NC NC AG Advisory Opinion (1978-01-19) 1978-01-19

Can a North Carolina county spend its money on advertising the county's advantages (to attract tourists, businesses, and industry), and can it hand a chunk of that money over to the local Chamber of Commerce to do the actual advertising? Does it matter whether the money is property tax revenue or non-tax revenue?

Short answer: Yes for both, but with significant limits. The 1978 AG concluded that under G.S. 153A-149(d) and Chapter 158, Article 1, a county may levy a property tax for advertising / local development only with voter approval, and the levy amount is capped by G.S. 158-1. Non-tax funds may be appropriated for advertising and local development without a vote, so long as no other statute restricts their use. Funds may be allocated to a Chamber of Commerce under G.S. 158-7.2 only if the county takes proper safeguards over the Chamber's expenditures; a county cannot gift or donate public funds to private organizations.

Disclaimer: This is an official North Carolina Attorney General advisory opinion. AG opinions are persuasive authority but not binding precedent like a court ruling. This summary is for informational purposes only and is not legal advice. Consult a licensed North Carolina attorney for advice on your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official AG opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

Plain-English summary

The Surry County Attorney asked the AG two practical questions about county-level economic development advertising:

Can a county legally spend money to advertise the advantages of the county? Does it matter whether the money comes from taxes or from non-tax sources?
Can the county allocate money to the Mount Airy Chamber of Commerce so the Chamber can print and distribute brochures promoting industry, business, and tourism in the county?

The 1978 AG answered yes to both, but built two important limits into the answer.

The property tax question. G.S. 153A-149 sets out the purposes for which a county may levy property taxes without a vote of the people. Advertising is not on that list. So a property tax levy whose purpose is local-development advertising must take the G.S. 153A-149(d) route, which requires an approving vote by the voters of the county. Once voter approval is in hand, the amount of the levy is governed by G.S. 158-1.

This is the gating point. A county that wants to fund advertising from property tax revenue cannot do so by simple board action; it must put the question to the voters. The AG was clear on this: because G.S. 153A-149(b) and (c) (the no-vote lists) do not include local development, the (d) catch-all applies, which mandates voter approval. The General Assembly's choice to leave advertising off the no-vote list was the dispositive textual fact.

The non-tax revenue question. G.S. 158-2 authorizes the use of non-tax funds for local development. G.S. 158-7.1 separately authorizes the appropriation of revenues other than tax funds, when the use of those revenues is not otherwise restricted by law. Non-tax funds (general revenues, fees, interest income, grants not earmarked, and so on) can therefore be used for advertising without a referendum, subject to any specific statutory restrictions on the particular source.

The Chamber of Commerce question. Once the funds are properly in the county budget under Chapter 159 (the Local Government Budget and Fiscal Control Act), and either the property tax has been approved by voters or the funds are unrestricted non-tax revenues, the county can allocate the funds to the Chamber of Commerce. The legal authority for that arrangement is G.S. 158-7.2, plus Hormer v. Chamber of Commerce (231 N.C. 440; 235 N.C. 77) and Dennis v. Raleigh (253 N.C. 400).

But the AG added a public-purpose limit. A county cannot make a gift of public money or property to private persons or organizations (citing Strong's NC Index 2d, Municipal Corporations, Vol. 5, p. 615). That means the allocation to the Chamber cannot be a bare transfer; the county has to retain proper safeguards over how the Chamber spends the money to ensure the funds serve the county's local-development purpose, not the Chamber's private interests.

For Surry County, the operational answer was: yes you can fund the Chamber-printed brochure, but the funding source dictates the procedure. Voter approval if you want property tax. No voter approval needed for non-tax funds. Either way, retain oversight of how the Chamber actually spends the money.

Currency note

This opinion was issued in 1978. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. G.S. 153A-149 has been substantially revised since 1978, the list of purposes for which counties may levy property tax without a vote has expanded, and the local development article (Chapter 158) has been the subject of significant litigation including Maready v. City of Winston-Salem, 342 N.C. 708 (1996), and subsequent legislative responses. Anyone advising a county on economic development spending today should rely on current Chapter 153A and 158 text, current local government finance treatises, and recent appellate decisions on the public-purpose doctrine.

Historical context: what the AG concluded

The opinion is a clean exercise in reading two statutory chapters together.

Chapter 153A (the County Property Tax Statute). G.S. 153A-149 is structured as a list-plus-catch-all. Subsections (b) and (c) enumerate specific purposes for which counties may levy property tax without a vote. Subsection (d) provides the catch-all: for any purpose not listed in (b) or (c), the county may levy property tax only with voter approval. The AG worked through the (b) and (c) lists, did not find "advertising" or "local development" on either, and concluded that the (d) route was the only available path for tax-funded advertising. The conclusion follows mechanically from the statutory text.

Chapter 158 (Local Development Authority). G.S. 158-1 caps the amount of tax funds that may be raised for local development, conditional on voter approval. G.S. 158-2 authorizes use of non-tax funds. G.S. 158-7.1 authorizes appropriation of (a) property tax levies under G.S. 153A-149 and (b) revenues other than tax funds when not otherwise restricted by law. G.S. 158-7.2 authorizes allocations to private development organizations (Chambers of Commerce being the paradigmatic example).

The AG read these as a coordinated regime. Property tax for development requires voter approval (per Chapter 153A) and is capped (per G.S. 158-1). Non-tax revenue does not require voter approval (per G.S. 158-2 and 158-7.1) and is subject only to source-specific restrictions. Either funding stream can flow to a Chamber of Commerce (per G.S. 158-7.2), but only with proper safeguards because public funds cannot be donated to private organizations.

The public-purpose doctrine. The cited cases (Hormer, Dennis) are background authorities for the proposition that government allocations to private organizations are permissible when the funds serve a public purpose, and that the government retains a duty to ensure the public-purpose use. The Strong's NC Index citation gives the general rule against gifts of public funds. Together, these point to a structural requirement: the county-Chamber arrangement must be more than a donation; it must be a public-purpose contract with adequate oversight.

The AG does not specify what counts as "proper safeguards." Common practice in such arrangements includes a contractual agreement specifying how the funds will be spent, requirements that the Chamber report expenditures and produce documentation, restrictions on the types of activities funded, and audit rights for the county. The opinion leaves the specifics to the county attorney's drafting.

For a board of county commissioners in 1978, the takeaway was: structure development funding to fit the statute. If you want property tax revenue, schedule a referendum. If you can use non-tax revenue, do so by simple appropriation. Either way, structure the Chamber allocation as an oversight-laden public-purpose arrangement, not a gift.

Common questions

Can a North Carolina county put advertising money in its budget without a referendum?

Yes, if the funds come from non-tax sources. G.S. 158-2 and G.S. 158-7.1 authorize use of non-tax revenue for local development without voter approval. If the county wants to fund advertising from property tax revenue, voter approval is required under G.S. 153A-149(d) and the amount is capped by G.S. 158-1.

Why does property tax for advertising require voter approval but non-tax revenue does not?

Because the General Assembly drew the line that way. G.S. 153A-149 lists the purposes for which a county may levy property tax without a vote, and "advertising" / "local development" is not on the no-vote list. The catch-all in subsection (d) requires voter approval for everything not listed. Non-tax revenue is governed by Chapter 158 directly and does not run through G.S. 153A-149.

Can the county just give money to the Chamber of Commerce?

Not as a bare donation. A county cannot make a gift or donate public funds or property to private persons or organizations (per Strong's NC Index 2d, Municipal Corporations, Vol. 5, p. 615). The allocation must be a public-purpose arrangement under G.S. 158-7.2, structured with appropriate safeguards over how the Chamber spends the money.

What safeguards must the county take?

The opinion does not specify, but the requirement is that the county ensure the funds are spent for the local-development purpose, not for the Chamber's private interests. Practical safeguards typically include a contract specifying eligible expenditures, reporting requirements, and audit rights.

What cases did the AG rely on?

Hormer v. Chamber of Commerce, 231 N.C. 440; 235 N.C. 77, and Dennis v. Raleigh, 253 N.C. 400, on the framework for allocating public funds to private development organizations. The North Carolina rule against gifts of public funds is cited via Strong's NC Index 2d, Municipal Corporations, Vol. 5, p. 615.

What about Chapter 159 procedures?

Chapter 159 is the Local Government Budget and Fiscal Control Act, which governs how counties adopt budgets and appropriate funds. The AG explicitly references Chapter 159 to remind the Surry County Attorney that whatever funds are used must be appropriated through proper budget procedures, on top of the substantive Chapter 153A and Chapter 158 limits.

Background and statutory framework

The opinion engages three coordinated statutory schemes.

County property tax authority. G.S. 153A-149 organizes county property tax authority. Subsections (b) and (c) enumerate purposes for which counties may levy without a vote. Subsection (d) is the catch-all requiring voter approval for any purpose not enumerated. Because local-development advertising is not enumerated, the catch-all controls.

Local development authority. Chapter 158, Article 1 governs county and municipal local-development activities. G.S. 158-1 caps the tax amount, conditional on voter approval. G.S. 158-2 authorizes use of non-tax funds. G.S. 158-7.1 organizes the appropriation authority. G.S. 158-7.2 authorizes allocations to private development organizations.

Budget and fiscal control. Chapter 159 (Local Government Budget and Fiscal Control Act) is the procedural overlay. All county appropriations must comply with Chapter 159's budget adoption and execution procedures, regardless of the substantive funding authority.

Public purpose doctrine. Hormer v. Chamber of Commerce, Dennis v. Raleigh, and Strong's NC Index 2d treatise material supply the public-purpose constraint and the prohibition against gifts of public funds to private parties.

Citations

G.S. 153A-149
G.S. 153A-149(b)
G.S. 153A-149(c)
G.S. 153A-149(d)
Chapter 158, Article 1
G.S. 158-1
G.S. 158-2
G.S. 158-7.1
G.S. 158-7.2
Chapter 159 of the General Statutes (Local Government Budget and Fiscal Control Act)
Hormer v. Chamber of Commerce, 231 N.C. 440; 235 N.C. 77
Dennis v. Raleigh, 253 N.C. 400
Strong's NC Index 2d, Municipal Corporations, Vol. 5, p. 615

Source

Landing page: https://ncdoj.gov/opinions/counties-and-municipalities-advertising-use-of-tax-and-non-tax-funds/

Original opinion text

Requested By: Fred Folger, Jr.
Surry County Attorney

Questions:

(1) Does a county have statutory authority to advertise the advantages of the county by the use of tax or non-tax funds?
(2) Does the county have authority to allocate funds to the Mount Airy Chamber of Commerce for the purpose of printing and distributing a brochure designed to attract and promote industry, business and tourism in the County?

Conclusions:

(1) Yes, but only within the limitations discussed below.
(2) Yes, but only within the limitations discussed below.

G.S. 153A-149 sets forth those purposes for which a county may levy property taxes without a vote of the people. Advertising is not listed therein.

G.S. 158-1 specifies the amount of tax funds which may be used to promote local development in the county, but no such tax funds shall be raised or appropriated without approval at an election by the voters of the county.

G.S. 158-7.1 authorizes a county to appropriate funds for local development, as specified therein by levy of a property tax pursuant to G.S. 153A-149, and by allocation of other revenues which use is not otherwise restricted by law.

Since G.S. 153A-149(b) or (c) does not include local development within those purposes listed, it is our view that G.S. 153A-149(d) would be controlling, and any tax levy for such purpose of advertising the advantages of the county pursuant to Article 1 of Chapter 158 of the General Statutes, would require an approving vote of the people as provided for in G.S. 153A-149(d). The amount of the levy would be controlled by G.S. 158-1.

G.S. 158-2 authorized the use of funds from non-tax sources, and G.S. 158-7.1 authorizes the use of revenues other than tax funds which use is not otherwise restricted by law.

Assuming the funds have been properly appropriated in the budget pursuant to Chapter 159 of the General Statutes, and that the funds have been raised by taxation after approval of the voters of the county, or funds are non-tax funds when use is not otherwise restricted by law, then such funds could be allocated to the Chamber of Commerce if the county takes the proper safeguards as to the expenditures of such funds by the Chamber of Commerce. See Hormer v. Chamber of Commerce, 231 NC 440; 235 NC 77; Dennis v. Raleigh, 253 NC 400; G.S. 158-7.2.

A county cannot make a gift or donate public funds or property to private persons or organizations. See Strong's NC Index 2d, Municipal Corporations, Vol. 5, p.615.

Rufus L. Edmisten
Attorney General

James F. Bullock
Senior Deputy Attorney General