AGENDA #5a

 

MEMORANDUM

 

 

TO:                  Mayor and Town Council

                       

FROM:            W. Calvin Horton, Town Manager

Ralph D. Karpinos, Town Attorney

 

SUBJECT:       Invitation to Participate in Litigation to Recover Utility Franchise Tax Revenues

 

DATE:             January 27, 2003

 

 

Earlier this month, we received the attached communication from the law firm representing some municipalities and counties that have filed suit to recover utility franchise tax revenues withheld and used by the State.

 

We understand from recent newspaper reports that the Raleigh City Council has voted against participating in the litigation and that the Wake County Commissioners have joined the lawsuit.

 

Also attached is our previous report on this issue and on the legislation that was enacted last year clarifying that these funds are local funds. 

 

In light of the information contained in the previous memorandum and attachments thereto, we continue to recommend that no action be taken at this time to join the pending litigation.  A draft resolution has been prepared for the Council’s consideration in the event the Council chooses to join the litigation.

 

ATTACHMENTS

 

  1. Memorandum from Boyce and Isley, PLLC (p. 2).
  2. September 23, 2002 Memorandum to Town Council (with attachments) (p. 8).
  3. Draft Resolution (p. 34).

 

 

 

RESOLUTION

 

______________________BOARD OF COMMISSIONERS AUTHORIZING A LAWSUIT TO RECOVER REIMBURSEMENT AND RECEIPT OF REVENUE DUE THE COUNTY/CITY/TOWN OF _____________________ BEING ILLEGALLY WITHHELD BY THE STATE OF NORTH CAROLINA

 

WHEREAS, the 641 towns, cities and counties of North Carolina have long depended on tax revenues to which by law they are entitled upon collection by the Secretary of Revenue, and the General Assembly until now has historically held local governments harmless by appropriated reimbursement when one or more local revenue sources is diminished or eliminated; and

 

WHEREAS, local government revenues for FY 2001-2002 were withheld illegally for FY 2001-2002 by the Secretary of Revenue and it appears the Governor will order the Secretary to withhold FY 2002-2003 local revenues due to be paid beginning g September 215, 2002, and otherwise; and

 

WHEREAS, no administrative remedy exists to correct the illegal conversion of the local revenues and a genuine controversy exists about proper interpretation of the law as to ownership of the local tax revenues, and enactment of the pending clarifying legislation favoring local governments will likely not be enacted; and

 

WHEREAS, the General Court of Justice is the sole, proper and independent branch of government to make a final legal determination of the rights of the respective parties.

 

NOW, THEREFORE, BE IT RESOLVED that _____________hereby authorizes its Attorney to retain Boyce & Isley PLLC, of Raleigh, North Carolina at a cost not to exceed $1,000 with all other fees, costs and expenses of litigation, if any, paid on a contingency basis not to exceed fifteen percent (25% of any total monetary recovery by settlement or judgment or as may be ordered by the Court.  Outside counsel will agree to prosecute a civil action in Wake County Superior Court to have declared the legal rights of local government to recover past tax revenues and reimbursements withheld and to enjoin withholding of future tax revenues as above set forth.

 

ADOPTED this the _______day of ____________, 2003.

 

                                                                        ______________________________________

                                                                        ___________________, Chairman

                                                                        ___________________Board of Commissioners

 

ATTACHMENT 3

 

A RESOLUTION AUTHORIZING A LAWSUIT TO RECOVER REIMBURSEMENT AND RECEIPT OF REVENUE DUE THE TOWN OF CHAPEL HILL BEING WITHHELD BY THE STATE OF NORTH CAROLINA (2003-01-27/R-10)

 

WHEREAS, the 641 towns, cities and counties of North Carolina have long depended on tax revenues to which by law they are entitled upon collection by the Secretary of Revenue, and the General Assembly until now has historically held local governments harmless by appropriated reimbursement when one or more local revenue sources is diminished or eliminated; and

 

WHEREAS, local government revenues for FY 2001-2002 were withheld for FY 2001-2002 by the Secretary of Revenue; and

 

WHEREAS, no administrative remedy exists to correct the unlawful conversion of the local revenues and a genuine controversy exists about proper interpretation of the law as to ownership of the local tax revenues; and

 

WHEREAS, the General Court of Justice is the sole, proper and independent branch of government to make a final legal determination of the rights of the respective parties;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby authorizes its Attorney to retain Boyce & Isley PLLC, of Raleigh, North Carolina at a cost not to exceed $1,000 with all other fees, costs and expenses of litigation, if any, paid on a contingency basis not to exceed fifteen percent (25% of any total monetary recovery by settlement or judgment or as may be ordered by the Court).  Outside counsel will agree to prosecute a civil action in Wake County Superior Court to have declared the legal rights of local government to recover past tax revenues and reimbursements withheld and to enjoin withholding of future tax revenues as above set forth.

 

This the 27th day of January, 2003.