General Assembly approves budget

The House and Senate gave final approval on Thursday to the state's FY 2006-07 budget, adopting the conference report for SB 1741 – Modify Appropriations Act of 2005.  Adoption of the $18.9 billion budget puts the General Assembly on the road to adjournment, although we are not sure how long that road will be.  Legislative leaders have said that they hope to complete their work by the end of next week.

The budget reduces the state sales tax rate from 4.5 to 4.25 percent effective December 1, 2006 and lowers the highest personal income tax rate from 8.25 to 8 percent effective January 1, 2007.  It caps the variable wholesale component of the gas tax at 12.4 cents per gallon through June 30, 2007.

The budget pumps $27 million into the court system, with funding for improved technology as well as 17 more district court judges, 90 assistant district attorneys and 75 deputy clerks.  Counties will get $27.4 million in one-time Medicaid relief.  Additional funding is provided for mental health programs and the Governor's educational initiatives.  State employees will receive a 5.5 percent raise, while teachers and community college and university faculty will get 6 percent.

The budget includes more than $500 million in reserves for savings and the state building repair fund.  It also authorizes some $672 million in special indebtedness for capital projects including the expansion of the N.C. Museum of Art, a new public health laboratory, a hospital at Central Prison, replacement of state mental hospitals in Morganton and Goldsboro, and a secondary data recovery center.

The final budget increases the annual operating permit fees for community water systems and imposes new fees for construction or alteration of water distribution systems, groundwater systems, and surface water systems.  A recent series of newspaper articles highlighted problems with water supply testing and concluded that the state's water supply division is understaffed and underfunded.  Improvement in public water supply compliance and technical assistance staffing was a priority of the Governor and the Secretary of Environment and Natural Resources this year, and the operating permit fees had not been increased since they were first implemented in 1992.  After the League expressed concern that implementing an increase this July 1 would impose an unreasonable hardship on local governments, the effective date was postponed until January 1, 2007, which will delay the payment of the higher fees until the fall of 2007 when the fees are typically due. 

The final budget does not include provisions to increase the minimum wage or to impose a moratorium on landfill permits.  There items had been under discussion as part of the budget process but could still move forward in separate legislation.

The bill now goes to the Governor for his signature.

Video bill marches on

The video bill continued its relentless march through the legislature, passing second reading in the Senate yesterday by a unanimous vote.  It is scheduled for third reading today, then will return to the House for concurrence in the Senate's changes.  HB 2047 – Video Franchising becomes effective January 1, 2007, making the state the franchising authority for video services and preempting local government franchising authority.  We will provide a complete a complete analysis of the bill in a future bulletin.

Economic development changes advance

The House Appropriations Committee gave a favorable report yesterday to two bills to revise the state's economic development tax incentives program.   HB 2744 – Economic Development Program Modifications went directly to the House floor, where it passed second and third readings.  The bill makes various changes to extend and expand the Job Development Investment Grant (JDIG) program, and makes financial services, securities operations, and related systems development facilities eligible for the sales tax refund on construction materials.  HB 2170 – Bill Lee Changes is scheduled for floor debate on Monday, July 10.  That bill establishes three basic economic development tax credits (job creation, business property investment, and real property investment in tier one area) and simplifies the qualification criteria.  It changes the existing tier structure from five tiers to three, with the county's designation based on unemployment, median household income, percentage in population growth and per capita adjusted assessed property value. 

Enhanced credits are available in disadvantaged and rural counties, as well as in agrarian zones and urban progress zones.  The bill replaces development zones with “urban progress zones.”  These zones are more narrowly focused on targeting urban poverty areas.  They must be entirely within the corporate limits of a municipality with a population of at least 10,000 and can comprise no more than 15 percent of the area of the municipality.  The bill expands the list of businesses eligible for tax incentives and significantly modifies the wage standard.  The N.C. Metropolitan Coalition, an organization of the state's largest municipalities that is affiliated with the League, worked on the bills and supports their provisions.

Identity theft notice requirement added

A Senate committee substitute for HB 1248 – Amend Identity Theft Protection Act of 2005 would require local governments, as well as agencies of the state, to notify affected persons if there is a security breach of data containing certain personal identifying information.  Such notification is already required of businesses that experience security breaches.  The bill was reported out of the Judiciary I committee yesterday and is scheduled for debate on the Senate floor this afternoon (Friday).

Following are some of the bills that were introduced or acted upon this week.  If you need a copy of these or any other bills, please contact the Legislative Printed Bills Office at 919-733-5648 or the League office.  Remember that bills and legislative calendars are now available on the Internet at http://www.ncleg.net .  Please contact the League staff if you have any particular interest or concern regarding any piece of legislation.

ENVIRONMENT

SB 1862   Limit Nutrient Offset Payments
Sets the per pound factor for nutrient offset payment at $11 per pound of nitrogen and provides that there shall be no offset program for phosphorous under the rule adopted by the EMC in January.  Directs the ERC to study issues related to nutrient offset program and report its findings to the 2007 session.  Sen Malone  H cal for 6/10

INCORPORATIONS

SB 1852   Incorporate Midway
Incorporates the Town of Midway in Davidson County.  Prohibits the town from annexing into Forsyth County.  Prohibits the town from annexing into Davidson County to the west of a designated line unless pursuant to an annexation agreement with Winston-Salem.  Sen Bingham    SL 2006-37

LOCAL BILLS

HB 1881   Pink Hill Deannexation
Removes described property from the Town of Pink Hill.  Rep LaRoque    SL 2006-44

HB 1913   Red Cross Deannexation
Removes described property from the Town of Red Cross.  Rep Setzer    SL 2006-46

HB 1989   Princeton/Smithfield Satellite Annexations
Exempts the Towns of Princeton and Smithfield from the 10% limitation on satellite annexations.  Rep Langdon    SL 2006-62

HB 1992   Shallotte Annexation
Adds certain described property to the Town of Shallotte.  Rep Hill    SL 2006-47

HB 2311   Kannapolis' 100 th Anniversary
Honors the founders of the City of Kannapolis on the city's centennial.  Rep Barnhart    Res. 2006-17

HB 2491   Candor Annexation
Adds described territory to the Town of Candor, effective January 1, 2007.  Rep Goodwin    SL 2006-55

HB 2524   Chocowinity ETJ
Provides for the expansion of the ETJ of the Town of Chocowinity over certain described territory.  Rep Williams    SL 2006-51

HB 2549   Landis Annexation/Planning
Adds certain described property to the Town of Landis, effective September 30, 2007.  Allows the town to begin exercising its planning and zoning powers in the area described after the date the act becomes law.  Rep Steen    SL 2006-58

HB 2604   Clayton Annexation
Extends the corporate limits of the Town of Clayton to include described property.  Rep Daughtry    SL 2006-57

HB 2656   Dortches/Morganton Deannexation
Removes certain described property from the Town of Dortches.  Removes certain described property from the City of Morganton.  Specifies that the Morganton property reverts to the Residential Transition zoning classification until such time as the city reclassifies it.  Rep Daughtridge    SL 2006-56

HB 2725   Chapel Hill Annexations
Annexes described property into the Town of Chapel Hill.  Rep Insko    SL 2006-53

SB 1526   Reidsville Deannexation
Removes certain described property from the City of Reidsville.  Effective from and after April 13, 1994.  Sen P. Berger    SL 2006-35

SB 1905   Asheville Annexation
Annexes certain described property into the City of Asheville.  Sen Apodaca    SL 2006-35

PERSONNEL

HB 2885   ESC/Employers' Protest Filing Period
Shortens from 15 to 10 days after receipt of notice the time an employer has to protest an unemployment insurance claim by an employee.  Rep Wainwright    H cal for 6/10

TRANSPORTATION

HB 749   Agreement For Transportation Improvements
Authorizes the Board of Transportation to approve partnership agreements with private entities and authorized political subdivisions to finance, by tolls and other methods, the costs of acquiring, constructing, maintaining and operating highways and bridges in the state.  Rep Cole    H passed 2 nd reading

SB 1458   Rental Car Tax for Transit Changes
Amends SL 1997-417, which authorized Mecklenburg County to levy an additional one-half cent sales tax for public transportation, to make the county an authority for the purposes of the regional transit authority vehicle rental tax and to require the county to transfer the funds to the largest city in the county.  Amends the Mecklenburg County sales tax for public transportation [G.S. 105-510] to authorize a unit of local government to use funds received from the vehicle rental tax to supplant or replace other resources.  Sen Hoyle    H ref to Finance