News: CJ Exclusives

Ruling Puts Red-Light Cameras in Peril

NC Appeals Court decision would force cities to pay schools millions

A new N.C. Court of Appeals ruling likely will temporarily unplug most of the state’s red-light cameras. The decision requires that most of the money generated by the cameras go to local school systems, making the cameras a financial drain on localities under their existing state operating authority.

High Point, like about two dozens other localities, has authority from the General Assembly to operate a red-light camera program. The city contracts with a private company, Peek Traffic, to supply the equipment and operate the system. In exchange, Peek got $35 from each $50 civil penalty issued. The remaining revenues from the cameras, less compensation for hearing appeals officers, went into a special fund for traffic safety improvements in High Point.

Henry H. Shavitz was assessed a $50 penalty for running a red light April 4, 2001. Shavitz contested the penalty, and eventually challenged the legality of red-light cameras before Superior Court Judge Moses Massey.

Massey upheld the legality of the cameras. He found a problem, however, with what the city was doing with the money from the fines. Article IX, Section 7 of the N.C. Constitution requires that “the clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the state, shall belong to and remain in the several counties, and shall be faithfully appropriated and used exclusively for maintaining free public schools.”

Massey found that a red-light infraction was a violation of a penal law of the state, and that Guilford County schools were entitled to almost all of the penalty money collected by High Point. The judge ruled that the city could not subtract what it paid Peek or hearing appeals officers when calculating the “clear proceeds” due the school system.

Because of the ruling, High Point owed the school system several million dollars. The city shut down its red-light cameras — each additional infraction issued effectively cost the city more money — and challenged the Superior Court’s ruling.

Before the Court of Appeals, High Point argued that red-light camera penalties should be covered by Article IX, Section 7. The appeals court did not accept the city’s reasoning.

If a motorist failed to observe a red stoplight at an intersection at which High Point had placed a red-light camera, the motorist violated section 20-158(b)(2) of the General Statutes, Judge Douglas McCullough wrote for the court.

“If High Point punishes that motorist by imposing the civil penalty established by its red light camera ordinance, then High Point is enforcing a penal law of the state because the City is acting under the authority of section 160A-300.1 of the General Statutes, which provides for municipal civil enforcement of section 20-158. To hold otherwise would be to permit High Point to ‘circumvent the state constitution by setting up a local [penalty program] pursuant to state-delegated authority, and thereby develop a new revenue stream, while depriving the schools of funds directed to them by Article IX, Section 7 of the North Carolina Constitution.’ Further, the fact that the violation results in a civil penalty rather than a fine for an infraction is irrelevant if we are to observe the Supreme Court’s admonition to consider ‘the nature of the offense committed, and not… the method employed by the municipality to collect fines for commission of the offense.’” (Emphasis in decision.)

High Point also argued that the money it paid to Peek to operate the cameras and for appeal hearing officers should be subtracted when calculating the “clear proceeds” of the red-light program. The Court of Appeals did not agree.

“This assertion is nonsensical, as these expenditures clearly constitute enforcement costs rather than collection costs. The payments to Peek accomplish enforcement of the traffic laws in much the same way as paying police officers for traditional enforcement, and the payment of the appeal hearing officers is comparable to the payment of judges who preside over traditional infraction hearings. As the costs of employing police and judges are not deducted to determine the clear proceeds of a penalty, ante, High Point may not deduct its analogous enforcement costs.”

The appeals court also did not accept High Point’s argument that the legislature had implicitly intended that operating and administrative hearing officer costs should be subtracted because the laws governing red-light cameras in Wake County and Concord consider these costs in determining “clear proceeds”.

“Further, the General Assembly’s 2001 enactment concerning Concord and Wake makes it clear that the Legislature feels it has the authority to clarify the meaning of clear proceeds in the context of red light camera programs. As the General Assembly has not made a new definition applicable to High Point, we must conclude that the City is bound by the definition of clear proceeds set forth in section 115C-437 of the General Statutes.”

The Court of Appeals did not address whether the means of calculating “clear proceeds” in Concord and Wake was constitutional. If the Assembly does have the authority to define the term as it did for those two jurisdictions, then red- light camera programs in other areas could return to operation if the legislature extends the Wake and Concord definition to other jurisdictions.

The Court of Appeals did, however, find that the schools were not entitled to post-judgment interest. North Carolina law generally provides that interest accrues on judgments not stemming from a contract dispute. In general though, laws only apply to the “sovereign,“ the state, including its political subdivision, when they specifically reference the sovereign.

“We conclude that the same rule that applies to general statutes of limitation should obtain in the case of general interest statutes,” McCullough wrote.

“Thus, absent a legislative provision to the contrary, a municipality should not be ordered to pay interest pursuant to a general interest statute where the issue which has been litigated involves a governmental function of the municipality.

“In the present case, High Point was sued for enforcing state and municipal traffic laws and for its management of the proceeds collected for violations. These functions were governmental such that, under the foregoing analysis, the general post-judgment interest provisions of section 24-5 of the General Statutes did not apply to any judgment against the City. ”

Decisions by the N.C. Court of Appeals are binding interpretations of North Carolina law unless overruled by the N.C. Supreme Court. Because the decision of the three-judge panel of the Court of Appeals was unanimous, the high court does not have to hear the case if High Point further appeals.

The case is Shavitz v. City of High Point, (05-571).

Michael Lowrey is associate editor of Carolina Journal.