From the N.C. Institute for Constitutional Law:
NCICL Attorneys join appeal in Highway Trust Fund Case
The North Carolina Institute for Constitutional Law?s Executive Director Bob Orr and Senior Staff Attorney Jeanette Doran, in collaboration with Gene Boyce and Dan Boyce of the Boyce & Isley law firm, filed a Notice of Appeal and Petition for Discretionary Review on behalf of Plaintiffs W.D. Goldston, Jr. and James E. Harrington in a case challenging diversion of taxes specifically collected for the building of specific roads and highways and placed in North Carolina?s Highway Trust Fund. The funds were transferred by Governor Mike Easley and the North Carolina General Assembly to the State?s general fund in order to balance the State?s budget. Governor Beverly Perdue has given notice that she also intends to appeal the case.
Last month, the Court of Appeals ruled in favor of Goldston, a former Democrat Senator, and Harrington, a former Secretary of Transportation in a Republican administration, that the State Constitution prohibits the Governor from transferring money from the Highway Trust Fund to the State?s General Fund in an effort to balance the budget. But the court also ruled that the General Assembly could make such transfers and that ?trust fund? principles were not applicable even though the money had been placed in the ?Highway Trust Fund.? The plaintiffs are now appealing the decision to the Supreme Court on the grounds that the case involves a substantial constitutional question relating to the transfers by the Legislative Branch and the Executive Branch. The State is expected to appeal the portion of the Court of Appeals decision which held the Governor did not have authority to transfer $80 million from the Highway Trust Fund.
The State Constitution requires that a tax statute state the ?special object? or purpose for which the tax is being imposed and mandates that tax money be spent only on those purposes. Money in the Highway Trust Fund comes from a variety of taxes, including the gas tax and taxes on the purchase and leasing of cars. State law requires that money in the Highway Trust Fund be used exclusively for transportation expenses such as road maintenance and highway construction. But, in 2002, then Governor Easley used $80 million from the Highway Trust Fund to balance the state budget and the General Assembly transferred $125 million from the Highway Trust Fund to the General Fund for general spending purposes.
NCICL was contacted by Boyce & Isley following last month?s Court of Appeals decision and asked to join in the Supreme Court appeal. Orr and Doran, on behalf of NCICL, will represent the Plaintiffs along with Boyce & Isley in the appeal of all the issues before the Supreme Court.
This case has already been to the Supreme Court on the question of whether Goldston and Harrington had the right to file the lawsuit. In 2006, the Supreme Court ruled in favor of the Goldston and Harrington and sent the case back to the trial court saying taxpayers have the right to sue to challenge the unconstitutional misuse of public funds. NCICL filed a friend of the court brief in the previous appeal and has closely followed the case since its inception.
