In today’s Friday interview, Carolina Journal’s Mitch Kokai discusses taxpayer “standing” issues with Bob Orr, former N.C. Supreme Court Justice and executive director of the North Carolina Institute for Constitutional Law. The interview aired on Carolina Journal Radio (click here to find the station near you).

Kokai: So, first of all, let’s go through the traditional process that this voter or taxpayer would have used to challenge something that he thinks is unconstitutional. How has it worked in the past?

Orr: Well, it’s actually worked differently at the federal level from here at the state level in North Carolina. But the concept of “standing” is a court-developed concept that determines who has a right to litigate a particular case in court. And in North Carolina there has developed over the years the concept of taxpayer constitutional standing and, in simple terms — that simply means that a taxpayer who wants to challenge the constitutionality of the expenditure of tax dollars, for example, has the right to go into court and do that. On the other hand, at the federal level, the courts there, based upon the U.S. Constitution, have taken a very limited, very narrow approach to taxpayer standing, and have required that there be some specific injury to the taxpayer as opposed to the more generalized injury that, arguably, a taxpayer has.

Kokai: And in recent months and years, perhaps the state has been moving closer to that federal standard?

Orr: Well, over the last couple of years, there have been cases coming out of predominately the Court of Appeals, the intermediate appellate court, in which the language of the opinions has appeared to adopt the federal restrictive standard and required that a taxpayer show some very specific direct injury before having the right to bring the suit.

Kokai: What sort of impact has that been?

Orr: Well, it’s a practical matter if the federal standard becomes the law in North Carolina. The door to the courthouse is, if not nailed shut, is at least heavily tacked. And it will be very, very difficult for taxpayers, in a broader general sense, to bring lawsuits challenging governmental acts, expending tax dollars.

Kokai: And why can that then be a problem?

Orr: Well, it essentially means that the General Assembly or local governments can spend tax revenues without having to fear a challenge, because, in most instances, there isn’t any direct, specific injury to an individual taxpayer or an individual business. And so the question of the constitutionality of the acts would then essentially go unchallenged.

Kokai: Now, based on the precedent here, some might say, “Well, this is probably a good thing because nuisance lawsuits go away.” But North Carolina taxpayers and voters have had a pretty good deal of success in recent years in fighting unconstitutional actions by the General Assembly.

Orr: Well, they have. And there has been, like I indicated, a series of cases at the Supreme Court level which have indicated that taxpayers do have the right to come into court and challenge the constitutionality of how their tax dollars are being spent — even if there isn’t any really direct or substantial harm or injury to them. And this issue is coming to a head this fall at the state Supreme Court when one particular case, the Goldston case, is scheduled to be argued on this very issue. [Editor’s note: Goldston & Harrington v. State & Easley was argued October 16]. The Court of Appeals dismissed the lawsuit brought by the taxpayers challenging the governor’s transfer of money from the highway trust fund to the general fund. And, you know, the court said, “Well, you haven’t shown any direct injury,” which is essentially the federal test, “and therefore you have no right to be here.” And so the issue of whether the governor acted properly and in a constitutional fashion, at least at this point, has gone unanswered.

Kokai: Now, you mentioned the Supreme Court, the Supreme Court of North Carolina would be setting the standard. How important [is it] for the future of lawsuits of this type that the Supreme Court decide any taxpayer will have the standing to challenge these things?

Orr: Right, well, of course, the state Supreme Court is the final word on any questions of state law and the state constitution. And so if the Court adheres to what we consider to be the longstanding practice, then taxpayers will have the opportunity to go into court and challenge the constitutionality of specific acts. Now, should the court, should this North Carolina Supreme Court, revert to the very restrictive federal rule, then I think it’s a practical matter, like I said, though. The door to the courthouse is effectively shut in most instances for taxpayers to go in on broad, general grounds and attack the constitutionality of, for example, whether the governor could properly transfer money from the highway trust fund.

Kokai: So, people who have an interest in good open government should be watching very closely what comes out of this case.

Orr: Absolutely. I think this has enormous ramifications for public-interest litigants, and really that includes conservative libertarian groups. It includes liberal groups. I think anybody who is interested, like you say, in open government and the ability to go into court and to hold the legislative and executive branches accountable for their acts, has to be concerned about where North Carolina is headed on this issue.

Kokai: And as we were saying, it’s not as if the General Assembly has a perfect record. There have been a number of cases in recent years when the highest court has said, “No, you did this wrong. You need to pay some taxpayers millions of dollars because of your mistakes.”

Orr: Right, well, that’s exactly right. And over the years, that’s been the case. And it’s not just in the context of multi-million dollar state litigation, but there have been cases where local taxpayers have challenged acts of local government. And in this day and age, there is millions to be spent at the local level, and taxpayers in each of these municipalities and counties should have that right.