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Appeals Court hears Highway Trust Fund lawsuit

Posted January 28, 2009
Updated March 9, 2009

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— The North Carolina Court of Appeals heard arguments Wednesday over a six-year lawsuit against former Gov. Mike Easley and state concerning the Highway Trust Fund.

Then-Department of Transportation Secretary Jim Harrington and Sen. Bill Goldston, who lobbied to create the fund in 1989, claim Easley and the Legislature violated the state constitution when they transferred $205 million to help balance the 2001-2002 budget.

North Carolina Legislature Building (4x3) Appeals Court hears Highway Trust Fund lawsuit

Lawmakers have said they borrowed the money from the trust fund with the intent to pay it back with interest.

The Highway Trust Fund provides multiyear funding for highway construction and maintenance, and funding is collected from gasoline taxes, highway use taxes and motor vehicle registrations to pay for seven urban loops throughout the state, including N.C. Highway 540.

During Wednesday's hearing, Dan Boyce, an attorney for Harrington and Goldston, argued that taxing the public requires the funding to be used for its designated purpose and that the state violated the constitution by reallocating the money.

"There's already a General Highway Fund," Boyce said. "Why did you have the need for a Highway Trust Fund if you didn't mean to protect the money for that specific purpose?"

Norma Harrell, an assistant attorney general representing the state, argued, however, that the governor has the duty and the authority to balance the budget at whatever costs and that he or she also has the authority to get money, wherever appropriate.

"That's the kind of authority and duty the governor must be given leeway to execute, because our constitution prohibits a deficit," Harrell said.

Boyce argued that although the governor has a right to balance the budget, it is by cutting spending.

"Here, they didn't cut spending," Boyce said. "They created new revenue by dipping into the trust fund and moving it over to the general fund."

The plaintiffs in the case say they don't want the $205 million to be repaid, but given the state's current budget crisis with a projected $2 billion shortfall, they are concerned that it could happen again.

"There ain't no money in state government, as you know, anymore," Goldston said following the hearing. "That would be ludicrous to say you have to pay back something you don't have."

In 2006, the state Supreme Court overturned a ruling by lower courts that Harrington and Goldston had legal standing to sue as taxpayers.

A later ruling by the trial court was in favor of the state, but the new appeal claims the trial court judgment erred when it did not fully address the constitutionality of the transfer.

"This is a constitutional issue, and all I heard this morning was tap dancing from one article to another, back and forth," Goldston said. "But it's a simple issue."

"If the Court of Appeals doesn't rule in our favor, can there ever be another trust fund? I mean, if you're not going to follow the constitution, then why have it?"

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  • pbjbeach Jan 29, 2009

    I personnaly feel that the new governor of north carolina should first an foremost take into consideration the taxpayers of this state with regards of any funding issues an that highway trust mony'e should be used for the stated purpose an that purpose only .An do to the past screw -up i think the entire department of transportation upper mangament that has been in charge over these last past eight years should be immedately terminated an the governor should be impeached as the she an easly wre alla part of the whole thing in letting contractors get away with anything that they wanted to do with regards to the non enforecment of the state of north carolina speceficiations for roads & bridges an for not allowing state inspectors to perform their job duty's when it comne to the enfiorcement of these speceficiations an evryone from the governor down has had a hands off approach an just let contractors do whatever they want to with no accountable at all for anything thank you

  • agentm Jan 29, 2009

    you caqnt just blame easley it mess like this goes on all the time from both sides ...the goverment is crooked noone there is really turst worthy ....

  • Tax Man Jan 28, 2009

    Norma Harrell, an assistant attorney general representing the state, argued, however, that the governor has the duty and the authority to balance the budget at whatever costs and that he or she also has the authority to get money, wherever appropriate.

    "That's the kind of authority and duty the governor must be given leeway to execute, because our constitution prohibits a deficit," Harrell said.

    Harrell and the Gov need to understand that to balance the budget you reduce spending, not steal more money from taxpayers! This is just plain corruption at the highest level of our state government and this attorney is full of baloney!

  • mep Jan 28, 2009

    It is like this in nearly every State. Taxes approved by voters for a particular need, then those taxes are dumped into the general tax pool account, only to be spent by the State on other things. Sure the State "intended" to pay back what it borrowed, but we all know Heck is paved with good intentions. And in this case, there would be no money for the pavement.
    Tax and spend, regardless of where that money comes from.

  • Tax Man Jan 28, 2009

    Easley and his cronies, including the new Governor, are just plain, ordinary crooks - they take our money that is designated as a Trust Account for Highways and misuse it on social services that are unnecessary and a waste of taxpayer dollars. Then there is not enough money for the roads so they raise the taxes and start a Toll Authority to steal more taxes from us! The money should be returned to the Trust Fund in full, plus accrued interest. The funds collected in the future should be ONLY usable for Roads! Any attempt to steal more funds should cause the Governor to face criminal charges. The Toll Authority should be disbanded and all funds allocated for it returned to the Highway Trust Fund. Then, reduce the gas taxes accordingly.

  • ObamaMustGo aka NCcarguy Jan 28, 2009

    When they're done here, they can line up the Lottery people and ask where that money is going too??? It sure isn't "Education" like they sold it to us as!