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 August 14 

This week's development

Final approval on transit tax authority

The General Assembly has enacted HB 148 – Intermodal Transport Bill, which authorizes five counties to hold a referendum on a half-cent sales tax for transit. The other 94 counties (except for Mecklenburg) may hold a referendum for a one-quarter cent sales tax for transit. [Mecklenburg already has a voted sales tax for transit.] This was a legislative priority for the N.C. Metro Mayors Coalition and the League.

More say on one-stop polling places

HB 908 – Election Administration Amendments includes a provision that will give cities and towns some more room to negotiate and participate in the selection of facilities for one-stop voting in order to avoid disrupting normal activities and events. Our thanks to Rep. Skip Stam for speaking on the House floor in support of this need when the bill was up for concurrence.

Ethics training and ethics codes

The passage of HB 1452 – Local Government Code of Ethics means all elected officials need to complete at least two hours of ethics training within 12 months of being elected or appointed or reelected. The Essentials of Government, which will be offered in six locations across the state beginning in December, will include training that satisfies this requirement. This two-day course is sponsored by the Local Elected Leaders Academy, a program of the League, the UNC-Chapel Hill School of Government and the N.C. Association of County Commissioners (NCACC) An Aug. 27 pre-conference session at the NCACC annual conference also will satisfy this requirement. In addition, your staff is working with the School of Government and others to offer additional training opportunities.

The new law also requires that cities, counties and school boards adopt codes of ethics. If your board already has a code of ethics adopted for elected officials that you feel is effective, please email Jennifer Webb at the League. We would like to use it in working with the School of Government to prepare and provide resources for individual cities and towns in developing a strong code of ethics. Please stay tuned for more.


Select legislative issues we may see in the 2010 session

A number of bills of interest to cities and towns are eligible for the 2010 session. Generally, bills that passed one body (House or Senate) and were received by the other remain eligible, along with bills directly and primarily affecting the state budget or meeting certain other criteria.

HB 1134 - Open Government Act passed the House but remains in the Senate. The bill would require the awarding of attorneys' fees to anyone who “substantially prevails” in a public records case against a city, county or the state. The governmental unit must act in reliance on a judgment, court order or written opinion of the attorney general to avoid paying the fees. It also establishes a mediation unit within the Attorney General's Office to resolve open meetings and public records disputes. The League has concerns about the bill and will continue to seek amendments to this bill.

SB 117 – Clarifying Development Moratoria Authority passed the Senate but remains in the House. This bill would prohibit a city or county from adopting a temporary moratorium on development for the purpose of developing and adopting new or amended ordinances. The League opposes this bill because planning statutes were revised several years ago to set sufficient standards for moratoria, an important tool for addressing local growth and development issues.

SB 761 – Street Construction/Developer Responsibility passed the Senate and remains in the House. SB 761 alters the ability of local governments to require developers to make necessary transportation infrastructure improvements to relieve the traffic impacts of the development. The bill limits the financial obligation of an individual developer to the amount necessary to serve projected traffic generated by the proposed development only – likely a partial payment on the needed infrastructure. The League has concerns about the bill impairing necessary infrastructure improvements.

HB 1268 – Eminent Domain did not pass the House or Senate but may remain eligible because it is a constitutional amendment. The bill calls for a constitutional amendment to prohibit use of eminent domain for economic development purposes. State law already prohibits use of eminent domain for general economic development purposes.

HB 116 -- Railroad Corridor Management passed the House and is in the Senate. The bill deals with encroachments onto railroad easements. When a railroad files a corridor map with the Department of Transportation, a local government may not issue certain development approvals, such as building permits, in the corridor without the railroad's consent. The current version includes a provision allowing local officials to rely on documentation of agreement provided by the applicant.

**Many other key bills likely are eligible — the above is not meant to be a complete list. General Assembly staff is expected to post a complete listing within the next few weeks. We will incorporate in future Bulletins

Bills may ‘die' but the issues often linger

Many other bills, such as those dealing with collective bargaining, exactions, ABC system modernization and many other issues, may not be discussed in the short session, but the issues will not go away. If legislation on these issues is not considered in 2010, look for it in 2011.

Topics for study committees and commissions

The following select issues are included in the 2009 Studies Bill and may be studied in the interim. It does not mean that all will be studied, but that they may be studied. Also, please remember that the budget bill includes plans to study tax reform in the interim as well.

Potential Legislative Research Commission Studies:

  • Youth violence – review current efforts to prevent youth violence.
  • State-funded regional economic development programs
  • Broadband Use -- promotion of broadband access and use within the state; broadband account use limits and tiered pricing based, in part or in whole, on data consumption, and penalties and fees for exceeding those limitations.
  • Study feasibility of tax credit for installation of innovative, low-impact storm water management systems.
  • Study transfer of development rights into the developed areas of counties, including Currituck and Chatham Counties, in association with conservation easements in rural areas of counties.
  • High speed Internet access in underserved urban areas and in rural areas.

Potential Environmental Review Commission Studies:

  • Continue study of water allocation (SB 907). Further research and study of 2008 Report of Water Allocation Study to Environmental Review Commission.
  • Consolidating the state's environmental policymaking, rulemaking, and quasi-judicial functions into one commission.
  • Sustainable growth study - what it means for state's growth and development to be sustainable.
  • Study possibility of requiring new and renovated commercial buildings and new residential buildings to comply with energy conservation standards.
  • Study use and storage of reclaimed water.

Potential Revenue Laws Study Commission studies:

  • Municipal Broadband -- local government owned and operated communication services.
  • Issues relating to the effects on local units of government of enacted property tax relief programs and exemptions.
  • Effects on state revenues of government enacted tax incentives, exemptions, credits, refunds, and exclusions.

Potential Joint Legislative Elections Oversight Committee studies:

  • Filling vacancies in local offices.

Legislative Study Commission on Water and Wastewater Infrastructure (New Commission)

  • Identify statewide water and wastewater infrastructure needs and to improve the delivery of state appropriated water and wastewater programs.
  • Evaluate drinking water and wastewater needs, evaluate data and information available, study and report on needs, including those of small towns whose water and sewer rates exceed the high-unit-cost threshold as defined in G.S. 159G-20.
  • Determine whether the priorities appropriately reflect the state's most pressing needs in light of future growth projections and recommend changes to infrastructure funding priorities and appropriations processes to ensure that funds are used to meet the state's most pressing needs.
  • Ascertain the capacity and role of the state in bridging identified gaps between funding priorities and available funds and determine what steps funding agencies can take to improve the delivery of existing funding programs.

List of General Statutes and laws amended in 2009


General Assembly adjourns tough session; Annexation reform unresolved; Thanks for your hard work on behalf of your residents

With the state budget in place, the General Assembly quietly concluded its 2009 session on Aug. 11 and set May 12 as the opening date for the 2010 session. The major municipal issue left unresolved was annexation reform. The House passed
HB 524 – Annexation – Omnibus Changes with a referendum provision making the bill unworkable for cities and towns, and the Senate did not take up the bill.

A key municipal legislative priority for this session was passage of annexation reform that was fair to both in-town and near-town residents. Municipal officials took a leadership role to address concerns heard in select communities by suggesting comprehensive annexation reform. You and your citizens supporting fair annexation should be proud of your proactive leadership approach to address this issue. The House Judiciary II Committee crafted a compromise bill encompassing many of the League's suggested reforms as well as most of the changes proposed by annexation opponents. The result was a committee substitute for HB 524 – Annexation – Omnibus Changes. When the bill reached the House Finance Committee, an amendment was added requiring a referendum on city-initiated annexations when a petition is submitted by 15 percent of the registered voters in the area to be annexed and the municipality. The bill reached the House floor and was then sent to the House Appropriations Committee, where an attempt to remove the referendum provision failed by a narrow margin. On the House floor, the bill was again amended to allow up to a year for collection of signatures on the petition (beginning with the date of the resolution of consideration). HB 524 then passed the House.

We are disappointed the referendum was added to HB 524. The bill, without the referendum addressed the legitimate concerns of citizens and made sweeping proposed changes in the state's annexation laws making it more difficult to undertake city/town initiated annexations. In an effort to put the issue to rest, we reluctantly supported the proposed compromise. But the addition of the referendum provision made the bill unfair and unworkable, setting a path that would effectively eliminate the use of annexation as a tool to manage growth and provide urban services in an orderly manner

Our task now is to work with our residents to engage our senators and representatives in discussion about what reasonable and fair annexation reform needs to include. We remain committed to annexation improvements that address legitimate concerns while protecting all residents and supporting well-managed growth.

Thank you for your leadership and support of N.C. cities and towns

Our thanks to the many legislators who in this session supported cities and towns and our residents. We will ensure your support of municipal residents is properly communicated in your district. A special thanks in the House to Speaker Joe Hackney, Reps. Kelly Alexander, Lucy Allen, Jeff Barnhart, Alice Bordsen, Becky Carney, Lorene Coates, Margaret Dickson, Pryor Gibson, Rick Glazier, Jimmy Love, Paul Luebke, Marian McLawhorn, Mickey Michaux, Bill Owens, Earline Parmon, Deborah Ross, Ruth Samuelson, Skip Stam, Russell Tucker, William Wainwright and Jennifer Weiss.

In the Senate, we thank President Pro Tem Marc Basnight. Senate Majority Leader Tony Rand and Sens. Dan Blue; Dan Clodfelter, Don Davis, David Hoyle and Martin Nesbitt.

The League staff also extends a special thanks to the excellent legislative staff at the General Assembly. North Carolina is fortunate to have such excellent bill drafters, researchers, and assistants. Special thanks to Cindy Avrette, Amy Bason, Erika Churchill, Gerry Cohen, Evelyn Costello, Susanna Davis, Laura DeVivo, Sabra Faires, Emily Reynolds Freeman, Shara Graham, Joyce Harris, Jeff Hudson, Canaan Huie, Linda Johnson, Wanda Joyner, Jan Lee, Melissa Lennon, Jennifer McGinnis, B. J. McMillan, Bonnie McNeil, Sylvia Nygard, Judy Tardiff, Nick Tosco, and Keith Weatherly.

The League staff also thanks the many municipal officials and town residents who worked so diligently on the annexation issue. Your efforts are appreciated. Keep up the good work!

Full Report of Legislative Actions

We will publish a complete summary of 2009 legislative actions in the wrap-up issue of the Legislative Bulletin in the next few weeks, after some much-needed vacation time.

Budget note—Beer and wine tax revenues reduced for one year

As mentioned in last week's Legislative Bulletin, the state budget reduces the municipal share of beer and wine tax revenues for 2009-2010, part of the overall budget cuts/tax increases necessary to balance the budget. The General Assembly increased the state beer and wine tax and changed the distribution formula with the result being a $14 million decrease in the municipal payments due in May, 2010. This is a two-thirds decrease for 2009-2010, and cities and towns should decrease their expected revenues by two-thirds for this fiscal year. The formula is adjusted for 2010-2011, and the funding level will be restored for the May 2011 distribution.

We were disappointed that the General Assembly reduced this important municipal revenue source, especially since the cut occurred more than a month after the adoption of municipal budgets and the beginning of the municipal fiscal year.

We do appreciate the support of certain budget negotiators who defended cities and towns to ensure local budgets weren't even more severely impacted.