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Legislative Session Ends, Sort Of

A budget agreement reached this week cleared the way for state legislators to finally adjourn and leave town, but they might be coming back before all is said and done. An adjournment resolution approved by the Senate could have legislators coming back on Aug. 14, a move intended to give Governor Pat McCrory less time to consider vetoing bills. The governor has 30 days to consider vetoing legislation once lawmakers adjourn "sine die." By avoiding the sine die adjournment resolution, Governor McCrory would have only 10 days to consider any vetoes.

The Senate-backed adjournment plan also could have the legislature returning on Nov. 17 to consider Medicaid reform and a plan to clean up coal ash pits. The House and Senate were unable to agree on either issue during the session. In both reconvened sessions, legislators could consider any litigation filed against the state and appointments to state boards and commissions. If the House agrees with the adjournment resolution -- something that it had not done by mid-day Friday -- the coal ash legislation, among the remaining issues to be considered, would likely affect municipalities. (See Bulletin item below.) Lawsuits involving the Asheville water system and Charlotte Douglas International Airport could also become topics of consideration.    

It wasn't completely clear on Friday whether the House would agree to what amounts to an extension of the legislative session into the fall, and what would happen if they did not. If the weekend did largely represent the end of the session, it has been a busy final several days for the League's Governmental Affairs Team. League staff watched over the final resolution of regulatory changes, local government contracting rules, historic preservation and film tax credits, local-option sales tax legislation and, of course, the effects of the budget on municipalities. 

In many cases, particularly on the regulatory front, these final issues were resolved in ways favorable to municipalities. In other cases, policy changes got dropped in the final back-and-forth between the two chambers. And the effort to continue historic preservation tax credits looks as if it instead will become part of a legislative study, while a version of county local-option sales tax legislation might receive a final vote in the House on Friday. See further Bulletin coverage of those issues here and here. Look for an End of Session Bulletin in coming days to provide a comprehensive look at the session. All of the successes cities and towns have seen this session were only made possible with your help. Whether through individual contacts or organized events like Town Hall Day, your efforts to keep cities and towns strong were crucial this year. Thank you! Contact: Paul Meyer

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Legislators Reach Budget Deal

After weeks of contentious talks, House and Senate negotiators agreed on a budget deal that resolved differences over teacher pay and called for spending $21.1 billion in the current fiscal year. The Senate quickly moved to approve the plan on Thursday and Friday, in two required votes over two separate days, while the House gave more time for review before planning votes on Friday and Saturday. The Senate approved SB 744 Appropriations Act of 2014 in a 33-10 final vote just after midnight on Friday morning; the House was debating the budget bill this morning before an initial vote in that chamber.

Much of the focus on the budget bill coming out of negotiations remained on how much teachers would be paid, along with cuts to the Medicaid health care program for the poor. But the 260-page bill contained a number of provisions affecting municipalities. It projects $9.4 million in additional Powell Bill funds, bringing total funding in FY 2014-15 to $146.3 million. The budget bill also establishes regulation for unmanned drones, including use by local governments, and puts the state ABC Commission under the purview of the Department of Public Safety. The legislation also adds five positions in the Local Government Division of the Department of Revenue to aid in auditing nonprofit and governmental refund requests of sales taxes. Some grant programs that affect local government would receive additional money, while others would see new restrictions.

Budget provisions that will affect municipalities include:

  • Section 15.14A, which provides $1 million for the Main Street Solutions fund.
  • Section 14.8, which sets aside an additional $500,000 to the Clean Water Management Trust Fund.
  • Section 14.17, which requires that local governments applying for certain drinking and wastewater grants certify that no transfers take place from their utility funds to their general funds.
  • Section 15.10, which permits Rural Economic Development Division loans to be used to demolish buildings. 
  • Section 14.17A, which provides $1 million for water and sewer infrastructure improvements for local governments in Tier 1 an Tier 2 counties.

If the House gives final approval to the bill on Saturday, as expected, the legislation will have been approved 32 days into the new fiscal year. The legislature, though, approves a two-year budget in odd-number years, with budget bills approved in even-numbered years, like the current one, making adjustments to those spending numbers. Contact: Chris Nida

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Film Tax Credit Receives Appropriation, Historic Rehabilitation Credit to be Studied

The future of historic rehabilitation and film tax credits looked promising at the beginning of this legislative week, but as lawmakers churned toward adjournment, both credits faced setbacks. The League supports the extension of both tax credits and has been working with legislators to retain them since the session began.

In a joint press conference Tuesday, House and Senate leadership announced that their budget agreement included a $10 million appropriation to provide film grants to be awarded between the current film program's January 1, 2015 sunset date and the end of the fiscal year. While leadership touted the appropriation, many film tax credit supporters expressed disappointment that the current incentive program was not renewed and that the appropriation was too small. Film credit advocate and Wilmington based legislator Representative Ted Davis sponsored an amendment to SB 763 Revenue Laws Tech. Changes and Other Changes on the House floor on Thursday to extend the current film incentive program, with slight modifications, for another year. Although the bill is up for a final House vote today, it is likely moot because the Senate did not plan to take up any more legislation and had essentially adjourned. The budget bill that was approved this week does include the $10 million film grant program, and is expected to receive final approval by the House today and Saturday. 

Unlike the film incentives, the historic preservation tax credits did not appear in the House and Senate's budget agreement, but Representative David Lewis sponsored an amendment to SB 763 that was ultimately approved by the House Finance Committee that would have the credits continue in a form proposed by Governor Pat McCrory. With SB 763 most likely dead for the session, language was included in HB 1224 Local Sales Tax Options/Econ. Devpt. Changes to have the Revenue Laws Study Committee conduct an economic analysis of the tax credits and their effect on the rehabilitation of historic structures. The bill was expected to be passed by the House later today. The League would like to thank Representative Lewis and Representative Bob Steinburg for their diligent efforts to try to revive the historic preservation tax credits. Contact: Whitney Christensen

Fayetteville Mayor Nat Robertson and Senator Wesley Meredith meet to discuss city issues, including the preservation of the historic tax credit

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Local-Option Sales Tax Bill Revived in Final Hours

A bill that would cap a handful of urban counties' future authority to raise local-option sales taxes, while expanding sales tax options for most counties, was revived late Thursday as legislators eyed adjournment. HB 1224 Local Sales Tax Options/Economic Development Changes had appeared as if it might die in the House after chamber leaders there initially rejected the Senate plan and did not name a conference committee to try to work out differences. Late Thursday, they did name conferees, and a negotiated bill emerged that the Senate approved just before midnight Thursday. The House had not voted on the plan as of mid-day Friday, but was expected to do so.

The latest version of the bill gives four of six urban counties that had local-option sales tax authority up to 2.75 percent the ability to use that authority if they do so by the end of this year. (The other two, Durham and Orange, have already utilized their authority.) An earlier version of the bill would have capped those counties' authority at 2.5 percent. Wake County senators said the bill, even with the change, would penalize that county  because they have not planned a required advisory referendum. Senator Dan Blue argued that, without such a plan already in the works, getting the issue before voters and seeing a successful vote was unlikely.

The latest version of the legislation does include a study of historic preservation tax credits, potentially keeping the revival of the tax credit before legislators in 2015. It also includes money for various incentive funds. The League opposed the local-option sales tax legislation, raising concerns that it did not represent a comprehensive approach to local funding needs and only considered one-half of the local government equation to economic development and job creation. League staff continued to make that case to legislators over the last several days. We thank you for all your help in contacting legislators on this issue. You can read media coverage here and here. Contact: Paul Meyer  

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Farewell to League Summer Interns

The League's Governmental Affairs team is sad to say goodbye to its summer interns. Today is the final day of the summer for Felicia Hyde (second from left below), Sara Locklear (second from right), and Shawnda Martin (far right), while Will Richardson (far left) completed his time at the League in July. Felicia, Sara, Shawnda, and Will provided invaluable assistance in covering legislative committee meetings, monitoring bills, researching issues of importance to cities and towns, updating the League's bill tracking system, and much, much more. We are happy to say that, after a short time away, Shawnda will be rejoining us as an intern in the fall, but Felicia, Sara, and Will's time with us is at an end. Thank you all for your fantastic work this summer, and to all League members, keep an eye out for these four in the future. They come with our highest recommendation.

The League says goodbye to its 2014 summer interns

From left: 2014 League Governmental Affairs interns Will Richardson, Felicia Hyde, Sara Locklear, and Shawnda Martin

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E-Verify Fix Likely Dead for the Session

HB 369 Criminal Law Changes -- which includes a League-sponsored provision to resolve an administrative burden that local governments have been grappling with since 2013 -- appears to be dead, despite having significant momentum earlier. The Senate adjourned without agreement on a final version of the bill. Like a number of other other bills that included significant policy implications, legislators left without final agreements. HB 369 had already passed the House and the Senate overwhelmingly and was headed to a conference committee for final resolution before the Senate adjourned.

If it had been enacted, the legislation would have removed the requirement that cities and counties determine whether their contractors and vendors are compliant with the state's E-Verify laws before making any purchases or contracts, regardless of size or type. Instead, local governments would have only had to make sure that their contractors are complying with the E-Verify laws that govern public contracts in the formal bidding range. We will continue to work toward a legislative remedy to this issue in the 2015 Long Session and extend our sincerest thanks to Representative Harry Warren and Senators Thom Goolsby and Floyd McKissick for their assistance with our provision. Contact: Whitney Christensen

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Moped Registration Bill Proceeds to Governor

HB 1145 Insurance & Registration for Mopeds is headed to the Governor for his signature after the House and Senate approved a final version of the legislation. The bill will require North Carolina moped operators to register the vehicles with the Division of Motor Vehicles (DMV), but does not require moped operators to have liability insurance policies. House and Senate conferees opted instead for a study of the insurance component of the original bill. The new registration requirement would go into effect on July 1, 2015. If signed by Governor Pat McCrory, this legislation will partially achieve a 2013-14 Municipal Advocacy Goal. The League thanks the conferees and bill sponsors for their leadership on this important issue. Contact: Whitney Christensen
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Governor Signs League Sponsored Pension Spiking Bill

On Wednesday, Governor Pat McCrory signed into law HB 1195 Fiscal Integrity/Pension Spiking Prevention, a collaborative effort of the League, the Association of County Commissioners and the Office of State Treasurer. The bill's enactment achieves a 2013-14 Municipal Advocacy Goal by mitigating the impacts of significant, late career salary spikes on the state and local government retirement systems. The legislation received approval from the House in June and the Senate last week. We extend our thanks to Representatives Jeff Collins and Steve Ross for their leadership on this important topic. Recent media coverage of this issue can be viewed here. Contact: Whitney Christensen

From left: Rep. Jeff Collins, Governor Pat McCrory, Treasurer Janet Cowell, and Rep. Stephen Ross sign into law League-supported HB 1195 Fiscal Integrity/Pension Spiking Prevention

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Provision Allows Municipal Regulation of Fertilizer

The General Assembly stood one procedural vote away from passing HB 366 NC Farm Act of 2014 Friday morning. With a final vote by the House, this bill, which contains language allowing local regulation of fertilizers (Section 2), would only need action by the Governor to become law. The League negotiated this language with agriculture interests and designed it to allow NPDES wastewater and stormwater permit-holders to continue being able to regulate fertilizers in compliance with their permits. The bill also contained additional text that would preserve a local government's ability to regulate other explosive, corrosive, inflammable, or radioactive substances, particularly for fire safety reasons. Read previous League coverage of this provision in last month's EcoLINC. Contact: Erin Wynia

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Agreement to Expand Buffer Mitigation Passes

Both the House and Senate gave final approval to SB 883 Disapprove/Amend Buffer Rules this week, sending the Governor a bill that would expand the State's buffer mitigation rules. The League supported this effort because it would ease the ability of cities and developers to compensate for any disturbances made to buffer zones along water bodies. However, the issue garnered negative media attention for legislators and state regulators this week due to the process lawmakers followed in passing this bill ("Stream buffer protections rewritten by industry, DENR," Charlotte Observer; "NC lawmakers OK rewrite of stream protection rules, amid criticism of process," News & Observer). The League worked on this issue with environmental regulators for the past five years; read more in "Bill Opens up Buffer Mitigation Possibilities" (July 18 LeagueLINC Bulletin) and "EMC Approves Rules that Assist Buffer Mitigation in Urban Areas" (June 2013 EcoLINC). Contact: Erin Wynia

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League Water Supply Goal Awaits Governor's Signature

Thanks in large part to the efforts of Rep. Andy Wells, the League won a large victory for expansion of public water supplies with the passage of SB 163 Reclaimed Water as a Source Water this week. Approved by both the House and Senate and sent to the Governor for his consideration, the bill would expand the ability of municipalities to recycle reclaimed water to public water supplies. Under this proposal, water systems would treat the combined water to drinking water standards. Reclaimed water is a highly treated wastewater and is safely utilized in other U.S. states and countries to augment existing water supplies. Read more about this bill in this month's edition of EcoLINC. Contact: Erin Wynia

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Car-for-Hire Study Provision Sent to Conference Committee

Legislation that included several Department of Transportation (DOT) and Division of Motor Vehicles (DMV) provisions featured a section directing the Revenue Laws Study Committee to study the registration requirements, fees and penalties applicable to for-hire passenger vehicle services. Municipalities where rideshare programs like Uber and Lyft operate have been following this issue closely since the General Assembly voted in 2013 to modify a state statute to limit local government authority to regulate the programs. RDU Airport recently decided to ban the vehicles from airport grounds, citing lack of regulation and low insurance standards as its concerns, and 18 states have issued warnings about the associated insurance risks of using rideshare programs. Earlier this week, the House voted not to concur on the Senate's changes and the legislation was sent to a conference committee to resolve the differences. The Senate approved the committee's conference report, and the House scheduled a vote on the measure for Friday afternoon. Contact: Whitney Christensen
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Senate Revives, then Shuts Door on Regulatory Reform

Before adjourning this week, the Senate revived an omnibus package of regulatory reform measures before ultimately adjourning early this morning without addressing the bill. Given the terms of the Senate's adjournment, the topic of regulatory reform was unlikely to receive further consideration this year. However, the last Senate offer on regulatory reform included provisions familiar to municipal officials, including some supported by the League. Significantly, the bill brought back League-supported language that looked all but dead this session that would allow certain local governments to advertise required public notices electronically. The League thanks former Greensboro council member Sen. Trudy Wade for her efforts over this entire biennium to see this provision become law. Other topics of interest to municipal officials that the Senate put in this final offer included:

  • Choice of permit rules for development applicants
  • Building code officials discipline and other studies
  • Public nuisance chronic violators
  • County enforcement of floodplain ordinances on bona fide farms in municipal ETJs

The League expects interest in these topics to continue in the 2015-16 biennium. Contact: Erin Wynia

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League-Sponsored Special Elections Fix Passes Senate at Last Minute

Just moments before adjourning, the Senate voted to accept the House's changes to an omnibus elections bill that included a League sponsored provision to remedy a special elections drafting error from 2013. The error inadvertently created two conflicting timeframes governing when city council initiated special elections related to charter amendments can be held. Now that the Senate has approved the House's changes to SB 403 Omnibus Election Clarifications and it has been enrolled, the legislation will provide needed clarification to municipalities regarding when these elections can lawfully take place, assuming the Governor allows it to become law. The League thanks Representative David Lewis for working with us on this change and our own Associate General Counsel John Phelps for identifying the error. Contact: Whitney Christensen
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Coal Ash Deal Collapses Before Midnight Session

Legislators negotiating a package of new regulations on coal ash impoundments failed to agree on the deal last night, and the Senate adjourned after midnight today without taking action on the topic. Most legislative observers counted this package as one of the General Assembly's "must-do" bills this session, but the Senate left open the possibility of continued negotiations by approving an adjournment resolution that would allow consideration of coal ash legislation in a post-election session in November. The League sought a provision in that bill that would clarify state law regarding groundwater compliance boundaries with respect to municipal wastewater and inactive hazardous waste facilities; read background in "Coal Ash Provision Extends to Cities," June 20, 2014 LeagueLINC Bulletin. Contact: Erin Wynia

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League Comments Urge Speed in Approving Nutrient Reduction Practices

The League submitted comments yesterday urging the N.C. Division of Water Resources (DWR) to streamline its proposed process for approving nutrient-reducing stormwater practices. As the state increases nutrient regulations on municipal stormwater and wastewater operations, cities' need for approved nutrient-reduction measures will grow. The League comments asked for more accommodation for new measures by state regulators, pointing out that DWR's proposed process could mean approvals would take several years at a minimum. The League membership prioritized sensible nutrient regulation as its top regulatory policy goal. Read background on the DWR proposal in "Regulators Propose Approval Process for New Stormwater Control Designs," July 2014 EcoLINC. Contact: Sarah Collins