Can the North Carolina General Assembly create a local-option tax by passing a bill on fewer than three separate days, or does Article II, Section 23 require strict three-day passage even for narrow city/county authorizations?
Plain-English summary
Rep. Timothy Tallent asked the AG whether S.L. 1997-452 (originally House Bill 786) was constitutional, specifically the parts that authorized Cabarrus County and the City of Concord to put "any question of public interest" to a binding voter referendum on petition of 25% of the voters or on resolution of the local board. Read literally, that authorization included putting a sales tax or any other local tax to a binding vote.
Chief Deputy AG Andrew Vanore concluded that the tax-authorization portion of H.B. 786 was unconstitutional. The reason was procedural: Article II, Section 23 of the NC Constitution requires that any law authorizing counties, cities, or towns to "impose any tax" be "read three several times in each house" on "three different days." That requirement is constitutional, not just a procedural courtesy, and bills that violate it are void.
The legislative-history problem. When H.B. 786 first passed the House on April 17, 1997, it did not contain the Concord/Cabarrus referendum-and-tax language. A Senate Committee Substitute added those provisions on August 4, 1997. The Senate then took the second and third readings of that substitute on the same day, August 5, 1997. When the bill came back to the House, the House concurred in the Senate changes on a single day, August 28, 1997. Neither chamber's handling of the tax-authorizing language satisfied the three-different-days requirement.
Why three readings matter. The North Carolina Supreme Court has held repeatedly that the three-readings rule for revenue bills is not waivable and not a technicality. Union Bank v. Commissioners of Oxford, 119 N.C. 214 (1896), and Commissioners of Stanly County v. Snuggs, 121 N.C. 394 (1897), both invalidated tax-authorizing acts that did not meet the requirement (those cases were decided under the predecessor provision, former Article II, Section 14 of the 1868 Constitution, which the modern Article II, Section 23 closely tracks). N.C. Eastern Mun. Power Agency v. Wake County, 100 N.C. App. 693 (1990), continued the line into the modern era.
Scope of the conclusion. The AG was careful to limit the unconstitutionality to the tax-authorizing portion of the bill. Other parts of H.B. 786 that did not authorize taxes were not necessarily void. The binding-referendum mechanism, to the extent it authorized only non-tax matters, was outside Article II, Section 23 and would have to be tested under different doctrines (e.g., the proper-scope-of-local-legislation doctrine, the Dillon's Rule limits on municipal authority, or the Constitution's restrictions on legislative delegation).
Currency note
This opinion was issued in 1997. 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. Article II, Section 23 has not been amended, but later court decisions have continued to develop how strictly the three-readings rule is enforced and what the remedy is for violations. Anyone analyzing a current local-tax-authorization bill or challenging an enacted local-government tax should review the current case law on three readings and recent legislative-procedure decisions.
Background and statutory framework
Article II, Section 23 of the NC Constitution restricts certain revenue and tax legislation:
No law shall be enacted to raise money on the credit of the State, or to pledge the faith of the State directly or indirectly for the payment of any debt, or to impose any tax upon the people of the State, or to allow the counties, cities, or towns to do so, unless the bill for the purpose shall have been read three several times in each house of the General Assembly and passed three several readings, which readings shall have been on three different days, and shall have been agreed to by each house respectively, and unless the yeas and nays on the second and third readings of the bill shall have been entered on the journal.
This requirement attaches not only to state-level revenue bills but to legislation that "allow[s] the counties, cities, or towns" to impose any tax. The reason: local taxing authority is a delegated state power, so granting it requires the same procedural protection that direct state taxation requires.
H.B. 786 ran afoul of this rule by adding the local-option language late in the Senate process and then compressing the second and third readings into a single day. The House's one-day concurrence in the Senate changes worsened the procedural problem. The AG's review of the legislative history made the timeline plain.
The Supreme Court's pre-modern cases (Union Bank, Snuggs) and the appellate court's modern application (N.C. Eastern Mun. Power Agency) all reach the same conclusion: a revenue bill that does not satisfy the three-readings rule is void as to the revenue authorization.
Common questions
Did the AG's conclusion strike down all of S.L. 1997-452?
No. The AG focused only on the tax-authorizing portions. Non-tax portions of the Act survived this analysis (though they might have been subject to other constitutional or statutory challenges). The unconstitutionality was severable to the extent the rest of the Act could function independently.
Could Cabarrus or Concord have levied a local sales tax under H.B. 786 anyway?
Under the AG's analysis, no. Any sales-tax levy purportedly authorized by H.B. 786's binding referendum would have rested on a void enactment. Local officials relying on the bill to support a tax would have faced challenges that the underlying authorization was constitutionally infirm.
What is "three separate days"?
The constitutional language requires that the three readings occur on three different calendar days. Reading a bill twice on the same day (even with hours between the readings, even if part of a special-session schedule) does not satisfy the requirement. Concurrence in the other chamber's changes counts as the chamber's reading of the changed bill, so concurrence too must occur over three days if the changes involve revenue authorization.
Did this apply to local-option referendums on non-tax questions?
No. Article II, Section 23 applies to bills that impose or authorize taxes, not to all local-option legislation. A bill putting a non-tax matter to a binding local referendum would not, by virtue of that fact alone, need three-readings treatment. But the breadth of H.B. 786's "any question of public interest" language swept in tax questions and that was enough to require the procedural protection.
How could the General Assembly have done this properly?
The General Assembly could have either narrowed H.B. 786 to exclude tax questions from the referendum scope, or, if it wanted to include tax authorization, complied with the three-different-days requirement on the substitute bill in both chambers. The procedural protection is not heavy lifting; the issue was the compressed schedule the Senate used.
How has this rule been used since?
The three-readings rule continues to function as a constitutional check on rushed or hidden revenue legislation. Later courts have continued to enforce it. The political effect, beyond invalidating specific bills, is to give legislators a clear procedural floor for any tax-related authorization, which slows down attempts to slip tax language into bills at the last moment.
Source
- Landing page: https://ncdoj.gov/opinions/laws-authorizing-counties-or-cities-to-impose-any-tax-must-comply/
Citations
- N.C. Const. art. II, § 23
- S.L. 1997-452 (House Bill 786)
- Union Bank v. Commissioners of Oxford, 119 N.C. 214 (1896)
- Commissioners of Stanly County v. Snuggs, 121 N.C. 394 (1897)
- N.C. Eastern Mun. Power Agency v. Wake County, 100 N.C. App. 693 (1990), cert. denied, 329 N.C. 270 (1991)
Original opinion text
September 16, 1997
The Honorable Timothy N. Tallent
N.C. House of Representatives
Room 1104, Legislative Building
Raleigh, NC 27601-1096
RE: Advisory Opinion; Revenue Bills; Constitutional Requirement that Laws Authorizing Counties or Cities to Impose any Tax must comply with the North Carolina Constitution; Article II, Section 23 of the North Carolina Constitution
Dear Representative Tallent:
You ask our opinion whether S.L. 1997-452 (House Bill 786), to the extent it authorizes Cabarrus County or the City of Concord to increase or levy a sales tax or any other tax, is constitutional. For reasons which follow, to the extent House Bill 786 authorizes Cabarrus County or the City of Concord to levy a tax, it is unconstitutional because it was not read on three separate days in each house of the General Assembly, as required by Article II, Section 23 of the North Carolina Constitution.
House Bill 786 authorizes the City of Concord and Cabarrus County to provide for referenda to be held on "any question of public interest" upon petition of 25 percent of the voters or upon resolution of the city or county governing boards. If the voters approve the proposed measure, "then the vote of the people shall be binding" and "the measure shall become effective." This language appears to authorize any measure whatsoever, including the levy of a sales tax or other local tax.
Article II, Section 23 of the North Carolina Constitution provides:
No law shall be enacted to raise money on the credit of the State, or to pledge the faith of the State directly or indirectly for the payment of any debt, or to impose any tax upon the people of the State, or to allow the counties, cities, or towns to do so, unless the bill for the purpose shall have been read three several times in each house of the General Assembly and passed three several readings, which readings shall have been on three different days, and shall have been agreed to by each house respectively, and unless the yeas and nays on the second and third readings of the bill shall have been entered on the journal. (Emphasis supplied.)
The legislative history of House Bill 786 is enclosed. The measures relating to the initiative and referendum for Concord and Cabarrus County were not in House Bill 786 when it passed the House on April 17, 1997. These measures were added in a Senate Committee Substitute, which was adopted on August 4, 1997, but received both its second and third readings on the same day, August 5, 1997. When the bill was returned to the House of Representatives, that body concurred on one day, August 28, 1997, not on three separate days. Therefore, it is clear that the requirements of Article II, Section 23 of the Constitution were not complied with. Our State Supreme Court has stated on numerous occasions that an act of the General Assembly which is not passed with the formalities required by Article II, Section 23 is void. See, Union Bank v. Commissioners of Oxford, 119 N.C. 214 (1896); Commissioners of Stanly County v. Snuggs, 121 N.C. 394 (1897), which are cases decided by the Supreme Court under former Article II, Section 14 of the North Carolina Constitution of 1868, which is substantially the same as Article II, Section 23 of our present Constitution. See, N.C. Eastern Mun. Power Agency v. Wake County, 100 N.C. App. 693 (1990), cert. denied, 329 N.C. 270 (1991).
Andrew A. Vanore, Jr.
Chief Deputy Attorney General