Opinion: Daily Journal

Federal grant highlights ongoing dispute over control of N.C. government spending

North Carolina’s second-highest court recently reminded us that state lawmakers have the final say over money flowing through the state’s treasury.

The federal government must have missed the memo.

Language in legislation providing one piece of federal COVID-19 relief to the state had the potential to set up a constitutional clash. It would not have been the first spending dispute pitting the Republican-led General Assembly against Democratic Gov. Roy Cooper.

At issue is $95.6 million. That’s North Carolina’s designated portion of the $3 billion Governor’s Emergency Education Relief Fund, one piece of Congress’ much larger $2 trillion CARES Act.

Ignoring state-level legislative branches nationwide, those who wrote the language creating the education relief fund focused on governors. Congress clearly contemplates governors controlling how the money should be spent. Money from the fund can “provide emergency support through grants to institutions of higher education serving students within the State that the Governor determines have been most significantly impacted” by COVID-19.

Money also can support education-related groups “that the Governor deems essential for carrying out emergency educational services.” Possible uses include child care, early childhood education, protection of education-related jobs, even “social and emotional support.”

The law even calls for the state to forfeit any money from the fund “that the Governor does not award within one year.” That money would head back to the U.S. education secretary. She could disburse it to other states.

The language is clear. It also creates a problem.

Our governor doesn’t make final decisions about spending state revenue, even if that revenue arrives from the federal government. A Dec. 3 ruling from the N.C. Court of Appeals confirmed this fact.

In that case, one of multiple disputes dubbed Cooper v. Berger, the governor and legislature battled over a different set of federal block grants. Cooper had sued in 2017 when lawmakers amended his plans for spending federal money. The federal grants targeted community development, maternal and child health, and substance abuse prevention and treatment.

A Superior Court judge ruled in lawmakers’ favor in April 2018. Last December, a three-judge Appeals Court panel agreed.

“The North Carolina Constitution provides that ‘[n]o money shall be drawn from the State treasury but in consequence of appropriations made by law,’” according to the panel’s unanimous opinion. “The General Assembly’s primacy over State expenditures embodied in this language dates to the genesis of the State.”

“Legislative — rather than executive — authority over the State’s expenditure of funds was intrinsic to the State’s founding,” the Appeals Court added.

Feuds between Cooper and Republican legislative leaders often take on a partisan tone. But the judicial rulings over spending authority have not broken down along party lines. The trial judge who ruled against Cooper is a fellow Democrat. So is the author of the Appeals Court opinion. (That author, Judge Lucy Inman, will join Cooper this fall on Democrats’ statewide election ticket. She’s seeking a seat on the N.C. Supreme Court.)

Despite state courts’ clarity on spending authority. It does not appear that the new federal emergency education relief will prompt another legal showdown. The executive and legislative branches can hold back their attorneys.

Cooper could have short-circuited any prospect of a courtroom fight. He could have worked with legislative leaders to craft a bipartisan, mutually acceptable plan for the funds.

Even with a unilateral plan from the governor’s office, lawmakers don’t appear to be seeking a fight. While $95.6 million is real money for most of us, it amounts to less than 2.5% of the federal funds flowing into the state from a separate source: the Coronavirus Relief Fund. That much larger fund for state and local governments is also part of the CARES Act.

When the debate involves billions of dollars, it’s not surprising that a pot of less than $100 million attracts less scrutiny.

But the budget tension between the governor and General Assembly is worth watching. State government continues to operate largely under budget provisions approved in 2018 because of an ongoing impasse over competing budget priorities. Cooper vetoed lawmakers’ revisions of his budget plan last year. He continually fought Republican legislative leaders’ efforts to secure Democratic support for the legislative budget bill.

Nor has Cooper given up on the court case that declared the General Assembly’s “primacy over state expenditures.” Despite unanimous bipartisan rulings against him, the governor is taking the case to the N.C. Supreme Court. With a current lineup of six Democrats and a single Republican, Cooper and his legal team must expect a more favorable outcome in that venue.

No one can say for certain how the court case will end. But the federal government’s recent decision to route federal COVID-19 relief money directly to governors offers an important reminder: The constitutional fight continues over control of state government funds.

Mitch Kokai is senior political analyst for the John Locke Foundation.