Recent Blog Posts

  • 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 »

  • Gap Time and the FLSA

    Authored by: on Friday, December 1st, 2017

    What is “gap time?” The term does not appear in the Fair Labor Standards Act (FLSA) or in the U.S. Department of Labor’s (DOL’s) FLSA regulations. It is, however, used by human resources and payroll professionals and appears in a number of DOL Administrator Opinion Letters. “Gap time” refers to the hours that fall between a nonexempt employee’s regularly scheduled hours and the 40 hours that an employee must work before becoming entitled to time-and-one-half overtime premium pay (for law enforcement officers and firefighters working on a 28-day work schedule it’s 171 and 212 hours respectively). When an employee is scheduled to work 40 hours per week, there is no gap time. But for employees working fewer than 40 hours –37.5 hours per week, for example – gap time is time worked between 37.5 and 40 hours. Do nonexempt employees get paid for gap time? Read more »

  • “Fore!” Golf Carts and Local Taxes

    Authored by: on Wednesday, November 22nd, 2017

    Can local governments levy property taxes on residential golf carts? This seemingly simple question doesn’t have a simple answer.  I say yes, but the NC Department of Revenue says no. A good chunk of money hangs in the balance as golf carts grow more popular and more upscale (check out this faux ’57 Chevy cart listed for $15,000!). Read more »

  • The Old “New Overtime Rule” and a Possible New “New Overtime Rule”

    Authored by: on Thursday, November 16th, 2017

    Whatever happened to the “new” FLSA overtime rule that had been due to take effect last December but was stopped when a federal court in Texas issued a nationwide injunction? Employers, many of whom were none too fond it, can be forgiven for wondering whether the 2016 rule is dead. Unfortunately, you can’t put changes to the FLSA salary test behind you yet: in July, the Trump Department of Labor (DOL) issued a Request for Information, apparently signaling an intention to set a new “new” higher minimum salary for overtime exemption, and in October, the Trump DOL appealed the federal court’s final decision in the new rule case. That decision threw the 2016 rule out. Confused? So are a lot of people. Read more »