Bills introduced to establish state franchising system for video programming

Legislation was introduced this week to replace the existing system of local franchising for cable/video programming and replace it with a system where the state grants all franchises. HB 2047 – Video Service Competition Act, the legislation recommended by the Revenue Laws Study Committee, would allow telephone companies to enter the video programming market by filing for a state franchise. Service would have to begin within 120 days after filing the notice of service.

Current local cable franchise holders can opt out of their franchises as soon as a competitor offers service to one household within the local franchise area. The local franchise holder then can opt out of the local franchise and apply to receive a state franchise. If the local franchise holder does not opt out, the local cable franchise would continue, but it may not be renewed at the end of its current term.

Under the provisions of this bill, local governments would receive monies approximately equivalent to what is now received from local franchise fees. Replacing the local franchise fee would be percentages of three state taxes: the telecommunications sales tax; the cable sales tax; and the satellite sales tax.

HB 2047 includes provisions that local governments retain control over public rights-of-way, and there are some requirements for provision of public, educational and governmental (PEG) channels. The PEG requirements of HB 2047 may be less or more than what individual cities and towns have negotiated in their local franchises.

The legislation also does not include build-out requirements for state franchise holders. Although there is nondiscrimination language in the bill, it will still permit companies to decide which neighborhoods and areas to serve. Most local cable franchises include provisions requiring that all of a franchise area be offered service if the area meets a density standard.

Under HB 2047, the State Attorney General’s Office would have responsibility for customer service complaints.

We believe franchising for video programming is best left at the local level. If state franchising is to be implemented, however, we have insisted that the local revenue stream be protected, that city authority to regulate the right-of-way be preserved, that build-out requirements be included, that customer service standards remain in place, and that adequate PEG channels and other community benefits be provided. The bill as currently written does not meet those requirements, and we continue to work to achieve a bill that protects the public and promotes real competition.

HB 2047 was introduced by Reps. Carney, Luebke, McComas and Wainwright. A companion bill, SB 1559 – Video Service Competition Act, was introduced by Sen. Clodfelter.

Senate making progress on budget
The Senate expects to present its 2006-2007 budget by Memorial Day, and legislative leaders are hoping to adopt the state budget by the end of June.

Is this a year for state bonds?

With a better economic outlook and a backlog of needs, groups have lined up to ask the General Assembly to approve statewide bond bills, some requiring voter approval.

Already introduced is legislation calling for $1 billion in general obligation bonds to be used for water, wastewater and stormwater capital projects. Sen. John Kerr is the primary sponsor of SB 1281- Clean Water Bonds Act of 2006, which would provide $1 billion in funding for these projects if approved in a November 2006 referendum. The bill was referred to the Senate Finance Committee. A similar bill was introduced in the House, HB 1809 – Clean Water Bonds Act of 2006 and was referred to the House Finance Committee. Primary sponsors of this bill are Reps. Owens, Gibson, Ross, and Daughtridge.

Also expected is a bond proposal for transportation, but details are not yet available on this. This proposal might include financing other than general obligation bonds. The N.C. School Boards Association has proposed $2.1 billion for school construction loans with funding from the 40 percent of lottery proceeds that are earmarked for school construction. These would be limited obligation bonds not requiring a referendum.

A coalition, Land for Tomorrow, is asking for a $1 billion general obligation bond issue for open space preservation, natural heritage and farmland preservation, parks and recreation and economic development associated with natural and historic resources. A bill to provide $250 million in general obligation bonds for affordable housing has been introduced, HB 1924 – Affordable Housing Bonds of 2006.

In a recent presentation, the State Treasurer’s Office recommended that the state borrow no more than $214 million annually over the next ten years.

At their May 18 meeting, the NCLM Board of Directors voted to support a state bond package that provides substantial funding for clean water projects and urban transportation needs.

Anti-annexation bills have a local slant
Several local bills to restrict annexation authority bear watching. Two companion bills would prohibit municipalities outside Lincoln County from annexing into that county or extending their extraterritorial jurisdiction (ETJ) into Lincoln County (HB 1852 and SB 1207 –Lincoln Annexations). Another would prohibit municipalities that are primarily outside Davidson County from annexing into that county or extending ETJ into the county (HB 2005 – Davidson Annexations). This means HB 2005 would keep a municipality that already includes areas in Davidson County from annexing any additional areas in that county if the city or town is primarily located in an adjacent county. The League opposes both bills because they set bad precedents and could be expanded or amended to include other areas.

Bills pouring in
Even with rules that limit the introduction of new bills, more than 700 bills have been introduced since the session began May 9. We will begin publishing synopses of the bills affecting cities and towns next week.

Remember Town Hall Day
The deadline for registering for Town Hall Day (Wednesday, June 7) has been extended to May 25. Please sign up today to attend this important legislative action day. The N.C. Association of County Commissioners held their legislative day this week with a strong showing, and we note that they were able to reach a large number of legislators with their message.