State refuses to give North Shore interest money to Swain
The N.C. Department of Revenue is holding money belonging to Swain County captive, according to county officials.
The state revenue department controls a trust fund filled with money given to Swain County from the federal government as part of the North Shore Road settlement. The agreement between the county and federal officials promised Swain County $52 million and released the federal government from its obligation to rebuild a flooded-out road through the Smoky Mountains. Thus far, the federal government has paid out $12.8 million of the money.
That portion of the settlement money, however, resides in a trust fund maintained by the state revenue department and cannot be touched unless two-thirds of Swain County’s registered voters agree. However, the account accrues interest each year, which can be tapped by county leaders and placed in its general fund — as long as Department of Revenue officials sign off.
That latter is the tricky part. Last year, Swain County requested $600,000, but the state only gave the county half that. This year, despite having $780,000 in interest accrued, the state isn’t willing to part with any of it.
“As the county has requested money from the state, they have not released that like they usually do,” said Eric Bowman, the independent auditor hired to review Swain County’s finances each year. “We recommend that you contact them and tell them this isn’t working.”
That is advice the county plans to take.
“We are going to ask for the whole amount,” said Swain County Manager Kevin King.
It seems unlikely that the state would go for it, however. The revenue department doesn’t hand over the entire amount in case the interest rates decline or the fund posts a loss for the year. The interest can act as a safety net for the principal amount.
This year, state officials said they need the full $780,000 to stay in its Raleigh account.
“They said they might be expecting some losses,” King said.
The trust fund only earned $38,000 in interest last fiscal year, according to the county’s 2013 audit report. Such a small increase led Phil Carson, chair of the Swain County Board of Commissioners, to wonder if the N.C. Department of Revenue put much effort into managing the trust fund.
“The assumption is they could care less if we make a cent or not,” Carson said.