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Introduction to Local Government Finance

Introduction to Local Government Finance
Fifth Edition 2023

Connor H. Crews

Published August 18, 2023
978-1-64238-079-8
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About the Author

Connor Crews joined the School of Government in February 2020. In June 2022, Crews shifted his focus at the School to topics in local government finance law, including local government revenues and sales and use tax issues. Immediately prior to joining the School, he worked as an associate at McGuireWoods LLP in Raleigh, where he served as bond counsel, borrower’s counsel, and underwriter’s counsel in a wide range of tax-exempt and tax-advantaged financings for public entities and nonprofit organizations.

Preface

Finance—the acquisition, management, and expenditure of money and other financial resources—is critical to local government operations. How a local government approaches finance significantly affects how its officials and employees perform their duties and how it can serve its constituents. But North Carolina’s local governments do not operate with complete independence or at the sole discretion of their officials or employees. Instead, our state’s local governments derive all of their powers from the North Carolina General Assembly—and the General Assembly, through a variety of laws, has delineated the manner in which local governments may acquire, manage, and expend public funds.

Now in its fifth edition, this book introduces readers to these key legal rules affecting local government finance and basic principles of revenue forecasting, budgeting, governmental accounting, and financial management. It continues to serve as the textbook for Introduction to Local Government Finance, the foundational course of the UNC School of Government’s local government finance curriculum. Intended for local government officials and employees who manage, supervise, or oversee any aspect of local government finance, the course is particularly recommended for new finance officers and other finance personnel, managers, budget officers, purchasers, tax collectors and other tax office personnel as well as local government attorneys. The course provides a survey of the statutory, strategic, and practical limits of local government finance and financial management. Areas of instruction include the basic legal authority and limitations relating to local government revenues, budgeting processes, cash management, purchasing and contracting, expenditure control, conflicts of interest, fund accounting, and financial reporting. It also covers special public records laws relating to local government finance records and information.

Like the School of Government’s course, this book is a collaborative effort among School faculty members that specialize in local government finance. Unless otherwise specified in a given chapter, it reflects statutory provisions and case law through July 1, 2023. It is divided into four sections:

  • Section I (“Legal Framework”) discusses the public purpose clause of the North Carolina Constitution and provides a brief overview of the Local Government Budget and Fiscal Control Act (LGBFCA), which comprises the set of state statutes that govern budgeting, accounting, and financial management of public funds by North Carolina’s local governments.
  • Section II (“Budgeting and Revenues”) surveys sources of revenue available to local governments and discusses the processes by which local governments budget for operating and capital expenditures.
  • Section III (“Financial Management”) describes several processes and requirements of the LGBFCA that affect local government finance operations, namely, cash management and investments, expenditure control, and governmental accounting and financial reporting. Section III also contains a new chapter—Internal Control in Financial Management—that describes certain statutory internal controls mandated by the LGBFCA and other general principles of internal control. It lastly covers state and selected federal laws and regulations that govern local government procurement and regulate conflicts of interest.
  • Section IV (“Select Expenditure Categories”) highlights the financing authority for selected major functions of North Carolina’s local governments—public enterprises, public schools, and community and >economic development.

The authors are grateful to Melissa Twomey for her careful review and editing of each chapter of this Fifth Edition; Kevin Justice for his coordination of efforts among editors, authors, and designers; and Kit Sweeney for her thoughtful and careful design. Special thanks is also owed to Kara Millonzi, the editor of the first four editions of this book, for her efforts to create the book and ensure its timely updates over the last decade.

This text has benefited from continued interactions between School of Government faculty and local government officials and employees from across North Carolina since the publication of the Fourth Edition. In the coming years, local government officials, employees, and all readers are encouraged to contact the author of each chapter with questions or suggestions for improvement.

Connor H. Crews

Assistant Professor of Public Law and Government

July 2023

Contributors

Connor H. Crews is an assistant professor of public law and government specializing in local government finance law.

 

Whitney B. Afonso is a School of Government faculty member who focuses on state and local public finance with an emphasis on local sales taxes.

Gregory S. Allison is a School of Government faculty member who specializes in governmental accounting and financial reporting for state and local governmental entities.

Rebecca Badgett is an assistant professor of public law and government specializing in internal control and grants management for local government.

Crista Cuccaro is an assistant professor of public law and government specializing in procurement, contracting, property disposal, and ethics and conflicts of interest related to contracting.

Christopher B. McLaughlin is a School of Government faculty member who specializes in the legal aspects of local taxation.

Kara A. Millonzi is a School of Government faculty member who specializes in local government law and local government finance.

C. Tyler Mulligan is a School of Government faculty member who specializes in development finance, community economic development, and public-private partnerships for revitalization. He launched the School’s Development Finance Initiative and now serves as its faculty lead.

William C. Rivenbark is a School of Government faculty member who specializes in budget preparation and enactment.

Kristina Wilson is an assistant professor of public law and government specializing in transparency, board procedures, and general local government law.

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Introduction to Local Government Finance

Introduction to Local Government Finance