(a) Except as provided in subsection (b) of this section, all moneys, stocks, bonds, and other property belonging to a county school fund, and 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.
(b) The General Assembly may place in a State fund the clear proceeds of all civil penalties, forfeitures, and fines which are collected by State agencies and which belong to the public schools pursuant to subsection (a) of this section. Moneys in such State fund shall be faithfully appropriated by the General Assembly, on a per pupil basis, to the counties, to be used exclusively for maintaining free public schools.
(2003-423, s. 1.)
Cross References. - As to allocation of revenues to local school administrative units, and definition of "clear proceeds," as referred to in this section, see G.S. 115C-437.
History Note. - The provisions of this section are similar to those of Art. IX, § 5, Const. 1868, as added by the Convention of 1875.
Editor's Note. - Session Laws 2003-423, ss. 4 and 5, provide: "The amendment set out in Section 1 of this act shall be submitted to the qualified voters of the State at the statewide general election in November of 2004, which election shall be conducted under the laws then governing elections in the State. Ballots, voting systems, or both may be used in accordance with Chapter 163 of the General Statutes. The question to be used in the voting systems and ballots shall be:
"[ ] FOR [ ] AGAINST
"Constitutional amendment to provide that the General Assembly may place the clear proceeds of civil penalties, civil forfeitures, and civil fines collected by a State agency in a State fund to be used exclusively for maintaining free public schools.
"If a majority of votes cast on the question are in favor of the amendment set out in Section 1 of this act, the State Board of Elections shall certify the amendment to the Secretary of State. The Secretary of State shall enroll the amendment so certified among the permanent records of that office. The amendment set out in Section 1 of this act shall become effective January 1, 2005."
The constitutional amendment proposed by Session Laws 2003-423, s. 1, was adopted by vote of the people at the general election held November 2, 2004, and the results of the election were certified by the State Board of Elections.
Legal Periodicals. - For article, "Fines, Penalties, and Forfeitures: An Historical and Comparative Analysis," see 65 N.C.L. Rev. 49 (1986).
For a survey of 1996 developments in constitutional law, see 75 N.C.L. Rev. 2252 (1997).
For note on the Supreme Court's decision in Hudson v. United States, see 33 Wake Forest L. Rev. 439 (1998).
For note, "Will North Carolina Vouch for Zelman? Examining the Constitutionality of School Vouchers in North Carolina in the Wake of Zelman v. Simons-Harris," see 81 N.C.L. Rev. 2419 (2003).
Effect of Amendments. - Session Laws 2003-423, s. 1, redesignated the formerly undesignated provisions of the section as subsection (a); added subsection (b); and in subsection (a), added "Except as provided in subsection (b) of this section." See editor's note for effective date.
CASE NOTES
Editor's Note. - Some of the cases cited below were decided under former Art. IX, § 5, Const. 1868, as added by the Convention of 1875.
This section was designed in its entirety to secure two wise ends, namely: (1) to set apart the property and revenue specified therein for the support of the public school system; and (2) to prevent diversion of public school property and revenue from their intended use to other purposes. Boney v. Board of Trustees, 229 N.C. 136, 48 S.E.2d 56 (1948); Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976); Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 336 S.E.2d 59 (1985).
This Section Requires Legislation to Give It Effect. - G.S. 115C-457.1, which created the civil penalty fund, is consistent with the intent and purpose of N.C. Const. art. IX, § 7 that civil penalties be used exclusively to support the State's public schools; because art. IX, § 7 fails to unambiguously specify how that is to be accomplished, it requires legislation to give it effect, and G.S. 115C-457.1 properly articulates the necessary details to effect the constitutional purpose. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
The term "penal laws," as used in the context of this section, means laws that impose a monetary payment for their violation. The payment is punitive rather than remedial in nature and is intended to penalize the wrongdoer rather than to compensate a particular party. Mussallam v. Mussallam, 321 N.C. 504, 364 S.E.2d 364, rehearing denied, 321 N.C. 116, 367 S.E.2d 915 (1988).
Penalties, forfeitures and fines are to be used for the support of the public schools. McMillan v. Robeson County, 262 N.C. 413, 137 S.E.2d 105 (1964).
When Prescribed as Punishment for Public Wrongs. - Where fines and penalties are prescribed as a punishment for a violation of public wrongs, i.e., crimes, and such penalties or fines are to be recovered by public authority, the disposition of such recovered fines or penalties comes within the constitutional provision under consideration, and they may not be turned away from the prescribed constitutional course. Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976).
This section appropriates all fines for violation of the criminal laws of the State for establishing and maintaining free public schools in the several counties, whether the fines are for violation of town ordinances made misdemeanors by statute or other criminal statutes. Board of Educ. v. Town of Henderson, 126 N.C. 689, 36 S.E. 158, modified on other grounds, 127 N.C. 8, 37 S.E. 72 (1900).
And Given by Law to State. - Under this section penalties and forfeitures belong to the State for free school purposes only when given by law to the State. State ex rel. Carter v. Wilmington & W.R.R., 126 N.C. 437, 36 S.E. 14 (1900).
Statute purporting to give fines to an individual or another governmental agency violates this section. Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976).
As Would Judgment. - Judgment by a trial judge which seeks to direct payment of a fine anywhere other than to the counties for the use of the public schools is unconstitutional. Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976).
Municipal Clerk Not Entitled to Fees from Fines. - By provision of this section, the clear proceeds of fines collected by the clerk of a municipal court belong to the county school fund, and the clerk is not entitled to retain a percentage thereof as his fees, regardless of the provisions of public-local laws relating to his compensation. County Bd. of Educ. v. City of High Point, 213 N.C. 636, 197 S.E. 191 (1938).
Moneys Voluntarily Paid for Violation of City Ordinances Belong to School Fund. - Moneys voluntarily paid by motorists to a city upon citations for violations of a city overtime parking ordinance constitute a penalty or fine collected for breach of a state penal law and should be used exclusively for maintaining free public schools in the county pursuant to this section, since violation of a city ordinance is also a violation of G.S. 14-4 which makes the violation of a local ordinance a misdemeanor. Cauble v. City of Asheville, 301 N.C. 340, 271 S.E.2d 258 (1980).
Two Funds for Public Schools. - The provisions of this section relating to the clear proceeds from penalties, forfeitures and fines identify two distinct funds for the public schools. These are (1) the clear proceeds of all penalties and forfeitures in all cases, regardless of their nature, so long as they accrue to the state, and (2) the clear proceeds of all fines collected for any breach of the criminal laws. Mussallam v. Mussallam, 321 N.C. 504, 364 S.E.2d 364, rehearing denied, 321 N.C. 116, 367 S.E.2d 915 (1988).
This section establishes two funds for public schools: (1) the clear proceeds of all penalties and forfeitures in all cases, regardless of their nature, so long as they accrue to the state; and (2) the clear proceeds of all fines collected for any breach of the criminal laws. United States v. Winston-Salem/Forsyth County Bd. of Educ., 902 F.2d 267 (4th Cir. 1990).
Bond Proceeds Held Payable to Board of Education. - In custody case in which wife sought to regain custody of child who had been removed outside the country, bond set by superior court judge was to ensure husband's appearance, as the punishment for his failure to so appear would be immediate forfeiture of the bond, and since the terms of the bond specifically made its proceeds payable to the state of North Carolina should it be forfeited, such bond was penal in nature and accrued to the Board of Education. Mussallam v. Mussallam, 321 N.C. 504, 364 S.E.2d 364, rehearing denied, 321 N.C. 116, 367 S.E.2d 915 (1988).
The 1985 amendment to § 115C-437, defining "clear proceeds," could only be effective as to monies collected because of traffic violations occurring on and after July 17, 1985. Cauble v. City of Asheville, 314 N.C. 598, 336 S.E.2d 59 (1985).
Disposition of Parking Fines. - In the situation of parking fines, the costs of collection often surpass the amounts collected, the intent of the municipality in passing these ordinances being the regulation of traffic rather than the production of revenue. Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 314 N.C. 598, 336 S.E.2d 59 (1989).
While it is important that the needs of school children be met, and met generously, it is also important that a municipality feel free to enact ordinances imposing small fines for overtime parking violations without being economically penalized, if indeed the municipality realizes no revenue from enforcement of these ordinances. Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 314 N.C. 598, 336 S.E.2d 59 (1989).
Although defining costs of collection is a legislative function, the North Carolina General Assembly has not seen fit to provide municipalities with a formula for determining "clear proceeds" of fines realized from traffic violations. Lacking guidance on the subject, the court would be compelled to resort to a less precise measure in order to allow municipalities to retain the costs of collecting overtime parking fines. Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 314 N.C. 598, 336 S.E.2d 59 (1989).
The money penalty collected by a city from a motorist who violates its ordinance prohibiting overtime parking constitutes a penalty or fine collected for the breach of a state penal law, even if the motorist has not been convicted of violating G.S. 14-4. Cauble v. City of Asheville, 314 N.C. 598, 336 S.E.2d 59 (1985).
The "clear proceeds" of a forfeiture are defined as the amount of the forfeit less the cost of collection, meaning thereby the citations and process against the bondsman usually in the practice. Hightower v. Thompson, 231 N.C. 491, 57 S.E.2d 763 (1950).
The term "clear proceeds," as used in this section, is synonymous with "net proceeds." Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 314 N.C. 598, 336 S.E.2d 59 (1989).
The words "clear proceeds" in this section have been construed to mean the total amount of the fine, penalty, or forfeiture, less only the cost of collection, which, for a bail bond, is the cost of citing and issuing process against the bondsman in the usual manner. In re Dunlap, 66 N.C. App. 152, 310 S.E.2d 415 (1984).
The costs of collection of a fine will be deducted to determine clear proceeds. Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 314 N.C. 598, 336 S.E.2d 59 (1989).
Reasonable costs of collection constitutionally may be deducted from the gross proceeds of the fines collected by a city for overtime parking. Cauble v. City of Asheville, 314 N.C. 598, 336 S.E.2d 59 (1985).
Applicable Forfeitures. - This section applies only to forfeitures that result from a breach of North Carolina penal law and not to forfeitures initiated by a federal agency because of a violation of federal law. United States v. Winston-Salem/Forsyth County Bd. of Educ., 902 F.2d 267 (4th Cir. 1990).
A forfeiture initiated by federal authorities and arising from violations of federal law is not controlled by this section. United States v. Winston-Salem/Forsyth County Bd. of Educ., 902 F.2d 267 (4th Cir. 1990).
RICO Forfeitures. - Since the Racketeer Influenced and Corrupt Organizations Act (RICO) provides that the proceeds from the sale of RICO forfeited property accrue to the State, such proceeds must therefore be paid to the public school fund pursuant to this section. State ex rel. Thornburg v. 532 "B" Street, 334 N.C. 290, 432 S.E.2d 684 (1993).
Forfeitures of § 90-112(d1) Compared. - The plain language of this section limits its application to forfeitures resulting from a "breach of the penal laws of the State" and G.S. 90-112(d1) of the North Carolina Act refers only to forfeitures "pursuant to this section." United States v. Winston-Salem/Forsyth County Bd. of Educ., 902 F.2d 267 (4th Cir. 1990).
The test for determining permissible deductions from gross moneys taken in is that the item, to be deductible, must bear a reasonable relation to the costs of collection of the fine. A determination of costs can be made by qualified accountants, which determination is no more complicated than other problems accountants are daily accustomed to resolving. Cauble v. City of Asheville, 66 N.C. App. 537, 311 S.E.2d 889 (1984), aff'd, 314 N.C. 598, 336 S.E.2d 59 (1989); Harrell v. Harriet & Henderson Yarns, 314 N.C. 566, 336 S.E.2d 47 (1985), decided prior to 1985 amendment to G.S. 115C-437 defining "clear proceeds."
The costs of collection do not include the costs associated with enforcing the ordinance, but are limited to the administrative costs of collecting the funds. Cauble v. City of Asheville, 314 N.C. 598, 336 S.E.2d 59 (1985).
Moneys to be set aside for future enforcement of the law cannot be deducted from "fines" to arrive at "clear proceeds" of fines. Shore v. Edmisten, 290 N.C. 628, 227 S.E.2d 553 (1976).
Use of Penal Fines. - This section provides that the fines collected for any breach of the penal laws shall be used exclusively for the benefit of the public schools. Any judgment of a trial judge which seeks to direct payment of a fine anywhere other than to the counties for the use of the public schools is unconstitutional. Florence v. Hiatt, 101 N.C. App. 539, 400 S.E.2d 118 (1991).
Where a local ordinance was passed to enforce state-mandated air quality standards was a penal law, the penalties imposed for the violation of the ordinance were punitive in nature, and the payment of those penalties was payable to the school board under the mandate of N.C. Const. art. IX, § 7. Donoho v. City of Asheville, 153 N.C. App. 110, 569 S.E.2d 19 (2002), cert. denied, 356 N.C. 669, 576 S.E.2d 107 (2002), cert. dismissed, 356 N.C. 669, 576 S.E.2d 110 (2003), cert. denied, 356 N.C. 669, 576 S.E.2d 110 (2003).
Use of Assessments. - While the court concluded that the assessments made pursuant to G.S. 160A-300.1 and High Point, N.C. Ordinance No. 00-89, § 10-1-306 constituted monetary payments which, although levied in a civil setting, were penal in nature, the assessments did not accrue to the state; therefore, the "civil penalties" assessed a city pursuant to the ordinance were not subject to the requirements N.C. Const. art. IX, § 7, and therefore the school board's motion for summary judgment on the issue was denied. In denying the school board's motion, the court responded to its request for a declaratory ruling as to whether the fines and other amounts received by the city and the other defendants under the statute and the ordinance had to be paid to the school board; such assessments were not required to be appropriated and used exclusively for maintaining free public schools in the county. Shavitz v. City of High Point, 270 F. Supp. 2d 702 (M.D.N.C. 2003).
What County Is Entitled to Proceeds. - Neither the Constitution nor any statute enacted by the General Assembly states which county is entitled to receive forfeitures in cases that are started in one county and removed to another. In re Dunlap, 66 N.C. App. 152, 310 S.E.2d 415 (1984).
A suit to compel a city to pay fines and penalties to the county board of education should be brought against the city or the board of aldermen, and not against the chief of police. Bearden v. Fullam, 129 N.C. 477, 40 S.E. 204 (1901).
A school is an institution consisting of a teacher and pupils, irrespective of age, gathered together for instruction in any branch of learning, the arts or the sciences. Benvenue Parent-Teacher Ass'n v. Nash County Bd. of Educ., 4 N.C. App. 617, 167 S.E.2d 538, appeal dismissed, 275 N.C. 675, 170 S.E.2d 473 (1969).
A school is public when it is open and public to all in the locality. Benvenue Parent-Teacher Ass'n v. Nash County Bd. of Educ., 4 N.C. App. 617, 167 S.E.2d 538, appeal dismissed, 275 N.C. 675, 170 S.E.2d 473 (1969).
A county technical institute which provides adult vocational and general educational training is a part of the public school system of the State, and the expenditure of funds by a county as authorized by former G.S. 115-234 et seq. for maintenance of a building used by such technical institute does not violate this section. Benvenue Parent-Teacher Ass'n v. Nash County Bd. of Educ., 4 N.C. App. 617, 167 S.E.2d 538, appeal dismissed, 275 N.C. 675, 170 S.E.2d 473 (1969).
The maintenance of an athletic field and playground is a proper use of school funds, since physical training is a legitimate function of education. Boney v. Board of Trustees, 229 N.C. 136, 48 S.E.2d 56 (1948).
An agreement under which a graded school district, without monetary consideration, was to transfer in fee to a municipality a tract of school property, and the municipality was to construct thereon an athletic stadium and grant the graded schools of the district free and unlimited use of the stadium and grounds during the school term except when required for regularly scheduled games of a professional baseball association, did not constitute a diversion of school property in contravention of this section. Boney v. Board of Trustees, 229 N.C. 136, 48 S.E.2d 56 (1948).
Provision in separation agreement that plaintiff pay educational expenses for children is not violative of this section nor of the U.S. Const., Amend. XIV where such expenses are incurred in attendance at private school. Carpenter v. Carpenter, 25 N.C. App. 235, 212 S.E.2d 911, cert. denied, 287 N.C. 465, 215 S.E.2d 623 (1975).
Former G.S. 15A-544(h) (see now § 15A-544.1 et seq.), permitting remission of the amounts adjudged forfeited on criminal appearance bonds, did not violate the constitutional provision that the proceeds of forfeitures are to remain in the several counties and be used in the public schools. State v. Locklear, 42 N.C. App. 486, 256 S.E.2d 830, appeal dismissed, 298 N.C. 302, 259 S.E.2d 303 (1979).
Federal Forfeiture Law Held Applicable. - Where city police seized cash from a drug dealer, the city police could share in the proceeds according to federal forfeiture law. Federal and state forfeiture laws did not conflict, as this section applies only to forfeitures resulting from a breach of the penal laws of North Carolina, and the cash in question was forfeited because it was used in violation of a federal law. United States v. Alston, 717 F. Supp. 378 (M.D.N.C. 1989), aff'd, 902 F.2d 267 (4th Cir. 1990), aff'd sub nom. United States v. Winston-Salem/Forsyth County Bd. of Educ., 902 F.2d 267 (4th Cir. 1990).
Trial court correctly applied the three-year limitations period of G.S. 1-52, rather than the one-year statute of limitations contained in G.S. 1-54(2), to action by the North Carolina School Boards Association and several boards of education for a declaratory judgment that various monetary payments collected by state agencies were subject to N.C. Const. art. IX, § 7; although G.S. 1-54(2) had been applied to actions commenced by the State upon a statute to collect civil penalties or forfeitures, G.S. 1-54(2) was not applicable in the case at bar because the school boards sought to recover payments provided to the public schools by N.C. Const. art. IX, § 7, and those payments had already been collected by the State. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Payments collected by the North Carolina Plumbing and Heating Board, the North Carolina Electrical Board, the North Carolina Cosmetic Board, and the North Carolina State Bar for late renewal of occupational licenses or late payment of license fees are remedial in nature and therefore not subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Standing to Sue. - An individual, who was assessed a $50.00 civil penalty for a red light violation detected by cameras installed under the authority of G.S. 160A-300.1 and High Point, N.C. Ordinance No. 00-89, § 10-1-306, launched a challenge to the statute and the ordinance based on N.C. Const. art. IX, § 7; he did not, however, have standing to bring this claim, as he did not allege that (1) there had been a demand on and refusal by the proper authorities to institute proceedings for the protection of the interests of the political agency or political subdivision; or (2) a demand on such authorities would have been useless. Shavitz v. City of High Point, 270 F. Supp. 2d 702 (M.D.N.C. 2003).
Civil Penalties That Do Not Accrue to the State. - An individual, who was assessed a $50.00 civil penalty for a red light violation detected by cameras installed under the authority of G.S. 160A-300.1 and High Point, N.C. Ordinance No. 00-89, § 10-1-306, launched a challenge to the statute and the ordinance based on N.C. Const. art. IX, § 7; while the court concluded that the assessments in question constituted monetary payments which, although levied in a civil setting, were penal in nature, the assessments did not accrue to the state. Therefore, the "civil penalties" assessed the city pursuant to its ordinance were not subject to the requirements of N.C. Const. art. IX, § 7. Shavitz v. City of High Point, 270 F. Supp. 2d 702 (M.D.N.C. 2003).
Payments collected as penalties under the Employment Security Act are "additional taxes" and thus remedial, rather than punitive, in nature; accordingly, payments collected by the Employment Security Commission pursuant to G.S. 96-10 are not subject to N.C. Const. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Proceeds of penalties that are collected for violation of campus traffic and parking ordinances as "infractions" under G.S. 116-44.4(g) are subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
"Civil penalties" imposed by G.S. 116-44.4(h), which are intended to compensate campuses for the expense of establishing and maintaining parking-and transportation-related services, are remedial in nature and thus are not subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Because the North Carolina General Assembly enacted G.S. 116-44.4 pursuant to a clear grant of constitutional authority to establish a mechanism for administering the "maintenance and management" of traffic and parking on each University of North Carolina campus, G.S. 116-44.4 is constitutional under N.C. Const. art. IX, § 8, which is a co-equal provision with N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Broad authority granted to University of North Carolina (UNC) campus trustees under G.S. 116-33, including the authority to assess fines for the loss, damage, or late return of campus library materials, is intended to promote the remedial purpose of keeping the cost of an education at the several UNC campuses as low as possible; because G.S. 116-33 advances this remedial purpose, the statute is constitutional under N.C. Const. art. IX, § 9, which is a co-equal provision with N.C. Const. art. IX, § 7. Thus, the clear proceeds of payments collected pursuant to G.S. 116-33 are not subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Purpose of G.S. 105-113.105 through 105-113.113 is to levy an excise tax to generate revenue for state and local law enforcement agencies and for the General Fund, which is a remedial purpose; payments collected under G.S. 105-113.105 thus are not subject to N.C. Const. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Penalties Collected for Failing to Comply with Statutory or Regulatory Tax Provisions. - Monetary payments for a taxpayer's noncompliance with a mandate of Chapter 105 are penalties and, therefore, subject to N.C. Const. art. IX, § 7; thus, monies collected by the North Carolina Department of Revenue for late filings, underpayments, and for failing to comply with statutory or regulatory tax provisions are payable to public schools. N.C. Sch. Bds. Ass'n v. Moore, 359 N.C. 474, 614 S.E.2d 504 (2005).
Payments by an environmental violator to support a supplemental environmental project as part of a settlement agreement are still paid because of a civil penalty assessed against the environmental violator; as such, they are punitive in nature and therefore subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Payments collected by state agencies as fines or civil penalties assessed against a public school or local school administrative unit need not be remitted to the Civil Penalty Fund but may instead remain with the collecting State agency, where they may be used for purposes other than maintaining public schools; if payments collected as civil penalties from public schools were subject to N.C. Const. art. IX, § 7, the offending unit would receive back from the School Technology Fund a portion of the fine or penalty assessed against the unit and thus would be unjustly enriched by its own wrongdoing in the sense that it would retain the use of money that would otherwise have been entirely paid to a State agency. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Civil penalties paid by public school systems to state agencies must be remitted to Civil Penalty Fund for return to all of the public schools in the manner dictated by G.S. 115C-457.3. N.C. Sch. Bds. Ass'n v. Moore, 359 N.C. 474, 614 S.E.2d 504 (2005).
Payments authorized by G.S. 20-118(e) are punitive in nature and are therefore subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
G.S. 105-267 did not preclude action by the North Carolina School Boards Association and several boards of education for a declaratory judgment that various monetary payments collected by state agencies were subject to N.C. Const. art. IX, § 7; school boards did not owe any taxes, and their claims against the North Carolina Secretary of Revenue were not brought for the purpose of preventing the collection of any tax but instead to determine the proper disposition of amounts collected by the North Carolina Department of Revenue as statutorily-denominated "penalties" or "additional taxes." N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Payments authorized by G.S. 20-309(e) are in the nature of sanctions and are thus subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Penalties assessed as an additional tax under G.S. 105-236 and other provisions of the North Carolina Revenue Act for failure to comply with the tax code are remedial, not punitive, and are thus not subject to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 160 N.C. App. 253, 585 S.E.2d 418 (2003).
Monies Received for Excise Tax Versus Penalties and Interest Payments. - Excise tax on unauthorized substances is not a penalty subject to the provisions of N.C. Const. art. IX, § 7 and is, therefore, not payable to public schools; however, the penalties and interest payments collected by the Department of Revenue for enforcement of the excise tax are classified as penalties to be disbursed to public school systems, pursuant to N.C. Const. art. IX, § 7. N.C. Sch. Bds. Ass'n v. Moore, 359 N.C. 474, 614 S.E.2d 504 (2005).
Allocation of Funds From a City's Red Light Camera Ordinance. - County board of education was entitled to funds derived from a city's red light camera program, which program was implemented by an ordinance pursuant to G.S. 160A-300.1(c), as N.C. Const. art. IX, § 7 applied to the civil penalties assessed by the city for violations of the ordinance regarding the failure to stop for a red stoplight. Further, pursuant to G.S. 115C-437, the city was to pay 90 percent of the amount collected by its red light camera program to the board. Shavitz v. City of High Point, 177 N.C. App. 465, 630 S.E.2d 4 (2006), cert. denied, appeal dismissed, 361 N.C. 430, 648 S.E.2d 845 (2007).
Applied in State v. Walker, 27 N.C. App. 295, 219 S.E.2d 76 (1975); In re Phillips, 66 N.C. App. 468, 311 S.E.2d 365 (1984).
Cited in Wilson County Bd. of Educ. v. Wilson County Bd. of Comm'rs, 26 N.C. App. 114, 215 S.E.2d 412 (1975); Roberson v. Dale, 464 F. Supp. 680 (M.D.N.C. 1979); Kiddie Korner Day Schools, Inc. v. Charlotte-Mecklenburg Bd. of Educ., 55 N.C. App. 134, 285 S.E.2d 110 (1981); Britt v. North Carolina State Bd. of Educ., 86 N.C. App. 282, 357 S.E.2d 432 (1987); State ex rel. Thornburg v. Currency in Amount of $52,029.00, 324 N.C. 276, 378 S.E.2d 1 (1989); Francine Delany New Sch. for Children, Inc. v. Asheville City Bd. of Educ., 150 N.C. App. 338, 563 S.E.2d 92 (2002), cert. denied, 356 N.C. 670, 577 S.E.2d 117 (2003).
Opinions of Attorney General
Confiscated Drugs. - If federal authorities confiscate drug related property and thereafter return a part of it to local authorities for law enforcement purposes, the North Carolina Constitution and laws do not require these funds to go to the local school board as forfeited property and they may be used by local law enforcement. See opinion of the Attorney General to Mr. Aubrey S. Tomlinson, Jr., Attorney for Franklin County, 57 N.C.A.G. 51 (1988).
Monies collected by a city from motorists who violate its ordinance prohibiting overtime parking do not constitute a penalty for a breach of a State penal law, and such "clear proceeds" need, therefore, not be used for the county schools pursuant to this section but may be kept by the city. See opinion of Attorney General to The Honorable C. Colon Willoughy, Jr., District Attorney, Tenth Judicial District, 1997 N.C.A.G. 58 (9/16/97).
Disposition of Proceeds of Environmental Civil Penalties. - The proceeds of environmental civil penalties controlled by this section, which were collected from offending local school administrative units before September 1, 1997, may not be returned to the offending local units but rather should be deposited into the General Fund. The proceeds of environmental civil penalties controlled by this section which are collected from offending local school administrative units on or after September 1, 1997, may not be returned to the offending local units. However, in compliance with G.S. 115C-457.1 et seq., these funds should be remitted to the Civil Penalty and Forfeiture Fund, transferred to the State School Technology Fund, and allocated to all eligible local school administrative units, except the offending unit, on the basis of average daily membership. See opinion of Attorney General to Richard Whisnant, General Counsel Department of Environment, Health & Natural Resources, 1997 N.C.A.G. 65 (11/4/97).
Counties do not have a sound legal basis for contesting the action of the United States Attorney in confiscating drug related property where all aspects of the investigation, search, arrest and seizure are handled by State law enforcement officials and all criminal charges are in State court. Where federal agents participate in the investigation, arrest or seizure the county has no legal standing. See opinion of the Attorney General to Mr. Aubrey S. Tomlinson, Jr., Attorney for Franklin County, 57 N.C.A.G. 51 (1988).