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Happy Easter Weekend!

Due to tomorrow's Good Friday holiday, LINC'ed IN is arriving a bit early this week and is slightly more abbreviated than usual. We'll be back on our regular schedule next week with a Friday LINC'ed IN full of the latest news important to all of North Carolina's cities and towns. On behalf of all of us at the League, have a great Easter weekend!
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LGERS Board Rescinds Previous Vote, Keeps Rates Constant

In their quarterly meeting this morning, the Local Government Employees' Retirement System (LGERS) Board of Trustees voted to rescind its January recommendation to increase the employer contribution rate and grant a cost of living adjustment (COLA) for current system retirees. Following today's action the employer contribution rate for general employees and fire fighters will remain at 7.07 percent for FY2014-15. The January vote, which you can read about here, called for an increase in the FY14-15 employer contribution rate from 7.07 to 7.17 percent, which would carry an estimated cost to local governments of $5.5 million. Offering the motion to rescind that recommendation, Board member Jerry Ayscue cited several other new financial burdens local governments currently face as well as his concerns with the LGERS Board taking a different position than the Teachers and State Employees' Retirement System (TSERS) Board of Trustees, which voted in January not to grant a COLA. His motion was seconded by Mayor Grady Smith of Elm City and supported by remarks from Morganton City Manager Sally Sandy and general public Board appointee John Aneralla. After Ayscue's motion to rescind prevailed in a 7-5 vote, the Board approved his subsequent motion to keep the employer contribution rates unchanged for FY14-15 in order to meet the Annual Required Contribution (ARC) for pension expenses in the system. The League thanks Ayscue and the other Board members who agreed to support the League's position to protect the fiscal health of local governments by voting in favor of the motion.

In his legislative preview presentation to both boards, State Treasurer's Office Policy Development Analyst Sam Watts provided an overview of the Pension Spiking Prevention Act of 2014 that the Treasurer's Office, League of Municipalities, and Association of County Commissioners have been collaborating to create over the last several months. If enacted, the legislation would help curb the effects of pension spiking on the state and local retirement systems by employing a Contribution Based Benefit Cap (CBBC) formula to identify employees whose contributions do not sustain their forecasted pension benefits. In his overview, Watts explained his office's intent to possibly raise the proposed average final compensation threshold for running the CBBC formula from $50,000 to $100,000. We will continue to update you on our collective efforts to safeguard the fiscal integrity of the pension system through pension spiking reform. If you have any questions on any of these issues, please contact League Government Affairs Associate Whitney Christensen.

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Contracting Proposal Responds to Prequalification, Design Concept Concerns

A legislative study committee recommended a proposal yesterday that scaled back language suggested for previous drafts that would have severely limited the flexibility a local government had to use prequalification procedures when bidding projects. While the Purchase and Contract Study Committee made minor amendments to the language in its proposal, the approved language would allow local governments to continue prequalifying bidders on public projects, pursuant to certain criteria. The committee drew from existing case law when developing the list of criteria.

In addition, the committee modified previously-proposed language that would have barred local governments from soliciting any type of designs or work products in bid documents. Now, while still prohibiting solicitation of designs or work products, the approved proposal encourages local governments to discuss with bidders design "concepts or approaches to the project, including impact on project schedules." Such conversations with potential bidders protect public dollars by ensuring that the local government knows of any innovative approaches to a project that could save on construction costs.

Because it came from an interim study committee, the approved proposal is eligible for introduction as legislation in the upcoming Short Session that begins May 14.

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Jordan Lake Committee Hears from Public on SolarBee Project

The legislative Committee on Jordan Lake held a public hearing yesterday where members of the public voiced perspectives on the SolarBee project funded in last year's budget. The project grew from years of legislative frustration that the Jordan Lake Rules imposed significant compliance costs on local governments with little evident improvement in the lake's water quality. SolarBee is a specific technology that aerates water, scrubbing it of nutrients in the process. The state's project sought to determine whether the technology could work on a large enough scale to prevent the growth of harmful algae in the lake, which are encouraged by the presence of nutrients. In addition to municipalities in the Jordan Lake watershed, dozens of other cities and towns across the state must pay for programs to remove nutrients from wastewater and stormwater discharges into state waters, a costly undertaking for many of them.

During the public hearing, environmental advocacy groups questioned the state's expenditure on SolarBees, pointing out that the technology was unproven for large water bodies such as Jordan Lake. Other commenters, including the City of Durham, stated that removing nutrients from the lake likely required a suite of treatment options, including technologies that provided in-lake removal of nutrients.

Committee co-chair Rep. John Faircloth announced that the committee would not propose legislation for the upcoming Short Session, though he said the co-chairs were open to any ideas from committee members about reforms to the Rules in future legislative sessions. The legislature has changed the Rules each legislative session since enacting them in 2009.

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MEC Votes to Accept 48 Rules, Remands to Staff for Coordination

On Wednesday, the Mining and Energy Commission (MEC) accepted rules regarding permitting, financial assurances, waste management, wastewater disposal, and other aspects of drilling. These rules were remanded to staff of the Division of Energy, Mineral and Land Resources for further coordination and will be submitted to the General Assembly for approval in October as part of the full set of regulations regarding the management of oil and gas exploration and development in the state.

The League was an active participant in MEC study groups that recommended regulations regarding funding levels and local government regulation. Of the rules accepted by the MEC on Wednesday, those of particular interest to cities and towns were the rules regarding (1) permitting and (2) severance taxes and impact fees. The permitting rule would require a road use agreement with DOT be part of the permit application and would set out emergency response planning requirements. The MEC does not have statutory authority to implement the severance taxes and impact fees rule, but it was included as a placeholder until the legislature either grants authority to the MEC or legislates on the issue. In addition, Commissioners expressed concern that the rules did not include proper assurances that a permittee would be sufficiently capitalized and reported that they will seek clarification from legislature about the MEC's authority to regulate on that issue.

Any legislative changes needed, regarding the MEC's regulation of oil and gas exploration activities in the State, could be recommended through the Joint Legislative Commission on Energy Policy, which is scheduled to meet on May 8 at 1:00 pm. It is the plan of the MEC to finish development of all its rules by May and then have a 60-day public comment period including three public hearings. (Read more from the News and Observer.)