Can the NC Association of County Commissioners (an unincorporated federation of the 100 NC counties) buy through the State purchase and contract system, the same way an individual county or state agency can?

Plain-English summary

The North Carolina Association of County Commissioners asked whether it could participate in the State's purchase and contract system. The AG concluded that it could, as a governmental entity or subdivision of the State for purposes of G.S. § 143-49(6). That statute made the Department of Administration's purchasing services available to governmental entities, state subdivisions, and their public agencies when spending public funds.

The opinion relied on the Association's particular facts. Its members were North Carolina's 100 counties. State statutes recognized it as an instrumentality wholly owned by counties and granted it certain privileges of political subdivisions. It was exempt from State sales tax, its employees were covered under the Local Government Employees' Retirement System, and it was treated as a county-owned instrumentality for unemployment insurance. The opinion also reported a federal income-tax exemption under Internal Revenue Code § 115 and said more than 98 percent of its revenue came from member-county fees.

The AG concluded that the Association was eligible for the State system on those facts. It remained responsible for ensuring that only public funds were used for purchases made through that system. The opinion did not decide the status of any other association.

Currency note

This opinion applied the Association's circumstances and the State purchasing statute in 1993. Check current G.S. § 143-49(6) and the organization's current status before relying on it for a present purchase.

Background and statutory framework

G.S. § 143-49(6), as quoted in the opinion, allowed the Department of Administration to provide purchasing services to governmental entities and other State subdivisions and their public agencies for the expenditure of public funds. The AG assessed whether the Association fit that language by looking at its membership, statutory treatment, tax status, and source of revenue.

The opinion cited G.S. § 96-9(a)(4) for the Association's treatment as an instrumentality wholly owned by a political subdivision for unemployment insurance. It also reported that the Association was federally tax-exempt under Internal Revenue Code § 115 because its income would accrue to the State or a political subdivision.

Common questions

Could the Association use the State purchase and contract system?

Yes. The AG concluded that the Association qualified under G.S. § 143-49(6), based on the facts described in the opinion.

Could it use any source of money for those purchases?

The opinion said the Association was responsible for ensuring that only public funds were used for purchases under the State system.

Does this opinion decide whether another county or municipal association qualifies?

No. It addressed the North Carolina Association of County Commissioners and its specific circumstances. It did not discuss the League of Municipalities or decide another association's eligibility.

Citations

• N.C.G.S. § 96-9(a)(4) (NCACC treated as an instrumentality wholly owned by a political subdivision of the State for unemployment-insurance purposes)
• N.C.G.S. § 143-49(6) (Secretary of the Department of Administration shall make purchasing services available to governmental entities and other subdivisions of the State and public agencies thereof in the expenditure of public funds)
• Internal Revenue Code § 115 (federal income-tax exemption for income that accrues to a state or political subdivision)
• North Carolina Local Government Employees' Retirement System (Association employees covered)

Source

• Landing page: https://ncdoj.gov/opinions/participation-in-the-states-purchase-and-contract-system/

Original opinion text

August 16, 1993

C. Ronald Aycock Executive Director North Carolina Association of County Commissioners

P. O. Box 1488 Raleigh, N.C. 27602-1488

Re: Advisory Opinion; Participation in the State's Purchase and Contract System

Dear Ron:

You have asked whether the North Carolina Association of County Commissioners (the Association) is entitled to participate in the State's purchase and contract system. It is our opinion that it is.

N.C.G.S. §143-49(6) provides that the Secretary of the Department of Administration shall make available to ". . . governmental entities and other subdivisions of the State and public agencies thereof in the expenditure of public funds, the services of the [Department] in the purchases of materials, supplies, and equipment . . . ." (emphasis added).

The Association is an unincorporated, nonpartisan federation of county governments. The Association's constitution provides that the 100 counties themselves comprise the Association's membership. State statutes have recognized the Association as an instrumentality wholly owned by the counties of the State by specifically naming it in legislation affecting the counties and by granting it privileges afforded only to political subdivisions. For example, the Association is exempt from State sales tax, its employees are covered under the North Carolina Local Government Employees' Retirement System and for purposes of unemployment insurance, the Association is treated as "an instrumentality wholly owned by a political subdivision of the State." N.C.G.S. §96-9(a)(4). Further, the Association is exempt from federal income tax under Section 115 of the Code on the grounds that all income of the Association will accrue to the State or a political subdivision thereof. Over ninety-eight percent of the Association's revenues come from fees from member counties. (See correspondence between Riddle & Fortner, CPA and the Internal Revenue Service, attached).

Based on the foregoing, it is our opinion that the Association is a governmental entity or subdivision of the State for purposes of N.C.G.S. §143-49(6) and is entitled to use the State purchase and contract system. The Association is responsible for insuring that only public funds are used to make purchases under the State purchase and contract system.

If you have further questions, please do not hesitate to call.

John McArthur, Chief Counsel