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League Efforts to Remove Environment Ordinance Moratorium Successful at ERC

A legislative study committee proposed language Wednesday that would remove a current de facto moratorium on local governments' ability to pass environment ordinances. The League membership supports this new proposal, which responded to a 2013 law that set a 100% vote requirement to pass any environment ordinances. Since last spring, the League membership informed legislators of the severe ramifications of any law that would restrict local governments' ability to enact local environment ordinances, including through testimony at a January committee meeting and a February public hearing on the issue. Most often, cities and towns pass environment ordinances to comply with state and federal mandates. The proposal introduced this week must receive a formal recommendation from the Environmental Review Commission and then pass through both legislative chambers and the Governor before becoming law. In addition, development interests that supported last year's law will likely continue pursuing proposals to restrict local governments' ability to enact regulatory measures such as environment ordinances.
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Revised Privilege License Bill, Estimates Presented to Committee

Members of the General Assembly's Revenue Laws Study Committee were presented with a revised draft of privilege license reform legislation and revised fiscal estimates of the bill's impact Wednesday, but they did not vote on the recommended legislation. The bill maintains the $100 per business cap that municipalities may charge, as revisions were primarily technical and involved the further definition of some terms. The revised fiscal estimates now project the impact of the reform to be between $11 million and $25 million statewide.

Based on the League's conversations with legislative staff, the revised estimates are based on U.S. Census Bureau numbers of firms with employees and nonemployer firms, with the majority of the privilege license tax payers being nonemployer firms. A portion of the estimates also rely on the assumption that cities and towns will tax all businesses in their jurisdiction at the full $100 rate. Legislative staff told the committee on Wednesday that they believe the proposed legislation allows municipalities the flexibility to charge different types of businesses differing rates, as long as those rates do not exceed the $100 per business cap.

League Director of Research and Policy Analysis Chris Nida addressed the committee and told members that municipalities around the state have used the authority granted to them by the statute to help fund the services their businesses have asked for and utilized, and that the losses expected as a result of the proposed legislation exceed a cent or more on the property tax rate in many cities and towns. Rep. Julia Howard, the Committee's co-chair, said on Wednesday that the Committee would vote on the proposal at their next meeting on April 8, at which time they would accept amendments to the proposed legislation as well. If and when the Committee votes to recommend the legislation, it would then be eligible for consideration during this legislative session and would still need to pass both the House and Senate and be signed into law by the Governor. For more on Wednesday's meeting and the impact of privilege license reform in two specific locations, see these articles from Hendersonville and Fayetteville.

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Flood Insurance Relief Bill Passes Senate, Heads to President

The U.S. Senate voted yesterday in favor of H.R. 3370 Homeowner Flood Insurance Affordability Act of 2014, sending the legislation to the desk of President Barack Obama for his signature. The League's Executive Committee and other local officials from North Carolina advocated for passage of the legislation this week while in Washington, D.C. (see below). The legislation has been one of the key federal goals being tracked by the League this session. As noted last week in LINC'ed IN, the legislation delays or reverses implementation of portions of the Biggert-Waters Act of 2012 that have led some property owners to see drastic increases in their flood insurance rates. Specifically, the bill caps FEMA's authority to increase premiums at 18 percent per property per year, repeals the provision that required sold homes to immediately pay the full actuarial flood insurance premium, and restores the grandfathering of rates based on original flood risk zones, among other actions. Both Sen. Richard Burr and Sen. Kay Hagan voted in favor of this legislation, and we thank them for their support of North Carolina's property owners and local governments.
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House Committee Expresses Skepticism Over Utility Management, Salaries

The Public Enterprise Systems and Use of Funds Committee began its series of interim meetings Monday with a detailed explanation of the various public enterprise services across the state and the allowable use of the funds generated from those utilities. Committee co-chair Rep. Tim Moffitt opened with strong remarks stating that "concerns have been raised over the years that some of our cities are leveraging the power that comes with controlling these critical state resources — by capriciously withholding them from the citizens who live outside their corporate limits and even neighboring local governments."

These comments regarding municipal control over its service area are similar to those made last week by Rep. Tim Moore in the Property Owner Protection Committee. Both these committees are the result of a suite of studies authorized last fall for the Legislative Review Commission, and therefore were eligible to suggest legislative action in the upcoming Short Session. However, in a meeting last week with League staff, Moffitt committed not to run legislation from either of these committees in the upcoming Short Session; instead, he said he intended to propose a package in the 2015 Long Session.

Committee members also raised concerns in regards to cost allocation of public enterprise funds; members expressed skepticism that proper accounting controls were actually in place to ensure that public enterprise funds were not supplementing general fund activity. Specifically, Rep. Mike Stone asked questions regarding salaries for utility managers/directors in relation to public enterprise funds and if there were oversight or limits on the use of enterprise funds to pay those salaries.

This study was modeled on 2013 legislation sponsored by Rep. Moffitt. That legislation, however, went beyond this study's listed tasks by including language emphasizing that excess revenues accumulated by public enterprise systems should be used to lower rates, pay off debt service in advance, and make investments in the system. Rep. Moffitt co-chairs this House committee with Rep. Brian Brown. Monday's meeting included presentations by the UNC Environmental Finance Center and the State and Local Finance Division of the North Carolina Department of State Treasurer. The committee will next meet on April 7 at 1:00 pm in Legislative Office Building Room 544.

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Legislator Questions Use of Stormwater Fees

Rep. George Cleveland raised specific concerns about stormwater fees at the Public Enterprise Systems and Use of Funds committee meeting on Monday. Rep. Cleveland inquired into how stormwater fees can be used and whether municipalities are supplementing their general fund with their stormwater fee. Jeff Hughes, of the Environmental Finance Center at UNC, explained that unlike other public enterprises, North Carolina law limits what stormwater fees can be used for -- revenue must be used for "stormwater related expenditures." However he did clarify that what is regarded as a "stormwater related expenditure" is not defined. Rep. Cleveland requested an overview of what municipal stormwater fees should be covering. The discussion of stormwater fees tied back into the overarching discussion of public enterprise cost allocation discussed above.

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Pair of Studies Would Incentivize Water Systems Interconnection

An interim legislative study committee took the League's recommendation to explore ways the State could incentivize interconnection of water and wastewater systems, introducing a pair of studies Wednesday. One study would direct the legislature's Program Evaluation Division to study possible financial incentives for "well-performing" systems to assume service in areas served by "failing" utilities. That study would also look at three regional systems -- Charlotte-Mecklenburg Utilities Department, Cape Fear Public Utility Authority, and Two Rivers Utilities -- to determine if the regionalization benefits experienced by those systems could be replicated across the state. A second study, to be completed by the N.C. Department of Environment and Natural Resources, would examine the circumstances under which the state's strict interbasin water transfer laws could be relaxed, such as in emergencies or between sub-basins. In the lead-up to these recommendations, the study committee heard from numerous groups, including the League. The study committee, created in last session's omnibus regulatory reform bill, was originally conceived of by Rep. Tim Moffitt, the primary driver behind the law that forcibly transferred Asheville's water system to a regional wastewater system. These recommendations will next be considered by the legislative Environmental Review Commission (ERC), an interim committee that may draft legislation for the 2014 Short Session.
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Internet Sales Tax Receives Hearing before US House Judiciary Committee

On Wednesday, the U.S. House Judiciary Committee participated in an unconventional hearing on internet sales tax. The committee was presented five different proposals to address the sales tax issue. Each proposal was explained by an advocate who answered questions and defended the concept against critiques from other panelists. The hearing is the latest advancement in the push for the Marketplace Fairness Act, supported by both the National League of Cities (NLC) and the League, which would require online companies to collect state and local sales taxes. Fiscal estimates reveal that in 2012, North Carolina had over $364 million in uncollected sales tax revenue. Not only would the collection of the internet sales tax give North Carolina and local governments their due share of the revenue, it would also provide for more level competition between online businesses and brick-and-mortar locations that are required to collect sales tax. This disparity faced by local businesses was noted by Rep. Susan DelBene during the committee hearing. She also recognized NLC and numerous other organizations representing local governments for their support of the issue. Please contact your US Representative and urge him or her to support this critical issue. Rep. Howard Coble and Rep. George Holding both sit on the House Judiciary Committee, so please contact them as well and ask for their support of the Marketplace Fairness Act.

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League Members Meet with Congressmen, Attend House Hearing

More than 70 municipal officials were in Washington, D.C. this week attending the National League of Cities' Congressional Cities Conference. Among them were the League's Executive Committee, which includes current League President Mayor Al King of Goldsboro, First Vice President Mayor Ronnie Wall of Burlington, and Second Vice President Mayor Lestine Hutchens of Elkin. They, along with League Executive Director Paul Meyer, spent their time in D.C. meeting with N.C. Representatives and Senators and addressing federal issues important to North Carolina's cities and towns. The group met with Sen. Kay Hagan (as noted in a report from the Elkin Tribune) and Rep. Howard Coble, as well as with staff from the offices of Sen. Richard Burr and Rep. G.K. Butterfield. They also attended the House Judiciary Hearing on the Marketplace Fairness Act detailed above. In addition to all the work on that piece of legislation and the Flood Insurance Affordability Act detailed elsewhere in LINC'ed IN, N.C. officials also heard from NLC that Congress is expected to pass another extension of transportation funding legislation but not a comprehensive bill, and that a consensus is developing around making no changes to the tax-exempt status of municipal bonds.

The League's Executive Committee and Executive Director Paul Meyer meet with Senator Kay Hagan in Washington, D.C.

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Draft Bill Tightens Wastewater Spill Reporting

At its Wednesday meeting, the legislative Environmental Review Commission (ERC) discussed a draft bill that tightened wastewater spill reporting. The proposal responded to a highly-publicized January sanitary sewer overflow event in Burlington that the ERC learned about at its meeting last month (read about that discussion in "Unauthorized Spills Capture Legislative, U.S. DOJ, Media Attention"). After hearing that state environmental officials counseled the City to delay its required public notice of the spill, legislators sought to speed up that process, proposing to change the window of time from 48 hours to 24 hours for a system to issue a press release. Wednesday's proposal would also codify an existing state regulation that requires systems to alert state regulators of a spill greater than 1,000 gallons within 24 hours of determining the untreated wastewater had reached the state's waters. The ERC will vote to finalize this recommendation at its April meeting. Once formally recommended, the draft bill would be eligible for introduction in the upcoming Short Session that begins May 14.
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ERC Releases Proposed Legislation to Clarify Gravel

The stormwater working group of the Environmental Review Commission (ERC) proposed draft legislation Wednesday to clarify how state laws treat gravel for the purposes of stormwater regulation. As the League previously reported, legislative recommendations included a provision directing N.C. State University's Biological and Agricultural Engineering Department (BAE) to study the infiltration rates of various aggregate surfaces -- specifically, the extent to which different aggregate surfaces are pervious, impervious or partially impervious. The BAE Department would receive $110,000 to implement this study, due no later than September 1, 2014. This study grew out of last session's omnibus regulatory reform bill, which excluded gravel from the definition of "built-upon area." Over the past few months, this legislative study committee further studied the effects of stormwater runoff from non-paved surfaces, and League members addressed this committee in December.

Another section of the proposed legislation stated that neither the N.C. Environmental Management Commission (EMC) nor Department of Environment and Natural Resources (DENR) would have the authority to define the term "gravel" for purposes of implementing stormwater programs. This aspect of the proposed legislation responded to a recent undertaking by the EMC, which was in the process of adopting a proposed temporary rule that clarified the Regulatory Reform Act of 2013's exclusion of gravel from the state's definition of "built-upon area." Commissioners voted to approve the temporary rule changes to at their Thursday meeting. The League supported the EMC's temporary rulemaking proposal because it allowed local stormwater programs to remain in compliance with their programs' regulatory mandates. The EMC will likely initiate a permanent rulemaking later this year and will take into account any future legislative actions on the topic.

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Revenue Laws Considers Reverting Back to Higher Tax Collection Fee Paid to LPAs

A subcommittee's bill draft presented to the Revenue Laws Study Committee on Wednesday recommended an increase in the fees paid by local governments to License Plate Agencies (LPAs) for their work in relation to the newly implemented Tag and Tax Together Program, despite a recent suggestion from Sen. Jerry Tillman that the Committee not make any changes to these fees until more data is collected. Last year's legislation set the fee at $1.06 from September 1, 2013 through March 1, 2014, and $0.71 thereafter. If enacted in its current form, the proposed legislation would revert the fee to the $1.06 rate indefinitely and would be applied retroactively to March 1, leaving local governments with a bill for the difference between the two rates between March 1 and the bill's date of passage. Citing her concerns with changing the rates without having received the results from the study commissioned by the General Assembly on this topic via legislation last year, Rep. Becky Carney asked that the Committee consider an amendment calling the group back in December of this year to reconsider the rates once the study has been completed. The Committee will vote on the recommendation and any amendments at its next meeting on April 8.
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Recommendation Standardizes Development Review Processes, Increases Reporting

After meeting once last month, a legislative working group formed to study how the State and local governments conduct development reviews such as stormwater, sedimentation/erosion control, and water and wastewater system designs recommended legislation that would standardize those practices. This study, directed by The Regulatory Reform Act of 2013, responded to concerns by the Professional Engineers of North Carolina, an advocacy trade group, that state and local reviewers often exceeded their authority in requiring changes to these plans. The draft legislation would also impose annual reporting requirements on those State and local programs. The local programs that would be subject to this legislation include those operating a delegated program from a state agency such as the N.C. Department of Environment and Natural Resources, the N.C. Department of Transportation, and the N.C. Department of Health and Human Services. Those delegated programs must also grant permits, licenses, and approvals of development plans. In addition, the draft legislation would require these delegated programs to institute a process by which a professional engineer would review innovative designs. The working group will meet again Tuesday to refine these initial proposals before a vote by the legislative Environmental Review Commission (ERC) next month. Any legislation recommended by the ERC is eligible for introduction in the upcoming legislative Short Session.
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McCrory Names Rocky Mount's Parks Council Chair

As detailed in a report in the Rocky Mount Telegram, City of Rocky Mount patrol sergeant Ricky Parks was recently named chair of the N.C. Youth Advisory Council by Gov. Pat McCrory. According to the report, the Council supports the mission of the state Youth Councils, approves funding, and promotes civic and community projects the Youth Councils do throughout the state. Parks has over 25 years of law enforcement experience, serving in both the Rocky Mount Police Department and the Nash County Sheriff's Office. When asked why he believes he was chosen as chair, Parks told the Telegram, "I hope they would say Ricky Parks has a proven history of public service, a heart and a passion for the community and a clean reputation, especially when dealing with youth and public funding." We at the League congratulate Parks on his appointment and thank him for his commitment to serve.
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NC 911 Board Solicits Municipal Input at its March Board Meeting

The North Carolina 911 Board is encouraging municipalities and counties that routinely interact with the 911 Board to attend and participate in its upcoming Greensboro board meeting. If your municipality has any concerns, questions or feedback for the 911 Board concerning any of its policies, we encourage you to attend. The meeting will take place on Friday, March 28 at 10 a.m. at the Guilford-Metro 911, located at 1201 Coliseum Blvd. At least two additional regional meetings of this variety will also be scheduled in the coming months. Please contact Richard Taylor if you plan on attending.
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NLC Transportation Webinar Today

Today, Friday, March 14, the National League of Cities (NLC) will partner with the Intelligent Transportation Society of America to conduct a free webinar, beginning at 2:00 pm. The webinar will cover transportation investments, communication issues, understanding the cost of congestion, and handling transportation emergencies and significant events. The webinar will provide a demonstration of the Regional Integrated Transportation Information System (RITIS), developed by the University of Maryland to analyze transportation data from government agencies and the private sector. You can join the webinar online, or participate by phone by dialing (888) 259-0463 and using conference code 25115122#.