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Revenue Laws Committee Takes Up Local Privilege License

The Revenue Laws Study Committee of the General Assembly met Tuesday and spent the majority of its meeting discussing the municipal privilege license tax. While legislators expressed concerns regarding the fairness and equity of the tax statewide, they appeared open to the League's desire to work with the other groups interested in the issue to reform the tax and address these concerns.

League Director of Governmental Affairs Paul Meyer spoke to the committee on behalf of all of North Carolina's cities and towns. Paul acknowledged issues regarding the privilege license that have been raised with the League, while noting that municipalities have been granted broad statutory authority in how they implement the tax. He also cited the fact that the privilege license is one of only two locally-controlled revenue sources. Paul told the committee that the League membership had chosen reform of the privilege license tax as one of its 25 advocacy goals for the 2013-14 biennium and reiterated the League's willingness to be at the table working with legislators and other groups to reform the privilege license tax.

Also addressing the committee on behalf of cities was Robin Rose. Robin, the Deputy Financial Officer for the City of Raleigh, spoke to the committee regarding Raleigh's administration of the privilege license tax and took questions from committee members.

Other presentations made to the committee included a general privilege license overview from UNC School of Government professor Chris McLaughlin, and testimonials from business owners across the state regarding their experience in paying the privilege license tax.

Legislators on the committee had varying reactions to the privilege license discussion. Committee co-chair Sen. Bill Rabon said he viewed the privilege license tax as giving municipalities a "license to gouge" businesses, while Rep. Mike Hager said he saw it as a "hidden tax" and felt that any taxes imposed on citizens should be "more transparent." Rep. Andy Wells said that while any reform of the privilege license should address the relatively few problems around the state, reform should not punish the vast majority of municipalities who have administered the tax well, and that any changes to the privilege license structure should be made collaboratively with cities.

The League will continue to represent the interests of all of North Carolina's cities and towns in the discussions regarding the privilege license that are sure to come about as a result of this committee meeting. We will keep you updated as to how the issue progresses.

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LGERS Board Votes to Increase Employer Contribution Rates

In their first meeting of the new year, the Local Government Employees' Retirement System (LGERS) Board of Directors voted yesterday to recommend an increase to the employer contribution rate. Members of the Board heard an update on the financial status of the retirement system and received an overview of the main policy options in consideration for funding the annual required contribution (ARC).

Based on recommendations from the Treasurer's Office staff and from the NC City County Management Association's Retirement Board, the League's Executive Committee chose to support no change to the current employer contribution rate. As reported after the October Board meeting, gains recognized from investment returns and lower than expected payroll increases would have allowed the FY 14-15 contribution rate to drop by .13 basis points. The League recommended to the LGERS Board at yesterday's meeting to keep the contribution rate at 7.07 percent and deposit the remaining savings back into fund balance (Option One). By doing so, this would help decrease budgetary volatility, as contribution rates were originally projected to increase in FY 15-16. This recommendation was also supported by the NC Association of County Commissioners and Treasurer's Office.

The Board ultimately voted to recommend an increase to the employer contribution rate, citing the long gap between the last COLA increase that occurred in 2008. By increasing the employer contribution rate to 7.17 percent, local government retirees could receive a 1 percent cost of living adjustment. This will provide, on average, a $15 a month increase for retirees and will cost local governments approximately $5.5 million. The Teachers' and State Employees' Retirement System (TSERS) Board of Directors voted to leave the contribution rate the same and not offer a COLA to state retirees.

Although the LGERS Board voted to grant a COLA, they are not statutorily authorized to do so when gains recognized to fund the increase are not solely from investment returns. Because of this, the Treasurer's Office will be required to recommend legislation to the General Assembly during the 2014 Short Session to fund the COLA. If the General Assembly passes the legislation, it will be applied retroactively to the start of FY 14-15. If the General Assembly is unable to pass the legislation, the employer contribution rate will remain at the current level of 7.07 and the remaining funds will be deposited into fund balance.

In addition, new ARC projections were revealed at yesterday's meeting by the Treasurer's Office. The new rate percentages, which are lower than originally projected, are as follows:

  • FY 15-16: 6.70
  • FY 16-17: 6.45
  • FY 17-18: 6.22
  • FY 18-19: 6.03
  • FY 19-20: 5.88

As the Treasurer's Office works to refine these projections, we will keep you updated on any changes. In addition, we will be working closely with the LGERS Board, Treasurer's Office, and legislators to communicate the fiscal impacts on local governments resulting from the recommended ARC increase. The next LGERS Board meeting will occur in April, but we will continue to inform you of any updates prior to that meeting. If you have any questions regarding yesterday's meeting please contact League Government Affairs Assistant Cara Bridges.

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League Briefs Legislators on Local Environment Ordinances

Most municipal environment ordinances exist to comply with State and federal requirements, League Legislative & Regulatory Issues Manager Erin Wynia told a legislative environmental review panel in a presentation Wednesday. Presenting to the Environmental Review Commission (ERC), an oversight committee that meets in between sessions to study environment issues and recommend legislation for the upcoming Short Session, the League responded to legislators' requests to define when and how they implement environmental ordinances. The request grew out of last session's omnibus regulatory reform bill, which tasked the ERC with determining the circumstances under which local governments may pass environmental ordinances "more stringent than" corresponding State or federal laws. The League members supported retaining their ability to tailor these mandates to their local circumstances, and they will work with study leaders Sen. Andrew Brock and Rep. Chuck McGrady on any recommendations, expected to be presented in March.

Erin Wynia presents to the ERC

League Legislative & Regulatory Issues Manager Erin Wynia presents to legislators regarding environmental issues.

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License Plate Agencies Study Committee Evaluates Rates

The Revenue Laws Study Committee's License Plate Agencies Subcommittee met Tuesday regarding its study of per transaction compensation rates for contractors who issue vehicle registrations and titles. The subcommittee collected information and public feedback on these per transaction rates that cities and counties pay to LPAs for the collection of local taxes under the Tag and Tax Together program. The rates, which are set by statute and went into effect in September of last year, vary based on the type of transaction.

Representatives from the North Carolina Association of Motor Vehicle Registration Contractors asked committee members to consider making the elevated temporary rate for initial and renewal registration transactions permanent, citing the complexity of the system and their overhead costs as justification for the higher rate. Local government representatives responded that while it was too early to tell the precise net costs to local governments in paying LPAs under the Tag and Tax Together program, cities and counties were compensating the LPAs heavily for the service of collecting the tax payments. 

Enacted Senate Bill 305 requires the Subcommittee to report its findings and recommendations on compensation amounts per transaction to the 2014 session of the General Assembly. The 2013 state budget also called for the N.C. Department of Transportation's Business and Contractual Services Unit to "evaluate current contractual models and compensation for the provision of registration, title, tax collection, and other vehicle service transactions" and report its findings and recommendations by March 1, 2014.

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N.C. City Officials Appointed to NLC Leadership Positions

Chris Coleman, the mayor of Saint Paul, Minn., and the President of the National League of Cities, announced appointments to NLC's policy committees and advisory councils this week. Three municipal officials from North Carolina will serve as chairs of these committees and councils. City of Charlotte Council Member Patsy Kinsey will be chair of the Transportation and Infrastructure Services Policy and Advocacy Committee; City of Creedmoor Mayor Darryl Moss will serve as chair of the Advisory Council; and City of Albemarle Council Member Martha Sue Hall will be chair of the Military Communities Council. The League congratulates all of the chairs on their appointments and thanks them for their service with NLC. Said Coleman, "This is a critical time for cities. Cities are America's centers of innovation, driving economic growth and solving problems at a local level even as Washington remains in gridlock. As we recover from the recession, I look forward to working with NLC's committee and council leaders for direction on how cities can continue to lead and help make America strong."
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Speaker Appoints Karen Duncan to PILOT Study Commission Per NCLM Request

The League received word this week that Speaker of the House Thom Tillis has appointed City of Morganton Finance Director Karen Duncan to the State Payment in Lieu of Taxes Study Commission. The Commission was established in SB 372 Omnibus County Legislation, which was passed last session, and according to the legislation "shall study issues relating to the development of a State payment in lieu of taxes for State properties, including wildlife and game lands." SB 372 calls for both the Speaker and the Senate President Pro Tempore to each make one appointment to the Commission based on a recommendation from the League, and we appreciate Speaker Tillis appointing Ms. Duncan and thank her for her willingness to serve. The Commission appointment from the Senate President Pro Tem is still pending.
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Tennyson, Holder Among Those Assuming New Roles at NCDOT

The N.C. Department of Transportation announced organizational changes today it said were intented to "improve effectiveness and efficiency." Nick Tennyson will now serve as NCDOT's Chief Deputy Secretary, a role that combines two previous Chief Deputy Secretary positions. Tennyson, the former mayor of the City of Durham, currently serves as the Chief Deputy Secretary of Support and has also recently been serving as Interim Chief Deputy Secretary of Operations and interim N.C. Division of Motor Vehicles Commissioner. NCDOT also announced that Mike Holder, who has been the Division Engineer for Division 12 since 2000, will now serve as Chief Engineer, overseeing all 14 Transportation Divisions. Other individuals assuming new roles at the NCDOT include Terry Gibson as Director of Operations for the North Carolina Turnpike Authority; Michelle Muir as the Director of Customer Service for the North Carolina Turnpike Authority; and Rodger Rochelle as the Director of Technical Services for NCDOT. The League congratulates all of these individuals on their new positions and looks forward to continuing to work with them.
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Governor Appoints City Officials to Commission, Task Force

Gov. Pat McCrory announced appointments to several state boards and commissions this week. Among them was the North Carolina Commission on Volunteerism and Community Service. Gov. McCrory appointed City of Winston-Salem Council Member Robert Clark to the Commission, whose duties include encouraging and recognizing community service and volunteer participation as a means of community and state problem-solving, and promoting and supporting voluntary citizen engagement in government and private programs throughout the state. Council Member Clark will fill the seat of a representative from local government. Gov. McCrory also made appointments this week to the North Carolina Statewide Impaired Driving Task Force, whose duties include reviewing existing North Carolina data, laws, regulations and programs and developing a statewide impaired driving plan to provide a comprehensive strategy for preventing and reducing impaired driving behavior. One of the appointees to the Task Force was Town of Waynesville Police Chief William Hollingsed. The League appreciates the Governor appointing municipal representatives to the Commission and to the Task Force, and we congratulate Council Member Clark and Chief Hollingsed on their appointments.
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State Water Infrastructure Authority Holds First Meeting

The State Water Infrastructure Authority met for the first time this week to begin its work administering the Drinking Water State Revolving Fund and the Clean Water State Revolving Fund. These funds are one of the few sources of water and wastewater infrastructure funding for local governments in North Carolina. This Authority was created in the 2013 budget bill passed by the General Assembly last session. The League is pleased that the interests of cities and towns are being represented on the Authority by Leila Goodwin, Water Resources Manager for the Town of Cary and a member of the League's Regulatory Action Committee.
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Public Comment on Local Transportation Priorities Open Now

Each of the 14 Transportation Divisions in the state will soon submit their top local priorities to compete with other projects across the state for funding. In advance of doing so, the Divisions are taking local comment on what those priorities should be. A 30-day public comment period opened on Tuesday and runs through Wednesday, Feb. 12. Additionally, each Division will be hosting a public open house in order to get feedback from local residents. The projects submitted will compete for funding under the Strategic Mobility Formula, which was created by HB 817 Strategic Transportation Investments that was passed last session. The League served on an N.C. Department of Transportation work group tasked with making recommendations regarding the law's implementation. Further details on the Strategic Mobility Formula and the public comment period, including information on all of the public open houses and contact information for each Division, can be found here.
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P3 Infrastructure Conference Coming to Charlotte

On March 5-6, Charlotte will play host to the East Coast P3 Infrastructure Conference 2014. Held at The Westin Charlotte, the P3 Conference will feature experts in public-private partnerships from around the country sharing tools such as social impact bonds, alternative financing methods, and unique delivery methods like the design-build-finance-operate-maintain approach. The two-day conference will focus on project delivery and financing infrastructure in the public domain. Registration is open now at a special early registration rate until Feb. 25. More information on the P3 Infrastructure Conference can be found here.