Could the Governor order a $5 million transfer from North Carolina’s Wireless 911 Fund to an escrow account to avoid the 2000–01 budget deficit?

Plain-English summary

The North Carolina Wireless 911 Board asked whether the Governor could order a $5 million transfer from the Wireless Emergency Telephone System Fund to an escrow account to address the 2000–01 budget shortfall. The AG answered yes, while saying the Governor had discretion whether to make the transfer.

The Fund was supported by an 80-cent monthly charge on wireless connections. Carriers collected the charge, the Board received it, and the proceeds were held in a separate fund with the State Treasurer for enhanced 911 purposes. The Board questioned whether that dedicated use prevented the proposed transfer.

The opinion cites the Governor's constitutional duty to administer a balanced budget. It then quotes the Executive Budget Act, which gives the Governor, as Director of the Budget, supervision over state agencies and boards using state funds, expressly including funds raised through fees. The AG treated the Wireless Fund as state funds within that supervision. It also relied on G.S. § 143-28, which includes powers necessarily implied by the budget duties and directs liberal construction of the Act.

For the proposed Wireless Fund transfer, the AG said the statutory restriction on fund uses yielded to the constitutional obligation to avoid a deficit. It did not analyze highway, park, licensing, or other dedicated funds or declare every board fund available for transfer in any emergency.

Currency note

This opinion was issued in 2001 for a specific budget shortfall and statutory fund. Check current constitutional and statutory provisions before applying its reasoning to another period or fund.

What this means for you

If you administer a dedicated fund: The opinion shows the AG's reasoning for one proposed transfer from the Wireless 911 Fund. It does not decide the status of every fee-funded or legally restricted account.

If you review an executive budget action: The opinion distinguishes the Governor's legal authority to order this transfer from the discretionary decision whether to order it.

Common questions

Could the Governor order the proposed Wireless Fund transfer?
The AG said yes: transferring money to escrow to avoid the 2000–01 deficit was within the Governor's authority, subject to the Governor's discretion whether to do so.

Why did the source of the money matter?
The Board's Fund came from fees. The opinion quotes G.S. § 143-2 to show that the Director of the Budget's supervisory role includes state funds arising from fees, not just legislative appropriations.

Did the dedicated-use provision defeat the transfer?
The AG said that restriction did not limit the Governor's authority to make this specific transfer to avoid a deficit because a statutory use limit must yield to the constitutional budget duty in that circumstance.

Did the AG authorize transfers from all dedicated funds?
No. It answered the Board's question about the Wireless Fund and the proposed escrow transfer. It did not analyze other funds or their specific legal restrictions.

Citations

• N.C. Constitution, Article III, Section 5: Governor's budget duty quoted in the opinion.
• N.C. Gen. Stat. § 143-2: Director of the Budget and supervision over state funds, including fees.
• N.C. Gen. Stat. § 143-28: implied budget powers quoted in the opinion.
• N.C. Gen. Stat. § 62A-22(c): separate Wireless Fund deposit requirement discussed in the opinion.
• In re Separation of Powers, 305 N.C. 767, 295 S.E.2d 589 (1982): executive budget responsibility cited by the AG.

Source

• Landing page: https://ncdoj.gov/opinions/authority-of-the-governor-to-transfer-money-in-a-budget-emergency-wireless/

Original opinion text

June 29, 2001

Mr. Charles B. Archer Vice Chair North Carolina Wireless 911 Board Post Office Box 17209 Raleigh, North Carolina 27619-7209

RE: Advisory Opinion; Wireless 911 Board; Authority of the Governor to Transfer Money in a Budget Emergency from the Wireless Emergency Telephone System Fund; N.C. Const. Art. III, § 5 & N.C. Gen. Stat. §§ 143-1 et seq.

Dear Mr. Archer:

On behalf of the North Carolina Wireless 911 Board you have requested an advisory opinion on whether the Governor has the authority to transfer money from the Wireless 911 Fund to avoid a budget deficit. Based upon our legal research, we conclude that the Governor does have the legal authority to make such a transfer although it is within his discretion as to whether to do so.

The Board is the statutorily-created entity charged with administering the Wireless Telephone E911 statute, N.C. Gen. Stat. 62A-21 et seq. ("Wireless Statute"). The intent underlying the Wireless Statute is to provide funds and to encourage deployment of enhanced 911 service for wireless telephone users. Enhanced 911 service for wireless telephone users permits public safety officials to know the location from which a wireless 911 call has been made.

As part of its duties, the Board administers the Wireless Emergency Telephone System Fund ("the Wireless Fund") pursuant to N.C. Gen. Stat. § 62A-22. The Wireless Fund is funded by the levy of a fee on the bills of wireless telephone customers. N.C. Gen. Stat. § 62A-23 requires the Board to levy a monthly service charge of 80 cents on each wireless telephone connection. The money is collected by the wireless telephone carriers from wireless customers and remitted to the Board. N.C. Gen. Stat. § 62A-24. The Board must deposit all revenues derived from the service charge into a separate fund established with the State Treasurer. N.C. Gen. Stat. § 62A-22(c).

Forty percent (40%) of the money in the Wireless Fund is remitted to local public safety officials for use in paying for enhanced 911 service for wireless telephone users. Sixty percent (60%) of the Wireless Fund is used to reimburse wireless telephone carriers for the commercially reasonable costs of providing enhanced 911 service to their wireless telephone customers. N.C. Gen. Stat. § 62A-25. The Board is also entitled to deduct a one percent (1%) administrative fee from the total service charges remitted by the wireless telephone carriers. N.C. Gen. Stat. § 62A-26.

The Board has received notification from the Office of State Budget, Planning and Management that it must transfer $5 million from the Wireless Fund to an escrow account to meet the budget shortfall for 2000-01. The Board asks whether the Governor has the authority to order such a transfer.

Article III, Section 5 of the North Carolina Constitution sets out the duties of the Governor, one of which is to administer the budget. Section 5(3) provides, in pertinent part, that "[t]he total expenditure of the State for the fiscal period covered by the budget shall not exceed the total of receipts during that fiscal period and the surplus remaining in the State Treasury at the beginning of the period." (Emphasis added.) The Governor is charged with continually surveying the collection of revenues and with taking steps to avoid a budget deficit. This duty is exclusively a responsibility of the Executive Branch of government. In re Separation of Powers, 305 N.C. 767, 295 S.E.2d 589 (1982).

The Executive Budget Act, N.C. Gen. Stat. § 143-1 et seq., statutorily addresses the Governor's constitutional duty to keep the budget balanced. N.C. Gen. Stat. § 143-2 specifically provides in pertinent part:

It is the purpose of [the Executive Budget Act] to vest in the Governor of the State a direct and effective supervision of all agencies, institutions, departments, bureaus, boards, commissions, and every State agency by whatsoever name now or hereafter called, including the same power and supervision over such private corporations and persons and organizations of all kinds that may receive, pursuant to statute, any funds either appropriated by or collected for, the State of North Carolina, or any of its departments, boards, divisions, agencies institutions and commissions . . . .

The Governor shall be ex officio Director of the Budget.

(Emphasis added.)

The Governor's authority as Director of the Budget is not diminished because the funds in question are revenues from fees and not budget allocations made by the General Assembly. N.C. Gen. Stat. § 143-2 further provides:

The test as to whether an institution, department, agency board, commission, or corporation or person is included within the purpose and powers and duties of the Director of the Budget shall be whether such agency or person receives for use, or expends, any of the funds of the State of North Carolina, including funds appropriated by the General Assembly and funds arising from the collection of fees, taxes, donations appropriative, or otherwise.

(Emphasis added.)

Fees have consistently been recognized as State funds. See, e.g., Opinion of the Attorney General to Mr. Phillip J. Kirk, Jr., Secretary of the Department of Human Resources, 1986 N.C. AG Lexis 13 (1986) (student activity fees and enterprise funds state funds); Opinion of the Attorney General to Mr. Richard J. Vinegar, Chairman of the Board of Directors of Lenox Baker Children's Hospital, 1986 N.C. AG Lexis 11 (1986) (unrestricted gifts to State hospitals are state funds); Opinion of the Attorney General to Mr. Henry L. Bridges, State Auditor, 49 Op. Atty. Gen. N.C. 74, 1979 N.C. AG Lexis 40 (1979) (fees collected by Occupational Licensing Boards are state funds).

It is clear from the duties imposed by the Constitution, the words of the Executive Budget Act and the precedent established by the cited sources, that the Wireless Fund, composed as it is of fees collected pursuant to statute, is subject to the authority of the Governor as Director of the Budget.

This authority necessarily includes the ability to order a transfer among funds to prevent a budget deficit. N.C. Gen. Stat. § 143-28 provides in pertinent part:

Any power expressed in this Article [the Executive Budget Act] or necessarily implied from the language hereof or from the nature and character of the duties imposed, in addition to the powers and duties heretofore expressly conferred herein, shall be held and construed to be given hereby to the end that any and all duties herein imposed and made and all purposes herein expressed may be fully performed and completely accomplished, and to that end this Article shall be liberally construed.

(Emphasis added.)

The Governor's authority to effect a transfer of funds from the Wireless Fund to an escrow account to avoid a budget deficit is necessarily implied from his constitutional duty to balance the budget and from his statutory duty to supervise the funds of all State agencies. This power is not limited by the express provisions of N.C. Gen. Stat. § 66A-22(c) restricting the use of the Wireless Funds to the uses set forth in Article 2 of Chapter 62A because a statutory limitation on the use of funds necessarily must yield to the Governor's constitutional obligation to balance the budget. Thus, we conclude that the Governor does have the legal authority to make such a transfer although it is within his discretion as to whether to do so.

Sincerely,

Edwin M. Speas, Jr. Chief Deputy Attorney General

Ann Reed Senior Deputy Attorney General

Susan K. Nichols Special Deputy Attorney General