North Carolina Court of Appeals rules that penalties collected under red-light camera program are subject to Article IX, Section 7
Shavitz v. City of High Point, ___ N.C. App. ___, 630 S.E.2d 4 (2006)
Earlier proceedings between Henry Shavitz and the City of High Point after he ran a red light under the city’s red-light camera program left unresolved a dispute between the city and the Guilford County Board of Education. [See digest in “Clearinghouse,” School Law Bulletin 35 (Fall 2004): 21–22.] The dispute concerned whether the clear proceeds of the fines and penalties collected by the red-light camera program were due to the board or the city.
The trial court ruled that these proceeds were due to the school board under Article IX, Section 7 of the North Carolina Constitution and awarded the board 90 percent of all amounts collected by the city from the inception of the red-light camera program, as well as post-judgment interest. The city appealed the entire ruling.
The North Carolina Court of Appeals affirmed the ruling, except the award of postjudgment interest.
Article IX, Section 7 of the North Carolina Constitution provides that the “clear proceeds of all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the state, shall belong to and remain in the several counties, and shall be faithfully appropriated and used exclusively for maintaining free public schools.” Over the years many court decisions have addressed whether particular penalties and fines fall within the ambit of this provision. [See, for example, “Clearinghouse” digests of North Carolina School Boards Association v. Moore and Donoho v. City of Asheville in, respectively, School Law Bulletin 36 (Spring 2005): 20–21 and 33 (Fall 2002): 19–20.]
Two issues generally arise in these cases: (1) are the proceeds penalties or fines? and (2) are they imposed for breach of a state penal law?
The state supreme court has defined a penalty or fine as an assessment imposed to deter future violations and to extract retribution from the violator for illegal behavior. The court of appeals concluded that proceeds of the red-light camera program meet this definition. Next, the court determined that the penalties or fines were assessed for violation of a state penal law. Section 20-158(b)(2) of the North Carolina General Statutes (hereinafter G.S.) makes failure to observe a red stoplight illegal. G.S. 20-176(b) makes this infraction punishable by a fine. G.S. 160A-300.1, which authorizes municipal red-light camera programs, merely creates an alternative mechanism for enforcement of G.S. 20-158(b)(2). Even though the red-light camera statute provides that a red-light violation punished under such a program shall be a noncriminal violation punishable by a civil penalty, it is still a violation of G.S. 20-158(b)(2)—a state penal law—for which the state statute has provided a municipal enforcement mechanism. Thus, the proceeds of the program are due to the Guilford County Board of Education.
The court of appeals also affirmed the percentage of the proceeds (90 percent) awarded to the board. G.S. 115C-437, which specifies how Section 7’s goals are to be implemented, provides that “clear proceeds” are the full amount of all penalties and fines collected under Section 7, less only the actual costs of collection, which are not to exceed 10 percent of the total amount collected. The court rejected the city’s argument that because its costs, including payments to the contractors who implemented the program, greatly exceeded 10 percent, it should be allowed to keep a higher percentage of the proceeds. The statute only authorizes holding back the actual costs of collecting the proceeds, not the costs of implementing or enforcing the program.
The court did reverse the trial court’s ruling on post-judgment interest. General statutes—such as G.S. 24-5(b), which governs post judgment interest—are not applicable to the state unless the state has shown its willingness to comply with them by an act of the General Assembly or a lawful contract. Because a municipality is a subdivision of the state, this principle applies to it as well.
 For a detailed analysis of the state supreme court’s decision interpreting the fines and forfeitures provision of Section 7, see Shea Riggsbee Denning, “N.C. Supreme Court Rules More Penalties Payable to Public Schools: North Carolina School Boards Association v. Moore,” School Law Bulletin 36 (Fall 2005): 1–9.
summarized by Ingrid M. Johansenposted Winter 2006