When Monroe City and Union County school systems merged in 1993, did the two separate voter-approved local school taxes collapse into one county-wide tax, and could either tax pay for any school in the merged system?

Plain-English summary

Counsel for the Union County education and commissioners' boards asked what would happen to two voter-approved supplemental school taxes after the Monroe City and Union County school systems merged. The former city system had authority for a tax up to 15 cents per $100 of valuation, and the former county system for one up to seven cents. The merger plan kept both taxes in force, directed the county commissioners to levy both at the same rate no higher than seven cents, and said the proceeds would support the merged school system.

The AG concluded that the two tax districts remained separate. The plan's direction to “levy both taxes” preserved them rather than creating one county-wide tax district. G.S. 115C-68.3 ratified the merger plan and treated it as an act of the General Assembly.

The AG also concluded that either tax could support the merged system as a whole, rather than only schools in its former territory. G.S. 115C-511(c) restricted use of supplemental taxes to purposes voters authorized. The opinion reasoned that each electorate had approved financial support for the school system where its members lived; after merger, that was the single merged system. It did not decide whether a new referendum was required for the merger arrangement.

Currency note

This opinion interprets the merger plan and cited statutes as they stood in 1993. Check the operative plan, tax authorizations, and current law for a present tax decision.

Background and statutory framework

The State Board of Education adopted the plan under G.S. 115C-68.2, effective July 1, 1993. G.S. 115C-67(6) required a merger plan to address whether existing supplemental school taxes would continue. Section 10(a) of this plan said both taxes would remain until changed under Article 36, would support the merged system, and would be levied in equal amounts subject to a seven-cent cap.

The opinion answered two interpretation questions: whether districts merged and where tax proceeds could be spent. Its explanation drew on the plan's wording and its ratification under G.S. 115C-68.3. It did not analyze the procedure for a new referendum or a later alteration of either tax.

Common questions

Did the merger create one county-wide supplemental tax district?

No. The AG read the instruction to “levy both taxes” as keeping both pre-existing tax districts in effect.

Could either tax support schools outside its former district?

Yes. The opinion says both taxes may support the merged school system as a whole and need not be confined to schools within their former boundaries.

Did the AG decide whether voters had to approve a new referendum?

No. The letter addresses the existing districts and use of proceeds under the ratified plan, without answering whether a new vote was required.

Citations

• N.C. Gen. Stat. §§ 115C-67, 115C-68.2, 115C-68.3 (school administrative unit merger procedures)
• N.C. Gen. Stat. §§ 115C-500 et seq. (Article 36, supplemental school tax authority)
• N.C. Gen. Stat. § 115C-511(c) (use of supplemental tax proceeds limited to voter-authorized purposes)

Source

• Landing page: https://ncdoj.gov/opinions/union-county-school-merger-plan-supplemental-taxes/

Original opinion text

• P.O.
• Drawer 399 Monroe, N.C. 28111-0399 Sanford L. Steelman, Jr. Union County Attorney
• P.O.
• Box 1034 Monroe, N.C. 28110

Re: Advisory Opinion; Union County School Merger Plan; Supplemental Taxes; G.S. 115C-67, 115C-68.2, 115C-68.3

Gentlemen:

As counsel for the Union County Board of Education and the Union County Board of Commissioners, you request our opinion about the levy and use of local supplemental taxes to support the newly merged Union County School System.

Under authority of G.S. 115C-68.2, the State Board of Education adopted a plan merging the former Monroe City School System and the former Union County School System effective July 1, 1993. G.S. 115C-68.2 required that merger plan to be "prepared and approved in accordance with G.S. 115C-67." Under G.S. 115C-67(6), one issue that had to be addressed in the merger plan was "whether or not there shall be continued in force any supplemental school tax which may be in effect in either or all local school administrative units involved."

Prior to the merger, local supplemental taxes had been approved by the voters in both the former Monroe City School System and the former Union County School System under authority of Article 36, Chapter 115C of the General Statutes. See, G.S. 115C-500, et seq. The authorized tax in Monroe was up to 15 cents per $100 valuation and in Union County was up to 7 cents per $100 valuation. The merger plan, as required by G.S. 115-68.2 and -67(6) addresses the continuation of these taxes. Section 10(a) of the merger plan provides:

The supplemental school tax of up to fifteen cents ($.15) previously authorized by referendum for support of the City School System and the supplemental tax of up to seven cents ($.07) previously authorized by referendum for support of the County School System shall remain in effect and be used to support the Merged School System unless or until abolished or modified in accordance with the provisions of Article 36, Chapter 115C of the General Statutes; provided the Merged School Board shall request the Board of County Commissioners to levy and the Board of County Commissioners shall levy both taxes in the same amount, but not in excess of seven cents ($.07).

You have asked two questions regarding the interpretation and application of this provision. They are:

• Does the merger plan eliminate the separate tax districts and create a single county-wide tax district; and
• May the proceeds of the taxes be used to support the merged system as a whole or must the tax for the former Monroe City School System be used exclusively to support schools located within the former city system and the tax for the former Union County School System be used exclusively to support the schools located within the former county system?

In our opinion both tax districts remain in effect and do not merge into a single county-wide tax district. We base this conclusion on the specific language of the supplemental tax provision of the merger plan that the "Board of County Commissioners shall levy both taxes." (emphasis added). These straight forward words, though contained in the merger plan, must be treated as the equivalent of an act of the General Assembly. See, G.S. 115C-68.3 (Ratifying a series of merger plans, including the Monroe/Union plan, and declaring that such plans shall be "considered to have been adopted by act of the General Assembly.")

It is also our opinion that both taxes may be used to support the merged school system as a whole and that their use is not limited to the support of schools located within the respective boundaries of the former school systems. The merger plan, which is now the law under G.S. 115C-68.3, specifically states that both taxes "shall . . . be used to support the merged school system."

In this regard, we do not perceive any irreconcilable conflict between the plan, as adopted by the General Assembly, and G.S. 115C-511(c). That statute makes it "unlawful for any part of a [local supplemental school] tax . . . to be used for any purpose other than those purposes authorized by the election in the unit or district." Each tax in question was approved by the voters to provide additional financial support for the school system in which the voters resided. With merger, the voters formerly residing within the Monroe City School System and Union County School System now reside within a single system, the newly merged county-wide school system. Thus, using the proceeds of both taxes to support the merged system as a whole is consistent with the purposes authorized by the voters; that is the support of the school system in which they reside.

If we can provide further assistance with these issues, please call.

Edwin M. Speas, Jr.

Senior Deputy Attorney General