Eligibility of Town of Midland to Receive Powell Bill Funds and Other State Tax Reimbursements

Re: Advisory Opinion: Eligibility of Town of Midland to Receive Powell Bill Funds and Other State Tax Reimbursements; N.C.G.S. § 136-41.2(c)

Dear Mr. Burgner:

This will respond to your letter dated June 27, 2001, addressed to Special Deputy Attorney General George Boylan in the Revenue Section of the Attorney General’s Office. We apologize for the delay in our response. Robert Crawford represents the Department of Transportation (“DOT”) and is familiar with the State Street-aid Allocation Law, commonly referred to as the “Powell Bill” Program (N.C.G.S. §§ 136-41.1 – 41.3). Analysis of these statutes seem most pertinent to your inquiry.

Under the Powell Bill Program, the North Carolina Department of Transportation is required to pay from the Highway Fund an annual allocation to all active and qualifying municipalities a sum equal to 1-3/4 cents on each taxed gallon of motor fuel and to be paid on or before October 1. The allocations are to be used for maintaining, repairing, constructing, reconstructing or widening of any street or public thoroughfare.

You have requested, as counsel for the Town of Midland (incorporated November 7, 2000), an opinion whether Midland’s provision of solid waste collection service for half the fiscal year, from January 1, 2002, through June 30, 2002, would be sufficient to satisfy as one of the four municipal services required to be provided under N.C.G.S. § 136-41.2(c) in order to qualify for Powell Bill funds and, in turn, qualify for various other tax reimbursements from the State of North Carolina. The Powell Bill statute is referenced by statutes providing reimbursements for Excise Taxes (N.C.G.S. § 105-113.82(h)), Franchise Taxes (N.C.G.S. § 105-116.1(e)), Sales and Use Taxes (N.C.G.S. § 105472(d)), and Supplemental Sales and Use Taxes (N.C.G.S. §§ 105-486(d), 501). Each of those tax statutes states that “No municipality may receive funds under this section if it was incorporated with an effective date of on or after January 1, 2000, and is disqualified from receiving funds under G.S. 136-41.2.”

Michael R. Burger August 27, 2001 Page Two

In short, a municipality may not receive these tax reimbursements unless it is qualified to receive Powell Bill funds. In order to be eligible to receive Powell Bill funds under N.C.G.S. § 13641.2, a municipality must show:

(1)

that it has conducted the most recent election required by its charter or general law;

(2)

that it has levied for the current fiscal year an ad valorem tax of at least $.05 per $100 valuation on all taxable property and collected at least 50% of the ad valorem tax for the previous fiscal year;

(3)

that it has formally adopted a budget ordinance in compliance with state municipal law showing revenue from all sources; and

(4)

for those municipalities incorporated after January 1, 2000, that “funds have been appropriated” for at least four of eight designated municipal services (police protection, fire protection, solid waste disposal or collection, water distribution, street maintenance, street construction or right of way acquisition, street lighting, zoning).

This fourth requirement was added by the General Assembly in 1999 with the enactment of “An Act to Revise the Municipal Incorporation Process So As To Provide More Scrutiny” (S.L. 1999-458, s. 5).

You correctly point out that N.C.G.S. § 136-41.2(c) does not establish any specifications for such municipal services, such as, for how long or to what extent those services must have been available. The Town of Midland anticipates that solid waste services will be provided to its citizens on or about January 1, 2002. Because the service is only provided for half the fiscal year, and out of an abundance of caution, you have advised the Town to pursue other options for fulfilling the fourth required service.

As a general rule of statutory construction, a statute must be construed as written. Where the language of a statute is clear and unambiguous, it must be given its plain and definite meaning. A court is without power to superimpose provisions not contained therein. Union Carbide Corp. v. Offerman, 351 N.C. 310, 526 S.E.2d 167 (2000). N.C.G.S. § 136-41.2(c) is plain and unambiguous; only the appropriation of funds is required. Accordingly, it is our opinion that the appropriation of funds in a municipality’s budget is all that is necessary under the fourth requirement of N.C.G.S. § 136-41.2. Therefore, Midland’s budgeting for solid waste services beginning January 1, 2002, is sufficient to satisfy as one of the designated services under N.C.G.S. § 136-41.2(c).

Michael R. Burgner August 27, 2001 Page Three

In further support of this conclusion, it is also a general rule of statutory construction that the interpretation of a statute given by the agency charged with carrying it out is entitled to great weight. Frye Regional Medical Center, Inc. v. Hunt, 350 N.C. 39, 510 S.E.2d 159 (1999). DOT is responsible for carrying out the provisions of N.C.G.S. § 136-41.1 et seq. DOT’s interpretation is that budgetary appropriation is sufficient to meet the requirements for eligibility to receive Powell Bill funds. We are advised by Betsy Williams, the DOT Powell Bill Program manager, that the Town of Midland has qualified for receipt of Powell Bill funds in 2001. In its certified application received by DOT on July 18, 2001, the Town of Midland relied upon the appropriation of funds for fire protection, solid waste collection and disposal, street maintenance, and zoning. DOT accepted the representation that the funds for those services have been appropriated.

The purpose of the requirements for eligibility to receive Powell Bill funds are to ensure that municipalities budget for and provide for taxes for certain minimum governmental services in the fiscal year in which the motor fuel tax funds are received. See, Opinion of Attorney General to Town of Stallings, 46 N.C.A.G. 17 (1976). You have stated that it is your opinion that the law was enacted to prevent municipalities from receiving state monetary benefits without providing a corresponding benefit to their citizenry. We concur with your opinion. We also believe our interpretation is consistent with the intent of the General Assembly as evidenced in the plain wording of N.C.G.S. § 136-41.2 and the 1999 amendment. The intent of the legislature controls the interpretation of a statute. Brown v. Flowe, 349 N.C. 520, 507 S.E.2d 894 (1998). Midland’s efforts to provide the required services through its budget process, albeit for half the fiscal year, satisfies the purposes of the law.

In summary, the Town of Midland has properly qualified for the receipt of Powell Bill funds by budgeting for four municipal services. Therefore, nothing else appearing, the Town of Midland also qualifies for reimbursements from the State of North Carolina for excise, franchise, and sales and use taxes.

We trust that this advisory opinion will be helpful to you. Please call Robert Crawford if you would like to discuss this matter further.

Sincerely,

Reginald L. Watkins Senior Deputy Attorney General Civil Division

Robert O. Crawford, III

Special Deputy Attorney General

Transportation Section #42376