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League Cities, Towns Set Priorities at Advocacy Goals Conference

The League's member cities and towns agreed Thursday on their legislative and regulatory priorities for the 2015-16 legislative biennium, selecting goals covering a range of topics from transportation needs to revenue options. The approval of 25 legislative, 5 regulatory and two federal priorities during the League’s Advocacy Goals Conference marked the culmination of more than six months of work by policy committees, the League’s Board of Directors and the League’s general membership.

The priorities were narrowed from 136 proposals submitted by member municipalities and affiliate groups. The policy committees were made up of 170 individuals representing 86 separate municipalities. At Thursday’s conference held in Raleigh, League  members narrowed the priorities to their final numbers, debating and amending a number of the proposals. The voting delegates at the conference also approved streamlined language for the League's Core Municipal Principles.

View the approved Legislative, Regulatory and Federal Advocacy Goals here.

View the revised Core Municipal Principles here.

The conference included a luncheon question-and-answer session between Gov. Pat McCrory and League President Ronnie Wall in which the governor reiterated his commitment to working with municipalities and legislators to find a replacement source of revenue for the privilege license tax. McCrory also urged municipal officials to work with his administration in getting state lawmakers to restore the historic preservation tax credit, saying the credit had little to do with broader tax reform. “We have to get the historic tax credit back.” McCrory said. Representative Paul Stam, the House Speaker Pro Tem, also spoke at lunch, providing his take on tax and finance issues facing the state and municipalities.

At the conference's conclusion, Mayor Wall told the municipal officials attending that the priorities chosen are about keeping up "the house we live in" and urged them to take concrete steps to discuss them with their local legislators. “Our goals are our long-term plan for this house we live in and those who will live in it after us,” Mayor Wall said. “We have to let our legislators keep hearing our voices.”

We thank all of you for your participation in the goals-setting process. Having a member-driven goals process, involving hundreds of city and town officials, strengthens our message and our efforts when League representatives go to lawmakers about the issues we face. Thanks also to Governor McCrory and Representative Stam for agreeing to participate. You can read media coverage from the Advocacy Goals Conference here. Contact: Paul Meyer

Lunch question-and-answer session between Gov. Pat McCrory and League President Ronnie Wall

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League Releases Template for New Plan Review Requirements

The League released a report template today for local government development plan review programs to use in meeting the requirements of a new state law that became effective December 1. Developed in conjunction with the N.C. Association of County Commissioners, the template and accompanying guidance gave a test for determining which development plan review programs must implement new procedures and file a report. Some of those programs include sedimentation/erosion control, stormwater, and water/sewer design reviews. The League guidance also contained an explanation and copy of the law (scroll to Section 29, pg. 22). The new requirements were motivated by a professional engineers' group, which sought to standardize some aspects of plan review and use of the title "engineer." All affected local government programs must electronically file a report by January 14, 2015, with Mariah Matheson, Commission Assistant, Environmental Review Commission, at Contact: Erin Wynia

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First Utilities Sales Tax Distribution Details Posted

The first distribution of the new Utilities Sales Tax Distribution will be made on Monday, Dec. 15, and the amounts of that distribution were posted to the N.C. Department of Revenue website this week. As the League has previously reported (including here and here), the tax reform bill of 2013 changed the system of taxation on the sales of electricity and natural gas. The previous utility franchise tax was eliminated, and the general sales tax rate was applied to those sales. A percentage of those sales tax proceeds was designated to be returned to cities and towns, with the intention that each city would receive at least the same amount of revenue as it had received in utility franchise tax revenues in the corresponding quarter in Fiscal Year 2013-14. Those sales tax proceeds are what makes up Monday's distribution.

Overall, sales of natural gas were down slightly from the first quarter of FY13-14, meaning that each municipality generally will see a slightly smaller distribution of natural gas taxes than they did last year. Sales of electricity were up, meaning that many cities and towns will receive larger distributions of taxes related to the sale of electricity than they did in the first quarter of last year. The only caveat to that is that in advance of the changes to the tax system, some utility companies filed amended returns that adjusted cities' previous distributions of the utility franchise tax. In all, 123 municipalities were impacted by the amended returns, and those adjustments are detailed here. Those adjustments are factored into the distribution amounts posted on the DOR website. If you have any questions regarding the new Utilities Sales Tax Distribution, please contact League Director of Research & Policy Analysis Chris Nida.

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State Budget Gap Grows

State revenues are now $190 million below forecasted amounts, a budget gap that state officials attribute to weak personal income tax collections. Budget officials continue to caution that the numbers do not mean that the state will face a shortfall for the fiscal year, which ends June 30, 2015. That's because the final numbers are more greatly affected by tax payments and refunds that come as taxpayers file returns beginning in January and through April 15.

While the income tax collections have been below projections, sales tax numbers have been stronger than expected. The numbers reported were through the month of November and cover the first five months of the fiscal year. Read more about the budget gap here.

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Senate Leader Discusses Changes Sales Tax Distribution

Leaders in the state Senate are continuing to discuss changing how the state distributes the local share of sales tax revenue back to counties and cities. Senate Majority Leader Harry Brown, speaking at a recent luncheon held by the N.C. Free Enterprise Foundation, told attendees that changing the sales tax distribution formula to help rural communities is "something we ought to look at." Sen. Bob Rucho, who co-chairs the powerful Senate Finance Committee, told a group last month that the Senate would look at more tax changes that would include changing how local sales taxes are distributed. 

Sales taxes are currently distributed both on a point-of-sale and per-capita basis, with the point-of-sale distributions favoring more urban counties and those with significant tourism economies, and per-capita distributions favoring more rural counties. Read more about Senator Brown's comments in this piece by The Raleigh News & Observer.

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Highway Trust Fund Sees Fund Balance Rise

Not all the state revenue news is bad. The N.C. Insider state government news service reports that an increase in new car sales has caused the fund balance of the state Highway Trust Fund to rise. The state's 3-percent Highway Use Tax is collected on the sales of vehicles. The Insider reports that the fund balance of the Highway Trust Fund rose from $610 million on June 30, 2013, to $878 million on June 30, 2014. 
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Power Deal Gets Key Approval

Duke Energy Progress has received approval from a key federal agency for the purchase of the power-generating assets of the 32 municipalities that make up the N.C. Eastern Municipal Power Agency. The approval of the agreement by the Federal Energy Regulatory Commission is one of several required before the deal is expected to be completed. Duke Energy Progress and the NCEMPA hope the final approvals come by the end of 2015. Municipal officials in the communities under the NCEMPA umbrella had long pushed for some relief from the ownership stake in Duke Energy Progress power plants that had led to high electricity rates, deterring economic development. Read more about the FERC approval here and here.
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Economist Sees Job, Wage Growth for NC in 2015

A UNC Charlotte economist predicts continued economic growth for North Carolina in the coming year, with employers expected to add more jobs. John Connaughton said that he expects the state unemployment rate to fall to 5.8 percent by the end of 2015 and for there to be rises in wages for the first time since the Great Recession. The seasonally-adjusted unemployment rate for North Carolina stood at 6.3 percent in October. Read more about Connaughton's forecast for 2015 here.