Could the Avery County Sheriff's Department hold and spend voluntary cash 'gifts' from arrested defendants in a separate 'Drug Fund' outside the county budget, and could the county finance officer cut the sheriff's regular appropriation by the amount in that fund?

Plain-English summary

Avery County's sheriff asked whether the county finance officer could reduce the department's annual appropriation by cash placed in a separate “Drug Fund.” The money came as voluntary, unconditional payments from people arrested for drug offenses and awaiting trial. The sheriff also asked whether the appropriation could be reduced by the value of property received through state or federal forfeiture laws.

The AG strongly discouraged the cash-gift practice. Although the opinion said it did not violate criminal law, it had a “strong appearance of impropriety” and could be understood as secret plea bargaining or as compromising impartial decisions. The office recommended discontinuing it in favor of court-ordered forfeitures or recorded plea agreements for restitution of extraordinary law-enforcement costs.

If the sheriff continued accepting the money, G.S. 159-32 required it to be deposited with the county finance officer or in an official depository under that officer's supervision. A finance or budget officer could not unilaterally reduce the sheriff's appropriation when the county received unanticipated revenue. Only the governing board could change appropriations by formal budget amendment under G.S. 159-15. The department also could not spend the new money without the board's approval through a budget amendment. If a donor restricted a gift's use, the board had to appropriate it for that use or return it.

The opinion did not answer the forfeiture question in this letter. It referred the sheriff to an enclosed February 1992 advisory letter, whose conclusions are not reproduced here.

Currency note

This opinion applies the fiscal-control statutes as discussed in 1993. Check current law and the actual source and terms of funds before acting on a present sheriff's account.

Background and statutory framework

The letter explains why an off-budget departmental account did not avoid county fiscal controls. The deposit rule covers money received by a local government officer or employee; the AG said it reasonably included unconditional cash gifts received by the sheriff for his department. After deposit, the finance officer must disburse funds in compliance with the budget ordinance.

The opinion distinguishes who controls appropriations from who handles the money. Receipt of extra revenue does not authorize the finance officer to cut a department's appropriation, and it does not authorize the sheriff to spend outside the adopted budget. The governing board must approve an amendment for those changes.

Common questions

Could the finance officer cut the sheriff's appropriation by the Drug Fund's cash balance?

No. The opinion says a finance or budget officer has no unilateral authority to reduce an annual appropriation because of unanticipated revenue. The governing board must make an appropriation change by formal budget amendment.

Could the sheriff keep and spend the cash through a separate account?

The AG said cash accepted for the department had to be deposited through the county fiscal system. Spending unanticipated revenue required governing-board approval through a budget amendment.

Was accepting cash from pending defendants endorsed by the AG?

No. The opinion said the practice did not violate criminal law but had a strong appearance of impropriety and urged the sheriff to discontinue it.

What did this opinion decide about forfeiture proceeds?

It referred the sheriff to an enclosed February 1992 advisory letter addressing that question. The letter here does not state the earlier opinion's conclusions.

Citations

• N.C. Gen. Stat. § 159-8(a) (no expenditure outside budget ordinance)
• N.C. Gen. Stat. § 159-15 (budget amendment by governing board)
• N.C. Gen. Stat. § 159-25(a)(1), (2) (finance officer duties)
• N.C. Gen. Stat. § 159-32 (deposit requirement)

Source

• Landing page: https://ncdoj.gov/opinions/cash-gifts-from-criminal-defendants-to-local-law-enforcement-agencies-propriety-and-fiscal-control/

Original opinion text

April 29, 1993

Sheriff Edward E. Gwyn
Avery County Sheriff's Department
Post Office Box 426
Newland, North Carolina 28657

Re: Advisory Opinion: Cash Gifts from Criminal Defendants to Local Law Enforcement Agencies; Propriety and Fiscal Control

Dear Sheriff Gwyn:

You state the Avery County Sheriff's Department has created and maintains a "Drug Fund" account into which is deposited money received from persons arrested by its deputies and awaiting trial for Controlled Substances Act violations. You further state the money is not paid over as part of plea bargains or under court orders but rather is provided voluntarily on the initiative of the alleged violators without any conditions attached to its use. The "Drug Fund" account is maintained separate and apart from funds appropriated to the Sheriff's Department by its governing board. We understand "Drug Fund" moneys are expended under the Sheriff's direct supervision only for official purposes which directly enhance the department's ability to perform its law enforcement duties. You ask whether Avery County's finance officer unilaterally may reduce the Sheriff's Department's annual appropriations by the value of the cash deposited into the "Drug Fund". You also ask whether the Sheriff's Department's annual appropriations may be reduced by the value of property it receives under state and federal forfeiture laws.

Before responding to your questions, the propriety of a law enforcement agency accepting money outside the judicial process from persons its officers have arrested and who are awaiting disposition of criminal charges should be addressed briefly. Although the practice does not violate the criminal law, it has a strong appearance of impropriety. Even if an alleged violator initiates the offer and provides the money without promise of any reciprocal consideration from the law enforcement agency, district attorney's office or court involved, the practice could be interpreted as improper or secret plea bargaining. The practice also could be seen as inhibiting those agencies' abilities to exercise impartial judgment in the violator's case and thereby erode public confidence in the entire judicial system. The Attorney General's Office does not support the practice and ferverently suggests it be discontinued in favor of court ordered forfeitures or recorded plea agreements providing for restitution of extraordinary costs incurred by law enforcement agencies.

Assuming you desire to continue the "Drug Fund" account, the first question that arises is whether it is appropriate for a local law enforcement agency to establish, maintain and make disbursements from such an account outside the uniform system of budget adoption, administration and fiscal control provided by the Local Government Budget and Fiscal Control Act (hereinafter "Act"). We think not. The Act requires "all taxes and other moneys collected or received by an officer or employee of a local government . . . [to] be deposited in accordance with this section." G.S. 159-32. The scope of the statute's requirement reasonably can be interpreted to include unconditional gifts of cash similar to those now being deposited in the "Drug Fund". For purposes of the Act, sheriffs are considered officials or employees of local government and are subject to the requirements of the Act. (See letter of April 24, 1980 from Douglas A. Johnston, Assistant Attorney General to Sheriff of Moore County.) Therefore, where a sheriff accepts on behalf of his department an unconditional gift of cash, he must deposit it "with the finance officer or in an official depository" under the supervision of the finance officer. G.S. 159-32.

Once money is deposited in accordance with the Act, a local government finance officer has the power and duty to "keep the account" and "disburse all funds . . . in strict compliance with [the Act] . . . [and] the budget ordinance". G.S. 159-25(a)(1) and (2). Although a governing board "by appropriate resolution or ordinance may authorize the budget officer to transfer moneys from one appropriation to another within the same fund", (G.S. 159-15) there is no statutory authority for a budget officer or finance officer unilaterally to reduce an agency's annual appropriations based upon the receipt of unanticipated revenue. Only the local governing board has authority to reduce or increase appropriations to a local government agency and such action must be accomplished by formal amendment to the budget ordinance. See G.S. 159-15.

While a local finance officer has no independent authority to reduce an agency's annual appropriations, an agency does not have authority to expend unanticipated revenue without with the approval of its governing board. G.S. 159-8(a) provides "no local government . . . may expend any moneys, regardless of their source . . . , except in accordance with a budget ordinance . . . ." Therefore, where a local law enforcement agency receives unanticipated revenue, it must obtain approval from its governing board, via amendment to its budget, to expend the funds. If the revenue is received with restrictions or conditions placed upon its use by the provider (e.g. to purchase law enforcement equipment or to be used as drug "buy money"), the local governing board must appropriate it for the specified uses or return it.

The question you ask concerning the authority of local governing boards to reduce annual appropriations to a law enforcement agency based upon receipt of proceeds from equitable sharing of federally forfeited property, state judicial forfeitures and state controlled substances excise tax assessments previously has been addressed fully in an advisory letter this office provided to all local law enforcement agency heads in February, 1992. A copy of the advisory letter is enclosed for your review and consideration.

The Treasurer's Office concurs in the legal conclusions set forth in this advisory opinion in so far as they involve matters within the Treasurer's statutory authority. Should you need further clarification of the opinions provided or have additional questions concerning the fiscal control of asset forfeiture proceeds, you may contact me or Assistant Attorney General Doug Johnston in the Treasurer's Office.

Edwin M. Speas, Jr.
Senior Deputy Attorney General

W. Dale Talbert
Special Deputy Attorney General