Local Politics

State revenue secretary resigns

Posted September 29, 2010

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— North Carolina Revenue Secretary Ken Lay submitted his resignation Wednesday in what state officials called a mutual decision reached by him and Gov. Beverly Perdue.

His last day on the job will be Oct. 22.

Sen. David Hoyle, a Gaston County Democrat who decided not to seek re-election this fall after 18 years in the state Senate, will succeed Lay in charge of the Department of Revenue.

"I thank Ken Lay for his service to the state and for the progress he has made in seeking a new strategic direction for the Department of Revenue,” Perdue said in a statement. “I am happy to welcome David Hoyle to the cabinet. He recognizes my commitment to setting government straight, and I believe he will garner the respect and trust of taxpayers."

As co-chairman of the Senate Finance Committee, Hoyle has been one of the Senate's chief budget writers and helped craft state tax laws.

Lay, who worked for Bank of America before being named revenue secretary early last year, has been criticized in recent months for delays in issuing state income tax refunds, for allowing two top managers to bill the department for commuting costs and for a new policy that allowed the state to keep overpayments on older tax returns.

“I consider it a great honor and privilege to have been asked to serve as secretary of the North Carolina Department of Revenue, and it is with continued honor that I now leave that position," Lay said in a statement. "The department has a stronger strategic vision that has reached a point of inflection, which is a perfect time for new leadership.”

In recent weeks, a rift developed between Perdue and Lay over the older returns. The department had adopted a policy of not confirming overpayments that had been flagged by its computers, and the time for taxpayers to claim a refund had lapsed in thousands of cases.

Department of Revenue, Revenue Department Outgoing revenue chief had his critics

Questions arose how much Perdue's staff knew about the policy, but the governor said she was incensed when she found out and said further delays in processing the refunds were "not acceptable." Lay then deployed teams of revenue department employees to handle the backlog of returns, which dated to 1994.

"I can't understand why someone would believe that money belongs to the state," said Sen. Clark Jenkins, co-chairman of the Senate Finance Committee.

Jenkins, D-Edgecombe, said that he also felt the revenue department had become "heavy-handed" in collections and "not business friendly."

Lay did get credit when his department negotiated $427 million in settlements from businesses that owed back taxes, but the department drew the scorn of privacy advocates when it went up against online retail giant Amazon.com in an effort to collect sales tax on Internet purchases by North Carolina residents.

Tardy refunds by the revenue department have irritated state taxpayers for two consecutive years, and the state had to pay more than 300,000 taxpayers interest on their 2009 refunds because they weren't processed by the end of May, as required by state law. Lay and other state officials said cash flow problems caused by the economic downturn forced them to hold money back in order to pay other bills.

A WRAL News investigation prompted the Lay to adjust the department's policies for travel expenses this summer. John Sadoff, the director of the department's tax compliance division, and Alan Woodard, the director of examinations, were reimbursed about $78,000 over the past two years for mileage and lodging as they commuted from their homes near Charlotte to work in Raleigh.

Lay initially defended the spending, but lawmakers questioned it in light of budget cutbacks elsewhere. The revenue department eventually decided to incorporate more technology to minimize the cost of travel and to use state vehicles for commuting workers.


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  • ctya Sep 30, 2010

    everyone is talking/commenting about the refunds. What about the people that owe the money from 1994. Bev is not going after that money. I would like to know how do you plan to may the money without collecting just as much, when you had to delay refunds to ensure they were paid. it just a mess all round. if the problem stated back in 1994 then Lay was nowhere around. How many have been appionted to that job prior. I could say more but why the problem is here and needs to be fixed. Lay was the fall man for something already in place.

  • North Carolina Home Sep 30, 2010

    history6557, Charles Aycock would be somewhere to the right of Glenn Beck in today's terms of party identification.

    Keep it in perspective....the Democrats of 1896 never let the citizens forget that the Republican party of President Lincoln changed the South to the status of an occupied country. The Democratic party during that time was nothing more than KKK recruitment center. They were wrong then and they are wrong now.

  • Its My Prerogative Sep 30, 2010

    It is so sad that this man was put into a position to fail and had to take the heat for a problem that has been apart of NC for some time now. This man hasn't been in the job long enough to "sneeze" let alone straighten out a problem that has exisited for years.

    I AGREE!! NCDOR had issues LONG before Lay came along. Those 2 guys just didn't start receving those LARGE mileage checks and Lay was NOT the Sec of Revenue when that back log of refunds occured!!!

    Do I think he was cocky in trying handling state business like private sector....OF COURSE but Lay is being used as the SCAPE GOAT and being blamed for issues NCDOR had way before he came along.

    Let's not forget about ALL of the other Revenue Secretaries BEFORE Ken Lay that OVER LOOKED all of the things surfacing now!!!

  • North Carolina Home Sep 30, 2010

    WRAL should start posting a daily scandal ticker for our Democrat owned state gov't like they do for the stock market and the lottery! I'm losing count but it goes something like this:

    DMV, DOT, SBI, SHP, SBOE, DOC, DMV, DOR, DENR,...I'm sure I've left some off but this is getting beyond ridiculous and doesn't even touch the Jim Black, Meg Scott Phipps, Thomas Wright, Frank Ballance, Mike Easley list of elected bad boys and girls.

  • ranquick Sep 30, 2010

    I have no doubt he will be involved in a investigation soon!

  • history6557 Sep 30, 2010

    "In NC, since Reconstruction, two Republican Governors have served honorably.

    Their ability to get things done was gutted by the Democrat Party’s dominance in the General Assembly.

    This fall, the good citizens in this state can change the makeup of The General assembly.

    Changing the Governor and Council of State will have to wait until 2012.

    Thimk- There have actually been THREE Republican governors since Reconstruction. Let's not forget "Ugly Dan" Russell who was elected Governor in 1896 and lowered the dignity and respect for the office of Governor which only his Democratic successor, Charles B. Aycock, restored.

  • Plenty Coups Sep 30, 2010

    "These are the same people who will be running our health care."

    Propaganda. The government isn't running health care now any more than the past. There are now regulations now in place so I can't be denied health care for financial reasons. The government is made up of people like you and I. Sometimes people make mistakes, in both the private and public sectors.

    "The government is us; we are the government, you and I"-Theodore Roosevelt.

  • pbjbeach Sep 30, 2010


    you are 1000% correct with your posting as itpertains to the adminstration of an the issues of contracting an especialy so within the NCDOT an it's contractors an vendors. as that there is waste fraud an abuse an no one in state government is any longer looking out for the total benefit of the taxpaying citizens of this state. State government has become nothing short of a slush fund for contractors an vendors in this state the states government had may as well throw open the doors to the states treasuary an say come an get it just like a farmer calling the hogs to get slops.( not much differeence if you ask me ) thank you

  • yabbadabbadooo Sep 29, 2010

    the position is an appointed position by the Governor. She put him there originally. Why didn't the article mention the money wasted with the Amazon.com lawsuit? This is the guy that was in charge of that as well...

  • WRALSUCKS Sep 29, 2010

    The Government is always efficient and honest, and looks out for the best interests of its citizenry.

    These are the same people who will be running our health care.