Can the North Carolina Governor sweep money from a dedicated wireless 911 fee fund to plug a state budget hole?

Plain-English summary

Charles Archer, Vice Chair of the North Carolina Wireless 911 Board, asked the AG to settle a budget-crisis question. The Office of State Budget, Planning and Management had told the Board that it had to transfer $5 million from the Wireless Fund to an escrow account to help close the state's 2000-01 budget shortfall. The Board wanted to know whether the Governor could legally do that, given that the Wireless Fund was funded by an 80-cent monthly fee on wireless customers and was supposed to be used only for enhanced 911 service.

Chief Deputy AG Edwin Speas, Senior Deputy AG Ann Reed, and Special Deputy AG Susan Nichols answered yes.

The Wireless Fund is generated by N.C. Gen. Stat. § 62A-23, which sets an 80-cent monthly service charge on every wireless telephone connection. The carriers collect the fee from customers and remit it to the Board (§ 62A-24). The Board deposits the proceeds in a separate fund at the State Treasurer (§ 62A-22(c)). Forty percent of the Fund goes to local public safety officials for enhanced 911 deployment, and 60% reimburses wireless carriers for the cost of providing the enhanced service to their customers (§ 62A-25). The Board takes a 1% administrative fee (§ 62A-26).

The Governor's transfer authority rests on three legal pillars.

First, Article III, Section 5 of the North Carolina Constitution makes the Governor responsible for administering the budget and specifically requires that total state expenditures not exceed total receipts plus the beginning surplus. The North Carolina Supreme Court in In re Separation of Powers confirmed that balancing the budget is an exclusively executive responsibility.

Second, the Executive Budget Act (G.S. § 143-1 et seq.) implements that constitutional duty. Section 143-2 vests in the Governor "direct and effective supervision of all agencies, institutions, departments, bureaus, boards, commissions, and every State agency." The Governor is ex officio Director of the Budget. The Act explicitly extends the Governor's authority to "funds arising from the collection of fees" as well as appropriated funds.

Third, the AG cited a line of older opinions establishing that fees collected pursuant to statute are state funds. Student activity fees (1986), unrestricted gifts to state hospitals (1986), and fees collected by occupational licensing boards (1979) all qualified as state funds for budget-authority purposes. The Wireless Fund fits the same pattern.

Section 143-28 caps the analysis with an "implied powers" clause: any power "necessarily implied from the language hereof or from the nature and character of the duties imposed" is included in the Budget Director's authority, and the Article is to be "liberally construed."

Section 62A-22(c) does restrict Wireless Fund expenditures to enhanced 911 uses, but the AG held that this statutory restriction must yield to the Governor's constitutional balanced-budget obligation. Constitutional duties trump statutory limits when they conflict.

The bottom line in 2001: the Governor had the legal authority to sweep the Wireless Fund. Whether to do so was a policy choice. The 911 community could lobby against it, but they could not block it as illegal.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. North Carolina has reorganized its 911 funding multiple times since 2001, including consolidating wireless and landline 911 funding under a unified 911 Board. Constitutional law on dedicated funds versus emergency budget authority continues to evolve. Anyone facing a current sweep proposal or considering the constitutional limits on executive budget authority should consult current statutes and recent NC appellate decisions.

Background and statutory framework

The Wireless Fund's design. The General Assembly created the Wireless 911 Board to administer the Wireless E911 statute, designed to fund and encourage deployment of enhanced 911 service for wireless callers. Enhanced 911 lets dispatchers know the location of a wireless call (the equivalent of the address auto-display for landline calls). The 80-cent monthly fee was the funding mechanism, with proceeds split 40% local public safety, 59% carrier reimbursement (60% minus the 1% Board admin), and 1% Board administration.

Why the dedicated-fund structure suggests sweep immunity. The General Assembly often dedicates fees to specific purposes (gas tax to roads, 911 fee to 911 service, hunting license to wildlife conservation). The implicit deal with the fee payers is that their money will be spent on the service they pay for, not on unrelated state needs. Section 62A-22(c) reinforces that deal by requiring the Fund to be deposited separately at the Treasurer and restricting its use to the Wireless Statute's purposes.

Why constitutional balanced-budget duty overrides. Article III, Section 5 is not optional. The Governor cannot let the state run a deficit. If the General Assembly's appropriated revenues plus dedicated fees plus opening surplus are not enough to cover the budget, the Governor has to find money. The AG read the constitutional duty as a structural superior to any statutory dedication. Otherwise, the General Assembly could write itself out of balanced-budget responsibility by dedicating fees to every conceivable function, leaving the Governor with nothing to manage in a crisis.

The fee/appropriation parity in § 143-2. A potential argument for the Wireless Board would have been that the Governor's budget authority covers only "appropriated" funds, not fee-generated funds. The General Assembly explicitly closed that gap in § 143-2: the Governor's authority extends to "funds arising from the collection of fees, taxes, donations appropriative, or otherwise." Whatever the source, if it comes into the state's coffers, it falls under the Governor's supervisory power.

The implied-powers backstop in § 143-28. Section 143-28 instructs that any power "necessarily implied from the language hereof or from the nature and character of the duties imposed" is part of the Governor's budget authority. The AG used this to bridge any gap: even if the Executive Budget Act did not specifically authorize an inter-fund sweep, the implied powers clause filled the gap because the sweep was necessary to perform the constitutional balanced-budget duty.

The discretion qualifier. The AG made clear that authority is not obligation. The Governor could sweep the Wireless Fund; whether to do so was a policy judgment. The AG did not opine on the policy merits or political consequences. That was for the Governor to weigh.

Why this opinion mattered beyond 2001. Dedicated fee funds at every level of state government had to absorb this reading. Trust funds for highways, parks, professional licensing, agriculture, and many other purposes all became reachable in budget emergencies. The 2001 opinion is part of the legal foundation under which later North Carolina governors have managed budget shortfalls by sweeping dedicated funds.

Common questions

Q: Did wireless customers get their 80 cents back?

A: No. The fee continued to be collected regardless of the sweep. The sweep moved money out of the Fund; it did not refund money to fee payers. The mechanism is a bookkeeping transfer at the state level, not a refund to consumers.

Q: Could the General Assembly later restore the swept money?

A: Yes. The General Assembly could appropriate replacement funds when fiscal conditions improved, and historically has done that in some sweep situations. The AG did not address what the legislature would or should do; it addressed only the Governor's authority to make the initial sweep.

Q: Did this mean any state board could be raided at will?

A: Effectively, yes, when the Governor is acting under constitutional balanced-budget authority. Boards funded by dedicated fees do not have a legally enforceable shield against an emergency sweep. The legal protection sits in political accountability and in the Governor's own discretion.

Q: What about federally restricted funds?

A: The opinion did not address federal restrictions. Some state-administered funds are subject to federal use restrictions (Medicaid match, federal grant programs, federally collected highway funds). Federal restrictions impose independent legal limits that state constitutional balanced-budget duty does not override.

Citations from the opinion

• N.C. Const. art. III, § 5
• N.C. Gen. Stat. § 143-1 et seq. (Executive Budget Act)
• N.C. Gen. Stat. § 143-2
• N.C. Gen. Stat. § 143-28
• N.C. Gen. Stat. § 62A-21 et seq.
• N.C. Gen. Stat. § 62A-22
• N.C. Gen. Stat. § 62A-22(c)
• N.C. Gen. Stat. § 62A-23
• N.C. Gen. Stat. § 62A-24
• N.C. Gen. Stat. § 62A-25
• N.C. Gen. Stat. § 62A-26
• In re Separation of Powers, 305 N.C. 767, 295 S.E.2d 589 (1982)
• Opinion of the Attorney General to Phillip J. Kirk, Jr., Secretary of the Department of Human Resources, 1986 N.C. AG Lexis 13 (1986)
• Opinion of the Attorney General to Richard J. Vinegar, Chairman of the Board of Directors of Lenox Baker Children's Hospital, 1986 N.C. AG Lexis 11 (1986)
• Opinion of the Attorney General to Henry L. Bridges, State Auditor, 49 Op. Atty. Gen. N.C. 74, 1979 N.C. AG Lexis 40 (1979)

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