(The Center Square) – Currituck County in northeastern North Carolina says a 2004 amendment contains language that allows the county commissioners to use their judgment in deciding what uses of the tax on tourist’s lodging and property taxes are related to tourism.
Whether the commission can use that revenue to pay for police officers is up for decision by the North Carolina Supreme Court. At one time, they clearly could. Fifteen years after the amendment, a lawsuit generated question and 22 years later it has reached the state’s high court.
The seven-member bench heard oral arguments Tuesday and did not immediately release an opinion.
The North Carolina Court of Appeals ruled in 2024 that the amended law limits the discretion of the commissioners and requires a “strict construction” of the term “tourism-related expenditures.”
Attorneys for the county say the commissioners were unanimous in deciding how to spend the money from the lodging tax, and there was no public outcry or legislative criticism of how it has been spent.
Troy Shelton, attorney for those challenging the use of the tax, told the court that the commissioners did not like the 2004 change in the state law.
“It had been using the occupancy tax dollars on general public services – things that property taxes are supposed to fund,” Shelton told the court. “So the county lobbied the Legislature to roll back the changes but the Legislature declined.”
The county then “ignored” the changes in the law, Shelton said.
“The county has been breaking the law and needs to stop,” Shelton said.
When asked by a judge whether having more police officers would attract more tourists to the county, Shelton said that if the law were interpreted that way, the money from the lodging tax could be spent on any government service.
“The county could use the occupancy tax to pay for social services, social workers, to get homeless people off the street,” Shelton said.
Currituck County is eastern-most of the five northeastern finger counties, providing the northern end of the Outer Banks. The town of Corolla generates most of the county revenue through a tax on tourist’s lodging and property taxes, according to court documents.
In 1987, the Legislature passed a bill allowing the lodging tax, but also requiring that 75% of the revenue from the tax could be spent “only for tourist related purposes, including construction and maintenance of public facilities and buildings, garbage, refuse, and solid waste collection and disposal, police protection, and emergency services,” a court synopsis of the case says.
In 2004, the Legislature amended the law by deleting “tourist-related purposes,” and replacing it with “tourism-related expenditures, including beach nourishment. The change also deleted any reference to police protection.
However, the county continued to use revenue from the tax according to the language in the 1987 law, prompting a lawsuit in 2019 by citizens.
The county says the 2004 amendment contains language that allows the county commissioners to use their judgment in deciding what uses of the tax money are related to tourism.
However, a state appeals court ruled in 2024 that the amended law limits the discretion of the commissioners and requires a “strict construction” of the term “tourism-related expenditures.”
