'No local competition' bill heard

The House Public Utilities Committee took up the misnamed HB 1587 – Local Government Fair Competition Act on Wednesday. A number of municipal officials were in attendance to oppose the bill. After some discussion, action on the bill was postponed until next week. It is scheduled in the committee again on Wednesday, June 6 at 10:00 a.m.

The bill would place significant roadblocks and restrictions on any local government that wants to provide communications services - including cable, telephone, electronic voice, data, audio or video transmission and Internet access - to its citizens. Access to high-speed broadband service is critical for the future economic development of our state, but telecommunication companies want to prevent local governments from providing high-speed broadband to their communities.

Ironically, this same industry pushed for and won statewide franchising of video services last session, claiming that the local franchising process hampered competition. Now they complain that local government provides too much competition. The legislation last session imposed very little regulation and did not require companies to build out, or serve an entire community. Through their opposition to build-out requirements, the telecom industry has made it clear that they have no intention of investing in some rural and distressed urban areas. Local governments should have the ability to step in and provide a service to the entire community.

The League opposes HB 1587 because it seeks to undermine local authority to undertake enterprise activities--authority that has been upheld by the courts.

Our thanks to the municipal officials who made the trek to Raleigh for this week’s committee meeting. Your presence made a difference. Please continue to let your members on the committee know your concerns.

Members of House Public Utilities Committee
Rep. Saunders (chair); Reps. Brubaker, Coates and Cole (vice-chairs); Reps. Bryant, Earle, Grady, Gulley, Harrison, Holmes, Howard, Lucas, McComas, Wright

Senate approves budget proposal
The Senate approved its version of the state’s budget proposal this week with strong bipartisan support. The Senate substitute for HB 1473 – 2007 Appropriations Act calls for an end to two temporary taxes first adopted in 2001. While the House budget would extend for two more years the one-quarter percent state sales tax that was to expire this year and would keep the highest income tax rate at 8 percent, the Senate budget would allow them to expire as scheduled. The gasoline tax would be capped at 29.9 cents per gallon, a provision not included by the House, at a net loss of $8.1 million to the Highway Trust Fund. The Senate would add $150 million to the state's savings reserve fund, compared to $315 million proposed by the House.

The Senate plan includes a 4 percent pay increase for most state employees, compared to 4.25 percent in the House plan. It authorizes about $1.2 billion in special indebtedness for capital projects, primarily for universities and prisons, more than twice the amount authorized by the House.

Both budget plans would raise wastewater permit fees by 20 percent effective July 1, 2007 (same as the House). This would include NPDES permits, stormwater and wastewater discharge general permits, sewer system extension permits, water quality certifications and others. The fees had not been adjusted in approximately ten years. We had asked for a delayed implementation of these increases to give local governments adequate time to budget for the increased costs but neither proposal does so.

We were pleased to see increased allocations for the state’s criminal justice system in the Senate proposal. The Senate plan would put almost $9 million toward modernizing technology in North Carolina’s courts and almost $23 million toward hiring 155 new prosecutors and support staff, 60 assistant district attorneys, 15 district attorney investigators, and 300 new deputy clerks. An additional $2 million would be used to hire 42 new magistrates and $1.5 million for three new special Superior Court judges. The Senate would allocate $3 million for gang prevention, intervention and suppression grants ($4.8 million in the House plan).

For FY 2007-08, the Senate plan states the intent to increase the appropriation to the State Fire Protection Grant Fund by more than $1.6 million. These funds are used to provide local fire protection for state-owned property. For subsequent years, the increase will be about $1.2 million. This was not included in the House budget.

Both the House and Senate versions of the budget allocate $100 million for the Clean Water Management Trust Fund. Both include matching funds to obtain federal monies for the clean water and drinking water revolving funds. Funds of $3.7 million in the Senate plan ($4.1 million in the House) would be allocated for the flood plain mapping program. Both proposals would increase the state’s fee for review and approval of sedimentation and erosion control plans to $65 per acre. An interesting special provision in the Senate plan requires that at least 20% of any area designed to be used for vehicular parking (except a covered or multilevel area) must be a pervious surface.

Both proposals provide $19.5 million in each year of the biennium to the Rural Economic Development Center for grants to local governments for critical water and wastewater facilities and other infrastructure needs. Both would provide an additional $19 million to the REDC in FY 2007-08 for economic development grants with priority to severely distressed areas (including small towns and urban progress zones).

The stage is now set for the two sides to negotiate their differences. The General Assembly will be working with an eye toward adopting the compromise budget before the beginning of the new fiscal year.

Medicaid relief on table
The Senate’s budget expresses the General Assembly’s intent to permanently relieve counties of their share of the nonfederal Medicaid expenditures, with a plan in place by July 1, 2008. The House budget included one-time funds for partial Medicaid relief.

There is some speculation that competing plans for permanent county Medicaid relief will be discussed next week in the Senate Finance Committee. Both Sen. Dan Clodfelter’s proposal and Sen. Tony Rand’s proposal involve some form of local tax swap in exchange for the state taking over county Medicaid costs. We’ll be monitoring these discussions closely.

We support Medicaid relief as a part of an infrastructure funding package that will benefit counties, but cities must not be left by the wayside. Cities and towns provide vital services to growing populations and have tremendous funding needs for building and maintaining municipal streets (and sometimes state system roads), water and sewer systems, stormwater systems, and other infrastructure. They also provide police and fire protection for a large portion of the populace in the state.

We are working with the Partnership for North Carolina's Future, a coalition of advocates for increased state investments in school construction, affordable housing, roads, land and water conservation, and water and sewer services. North Carolina is facing a “population tsunami” that the General Assembly must meet with significant new capital investments to protect the state’s economy and quality of life and we are urging legislators to find long-term funding solutions for schools, roads, clean water and natural resources.

For more information on the Partnership, please visit www.ncfuturenow.org .

911 bill advances
A proposal to overhaul the funding and administration of 911 systems cleared House Finance this week. HB 1755 - Coordinate Statewide Enhanced 911 System rewrites the wireless telephone service statutes to consolidate the state’s Enhanced 911 system under a single board that will establish a uniform service charge to be collected by all voice communication service providers. It authorizes this board to levy a monthly Enhanced 911 charge on each voice communications service connection, with the charge set at seventy cents per month per connection. The bill deems the funds to be local revenues that may not be reduced or withheld by the Governor and provides for their distribution to public safety answering points.

It is our understanding that the method of distribution will hold public safety answering points harmless to FY 2005-06 funding levels. A percentage of the additional funds that flow into the statewide 911 program will be divided on a per capita basis among eligible PSAPs based on population served, and a percentage will be distributed to PSAPs in rural and other high-cost areas. The bill expands the authorized uses of 911 fees to include training, and dedicates unspent industry 911 funds to a grant fund for local 911 programs. Existing local fund balances will revert to the general fund of the local government. The bill is likely to be debated on the House floor next week.