White Papers and Policy Briefings

OVERVIEW OF ARTICLE 3J CREDIT INCENTIVES
Jeanette Doran
Mar 22nd, 2011

On January 1, 2007, the Tax Credits for Growing Businesses Act (known as Article 3J Credits) replaced the Bill Lee Act as a vehicle for delivering economic tax incentives to chosen North Carolina industries.1 Compared to the largess of Golden LEAF, this incentives scheme has not been a large source of fiscal drain on the State; still, the State perpetuates its practice of meddling with the State’s economy to the detriment of free market principles and the robustness that brings. Read more...


ECONOMIC DEVELOPMENT INCENTIVES—QUESTIONABLE EFFICACY AND CONSTITUTIONAL INFIRMITY
Jeanette Doran
Mar 22nd, 2011

Public debate surrounding the so-called “economic development incentives” has reverberated around the country. These incentives are doled out in a variety of forms, including tax credits, direct cash subsidies and tax exemptions, purportedly designed to stimulate economic development by facilitating location or retention of industry. Economists, attorneys and public officials have long debated the effectiveness of these measures, particularly relative to the cost of incentives. The use of incentives has devolved in to what some consider a tax war with one expert going so far as to describe the incentives competition as a “second Civil War.” Read more...


AN OVERVIEW OF THE GOLDEN LEAF FOUNDATION
Jeanette Doran
Mar 22nd, 2011

How Golden LEAF began and where its funds came from: On November 23, 1998, several states and U.S. territories signed the Master Settlement Agreement with all the major U.S. tobacco corporations in order to settle the actions brought against the corporations for expenses citizens’ use of tobacco products caused the states. North Carolina signed the Master Settlement Agreement thereby settling its lawsuit against tobacco companies in the case of North Carolina v. Philip Morris, Inc., et al. Among other things, under the Master Settlement Agreement, tobacco companies must pay the states a total of $265 billion over a 25-year period to support anti-smoking efforts. Read more...


OVERVIEW OF THE ONE NORTH CAROLINA FUND
Jeanette Doran
Mar 22nd, 2011

Formerly known as the Governor’s Industrial Recruitment Competitiveness Fund, the One North Carolina Fund was created in 2004 to supplement the smorgasbord of economic incentives available at the time. Specifically, it purports to be a “flexible tool” to “achieve uniform regional prosperity” and recruit “high value-added, knowledge-driven industries.” It was first funded with a $20 million appropriation and has historically enjoyed an approximately $10 million recurring annual allotment. Read more...


Memorandum of Law: Response to State Controller McCoy's Memorandum Concerning Interfund Transfer
Jeanette Doran
Mar 15th, 2011

A review of the State Controller’s memorandum dated March 9, 2011, in which he opined that the Governor may transfer funds from the Employment Security Reserve Fund (“ESC Reserve”) without violating the State Constitution reveals the Controller’s memorandum is incomplete and inaccurate. Click the title above to read NCICL's analysis of the Controller’s memorandum. Neither the Governor’s Memorandum of Understanding nor the State Controller’s memorandum offer any specific constitutional or statutory authority for the proposition that the Governor may revise the budget at her whim. No such authority exists.


Memorandum of Law: Budget Transfers
Jeanette Doran
Mar 10th, 2011


Memorandum of Law: Special Objects Clause
Jeanette Doran
Mar 10th, 2011


EQUAL PROTECTION AND THE LAW OF THE LAND IN NORTH CAROLINA
Jeanette Doran
Sep 15th, 2010

On July 4, 1776, fifty-six delegates to the Continental Congress unabashedly signed the Declaration of Independence which proclaimed that in the land of the free and home of the brave, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” This statement is embodied in N.C. Const. Art. I, § 19, which provides: “No person shall be taken, imprisoned, or disseized of his freehold, liberties, or privileges, or outlawed, or exiled, or in any manner deprived of his life, liberty, or property, but by the law of the land. No person shall be denied the equal protection of laws; nor shall any person be subjected to discrimination by the State because of race, color, religion, or national origin.” In general, as the Supreme Court explained more than half a century ago, “The equal protection clause and law of the land clause of the North Carolina Constitution imposes upon law-making bodies the requirement that any legislation classification ‘provide a reasonable means to a legitimate state objective.’” Powe v. Odell, 312 N.C. 410, 412, 322 S.E.2d 762, 763 (1984). The purpose of this memo is to outline the doctrine surrounding this general statement, beginning with equal protection and ending with the law of the land.

(Full PDF attached above).


THE PUBLIC PURPOSE DOCTRINE IN NORTH CAROLINA
Jeanette Doran
Sep 15th, 2010

Chief Justice Stacy once noted in Briggs, “the power to tax only for a public purpose, and not arbitrarily, is one of the chief distinctions between representative government and autocracy; and unless this difference is to be observed, the tyranny of the one, in matters of taxation, may become just as burdensome as the tyranny of the other.” Briggs v. City of Raleigh, 195 N.C. 228, 226, 141 S.E. 597, 600 (1928).

(Full PDF attached above).


TAXPAYER STANDING IN NORTH CAROLINA
Jeanette Doran
Sep 15th, 2010

The gist of any standing issue is “whether the party seeking relief has alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.” In re Appeal of Barbour, 112 N.C. App. 368, 373, 436 S.E.2d 169, 173 (1993) (quoting Stanley v. Dep’t of Conservation and Dev., 284 N.C. 15, 29, 199 S.E.2d 641, 651 (1973)); see also Flast v. Cohen, 392 U.S. 83, 99 (1968). From this general principle stems many rules regarding direct, derivative, municipal, etc. standing, but of particular concern in this memo are those rules surrounding the doctrine generally known as taxpayer standing.

(Full PDF attached above).


UNIFORM TAXATION IN NORTH CAROLINA
Jeanette Doran
Sep 15th, 2010

The North Carolina Constitution has had a provision requiring the Legislature to tax in a uniform manner since 1868. Prior to the adoption of the current Constitution, Article V, Section 3 provided: “Laws shall be passed taxing, by a uniform rule, all moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise . . ..” 1868 N.C. Constitution, Art. V, § 3. That provision has been retained in the current Constitution under Article V, Section 2(2) which states: “No class of property shall be taxed except by uniform rule, and every classification shall be made by general law uniformly applicable in every county, city and town, and other unit of local government.” N.C. CONST. Art. V, § 2(2). Courts have interpreted this provision to mean that a classification made for purposes of taxation “must not be arbitrary, unreasonable or unjust.” Great Atl. & Pac. Tea Co. v. Maxwell, 199 N.C. 433, 440, 154 S.E. 838, 842 (1930). See Smith v. State of North Carolina, 349 N.C. 332, 341, 507 S.E.2d 28, 33 (1998) (explaining that the uniformity rule from the 1868 Constitution was retained and that prior case law still applies to the interpretation of the corresponding provision in the current Constitution).

(Full PDF attached above).


EXCLUSIVE EMOLUMENTS IN NORTH CAROLINA
Jeanette Doran
Sep 5th, 2010

According to N.C. CONST. Art. I, § 31, “No person or set of persons is entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services.” This prohibition has been a part of our State Constitution since 1776, and it requires courts to determine whether a challenged expenditure meets “the fundamental democratic principle: ‘Equal rights and opportunities to all, special privileges to none.’” State v. Felton, 239 N.C. 575, 587, 80 S.E.2d 625, 635 (1954).

(Full PDF attached above).


POLITICAL QUESTION DOCTRINE IN NORTH CAROLINA
Jeanette Doran
Aug 19th, 2010

The political question has often been characterized as one of the most confusing of the justiciability doctrines. ERWIN CHEMERINSKY, CONSTITUTIONAL LAW: PRINCIPLES AND POLICIES 129 (Aspen Publishers 2006). This confusion stems from the fact that the courts often do engage in what would appear to be political matters and also because the most-cited standard for the rules surrounding political question doctrine is woefully difficult to apply. Id. at 129-130.

(Full PDF attached above).


NCICL Helps Protect North Carolinians From Potentially Unconstitutional Legislative Act
Jason Kay
Jul 14th, 2010

Last legislative session, the General Assembly considered the controversial Life Sciences Development Act, which would have created a constitutionally problematic State venture into the biotech start –up market, with taxpayers guaranteeing private investment. Jason Kay, Senior Staff Attorney at NCICL was asked to testify before a legislative committee about the constitutional problems with the Act.


North Carolina Municipal Annexation
Jason Kay
May 1st, 2008

North Carolina's involuntary annexation scheme does not raise constitutional issues, it raises political issues. The political power, vested in the people by the North Carolina Constitution, must be wielded for annexation reform in the legislature, not the courts.