Can a local North Carolina school board levy taxes on its own to fund its schools?

Plain-English summary

The Superintendent of Edenton-Chowan Schools asked the AG whether a local school administrative unit could levy taxes to fund its own schools independent of the county. Assistant Attorney General Laura E. Crumpler answered that it could, but only if the General Assembly granted the authority through one of two constitutional paths.

The starting point is the actual North Carolina school finance structure. Public schools are funded primarily by the State (which pays most teacher salaries and many other major operating costs) and the counties (which fund capital projects, supplementary local programs, and the operating costs the State does not cover). Counties have express statutory authority to levy taxes for these purposes under N.C.G.S. § 153A-149. Local school administrative units, by contrast, do not have inherent taxing power. The Constitution puts the taxing power in the legislative branch, and the legislature has not (in the default arrangement) delegated taxing power directly to school boards.

The constitutional permission for delegation runs through two specific clauses.

Article IX, Sec. 2(2) lets the General Assembly "assign to units of local government such responsibility for the financial support of the free public schools as it may deem appropriate." That is the general grant of authority to make local governments responsible for school funding.

Article V, Sec. 2(5) sets the constitutional rules for any local property tax: the General Assembly shall not authorize a unit of local government (county, city, town, special district, or other unit) to levy taxes on property "except for purposes authorized by general law uniformly applicable throughout the State, unless the tax is approved by a majority of the qualified voters of the unit who vote thereon."

Reading those two clauses together: the General Assembly can authorize a local school administrative unit to levy taxes, but the authorization must come either through (a) a general law that applies the same way to all comparable units statewide, or (b) a local act subject to a voter referendum.

The DeLoatch v. Beamon case from 1960 supplies the underlying principle. The taxing power "rests exclusively in the legislative branch of the governments." A school board cannot create taxing authority for itself; only the General Assembly can grant it. But the General Assembly can delegate that authority to school boards just as it has delegated it to counties.

What this opinion means practically for Edenton-Chowan or any other local school administrative unit asking the same question: you cannot just decide on your own to start levying taxes. You need either a general law (the same general taxing authority granted to all school administrative units uniformly) or a local act passed by the General Assembly specifically for your district, with a voter referendum to ratify it. Without one of those, school taxing authority does not exist.

Currency note

This opinion was issued in 1990. 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. The constitutional framework remains essentially unchanged; Article V, Sec. 2(5) and Article IX, Sec. 2 still govern. North Carolina's school finance system has been the subject of major litigation since 1990 (the Leandro line of cases on the State's constitutional duty to provide a sound basic education) and ongoing legislative reform. Specific local school district taxing authority, where it exists, depends on the particular statute or local act for that district.

Background and statutory framework

North Carolina has a centralized school finance system compared to many other states. State funding covers a high percentage of total K-12 costs, and local funding flows primarily through counties rather than directly through school boards. The Phay treatise the AG cited (Education Law in North Carolina) explains the structural reasons: North Carolina treats counties as agents of state government for service-delivery purposes, and that pattern carried over into school finance.

The county-based local funding pattern has practical consequences. School boards have to negotiate with county commissioners for their local share of funding, and disagreement over the local school budget is one of the recurring tensions in county government. Some school superintendents and boards have at various times argued for direct school district taxing authority to break out of that negotiation structure. The 1990 opinion answers them: the General Assembly has the constitutional power to grant that authority, but until it does, school boards have to work through their county.

The two constitutional paths in Article V, Sec. 2(5) (general law or voter-approved local act) reflect a deliberate constitutional choice to require some kind of accountability for new local taxing authority. A general law applies uniformly statewide and is subject to the political accountability of statewide legislators. A local act subject to a voter referendum involves direct democratic approval by the affected voters. Either way, the people taxed have meaningful input into whether the tax exists at all.

The opinion did not address how an existing supplementary local school tax (some counties had voter-approved school supplemental taxes) related to the framework. Those taxes are typically levied by the county on behalf of the school administrative unit, with the school board's recommendation but the county's formal action. The opinion's framework would treat that as county taxing authority under § 153A-149, not as direct school board taxing authority.

The Leandro litigation that began in the 1990s and continues today addresses a different aspect of school finance: the State's constitutional duty to ensure that every child receives a sound basic education. That litigation has been about the adequacy of State funding, not about local taxing authority. The AG opinion's framework on local taxing authority remains the analytical starting point for that question.

Common questions

Could the General Assembly authorize a school administrative unit to levy a sales tax or income tax instead of a property tax?

Article V, Sec. 2(5) is specifically about property taxes. Other types of taxes would be governed by other constitutional provisions. The General Assembly's authority to authorize local sales taxes (for example) is generally broader than its authority for local property taxes.

Could a county set up a local school district with its own taxing authority through a charter or interlocal agreement?

A county cannot create taxing authority that does not exist in state law. Any new taxing authority for a school district has to come from the General Assembly.

Did this opinion say anything about the existing supplementary school taxes some counties had?

No, those existing taxes were not before the AG. The framework in the opinion would generally support voter-approved local supplementary school taxes, since they typically go through the county under § 153A-149 with voter approval per the constitutional rule.

Could the General Assembly enact a general statewide school administrative unit taxing statute today?

Constitutionally, yes. Article IX, Sec. 2(2) and Article V, Sec. 2(5) authorize that path. Whether it would be politically achievable is a different question.

What happens if a school board tries to levy a tax without statutory authority?

The tax would be void as ultra vires. A taxpayer who paid it could recover (or refuse to pay), and the school board would have no enforcement remedy. School boards do not have inherent taxing power and cannot pretend they do.

Citations

• N.C. Constitution, Article V, Sec. 2(5)
• N.C. Constitution, Article IX, Sec. 2 and Sec. 2(2)
• N.C.G.S. § 153A-149
• DeLoatch v. Beamon, 252 N.C. 754, 114 S.E.2d 711 (1960)
• 1 Phay, EDUCATION LAW IN NORTH CAROLINA, 4-1 (1988)

Source

• Landing page: https://ncdoj.gov/opinions/education-taxation/

Original opinion text

Requested By: John B. Dunn, Superintendent, Edenton-Chowan Schools

Questions: Under the North Carolina Constitution, would a local school board be prohibited from levying taxes in support of its schools?

Conclusion: No, assuming there is a legislative grant of such power in accordance with the requirements of our Constitution.

The current funding structure in North Carolina is one in which public school financing rests primarily with the State. 1 Phay, EDUCATION LAW IN NORTH CAROLINA, 4-1 (1988). The local responsibility for financing the schools has traditionally been vested in the counties "which under North Carolina system of government serve primarily as agents of the state government in administering services that must be made available uniformly to all people in the state." Id. To that end, counties have used their tax-levying power to discharge their financing responsibilities and to supplement the funding by the State. Id. See N.C. Constitution Article IX Section 2.

The question has arisen whether a local school system may levy taxes and therefore support independently its schools. As noted, the current school funding structure in North Carolina provides for schools to be funded jointly by the State and the County. To this end, counties are given by statute the power to levy taxes. G.S. § 153A-149. Nevertheless, "the power to levy taxes rests exclusively in the legislative branch of the governments" DeLoatch v. Beamon, 252 N.C. 754, 757, 114 S.E.2d 711 (1960), and we believe the legislature may lawfully delegate its power to tax to another unit of government, including a local school administrative unit.

Article IX, Sec 2(2) of our State Constitution provides, inter alia, that,

The General Assembly may assign to units of local government such responsibility for the financial support of the free public schools as it may deem appropriate.

In addition, subsection (5) of Article V, Section 2 provides that

The General Assembly shall not authorize any county, city or town, special district, or other unit of local government to levy taxes on property, except for purposes authorized by general law uniformly applicable throughout the State, unless the tax is approved by a majority of the qualified voters of the unit who vote thereon.

It seems clear that our Constitution contemplates that the General Assembly may authorize units of government to levy property taxes, but unless such authority is conferred "by general law uniformly applicable throughout the State," it must be approved by a vote of the people affected by the tax. Thus, the legislature may by statute, consistently with the Constitution, provide that a local school administrative unit may levy taxes at the local level but such taxing authority must be conferred either by a general law, applicable statewide, or by local act subject to a vote of those persons affected.

Lacy H. Thornburg, Attorney General
Laura E. Crumpler, Assistant Attorney General