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City Issues Still in Play as Session Close to Conclusion

The Senate met today (Friday) to wrap up a handful of controversial items, so it appears the session will be concluded next week. Budget negotiators are working towards a final package to be considered next week. The League Governmental Affairs Team is actively lobbying a number of important issues for cities and towns -- mainly related to regulatory reform -- as we come down the home stretch. Keep your eyes open for late-breaking action alerts!
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Tax Reform Is Positive for Municipal Revenue Due to Your Efforts

General Assembly leaders reached a compromise on HB 998 Tax Simplification and Reduction Act with Governor McCrory this week and passed legislation for the Governor to sign. The bill sent to the Governor would have a positive impact on municipal revenues due to the efforts made by city and town officials to convince their legislators why it was important to keep cities and towns fiscally whole as part of the tax reform process. Hundreds of officials came to Raleigh throughout the session and many others contacted their legislators to express their concerns. Legislators gave serious consideration to your input and removed provisions, such as elimination of the privilege license tax and the local government sales tax refund, that would have harmed municipalities. 

The final version of HB 998 does contain the same provision that was in both the House and Senate versions to replace the franchise taxes on electricity and natural gas with a State sales tax on these items. Cities and towns would receive a portion of the sales tax on electricity and natural gas, which would be distributed through a formula designed to ensure that no municipality would lose revenue. This formula was intended to make the change revenue neutral for each city and town.

Municipalities will receive additional revenue as a result of several changes to the sales tax under HB 998. State and local sales tax will be applied to service contracts for maintenance/repair of automobiles and goods subject to sales tax, as well as to admissions to movies, live entertainment, and museums. In addition, some sales tax exemptions and the two sales tax holidays will be eliminated.  

HB 998 will produce a small revenue loss as well because it caps the State gas tax at 37.5 cents for the period October 1, 2013 to June 30, 2015. This will reduce Powell Bill funding for FY 14-15, but not FY 15-16, because the gas tax rate is not expected to exceed the cap after June 30, 2014. 

The total change in revenue for all cities and towns under the House, Senate, and Final versions of the bill is shown in the table below in millions of dollars. 































Each League member was sent a preliminary estimate earlier this week of the effect of the tax reform bill on its revenue for the next six years. Contact: Karl Knapp

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ACTION ALERT: Act Now on Transitional Hold Harmless

If your municipality is interested in an extension of transitional hold harmless payments, you need to contact your legislators immediately and let them know how important they are to you. An extension of these payments was included in the House budget but not the Senate budget, meaning it will be a point of negotiation between the two chambers. Legislative leaders could announce a budget agreement as soon as today, meaning this is the absolute last chance to make a push for the transitional hold harmless. If an agreement is reached this weekend, the budget would be debated and voted on early next week, with the legislature then aiming to adjourn until May at the end of next week. The League will have details of budget provisions of importance to cities and towns soon after the full budget is made available. Contact: Karl Knapp
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Cat & Mouse on Regulatory Reform This Week

Following the introduction of dueling regulatory reform bills last week, the House and Senate continued to find alternate vehicles for their preferred regulatory reforms this week. Throughout the entire debate, the League worked closely with bill sponsors to improve upon various reform provisions that were harmful to cities and towns. Keeping track of which provisions had moved from one bill to another amounted to a game of cat and mouse for legislative observers and legislators alike:

  • The week began with two proposals loaded with provisions, one in each chamber (read about provisions affecting League members in this week's EcoLINC article).
  • Two provisions of interest to League members then showed up in an unrelated bill before being removed in House floor debate the next day.
  • Then, the Senate countered by taking the provisions it preferred from both of last week's regulatory reform bills and adding them to HB 74 Regulatory Reform Act of 2013. The Senate voted to approve that legislation today and sent it to the House for concurrence.
  • To cap off that action, legislators from both chambers plan to meet over the weekend and finalize the regulatory reform provisions on which they can agree.

Of interest to League members, the latest Senate bill offering would convert to a study a provision that would have restricted the ability of cities and towns to pass environment-related ordinances that were more stringent than a corresponding state or federal law. In addition, the bill also contains the same harmful provision that would permanently grandfather existing billboards within municipal limits that was detailed in last week's LeagueLINC Bulletin. Contact: Erin Wynia

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Judge Halts Transfer of Charlotte Airport Ownership

The Senate gave final approval Thursday to legislation transferring control of Charlotte Douglas International Airport from the City of Charlotte to an airport authority to be created upon the legislation taking effect. However, by the end of the day a judge had granted the City of Charlotte a temporary restraining order preventing the law from taking effect until a legal challenge to the law is completed. The vote on SB 81 Charlotte Douglas International Airport followed a week in which members of the General Assembly and representatives of the City of Charlotte unsuccessfully attempted to reach agreement on a compromise plan. The League opposes SB 81, as it does with all legislative efforts to make decisions regarding the ownership and operation of locally-owned assets. Contact: Paul Meyer
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Amended IBT Bill Clarifies Application of Asheville Water Law

The House and Senate voted this week to approve SB 341 Amend Interbasin Transfer Law, a bill that makes incremental changes to the state's IBT laws but also now includes language related to previously passed legislation transferring control of the City of Asheville's water system. When a new version of SB 341 initially appeared in a House committee, it deleted a provision of the Asheville water legislation, opening that law for eventual application to utilities in the City of Greenville. The deletion remains in SB 341, but an amendment approved on the House floor is intended to ensure that the Asheville legislation would not apply in Greenville. The League believes that the amendment would not lead to the Asheville water law applying to any additional communities. The apparent motivation for these changes to the Asheville water law is to strengthen the State's case in the lawsuit filed by the City of Asheville. The amended version of SB 341 now heads to the Governor for his consideration before becoming law. Contact: Paul Meyer
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Limited Local Electronic Notice Bill Heard in Committee

Legislation that would allow the municipalities of Guilford County to publish legally required electronic notices on government websites and via other means was heard, but not voted on, in the House Rules Committee Thursday morning. The bill, now known as SB 287 Notice Publication - Guilford Co. Local Govs., previously applied to 10 counties and some additional municipalities, but the version heard Thursday was limited to Guilford County and the municipalities wholly or partly within Guilford County. The wider version of the bill previously passed the Senate and a House committee, but it was derailed on the House floor. Electronic publication of legal public notices was chosen by League members as a Municipal Advocacy Goal for 2013-14, due to members' desire to modernize and streamline their notification efforts and save taxpayers the burden of subsidizing the operations of newspapers across the state. Contact: Paul Meyer
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Bill Reducing Tag & Tax Together Revenues Sent to Governor

After more than an hour of debate Thursday, the House gave final approval to SB 305 DMV Commission Contract Changes. The bill was then sent back to the Senate, where Senators voted to concur with the House version of the bill without debate. SB 305 will now be sent to the Governor for his consideration before becoming law. The bill increases the fees local governments must pay to contract license plate agents who are now collecting property taxes under the Tag & Tax Together Program. The League opposes the fee increases, as there is no requirement that they be used to enhance the customer services provided by the agents. Such concerns were raised on the House floor, and before the bill's passage the House did approve an amendment requiring the Revenue Laws Study Committee to study the fee levels during the interim between sessions. The higher fees included in the bill would still be in effect while this study takes place. Contact: Paul Meyer
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Senate Delays Legislation Requiring Durham to Provide Services

Legislation to require the City of Durham to provide water and sewer service to a development outside of its corporate limits has repeatedly appeared on the Senate calendar since it was passed by the House last week, only to continually be delayed. Currently SB 315 Municipal Services is scheduled to be heard next Tuesday. According to this report the Senate is waiting on a bill from the House related to the Jordan Lake Rules. Click here for the League's previous report on the passage of SB 315 in the House. Contact: Paul Meyer
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Terminal Groin, City Ordinance Authority Bill Sent to Governor

Legislation approved by both the House and Senate this week will make it easier for coastal communities to build terminal groins to prevent beach erosion. SB 151 Coastal Policy Reform Act of 2013 was also amended on the floor to include language related to cities' ability to enforce their ordinances on the state's beaches. The amendment extends municipalities a limited version of this authority but does not include language, such as that in HB 300 Cities/Public Trust Rights, that would permit the enforcement of ordinances related to buildings and structures. This is a significant issue for many coastal communities, and Rep. Pat McElraft has committed to working with those communities in the short session to craft language that would address the issue. The League thanks Rep. McElraft for her commitment. SB 151 now heads to the Governor for his consideration before becoming law. Contact: Erin Wynia
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Governor Freezes State Funds to Rural Center

Governor Pat McCrory yesterday suspended all dispersement of state grant money to the North Carolina Rural Economic Development Center. The move comes after a week in which the State released an audit critical of the Rural Center's practices and longtime director Billy Ray Hall resigned. Gov. McCrory's statement on the matter also said the State could move to "recover the public money held by the center to ensure the funds are used for the original purpose of serving rural North Carolina." The News & Observer has more on the turmoil currently surrounding the Rural Center. Contact: Chris Nida
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811 Law Overhaul Approved by Senate

The Senate voted Wednesday in favor of HB 476 Rewrite Underground Damage Prevention Act, which will comprehensively overhaul the state's underground digging laws. These laws are commonly known as the "811" laws, in reference to the phone number excavators must call to notify utilities of planned digging activities. This legislation is the culmination of months of negotiations between League representatives, contractors and other excavators, and utilities with underground lines such as natural gas, electricity, and cable. Because the Senate made some changes -- all of which were supported by the League -- to the version of HB 476 previously approved by the House, it must now return there for a concurrence vote. Contact: Erin Wynia
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Local Bill Replaces Recording of Closed Sessions Legislation

A bill that would have required cities to record closed session meetings was converted to a local bill this week, likely ending the chances that that language would pass this session. In the Senate Rules Committee Wednesday HB 870 Record Closed Sessions of Public Bodies became HB 870 Duplin County Boards of Comms. and Educ. The League had worked with the sponsor of this bill to get important exceptions to the legislation inserted into its language, and we appreciate Rep. Jimmy Dixon's willingness to work with us on this issue. We expect this legislative language to instead receive consideration in the 2014 Short Session. Contact: Paul Meyer