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Committee to Propose $100 Privilege License Cap

After discussing the issue last month, the Revenue Laws Study Committee of the General Assembly is set to take up the municipal privilege license again on Tuesday. This time, the committee is expected to consider a proposal that would limit the municipal privilege license tax to $100 per physical location of a business, while eliminating all existing privilege license tax exceptions. The League is developing its estimates of the impact this would have on its members based on the information it recently received, but estimates from the General Assembly's Fiscal Research Division that were provided to the League indicate that this proposal would cost cities and towns approximately $27 million annually. The League has been working with legislators for months on this important issue, as the League membership selected privilege license tax reform as one of its Municipal Advocacy Goals at the 2013 Advocacy Goals Conference. League Executive Director Paul Meyer addressed the Committee in January and told the Committee that the League was committeed to sitting down and discussing this issue with all interested parties, in order to achieve the goal set by the League membership of reducing the complexity and inequity of the tax while maintaining it as one of only two locally-controlled sources of revenues. While this proposal would reduce complexity and inequity, the League is concerned about the restrictions it places on cities and towns and about the impact that the revenue loss caused by this bill would have on cities' ability to provide the services their businesses and citizens desire. Members of the Revenue Laws Committee said in January that they were committed to working with the League, and we look forward to continuing to refine this proposal heading into May's Short Session. Any legislation passed by this committee is simply a recommendation of legislation for the 2014 Short Session, and that legislation would be considered like any other bill before the General Assembly in 2014. Based on the draft legislation the League has seen, any changes to the privilege license tax structure would not go into effect until July 1, 2015.
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LGERS Employer Contribution Rates for FY2014-15

As many of our members enter the heart of budget season, the League has been receiving a number of questions regarding FY14-15 employer contribution rates for the Local Government Employees’ Retirement System (LGERS). The League has been working with representatives of the Treasurer’s staff to produce the information below.

At its January meeting, the LGERS Board of Directors voted to recommend a 1% Cost of Living Adjustment (COLA) for retirees. Doing so will require a 0.1% increase in the current employer contribution rates. For General Employees/Fire Fighters, the FY13-14 contribution rate is 7.07%, meaning that in FY14-15 it would increase to 7.17% with the COLA.

The situation is slightly more complex for Law Enforcement Officers. For FY13-14, the Normal contribution rate of 7.55% was reduced by a Court Cost Offset of -0.27%. For FY14-15, the Court Cost Offset is being reduced to -0.14% due to declining court fees. This means that, not including the 1% COLA, any municipality not currently paying the Death Benefit will have a LEO contribution rate of 7.41% in FY14-15. If the COLA is approved, that rate would increase to 7.51%. Employers who are paying the standard Death Benefit rate of 0.14% would see their contribution rates increase to either 7.55% (without the COLA) or 7.65% (with the COLA), but you will need to adjust your LEO contribution rate accordingly depending on your local Death Benefit contribution.

All of these calculations are laid out in the table below. Please also be aware that the Board of Directors’ recommended COLA must be approved by the General Assembly. If the General Assembly does not act to approve the COLA during its upcoming Short Session, then it will not go into effect. The Board of Directors also meets again in April and could take additional action at that time.

Anyone with questions about any of these numbers should contact League Government Affairs Assistant Cara Bridges.

FY15 LGERS Employer Contribution Rates

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NC Utilities Commission Issues Order Regarding LED Streetlight Tariff

Last week the North Carolina Utilities Commission issued an order regarding Duke Energy Carolinas' LED streetlight rates proposal. The League had previously submitted comments urging further revisions to this proposal, which the utility developed as a result of the League's intervention in last fall's Duke Energy Carolinas rate case. In that intervention, the League pressed the company for an LED streetlight rate for cities and towns in the Duke Energy Carolinas service area that would make it financially feasible for them to swap out old streetlight technologies for more energy-efficient technologies such as LED. In this latest action, as part of the Commission's order, the League's previous comments will be treated as a motion requesting that Duke Energy Carolinas:

  • Meet with municipalities during the first quarter of 2014 to discuss streetlight rates
  • File new rates by July 1 of this year that would, among other things, enable municipal customers to benefit from the declining costs of LED fixtures
  • Collaborate with the League in developing this filing.

The League also has an opportunity to revise its motion to provide further evidence to substantiate its comments, while Duke Energy Carolinas may comment on the League's motion until March 10. The League and staff members from League member municipalities are planning meetings with Duke Energy Carolinas to discuss aspects of the utility's LED streetlight rate design. The League's continued involvement in this issue is support by the 100-plus members of the Municipal Energy Group.

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Duke Energy Progress Discusses Purchasing NCEMPA Share of Power Plants

Duke Energy Progress and the North Carolina Eastern Municipal Power Agency (NCEMPA) have entered into exclusive discussions regarding the utility purchasing NCEMPA's ownership shares in four power plants operated by Duke Energy Progress. The authority, which consists of 32 municipal electric companies, owes roughly $2 billion in debt related to their purchase of the shares in these plants. That debt has led to high utility rates for many of the municipal residents served by these companies. Selling the shares in the plants to Duke Energy Progress could have a significant impact on those rates. "This would be a great benefit to the citizens of Rocky Mount in reducing the current electric rates," City Manager Charles Penny of Rocky Mount, one of the affected cities, said in a release. "We will continue to monitor the discussions and keep the best interests of our citizens in mind. In keeping our electric distribution system, we will be able to continue to provide the excellent reliable electric services that our customers are accustomed to."
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Cities Support Effort to Clarify Stormwater Runoff Legislation

The League submitted comments today supporting a proposed temporary rule that clarified a 2013 stormwater runoff law. The law, part of The Regulatory Reform Act of 2013, excluded gravel from the state's definition of "built-upon area." This exclusion upended long-standing practices in state and local stormwater programs, which treated gravel-covered surfaces such as roads, parking lots, and driveways, as impervious. Functionally, these surfaces act the same as other built-upon areas such as buildings, and they do not typically allow water to infiltrate into the underlying soil. Due to the lack of clarity in the 2013 law, the N.C. Environmental Management Commission voted to propose a technical definition of "gravel" (read further background on that proposal and vote in this January 2014 EcoLINC article). In response, the League supported the proposal, while also making suggestions for an expected permanent rulemaking. That permanent rulemaking process will likely begin later this year and may take into account any future legislative actions on the topic. Over the past few months, a legislative study committee has further studied the effects of stormwater runoff from non-paved surfaces; League members addressed this committee in December.
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Water/Wastewater Study Group Closes in on Recommendations

Meeting yesterday for a third time in as many months, a legislative study committee examining the state's statutory models for water and wastewater services closed in on its recommendations. Specifically, committee members focused on ways to provide financial support to failing systems. Study committee chair Rep. Mike Hager noted that cities and towns generally finance and run their systems well, and stated that he supported targeted funds to assist struggling systems, especially those that lacked the ability to improve through a voluntary merger with a nearby well-performing system. This study committee responded to previous presenters, including the League, that emphasized the need to retain flexibility in state law for these systems when considering ways to address any financial, management, and environmental challenges (read further background in this November 2013 EcoLINC article). While acknowledging that the study committee's recommendations were due to the legislative Environmental Review Commission next week, Hager indicated that the study committee may continue to meet informally in the coming months to further flesh out other proposals that may assist failing water and wastewater systems.
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Legislative Study on Technical Engineering Plan Review Begins

All four of the engineers serving the N.C. General Assembly joined a study group that met yesterday to begin an examination of how the State and local governments review technical/engineering plans. This study, directed by The Regulatory Reform Act of 2013, responds to concerns by the Professional Engineers of North Carolina that state and local reviewers often exceed their authority in requiring changes to these plans. Several League members joined the discussion yesterday, which focused on one solution offered by the trade group that would require a licensed professional engineer to supervise review of any designs that required a professional engineer's seal.

Local governments expressed concerns that such a requirement could increase the cost of development and slow review times for those plan reviews. Reps. Mike Hager and Rick Catlin recognized these concerns. Catlin stated that he saw the potential for many unintended consequences in this proposal and urged the group not to rush its recommendations. Hager suggested that a simpler way to address the trade group's concerns could come in providing a method of appeal for any engineers that disagreed with a plan reviewer's interpretations. Finally, the group agreed that further implementation of "best practices" for review processes would also address many of the engineering group's concerns. The study group will likely hold more meetings before proposing recommendations to the legislative Environmental Review Commission (ERC) later this spring. The League and other reviewing entities suggested improvements in a report submitted to the ERC last month (read a synopsis here).

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Bill Filing Deadlines for 2014 Legislative Session Released

The North Carolina General Assembly released bill filing deadlines for the 2014 Short Session this week. Both local bills and bills primarily affecting the State or local retirement systems must be to the Bill Drafting Division by 4 p.m. Wednesday, May 21, and filed by 4 p.m. Wednesday, May 28. A complete list of bill filing deadlines and the types of bills eligible for consideration in 2014 can be found here.
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State Commission Approves Natural Gas Extraction Setback Rules

The N.C. Mining and Energy Commission voted last Friday 10-1 to establish setback standards for natural gas extraction activities in the state, according to the News & Observer. Under the approved standards, drilling and extraction will be required to occur at least 650 feet from homes; other "high-occupancy structures" such as schools, daycares, and hospitals; water wells; and other sensitive landmarks. The rule contains an exception to this general setback rule, providing affected landowners an avenue to request a variance for less-restrictive setbacks from any feature except high-occupancy structures. The Commission also adopted smaller safety buffers for drilling and extraction from streams, wetlands and flood plains. The Commission's vote recommends these standards to the N.C. General Assembly, which will ultimately establish the standards for the natural gas extraction industry.