Occupancy-Tax “Tourism-Related Expenditures” Include Tourism-Driven Public Safety When Reasonably So Judged by Commissioners

A. Precedents Cited

The Court’s reasoning rests on two lines of authority: (1) statutory interpretation of local-government enabling acts and (2) limits on judicial review of discretionary decisions by public officials.

1. Enabling-act powers and statutory interpretation

• Lanvale Props., LLC v. County of Cabarrus (366 N.C. 142 (2012)) (quoting Martin v. Bd. of Comm'rs (208 N.C. 354 (1935))): Counties are state agencies and possess only powers “express and implied” conferred by statute. This frames occupancy-tax authority as strictly statutory, not inherent.
• Stam v. State (302 N.C. 357 (1981)): When the legislature authorizes a tax, the local government may exercise taxing power only within statutory limits—supporting the plaintiffs’ basic premise that compliance turns on the enabling act’s text.
• Cohane v. Home Missioners of Am. (387 N.C. 1 (2025)): Statutory meaning/scope is a question of law reviewed de novo. The Court uses this to set the interpretive posture: plain language first.
• Beavers v. McMican (385 N.C. 629 (2024)) and Quality Built Homes Inc. v. Town of Carthage (369 N.C. 15 (2016)): The “principal goal” is legislative intent found first in the “plain language,” and the Court begins with the enabling statute’s text to define the extent of conferred power.
• Bowers v. City of High Point (339 N.C. 413 (1994)) and Lanvale Props., LLC v. County of Cabarrus: Courts presume the legislature acted with care and interpret enabling acts in the broader regulatory context—supporting the Court’s use of cross-statute comparisons among many local occupancy-tax acts to show deliberate drafting choices (including Currituck’s governance structure).
• Smith Chapel Baptist Church v. City of Durham (350 N.C. 805 (1999)), Durham Land Owners Ass'n v. County of Durham (177 N.C. App. 629), and Bellsouth Telecomms., Inc. v. City of Laurinburg (168 N.C. App. 75): If enabling language is unambiguous, it must be enforced as written—reinforcing the Court’s reluctance to infer prohibitions from amendments that conflict with present text.
• Perkins v. Ark. Trucking Servs., Inc. (351 N.C. 634 (2000)): Dictionaries may be used to determine ordinary meaning. The Court uses this to ground “judgment” as a grant of evaluative discretion.
• Burgess v. Your House of Raleigh, Inc. (326 N.C. 205 (1990)): Statutory terms are read in context, supporting the Court’s structural point that the Commissioners’ role is central because the TDA’s voting members are the Commissioners.
• State v. Coffey (336 N.C. 412 (1994)): Courts should interpret statutes to give effect to all provisions. This supports the Court’s view that the legislature intentionally made “promoting travel and tourism” narrow while leaving “tourism-related expenditures” more open-ended and judgment-based.
• State v. Borum (384 N.C. 118 (2023)): Where statutory language is clear, it forecloses reliance on other interpretive tools—used to counter the plaintiffs’ heavy reliance on statutory history.
• Happel v. Guilford Cnty. Bd. of Educ. (387 N.C. 186 (2025)), Cooper v. Berger (371 N.C. 799 (2018)), and Evans v. Diaz (333 N.C. 774 (1993)): These cases are cited for interpretive canons (including the limiting effect of examples and the implication of exclusion when lists are used). The Court uses them to explain that removing examples can loosen limitations rather than impose new prohibitions.
• State v. Coker (312 N.C. 432 (1984)): Invoked to caution against over-reading minor phrasing changes where technical definitions control.
• Hanson v. Charlotte-Mecklenburg Bd. of Educ. (387 N.C. 445 (2025)) (Newby, C.J., concurring): Cited in a footnote to distinguish “statutory history” from “legislative history,” clarifying the kind of interpretive material at issue.

2. Judicial review of discretionary public-official decisions

• Pue v. Hood (222 N.C. 310 (1942)): Even within discretion, officials cannot act in bad faith, arbitrarily/capriciously, or in disregard of law; courts may afford relief when abuses impair rights.
• Barbour v. Carteret County (255 N.C. 177 (1961)): Courts do not pass on the “wisdom” of lawful acts and cannot substitute their judgment for county officials honestly and fairly exercised—an explicit deference principle.
• In re Hous. Auth. (235 N.C. 463 (1952)): Defines “arbitrary or capricious” action and associates it with abuse of discretion; the Court also contrasts this doctrine with rational-basis review.
• Painter v. Wake Cnty. Bd. of Educ. (288 N.C. 165 (1975)): The complaining party bears the burden to show officials failed to act in good faith and in accord with the spirit/purpose of law—crucial to the plaintiffs’ summary judgment loss.
• Williamson v. Lee Optical of Okla. Inc. (348 U.S. 483 (1955)): Used to distinguish federal “hypothetical rational basis” from state-law arbitrary-and-capricious review: a decision could be rationalizable yet still arbitrary if made by coin flip.
• Little v. Penn Ventilator Co. (317 N.C. 206 (1986)) (Barringer, J., concurring): Cited for the proposition that abuse-of-discretion review applies to decisions requiring judgment—supporting the concurrence’s framing of review.
• State v. Ashe (314 N.C. 28 (1985)) (Barringer, J., concurring): When discretion is granted, it must actually be exercised; the concurrence uses this to express concern about opaque budgeting practices.
• Philip Morris USA, Inc. v. N.C. Dep't of Revenue (386 N.C. 748 (2024)) (Barringer, J., concurring): Cited in a transparency-themed discussion; while not controlling on occupancy-tax interpretation, it supports the concurrence’s normative emphasis on accountable governance.

Together, these precedents supply the Court’s basic framework: de novo interpretation of the enabling act’s meaning, coupled with deferential review of the Commissioners’ discretionary application absent bad faith, arbitrariness/caprice, or legal error.

B. Legal Reasoning

1. The Court’s central textual move: “in the judgment of” as a bounded delegation

The pivotal statutory definition is that a “tourism-related expenditure” means expenditures that, “in the judgment of the Currituck County Board of Commissioners,” are designed to increase use of specified facilities by attracting tourists or business travelers.

The Court treats “judgment” as an explicit delegation of evaluative authority—requiring the Commissioners to discern the relationship between a proposed expenditure and the statutory objective (attracting tourists/business travelers). The delegation is not unlimited: it is tethered to the stated purpose (increasing facilities use by attraction of visitors). But within that tether, the Court reads the statute as intentionally flexible.

2. Structural reasoning: Currituck’s TDA design intensifies legislative trust in elected Commissioners

The Court reinforces its reading by focusing on Currituck’s unusual governance structure: the TDA’s voting members are the County Commissioners themselves. Comparing other local occupancy-tax acts (with TDAs composed of hospitality-industry representatives or mixed appointments), the Court infers deliberate legislative choice: Currituck’s elected officials were meant to make the value judgments about what attracts tourism locally.

3. Rejecting the “tourism-related equals tourist-attraction-only” theory

Plaintiffs argued “tourism-related expenditures” must be limited to literal attractions (events, museums, festivals). The Court rejects that narrowing for two principal reasons:

• The legislature showed it knew how to draft narrow spending categories (it did so for “promoting travel and tourism,” and it defined “beach nourishment” in detail), but it deliberately used an open-ended, judgment-based definition for “tourism-related expenditures.”
• The definition contains non-exclusive examples (“includes” capital expenditures and beach nourishment) and does not expressly forbid categories of spending.

4. Statutory history: deletion of examples is not an implied prohibition

The Court of Appeals treated the 2004 removal of “police protection” and “emergency services” (previously listed in the 1987 act) as evidence of an intent to prohibit those expenditures. The Supreme Court disagrees, reasoning:

• The 2004 amendments removed all prior examples, not just some—making it difficult to infer a targeted prohibition as opposed to a shift away from limiting examples.
• Examples in statutes often narrow; removing examples can widen interpretive scope.
• The 2004 title (“to Change the Purposes for Which the Tax May Be Used”) is fully explained by other changes (e.g., removing the earlier allowance to spend 25% for “any lawful purpose” and imposing the narrower “promoting travel and tourism” category), without implying a ban on tourism-driven public safety.

5. Application to the record: why the County’s decision survived

On the undisputed summary-judgment record, the Court finds the Commissioners’ rationale was reasoned and tethered to the statutory aim: tourists are less likely to visit if they believe the destination is unsafe; Currituck’s population roughly doubles during peak season; and the County incurs year-round staffing and preparedness costs to provide adequate seasonal capacity. The Court treats these as commonsense, non-whimsical judgments, supported by testimony and contemporaneous budget explanations.

6. No implied “findings on the record” requirement

Addressing Judge Hampson’s Court of Appeals concurrence, the Supreme Court holds that the enabling act does not require simultaneous, on-the-record findings for each expenditure’s tourism nexus. Although recordkeeping may be prudent, the record developed in discovery was enough to show the Commissioners actually exercised judgment in good faith and within statutory bounds.

7. The concurrence’s warning: discretion must be exercised transparently

Justice Barringer agreed on statutory authority but expressed “concern at the lack of record evidence” that discretion was being exercised pre-suit, emphasizing that if funds are “routinely dumped” into the general fund and become “practically untraceable,” the County invites future legal challenges. Relying on State v. Ashe, the concurrence frames transparency and identifiable appropriations as best practice—even if not required by the act’s text.

C. Impact

The decision is likely to have immediate and broader effects in North Carolina local government finance:

• Expanded practical scope for “tourism-related” spending where the statute is judgment-based. Counties (especially destination communities) can treat certain public safety and supporting services as tourism-related if they can reasonably articulate a visitor-attraction rationale tied to tourism-driven demand.
• Deference to elected officials’ tourism judgments—within guardrails. The Court reinforces that courts should not second-guess the “wisdom” of such decisions absent proof of bad faith, arbitrariness/caprice, or disregard of law.
• Litigation will shift from categorical bans to evidentiary “abuse of discretion” battles. Future challengers will likely focus on showing a disconnect between spending and tourism attraction, or on procedural facts suggesting the absence of genuine judgment (as flagged by the concurrence).
• Drafting and amendment signals. The Court’s treatment of statutory history signals that removing illustrative lists may be read as removing limits rather than creating prohibitions—an interpretive lesson for future local acts.
• Governance and transparency pressures. Even though formal findings are not required, Justice Barringer’s concurrence invites counties to adopt clearer budgeting practices (discrete projects, traceability, explicit tourism nexus statements) to reduce risk.