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NCLM Board Holds Timely Meeting With Governor McCrory

As Speaker of the House Thom Tillis announced Thursday that the General Assembly session would likely end by July 4th, the NCLM Board of Directors was meeting with Gov. McCrory to discuss tax reform and other pertinent and timely legislative matters at the Governor's Mansion. As the House and Senate negotiate over tax reform and the state budget, support for cities continues to be strong. We remain gravely concerned over the Senate tax reform proposal which would cost cities $164 million annually, but are heartened by the support we have received from members in both chambers, the governor, and city officials from around the state. Stay tuned for information on the outcome of the negotiations which are taking place, and stay connected to your General Assembly members! 

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League Executive Director Hankins Announces Retirement

Executive Director Ellis Hankins announced his plans to retire from the North Carolina League of Municipalities at yesterday's board of directors meeting. Hankins will remain in his role through January 2014. Hankins joined the League in 1982 as assistant general counsel and was eventually promoted to chief legislative lobbyist. Hankins left the League in 1993 to practice private law, but returned in 1997 to accept the role of executive director.

Board and staff members expressed their gratitude for Hankins' service to the organization. "Ellis has been a staunch advocate for cities and towns throughout his tenure with the League," said Art Schools, League president and mayor of Emerald Isle. "We thank Ellis for his efforts, and he will be missed."

For more information about Hankins' retirement, view the full press release here.

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Senate Delays Approval of Tax Reform Bill Pending Negotiations

The Senate did not take a scheduled final vote this week on its version of HB 998 Tax Simplification and Reduction Act, but instead sent the bill back to the Senate Finance Committee. It is expected that the bill will remain in committee until House and Senate leaders have reached an agreement with the Governor about what measures should be included in the tax bill. A bill embodying the agreement would then be brought before the committee for approval. 

The current Senate version of the bill would reduce annual municipal revenues by over $160 million when fully implemented. The House version is designed to ensure that no municipality would lose revenue. Municipal officials from across the state traveled to Raleigh this week to make the point that municipalities should not lose revenue under a tax reduction plan.  Many others wrote and called legislators to express their concerns. These contacts are having an impact on the tax reform negotiations. Speaker of the House Thom Tillis told News 14 Carolina reporter Tim Boyum that the tax bill has to be revenue neutral for cities and towns. Said Tillis, “We’re not going to do anything that puts a burden on the cities and counties. That’s our job to balance the budget, not to really shift it and have them have the responsibility for raising revenue because it could have an impact on property taxes and other things.” 

Municipal officials should continue letting legislators know the effect on their cities and towns of eliminating the local privilege license tax, the local sales tax on food, and sales tax refunds for local governments. Information about the versions of HB 998 approved by the House and given preliminary approval by the Senate can be found on the League's website. Contact: Karl Knapp

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To Adopt or Not Adopt? Budgeting in Uncertain Times

With the State budget and tax reduction legislation still under negotiation this close to the start of the fiscal year, some cities and towns may be wondering whether it is prudent to adopt a budget before legislative action is complete. In their current form, neither the House or Senate versions of the budget or tax bills would significantly affect FY 13-14 municipal revenues. Nevertheless, it is useful to consider the options available if local leaders do not want to adopt their budgets before those bills are finalized. Under G.S. 159-16, local governments may adopt an interim budget for a set period of time to cover the cost of salaries, debt service, and other ordinary expenses from revenue available during the interim budget period. An interim budget would not set the property tax rate. A municipality might also wish to make use of the option provided in G.S. 159-15 to adopt the budget and the tax rate, but later amend the tax rate if the municipality "receives revenues that are substantially more or less than the amount anticipated." The decision to adjust the tax rate must be made by January 1, but practically, any change should be adopted before tax bills are sent. Contact: Karl Knapp
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Budget Negotiations Begin, Rural Center Under Scrutiny

As House and Senate budget negotiators began their work this week, a two-part article in the Raleigh News and Observer on the NC Rural Center raised concerns about the continued viability of State funding for the Center. The article questioned the Rural Center's claims about the number of jobs its grants had generated and suggested that political decisions influenced the Center to adjust its own rules about which projects to fund. Governor Pat McCrory said the article shows why a new approach to economic development and job creation assistance is needed. The issues highlighted by the article may shift budget negotiations towards the Senate position of eliminating funding for the Rural Center and establishing a new development structure within the Department of Commerce. A comparison of the House and Senate versions of the budget can be found on the League's website. Contact: Karl Knapp
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Provision Limiting Asheville Water Bill's Application Eliminated

The House Environment Committee voted yesterday on a new version of interbasin transfer legislation (SB 341) that the League previously supported (see below). However, the new version of the bill includes a provision amending the previously passed law that would transfer the City of Asheville's water system to a metropolitan sewerage district, potentially making that law applicable to many more utility systems around the state. When passed, HB 488 Regionalization of Public Utilities included a provision limiting its application only to public water systems that had not been issued an interbasin transfer certificate. The new version of the interbasin transfer legislation eliminates that provision from law, which could threaten future municipal control of utilities around the state. The League opposes the provision and will be working with bill sponsors to ensure that this protection is maintained in law. Contact: Paul Meyer
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Interbasin Transfer Law Moves On in House

An amended SB 341 Amend Interbasin Transfer Law, a multi-faceted bill that makes incremental changes to the state's interbasin transfer (IBT) laws, received approval by the House Environment Committee yesterday. An IBT occurs when water is transferred from one river basin to another. Municipalities often initiate IBTs by, for example, withdrawing drinking water from one basin and discharging it as wastewater into another basin. The proposal in SB 341, a product of a water supply stakeholder group on which the League participates, spells out the process for modification of IBT certificates. It also applies a similar process for first-time IBT certificate requests to areas under the Central Coastal Plain Capacity Use Area -- an area in eastern North Carolina required to transition away from groundwater supplies toward surface water supplies -- thereby easing the transition for affected water systems. Importantly, the bill changes the definition for the threshold under which a withdrawer would need to seek a certificate, changing the limit to three million gallons/day and calculating it on a monthly basis rather than a daily basis. This change addresses the technical limitations of calculating daily withdrawals. Contact: Erin Wynia
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Hearing on Durham Annexation Bill Monday

After some legislative wrangling this week, the bill to require the City of Durham to provide utilities to the 751 South development has been scheduled for a public hearing in the House Finance Committee at 4 p.m. Monday. Last week, following the Durham City Council's rejection of a proposed agreement with the developers, the House Rules Committee voted in favor of SB 315 Municipal Services. The bill largely codifies that agreement that the Durham City Council voted against accepting, annexing the 751 South property into the Durham city limits in 2023 and requiring the city to provide utilities to the project. The bill applies statewide but would apply only to properties that meet the bill's narrow qualifications within sixty days of the passage of the legislation. There was a move on the House floor this week to remove the bill from the Finance committee and re-refer it to the Rules committee, but following a vote on the floor the bill will remain in the House Finance Committee and be heard on Monday. Contact: Paul Meyer
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Bill Begins to Phase Out Economic Development Corporations, Realign Regional Offices

A House committee approved a bill Wednesday that would phase out existing economic development nonprofits across the state, replacing them with an undetermined number of new nonprofits to continue those functions. The new nonprofits represent a reorganization of the N.C. Department of Commerce and are an initiative of Governor Pat McCrory. They would receive oversight by a new Economic Development Oversight Committee that would include legislative and executive branch appointments. SB 127 Customer Srvc., Econ. Dev., and Transport'n would also begin the process of realigning the state's regional offices for the N.C. Department of Environment and Natural Resources and N.C. Department of Transportation by directing those agencies to report to a legislative commission by January on "how they plan to abolish regions and transform them into Collaboration for Prosperity Zones as defined by this act." The bill outlines eight regions, which would serve as a starting point for drawing these new service areas. Many House committee members from both parties stated general support for the concepts in the bill during Wednesday's debate. The bill now moves to the House Appropriations Subcommittee on Natural and Economic Resources, suggesting any changes may become part of the state budget. Contact: Erin Wynia
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Transportation Reform Now Awaits Governor's Signature

The House gave its final approval to transportation reform legislation this week, sending it to the Governor for his signature into law. The details of HB 817 Strategic Transportation Investments remain unchanged from last week, when public transportation projects meeting certain criteria were made eligible for funding in the Regional project tier, and changes were made to ensure State funding limitations for bicycle and pedestrian projects did not apply to projects scheduled for construction by 2015. The League continues to participate on a N.C. Department of Transportation work group that is working on additional details regarding the legislation's implementation. Contact: Chris Nida
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House Passes "Call Before You Dig" Bill

After receiving a favorable report from a second House committee Wednesday, a modified version of HB 476 Rewrite Underground Damage Prevention Act passed the House unanimously yesterday. The bill is a comprehensive overhaul of the state's underground digging laws, also known as the "811" laws named after the "call before you dig" phone number excavators must dial to notify utilities of planned digging activities. The version approved by the House contains revisions to the enforcement section, assigning those responsibilities to an oversight board, which includes a representative recommended by the League. In addition, the N.C. Utilities Commission would take responsibility for assessing penalties for violations of the laws. The bill represents the culmination of months of negotiations between representatives of the League, contractors and other excavators, and utilities with underground lines such as natural gas, electricity, and cable. The League supports this compromise legislation, which would require all cities and towns with underground utilities subject to the act to join the NC 811 notification center. However, the bill would exempt cities from the requirement to mark -- or provide a "locate" -- for all gravity-fed wastewater lines installed prior to the law's effective date, and all stormwater facilities. The bill now moves on to the Senate for consideration. Contact: Erin Wynia

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Senate Approves Bill to Limit Local Government Tag & Tax Together Revenues

The Senate this week voted in favor of SB 305 DMV Commission Contract Changes, sending it to the House for consideration. The bill would increase the fees municipalities are required to pay to contract license plate agents who will be processing motor vehicle registrations and collecting property tax under the soon-to-be implemented Tag & Tax Together program. The additional revenues local governments were supposed to receive under that program will be limited by the bill. The League and the N.C. Association of County Commissioners both spoke in opposition to the bill in committee, with the League noting that there is no requirement that these increased fees be put toward additional positions or other customer service enhancements. The bill simply imposes additional costs on local governments. Contact: Paul Meyer
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Nuisance Abatement Law Passes House, Sent Back to Senate

The House gave its approval this week to legislation expanding municipal nuisance abatement authority, sending it back to the Senate for concurrence. The bill, SB 264 Abate Nuisances/Drug Sales From Stores, would achieve a municipal advocacy goal by authorizing municipalities to use nuisance abatement authority on properties that are the source of regular criminal nuisance activity but also have some legitimate use. This would reverse case law which limited city nuisance abatement authority when illegal activity is not the "sole purpose of the building or place." An amendment on the floor from Rep. Bill Brawley would have weakened the effect of the bill, but that amendment was later withdrawn. The Senate, which previously passed the bill, is scheduled for a concurrence vote next week, and the League thanks Senate Majority Leader Harry Brown for his sponsorship of the bill. Contact: Paul Meyer
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Hearing on Charlotte Airport Bill Delayed

The legislation that would transfer ownership of Charlotte Douglas International Airport from the City of Charlotte to a regional airport authority was pulled from the House Finance Committee calendar this week after originally being scheduled for a hearing. Negotiations continue regarding the details of the House's version of SB 81 Charlotte Regional Airport Authority, which the Senate has already passed. The League opposes the bill. As of Friday afternoon consideration of the bill had not yet been rescheduled. Contact: Paul Meyer
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Biosolid Application Provision Clarified in Revised County Legislation

The House Environment Committee voted in favor of SB 372 Omnibus County Legislation yesterday after little discussion. This bill contains a provision which would require state and local governments to give boards of county commissioners notice and opportunity to comment if land application of biosolids has been proposed in their counties. Biosolids are a byproduct of wastewater treatment and are used as a highly effective fertilizer for crops. The version approved yesterday includes a clarifying provision requested by the League to ensure notice occurs when Class B biosolids are proposed for land application. The League is not opposed to this specific proposal but would oppose any legislation giving local governments such as counties the ability to prevent the land application of biosolids. League members prioritized limiting regulation in that area to the state and federal governments as a regulatory advocacy goal. Contact: Erin Wynia
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FEDERAL: Contact U.S. Representatives Regarding Internet Sales Tax

The National League of Cities (NLC) is asking municipal officials across the country to contact their U.S. Representatives and ask for their support of the Marketplace Fairness Act. The Act, which has been passed by the U.S. Senate, would authorize cities to begin collecting the sales taxes on online purchases that they are currently owed but unable to collect. Passage of the Act would mean additional revenues for municipalities in North Carolina. See here for information on the bill from NLC Executive Director Clarence Anthony, and view a report of the bill's projected impact here. Governing magazine has more on the bill's current status in the House. Contact: Chris Nida
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Governor, Legislators Act on Bills Affecting Cities

The House and Senate took action on several bills this week that will have some impact on municipalities. These bills advanced without modification to significant issues that would affect cities and towns. Additionally, Governor Pat McCrory signed into law several bills affecting municipalities. The list below contains bills that were acted upon this week, the action taken, and prior League coverage of the bills.

General Assembly Legislation:

Legislation Signed by Governor McCrory: