Motor vehicle property tax collection under fire

In a surprise move earlier this week, a bill threatening to repeal legislation that enhanced the ability to collect motor vehicle property taxes cleared the House Rules Committee and seemed poised to quickly make its way through the General Assembly.  The proposal, a committee substitute for SB 600 , would repeal a law passed in the 2005 session to create an improved, combined motor vehicle registration renewal and property tax collection system.  HB 1779 (Session Law 2005-294), sponsored by Rep. Dale Folwell, provided for the new system to go into effect in 2009.  It would allow cities and counties to collect an estimated additional $80 million per year in property taxes that now go unpaid.  HB 1779 passed the House and Senate unanimously in 2005.

The provision to repeal it, now contained in committee substitute for SB 600 – Repeal Combined MV Reg. Renewal & Tax System , was re-referred to House Finance.  Please ask your House members to oppose this rewrite of SB 600 and not to rescind the legislation they passed unanimously last year.  The combined system will help local governments capture taxes that currently go uncollected.

On another motor vehicle property tax issue, the House Transportation Committee removed a troublesome provision from HB 1827 - Gen. Con. Lic. Except/Clearing/Vehicle Values this week.  That bill would have required motor vehicles to be appraised at wholesale rather than fair market value.  If enacted, the change would have cost cities and counties approximately $144 million per year in property tax revenues.  Your efforts in contacting House members on this issue made all the difference.  Please keep up the good work.

As municipal officials well know, measures that erode the property tax base, or make the collection of property taxes more difficult, place additional burdens on the remaining taxpayers.  The League will continue to vigorously oppose such measures.

Senate passes stormwater bill

The Senate passed SB 1566 - Stormwater Management 2006 this week to clarify the Phase II stormwater requirements.  The bill addresses the differences between legislation adopted in 2004 and rules subsequently adopted by the Environmental Management Commission in 2005.

The major change from the 2004 legislation is expansion of the Phase II program to 26 counties, and to approximately 100 cities and towns not previously covered by the stormwater rules or legislation.  The counties brought in by SB 1566 are Alamance, Brunswick, Cabarrus, Catawba, Chatham, Cumberland, Davie, Durham, Edgecombe, Franklin, Forsyth, Gaston, Guilford, Harnett, Henderson, Hoke, Mecklenburg, Nash, New Hanover, Onslow, Orange, Pitt, Randolph, Union, Wake and Wayne.  All qualifying development located in these counties would be required to manage stormwater, including development located in the municipalities within the counties.

We expressed concerns about adding non-Phase II designated municipalities to the legislation, and these concerns were addressed in that municipalities that are added under the bill only by virtue of their location within one of the counties listed above will not be required to implement the program themselves.  The N.C. Department of Environment and Natural Resources will be responsible for the stormwater program and will issue stormwater permits for development that takes place within those towns and the unincorporated areas of the counties, unless the local governments choose to request delegation.  Municipalities previously designated under Phase I or II will continue to implement their own programs.

The bill establishes a lower threshold for triggering stormwater control requirements in areas near shellfishing waters.  For those areas, controls are needed if built-upon area will exceed 12 percent.  In other areas, the threshold is 24 percent.  The amount of rainfall that stormwater controls must be designed to manage also differs.  In non-coastal areas, controls should be designed to manage the runoff from the first inch of rain; for coastal areas that are not in proximity to shellfishing waters, the runoff from the first 1.5 inches of rain; and for coastal areas in proximity to shellfishing waters, the difference in the runoff pre-development and post-development for the 1-year, 24-hour storm.

The bill also seeks to clarify municipal authority to adopt and enforce stormwater ordinances.  It specifies that cities can ban illicit discharges both within city limits and within the extraterritorial jurisdiction.  It also grants authority to require deed restrictions and financial arrangements for the future maintenance of stormwater management systems. 

The bill now goes to the House for consideration.  Although time is growing short, it remains to some extent a work in progress.  Please contact us as soon as possible with your questions and concerns.

Solid waste bill advances

A compromise version of SB 951 – Public-Private Solid Waste Collection was approved by the House Commerce Committee this week following extensive negotiations between local government and industry representatives over the past year.  The industry agreed to substantial changes to make the proposal acceptable. 

The original bill would have required cities and counties to pay 18 months of compensation to any “displaced” private solid waste collection company, or delay implementing a new provider for two years.  As rewritten, the bill requires cities and counties to give notice of the first meeting where the governing body will discuss a proposed displacement.  If the city or county then decides to take action to displace the existing provider, it has two options:  it may either allow a 15-month grace period (calculated from the date of notice of the first meeting) before a new provider takes over the service, or it may choose to pay the company its gross revenues for collection services provided in the displacement area for the six months prior to the first publication of the notice.

We want to clarify that nothing in the bill applies when an existing provider's contract is expiring.  We have received numerous inquiries on this point.  Failure to renew a contract or franchise is not “displacement” and local governments are free to change providers or take over solid waste services in that situation without complying with these requirements.  There are several other exceptions to the definition of displacement that narrow the application of the bill.  The legislation also specifies that it does not affect the authority of a city or county to establish recycling service where recycling service is not currently being offered. 

Our thanks to Sen. David Hoyle, sponsor of the bill, for allowing us the necessary time to negotiate with the interested parties.  SB 951 is scheduled for a vote on the House floor on Monday night, July 17.  Following action by the House, the bill must be returned to the Senate for concurrence in the compromise proposal.

Landfill moratorium moves

The Senate voted to approve a moratorium on permits to construct new landfills through January 1, 2008, to give the state time to study solid waste disposal issues.  Four “mega” landfill sites are planned around the state, with the potential to double North Carolina's waste capacity.  Senators expressed concern that North Carolina could become one of the nation's largest importers of waste from other states.  The moratorium had been included in the Senate's version of the budget, but was not included in the final budget bill.  The provision is now in a Senate committee substitute for HB 1093 – Moratorium Imposed On New Landfills , which must return to the House for concurrence.

The League has taken no position on this legislation but has notified its members so that they can express any concerns to their legislators.  The bill includes a series of exceptions to the moratorium, some of which were intended to address issues raised by local governments.  These exceptions are listed below:

- An amendment, modification, or other change to a permit for a landfill issued on or before 1 June 2006.

- A permit for a horizontal or vertical expansion of the landfill permitted on or before 1 June 2006.

- A permit to construct a new landfill within the facility boundary identified in the facility plan of a landfill permitted on or before 1 June 2006.

- A permit to operate a new landfill if a permit to construct the new landfill was issued on or before 1 June 2006.

- A permit for a sanitary landfill used only to dispose of waste generated by a coal-fired generating unit that is owned or operated by an investor-owned utility subject to the requirements of G.S. 143-215.107D.

- A permit for a sanitary landfill determined to be necessary by the Secretary of Environment and Natural Resources in order to respond to an imminent hazard to public health or a natural disaster.

Legislature gives final approval to video bill

The House concurred in the Senate version of HB 2047 – Video Franchising and the bill was sent to Governor Easley for signature.  Effective January 1, 2007, the Secretary of State's Office will have the authority to grant franchises for video services.  Local governments will receive percentages of three state sales taxes instead of local franchise taxes, with a proportional distribution.  We will provide a complete analysis of the legislation in a future bulletin.

Minimum wage to rise

The General Assembly gave its final approval to a state minimum wage increase and sent it to the Governor for his signature.  HB 2174 – Raise Minimum Wage increases the minimum wage by $1.00 to $6.15 per hour (or the amount provided under federal law, whichever is higher).  The change becomes effective January 1, 2007.

House approves Bill Lee revisions

The House has passed HB 2170 – Bill Lee Changes and the bill now moves to the Senate.  The legislation would revise and in some respects enhance the state economic development tax credits program.  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 economically distressed counties, as well as in agrarian zones and urban progress zones.  The bill replaces development zones with “urban progress zones” that are more narrowly focused on 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.  HB 2744 – Economic Development Program Modifications 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.  It passed the Senate and has returned to the House for concurrence. 

Another week in Raleigh

Although the General Assembly is clearly headed toward adjournment, legislators will be back on Monday, July 17.  We expect another full week of activity.  Please stay tuned and watch for our action alerts.