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Cap on Local Property Tax Revenues Proposed

Legislation that would cap the amount by which city property tax revenues could increase from year to year advanced out of the Joint Legislative Commission on Energy Policy Thursday. The property tax revenue cap can be found on Page 25 of the Energy Modernization Act, which otherwise deals largely with regulation of drilling and hydraulic fracturing activities (see below for more on these regulations). Under the proposed legislation, city property tax revenues may not increase by more than 8 percent over property tax revenues collected in the previous fiscal year. If projected property tax revenues are expected to grow by more than 8 percent for the coming fiscal year, cities would be required to reduce their property tax rate to bring revenue growth under 8 percent. Similar language applying to counties is also included as part of the proposal.

More detail is available in the Action Alert the League sent to its members on Thursday. We are asking League members to contact their legislators this weekend and let them know of the potential impact a property tax revenue cap would have. This would be the first-ever statutory limitation on property tax revenues in North Carolina, and such a broadly written cap could significantly limit cities' ability to provide the services required by their businesses and their taxpayers, and promote economic development.

This legislation is now eligible for introduction in the General Assembly session that convenes next Wednesday. It would still need to be considered by both the House and Senate and go through the Governor's office before becoming law. We will keep you updated on the progress of this legislation. If you have any questions, please contact League Director of Research & Policy Analysis Chris Nida.


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NCLM Officials Present Benefits of Planning to Committee

Elected officials from Fayetteville, Jacksonville, and Matthews addressed the Committee on Property Owner Protection and Rights Monday, describing the benefits of land use planning in their communities:

  • Fayetteville Council Member Bobby Hurst (pictured below), a small businessman and former state chairman and national committee representative for the N.C. Young Republicans, told how Fayetteville's development code "thinks economic development first" by encouraging high-quality development through flexible and transparent approvals, saving property owners time and money.
  • Jacksonville Mayor Pro Tem Michael Lazzara, a restaurant and sign business owner and former Marine, gave committee members an overview of how Jacksonville's planning practices protected the military mission of Camp Lejeune, ensuring that the City continued to meet the military's training needs by reducing encroachment from development. In addition, Lazzara stressed how the City's development code preserved residential property values for young service members, preventing foreclosures that could otherwise happen with frequent deployments and depressed property values.
  • Matthews Mayor Pro Tem Joe Pata, a banking executive, described how the Town's development code preserved its small-town character despite the Town's location adjacent to a major metropolitan center. Pata gave numerous examples of how the Town's code flexibilities met developers' needs while promoting the Town's vision of high-quality development with a small-town feel, a combination that he said attracted businesses and residents alike.

At this meeting, the committee's third, committee members continued their exploration of land use practices used by N.C. local governments. Following up on previous committee discussions, other presenters to the committee discussed two additional topics: N.C. counties' perspectives on extra-territorial jurisdiction and regulation of appearance standards. As in previous meetings, committee co-chair Rep. Tim Moffitt stated that the committee would reconvene after the Short Session that begins Wednesday, with the intention of recommending legislation for the 2015 Long Session.

Fayetteville Councilman Bobby Hurst presents to the Committee on Property Owner Protection and Rights

Fayetteville Council Member Bobby Hurst (left) discusses how the city's development code encourages economic development with the Committee on Property Owner Protection and Rights. Also pictured are committee co-chairs Rep. Tim Moffitt (center) and Rep. Chris Malone (right).


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House Committee Examines Water System Financial Practices

Continuing its examination of local government enterprise systems' financial practices -- with a particular emphasis on water and wastewater systems -- the Public Enterprise Systems Use of Funds Committee heard more Monday about how these systems account for funds received from system ratepayers. Of particular concern, CH2M Hill Vice President JD Solomon told the committee that many local governments no longer have the talent and ability to properly manage water and wastewater systems. Suggesting that privatization of these services provided a better outcome than public management, Solomon said many financial stresses justified his recommended "best practice," including out-of-control pension costs. North Carolina's local government retirement system is among the best-funded systems in the country.

Other presentations included UNC School of Government faculty members Gregory Allison and Kara Millonzi, who explained the accounting rules and legal standards which all public enterprise systems must follow when providing these services. They stressed that the Local Government Commission retained comprehensive oversight of system finances, helping to ensure systems followed state and federal laws and standards. They also pointed out that as a practical matter, a system's desire to access private bond markets for needed capital funds incentivized systems to keep their financial statements accurate. As he stated in previous meetings of this committee, co-chair Rep. Tim Moffitt said the committee would pick up its work with another meeting after the Short Session that begins next week, with a goal of recommending legislation for the 2015 Long Session.


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Current, Former Municipal Officials Victorious in Tuesday's Primaries

More than 1 million North Carolinians cast a ballot in Tuesday's primary election, voting for candidates for U.S. Senate, the General Assembly, and judicial and district attorney positions. Despite some initial difficulties tracking live results, by the end of the night virtually all of the state's races had either been decided or were headed to a run-off election in July.

Current and former municipal officials factored into a number of Tuesday's contests. In the most-watched race of the day, Speaker of the House Thom Tillis garnered more than 45 percent of the vote in the Republican primary for the U.S. Senate, eclipsing the 40 percent of the vote needed to avoid a run-off election and earning his party's nomination. Tillis, a former commissioner in the Town of Cornelius, will face current U.S. Senator Kay Hagan in November's election.

Also avoiding a run-off was Rep. Alma Adams, who drew more than 44 percent of the vote in the Democratic race for U.S. House District 12. Adams is a former member of the Greensboro City Council and will likely be favored to win her November election against Republican Vince Coakley in what is a heavily Democratic district.

In addition to several incumbent legislators with municipal experience that won their primaries -- including Sen. Don Davis, Sen. Ralph Hise, Rep. Jeffrey Elmore, and Rep. Chuck McGrady -- at least three other current and former municipal elected officials won primaries on Tuesday. They include:

  • Lee Zachary, the former mayor of Yadkinville, who will not have an opponent on the ballot in November and will thus almost certainly be the next Representative from House District 73;
  • John Bradford, a current Town of Cornelius commissioner who won the Republican nomination in House District 98; and
  • Carr Ipock, a former commissioner in the Town of Trent Woods, who won the Democratic primary in Senate District 2 and will face incumbent Sen. Norman Sanderson in November.

Full results of all of Tuesday's elections can be found here. The N.C. General Assembly website has unofficial primary results and candidate listings for both the N.C. House of Representatives and the N.C. Senate. The League offers its congratulations to all of the winners of Tuesday's primaries. We wish all the candidates competing in November's election the best of luck, and we look forward to working with all of the returning and newly-elected officials in the future. 


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Proposal Mandating Back-Up PSAPs Could Cost Cities 911 Funds

Public Safety Answering Points (PSAPs) that receive state 911 funding could soon be required to have back-up PSAP plans and facilities in place under draft legislation released by the Joint Oversight Committee on Information Technology this week. The proposed legislation, which the committee endorsed Thursday as part of its formal report to the General Assembly, would require all PSAPs that share in state 911 revenue to have either a stand alone back-up dispatch facility constructed or enter into an inter-local agreement with a nearby PSAP and coordinate technologies for back-up services in case of emergencies or outages. Under the legislation, any PSAPs that are non-compliant with this legislation at the time of its passage would be in jeopardy of having their existing 911 fund distributions reduced or suspended. Currently, only 28 of North Carolina's 127 Primary PSAPs have back-up PSAPs in place that would satisfy the proposed requirements. After the League and the North Carolina Association of Chiefs of Police informed committee members of our concerns with the associated costs and short time period to comply, committee co-chair Sen. Andrew Brock told the committee that the bill was only intended as an opening draft to initiate conversations about how to improve 911 dispatch redundancy statewide. The League has already had productive conversations with legislators about resolving our concerns with the proposal and will continue to update you on our efforts. For questions, contact Whitney Christensen.
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Legislation Dictates Aspects of Oil and Gas Regulation

As mentioned above, the Joint Legislative Commission on Energy Policy proposed legislation Thursday that would affect many aspects of regulations related to the management and development of oil and gas exploration in the state. One positive component of this proposal reiterated that the disposal of waste from oil and gas exploration by injection into subsurface or ground waters by means of wells, a practice that would pose large concerns for many municipalities drawing from aquifers for their water supplies, was prohibited in the state. However, another provision would invalidate local ordinances that prohibit or have the effect of prohibiting hydraulic fracturing activities. This section mirrored current statutory provisions that preempted local governments' regulation of hazardous waste facilities. Both that current law and this new proposal provided that a local zoning and land-use ordinance was presumed valid to the extent it was generally applicable to all development.

In addition to these provisions and the property tax restrictions mentioned above, other aspects of the proposed legislation included:

  • Extension of the deadline of rule development by the N.C. Mining & Energy Commission (MEC) and N.C. Environmental Management Commission (EMC) from October 1, 2014 to January 1, 2015
  • Exemptions for oil and gas-related rules from certain provisions in the Administrative Procedures Act
  • Creation of a new Oil and Gas Commission and reconstitution of the Mining Commission to replace the MEC (effective August 1, 2015)
  • Clarifications regarding trade secrets
  • Inclusion of a "bad actor" provision requiring environmental compliance review of drilling permit applicants by state regulators
  • Establishment of a severance tax
  • Studies of various topics, including transportation infrastructure

During the three-minute committee discussion of the proposal, former Rockingham mayor Sen. Gene McLaurin voiced concern about restrictions on local governments, particularly in regards to property tax, and suggested studying what other states have done. This act would be effective when it became law; however, it would still need to be introduced, pass both chambers, and be signed by the Governor before becoming law.


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Prayer at Board Meetings Ruled Constitutional, NLC Webinar to Discuss Impacts

In a ruling issued Monday, the U.S. Supreme Court deemed prayer at town board meetings to be constitutional. The Town of Greece v. Galloway verdict held that the Town of Greece practice of opening board meetings with prayer, even though the prayers included overtly Christian terms and references, did not violate the First Amendment. The ruling also determined that prayer does not have to be sectarian and as long as the local government maintains a policy of nondiscrimination, there is no requirement to achieve a balance in the types of religious prayer offered. Visit the League's website to read more about the ruling. The National League of Cities will also host a free webinar on the subject Wednesday, May 28, beginning at 1:00 p.m. The webinar will discuss how the Supreme Court's ruling impacts local governments. The panel of guests on hand includes one of the lawyers who argued the case before the Supreme Court. For more details and to register, click here.
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EMC Moves Water Quality Standards Package Forward

Acting in support of one of the League's top regulatory goals, the N.C. Environmental Management Commission (EMC) advanced a proposal (action item 14-11) yesterday to update the state's water quality standards, a rulemaking package known as the "triennial review." The triennial review is a process mandated by the federal Clean Water Act that directs states to review their surface water quality standards every three years. A highly technical scientific process, the review accounts for updated toxicological studies and other research regarding aquatic health in surface waters. In this most recent review, North Carolina proposed changes to certain metals standards such as cadmium, chromium, nickel, silver, and zinc, as well as other measured parameters such as chlorophyll-a. A complex mathematical exercise translates the standards into permit limits, taking into account the metals and other substances a wastewater system receives from homes and industries that discharge into its collection system. The assumptions made in those calculations determine whether or not a wastewater system (1) must make upgrades, or (2) can accept more wastewater connections from industries and other customers such as residences and businesses. Now, the standards will proceed to a 60-day comment period. As with all previous opportunities for comment on the triennial review, the League will provide input on this rules package (read about previous efforts in "League Leads City Input on Surface Water Quality Standards," January 2014).


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Short Session Begins Next Wednesday

The 2014 Short Session of the General Assembly is scheduled to convene at noon Wednesday, May 14. On Thursday of this week, Senate President Pro Tempore Phil Berger held a press conference to discuss his chamber's priorities for the session. In addition to the budget, President Pro Tem Berger mentioned teacher pay, coal ash management, regulatory reform, and hydraulic fracturing as issues likely to be considered by the Senate. You can read more on his thoughts via the News & Observer and WRAL.

During the legislative session, you can still expect to receive all the latest news impacting North Carolina's cities and towns from the League every Friday. That email will be under the LeagueLINC Bulletin heading during session rather than the LINC'ed IN email you have been receiving for the past several months, but it will remain the only weekly wrap-up of the issues most important to all of North Carolina's municipalities. All of our updates will continue to be linked on the League's website as well.


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Jeff Jackson Chosen to Replace Clodfelter in State Senate

Last Saturday, Democratic Party officials from State Senate District 37 selected Gaston County assistant district attorney Jeff Jackson to be their next Senator. He replaces Dan Clodfelter, who resigned from the Senate to become the mayor of the City of Charlotte. Jackson will complete the remainder of Mayor Clodfelter's term and be on the ballot unopposed in November. The League congratulates Mr. Jackson on his selection and looks forward to working with him in the future. Read more on his selection in the Charlotte Observer and WFAE.


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Transportation Funding Webinar Next Tuesday

The National League of Cities (NLC) will be teaming up with the International Bridge, Tunnel and Turnpike Association to provide a transportation funding webinar on Tuesday, May 13 beginning at 2:00 p.m. As transportation needs continue to grow for states and local governments, the importance of alternative financing and funding methods has become even more critical. The webinar will provide participants with funding options, ways to build a financing toolkit, and examples of how cities like Austin, TX and Tampa, FL are addressing transportation funding needs. The webinar is free and you can register here, on the NLC website.