Editor’s note: This story has been updated with additional information about Raleigh’s red-light camera enforcement program.

A court ruling this week against the funding scheme for Greenville’s red-light camera enforcement program could lead to questions about similar programs in three other N.C. cities.

Raleigh, Fayetteville, and Wilmington all have red-light camera enforcement systems that could be affected by the court decision. That’s a preliminary assessment from Paul “Skip” Stam, the Apex-based attorney whose firm represented plaintiffs in the Greenville case. (Stam is a board member of the John Locke Foundation, which oversees Carolina Journal.)

Those three cities, along with Greenville, are the only N.C. municipalities now operating red-light camera programs, according to information from Raleigh’s SafeLight program.

A unanimous three-judge panel of the N.C. Court of Appeals ruled Tuesday that Greenville’s red-light program failed to turn over enough of its proceeds to the Pitt County school system.

When a Greenville driver runs a red light and faces a $100 penalty, Article IX, Section 7 of the state Constitution kicks in. The Fines and Forfeitures Clause declares that the “clear proceeds” of that penalty must head to schools. State law defines “clear proceeds” as at least 90% of the penalty, according to the Appeals Court opinion in Fearrington v. City of Greenville.

In Greenville’s program, the city collects the penalties, then turns over all money to local schools. The city then bills the schools monthly for administrative costs. The city turns much of that bill over to Arizona-based American Traffic Solutions, which manages Greenville’s red-light camera program. ATS charges Greenville $31.85 for every $100 citation.

From 2017 to June 2019, Pitt schools ended up with less than 72% of the almost $2.5 million collected from Greenville drivers.

Because 100% of the money initially heads to schools, Greenville has defended the arrangement as complying with the state Constitution.

“This argument asks us to not only frustrate the clear intent of the people in ratifying Article IX, Section 7, it also contravenes the plain language of the Fines and Forfeitures Clause,” wrote Judge Jefferson Griffin in rejecting Greenville’s argument.

“The School Board does not receive the ‘clear’ proceeds of fines in any real sense when Greenville forwards the fines to the School Board and subsequently takes 30% of the money back for costs which are not deductible to begin with,” Griffin wrote. “Moreover, the clear purpose of the people in mandating that the clear proceeds of such fines be ‘faithfully appropriated’ to the public schools cannot be circumvented by the elaborate diversion of funds or cleverly drafted contracts.”

Barring a successful appeal to the N.C. Supreme Court, Greenville would be forced to change its funding arrangement or scuttle its red-light camera program.

The same could be true for Fayetteville. Stam cites a 2018 report on WNCN television.

“It will cost you $100 if a Fayetteville camera catches you going through a red light. And 35 percent of that goes to the vendor,” according to the TV report.

“In the last fiscal year: Drivers paid $1,499,978.10 in red light camera fines, the City sent the entire amount to Cumberland County Schools, then American Traffic Solutions billed the school district for its fee of $517,502.70,” WNCN reported.

The website for Fayetteville’s red-light camera program confirms the arrangement. “The first Notice of Violation is $100.00, of which, $35.00 is the cost of the program,” according to the website. “All funding is remitted to the Cumberland County School System through an interlocal agreement with the City of Fayetteville.”

With Cumberland County schools’ portion of the fines dipping well below 90%, it appears to face the exact same constitutional problem that led to Greenville’s loss at the Court of Appeals.

The same 2018 news report also highlighted Raleigh’s red-light camera program.

“Raleigh collected $1,768,372.19 in fines,” according to WNCN. “Wake County schools received $993,008.67 of those fines.”

“So where did the rest of the money go? The vendor took in a flat fee of $666,000. The City of Raleigh took $109,362.52 in administrative costs.”

That would mean that Wake schools secured 56% of fines at the time, far short of the 90% “clear proceeds” standard.

The website for Raleigh’s SafeLight program offers a different definition of “clear proceeds.” The language comes from a 2001 state law. That law spelled out specific rules for red-light cameras operated in Wake County.

“State law requires that the County School Fund (Wake County Public School System) receive annually calculated ‘clear proceeds,'” according to the website. “Clear proceeds are defined as the remaining money from the payment of citations after paying the expenses for the lease, lease purchase, or purchase of the traffic control photographic system; paying a contractor for operating the system; and paying any administrative costs incurred by the municipality related to the use of the system.”

With no reference to a 10% cap in the 2001 law, it’s unclear whether the Fearrington ruling would affect Raleigh’s program.

Wilmington’s red-light funding arrangement also raises questions for Stam, though it’s unclear whether the Greenville court case would have a direct impact.

A document obtained by Carolina Journal titled “Red light program financial accounting” offers details of Wilmington’s program costs through the 2015-16 budget year. The document indicates that the city recognized an obligation to provide 90% of red-light camera proceeds to New Hanover County schools starting in May 2002.

Starting in 2010-11, New Hanover County government paid at least $130,000 a year to help offset Wilmington’s administrative costs for the red-light camera program. In 2011-12, the city and county split net operating costs on a 50/50 basis.

Nothing in the document indicates that the county government is charging the school system for those administrative costs. It’s unclear whether the money the county devotes to Wilmington’s red-light program has any impact on local funding for schools.

In 2015-16, the last year included on the document, $973,291 (90%) of the $1.08 million in fines headed to New Hanover schools. But the county government paid $186,565 to help cover Wilmington’s administrative costs. That’s 17% of the program’s proceeds. If the county charges the schools for any of that administrative cost, the Greenville case suggests Wilmington’s program would fall short of the “clear proceeds” standard.

Wilmington also works with ATS. The city council voted in November 2020 to extend its contract with the firm for more than four years, according to a Port City Daily report.

The funding arrangement described in the document remained in place when the city renewed the contract.

“The red-light program nets the city $1 million in annual revenue, 90% of which is routed to New Hanover County Schools,” according to the newspaper report. “New Hanover County and the city pay the company $180,000 each, in addition to remitting 10% of the program’s revenue back to ATS, bringing the company’s total annual payments to $460,000.”

Only cities with permission from the N.C. General Assembly can adopt red-light camera programs. About 20 cities have secured that permission. Many of those cities do not operate red-light cameras today.