Budget negotiations intensify -- municipal revenue at risk

A Senate proposal to provide relief for the counties’ share of Medicaid costs would, in its present form, cost cities and towns future revenue. The Senate Finance Committee discussed, but did not vote on, SB 1484 – Medicaid Sales Tax Swap this week and is expected to discuss the proposal again at 6 p.m. on Monday. This is a complicated bill and the situation is fluid and subject to change, but in its present form, the bill takes part of the sales tax proceeds going to municipalities and replaces them with a flat reimbursement.

We support the efforts of the counties for Medicaid relief but not at the expense of municipal revenues.

Full information on the effects of SB 1484 on municipalities is not yet available. The bill as written would take five-eighths of one cent of local option sales taxes (one half cent of Article 44 tax and one-eighth cent of Article 40 tax) and make these state sales taxes. In turn, the state would take over the county’s share of Medicaid expenses. Counties could levy a new one-half cent local option tax, but the proceeds would not be shared with municipalities. Municipalities would receive a “hold harmless” payment equal to their share of the five-eighths cent in taxes that the state would be taking over, but the amount would be frozen with no growth factor. Our first analysis of SB 1484, based on this limited information, is that cities and towns would lose a minimum of $115.2 million in growth over the first five years.

A plan that takes away a growing municipal revenue source and replaces it with a flat reimbursement is a major concern for us. Losing growth means losing ground. And we know firsthand about the insecurity of reimbursements, having lost $130 million in municipal revenues in FY2001-02 when the state had a budget gap.

The House has its own version of a Medicaid relief plan, but details about this plan are somewhat sketchy. We understand that it would involve authorization for counties to increase the sales tax or impose a real estate transfer tax, subject to a referendum. We expect this issue to be decided in the next few weeks.

Please immediately deliver a simple message to your senators – and then to your representatives: We support a reasonable Medicaid relief plan for the counties, but not at the expense of essential municipal revenue sources.

Keep up the contacts on No Competition bill
Please keep up the good work in opposition to the “No Competition Bill,” also known as HB 1587 – Local Government Fair Competition Act.

We have been joined in our cause by some key network and internet technology companies. Google, Intel, Alcatel-Lucent, and Tropos Networks have all lent their voices to the growing opposition. The bill would sharply limit local governments' ability to create their own telecommunications networks and would prevent them from partnering with private telecom providers to establish broadband service.

The bill is heavily backed by the telecommunications industry and is intended to discourage competition from local government in the provision of communications services. However, it is clear that the industry does not intend to provide service in certain areas and will not commit to serve entire communities. Local governments should have the ability to provide citizens with access to high-speed broadband service for the future economic development of our state. Rural and distressed urban areas should not be left behind.

Please let us know if we may include your municipality on a list in opposition to this bill to be presented to members of the House. Contact Anita Watkins at awatkins@nclm.org.

Renewable energy discussed
A committee substitute for SB 3 - Promote Renewable Energy/Energy Efficiency was unveiled in the Senate Agriculture and Environment Committee this week, following a lengthy stakeholders’ process. The bill would subject electric power suppliers to a renewable energy and energy efficiency portfolio standard. Under the proposal, suppliers renewable fuels and energy efficiency efforts would have to comprise 12.5 percent of energy portfolios by 2021. No vote was taken, but the bill is scheduled in the committee on Tuesday of next week.

Steep slope construction bill heard
A committee substitute for HB 1756 – Safe Artificial Slope Construction Act was discussed in House Environment this week but no action was taken. As revised, the bill would affect nineteen counties in the western part of state. Those counties would be required to adopt ordinances to regulate site planning, design, and construction of artificial slopes in mountainous areas. Artificial slope construction is defined as any land-disturbing activity that creates or changes any slope, or attempts to do so. County ordinances would apply in both unincorporated and incorporated areas, unless a city chose to adopt its own ordinance to apply within city limits and the extraterritorial jurisdiction. (Many already have regulations in place.) Discussion is expected to continue in committee next week.

Homestead increase advances
The House unanimously passed a bill Wednesday that increases the income threshold for individuals to qualify for the property tax homestead exclusion from $19,000 to $25,000. The increase would be effective July 1, 2009. HB 1499 – Increase Homestead Income Limit to $25,000 does not change the amount of the exclusion itself.

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.

General Government

Bill: HB 24 – SMOKING IN STATE GOVT. BUILDINGS/PROHIBITION
Sponsors: Weiss (D35); Glazier (D45)
Status: Senate Calendar for 6/26
Allows local governments to restrict smoking in buildings and in public transportation vehicles owned or leased by the local government.

Bill: HB 1340 - AMATEUR RADIO ANTENNAS
Sponsors: McComas (R19)
Status: Passed Senate
Requires city and county ordinances to reasonably accommodate amateur radio communications antennas and structures and be the minimum practicable regulation necessary to accomplish the purpose of the ordinance. Prohibits cities and counties from restricting antennas or antenna support structures of amateur radio operators to heights of 90 feet or lower unless the restriction is necessary to achieve a clearly defined health, safety, or aesthetic objective.

Local Bills

Bill: HB 925 - GRANITE QUARRY-FAITH POLICE AUTHORITY
Sponsors: Steen (R76)
Status: SL 2007-88
Authorizes the two towns to establish a joint policy authority.

Bill: HB 1141 - GRANITE QUARRY/FORM OF GOVERNMENT
Sponsors: Steen (R76)
Status: SL 2007-89
Amends the town’s charter to allow it to operate under the council-manager form of government.

Bill: SB 350 - WAKE CO. TOWNS ELECTRONIC NOTICES
Sponsors: Stevens (R17)
Status: SL 2007-86
Authorizes Apex, Garner and Knightdale to adopt ordinances providing that notice of public hearings may be given through electronic means, including, but not limited to, the towns’ internet sites. Such ordinances do not supersede any state law that requires notice by mail to certain classes of people or the posting of signs on certain property and does not alter the publication schedule for any public notice.

Public Safety

Bill: SB 34 - KILL POLICE ANIMAL
Sponsors: Swindell (D11)
Status: SL 2007-80
Makes it a Class H felony to willfully kill or attempt to kill a law enforcement or assistance animal and makes it an aggravating circumstance for other criminal offenses that such an animal was seriously harmed or killed while engaged in performing official duties.

Transportation

Bill: SB 1453 - OYSTER SHELLS/HIGHWAY BEAUTIFICATION
Sponsors: Jenkins (D3)
Status: SL 2007-84
Prohibits DOT or any other unit of government from using oyster shells as a ground cover in a highway beautification project. Requires these entities that come into possession of oyster shells to make them available to the Division of Marine Fisheries for use in any oyster bed revitalization programs or any other program that may use the shells.