UNC School of Government

    Authored by: on Tuesday, March 30th, 2021

    SUPPORT the UNC SCHOOL OF GOVERNMENT

    For the entirety of its 90 years of existence, the School of Government’s mission has been focused on the people of North Carolina. Through our commitment to offering high-quality education, advising, and support to public officials across the state, we improve the lives of North Carolinians. We firmly believe this work is more critical than ever.

    You can help us continue to fulfill our mission.

    Today is GiveUNC, the University’s annual giving day. No matter where you direct your gift to the School of Government, your generosity makes a tremendous difference. We are grateful for your support of both the School and the state of North Carolina.

    I hope you’ll join us and take part in GiveUNC. Thank you for your support as we celebrate 90 years of service to the state of North Carolina.

     

    Mike Smith
    Dean, School of Government

  • Correcting Taxpayer Mistakes

    Authored by: on Tuesday, March 30th, 2021

    How far will your tax office go to fix mistakes caused by taxpayers? Consider the situation in which a taxpayer mistakenly makes a payment on property owned by another party.  The tax office applies the payment as instructed.  Later, the taxpayer or the tax office discovers the mistake. Can the tax office move the payment to the correct property? Read more »

  • Everyone Will Be Eligible for a COVID-19 Vaccine Starting April 7

    Authored by: on Thursday, March 25th, 2021

    In previous blog posts, I have written about whether North Carolina public employers may require employees to be vaccinated against COVID-19 (here) and about North Carolina’s vaccine priority plans and how they have changed (here). If you are trying to stay abreast of vaccine eligibility the better to encourage your employees to get their shot, you may be reading that some North Carolina counties have opened up vaccination to all comers and wonder whether you have missed something. You haven’t! In some counties, the vaccine supply is now greater than the number of eligible people signing up to be vaccinated. Those counties are opening up vaccination to everyone. But statewide, as of March 31, 2021, all Group 4 essential workers will be eligible. And on April 7, 2021, every resident of North Carolina over the age of 16 will be eligible (Group 5)! For a discussion of who falls into Groups 1, 2, 3 and 4, see here.

  • The American Rescue Plan Act: Employers Who Voluntarily Extend FFCRA Leave May Be Eligible for Substantial Employment Tax Credits

    Authored by: on Tuesday, March 23rd, 2021

    Local government employers are now eligible for credits against the social security and Medicare tax payments that they must make, if they voluntarily extend Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA leave) through September 30, 2021. Through most of 2020, governmental employers had to make the same special wage payments for EPSL and EMFLA leave as private employers, but private employers got a tax credit for those payments and governmental employers did not.  Now, the American Rescue Plan Act, signed into law on March 11, 2021, appears to allow local government employers to receive credit against FICA taxes for wages paid when employees take EPSL and EMFLA leave. Read more »

  • TDAs Eligible for PPPs

    Authored by: on Wednesday, March 17th, 2021

    Translation: Tourism Development Authorities Now Authorized to Borrow Money Through the Federal Paycheck Protection Program

    A Tourism Development Authority (TDA) is a local government entity that is typically created by a county or municipality to administer and expend local occupancy tax proceeds to promote tourism in the local government or region. There is no general law authority to create a TDA. Instead, that authority has been given to several counties and municipalities through local acts, almost always in conjunction with the authorization of a local occupancy tax. A TDA is a separate legal entity from the county or municipality that established it, although it may be reported as a component unit of the local government for financial reporting purposes. Although the general purpose of TDAs across the state is the same, the specific powers and authorities of individual TDAs vary and are prescribed by the respective local acts that authorize their creation.

    As discussed in a previous post, TDAs may not borrow money, because that authority may not be conferred by the General Assembly by local act. The NC Constitution requires the General Assembly to authorize a local government entity to borrow money only through a general law enactment. (A general law is defined in Sect. 3 of Art. XIV of the NC Constitution.) The lack of borrowing authority presented a difficulty for TDAs looking to take advantage of a COVID-19 related federal stimulus program, known popularly as the Paycheck Protection Program or PPP. The General Assembly recently enacted a general law granting TDAs borrowing authority for the limited purpose of applying for PPP loans. See Section 2.19 of S.L. 2021-3, effective March 11, 2021. Read more »