August 16, 1993
C. Ronald Aycock Executive Director North Carolina Association of County Commissioners
P. O. Box 1488 Raleigh, N.C. 27602-1488
Re: Advisory Opinion; Participation in the State’s Purchase and Contract System
Dear Ron:
You have asked whether the North Carolina Association of County Commissioners (the Association) is entitled to participate in the State’s purchase and contract system. It is our opinion that it is.
N.C.G.S. §143-49(6) provides that the Secretary of the Department of Administration shall make available to ". . . governmental entities and other subdivisions of the State and public agencies thereof in the expenditure of public funds, the services of the [Department] in the purchases of materials, supplies, and equipment . . . ." (emphasis added).
The Association is an unincorporated, nonpartisan federation of county governments. The Association’s constitution provides that the 100 counties themselves comprise the Association’s membership. State statutes have recognized the Association as an instrumentality wholly owned by the counties of the State by specifically naming it in legislation affecting the counties and by granting it privileges afforded only to political subdivisions. For example, the Association is exempt from State sales tax, its employees are covered under the North Carolina Local Government Employees’ Retirement System and for purposes of unemployment insurance, the Association is treated as "an instrumentality wholly owned by a political subdivision of the State." N.C.G.S. §96-9(a)(4). Further, the Association is exempt from federal income tax under Section 115 of the Code on the grounds that all income of the Association will accrue to the State or a political subdivision thereof. Over ninety-eight percent of the Association’s revenues come from fees from member counties. (See correspondence between Riddle & Fortner, CPA and the Internal Revenue Service, attached).
Based on the foregoing, it is our opinion that the Association is a governmental entity or subdivision of the State for purposes of N.C.G.S. §143-49(6) and is entitled to use the State purchase and contract system. The Association is responsible for insuring that only public funds are used to make purchases under the State purchase and contract system.
If you have further questions, please do not hesitate to call.
John McArthur, Chief Counsel