The first blow in what promises to be a lengthy legal slugfest over local tax reimbursements got thrown Monday by the Attorney General’s office. Responding to a lawsuit by several counties and municipalities filed to reclaim some of their withheld tax revenues, state attorneys are asking a Superior Court in Wake County to dismiss on the basis of standing to sue.
Specifically, the state is arguing that cities and counties, as legal creations of the North Carolina General Assembly, have no authority to take legal action against the entity (the state government) that created them. Separately, the state alleges that Gov. Mike Easley clearly enjoys the constitutional authority to move state money around if needed to cover state budget gaps.
Gene Boyce, one of the attorneys for the suing localities, told reporters that he was well-prepared for the Attorney General’s argument. Actually, he was dismissive enough to make fun of the state.
I presume that his confidence has do to with his experience and with the way he has crafted the lawsuit. The defendant is not the state legislature or governor but the Secretary of Revenue. And the taxes in question, in particular the franchise taxes, are clearly local ones that the state has collected merely as a convenience. It is hard to imagine that the framers of the state constitution meant the governor’s emergency budget authority to extend beyond the state government’s revenues.
Still, it is worth thinking about the core argument of standing to sue. Since localities do, in fact, derive their governmental power from a grant of state authority, not from any kind of local sovereignty, can they advocate a legal position separate to and even contrary to that of the state?
However this issue is resolved in the reimbursement case, state policymakers might want to take another look at the overall relationship between Raleigh and local governments. With many new members elected to the General Assembly this year from the ranks of local government – including former mayors, county commissioners, county managers, and sheriffs – the coming legislative session might present an excellent opportunity to reexamine these issues.
Time is no excuse. Lawmakers are likely to waste a great deal of it early next year, since nothing of consequence on the main issue facing the General Assembly, the state budget deficit, can be accomplished until the governor presents his 2003-04 budget. In the meantime, how about some hearings and debate about the rights and responsibilities of local governments in our constitutional system?