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The (Hopefully Short) Road Ahead

As the Senate approved its budget this week with very few amendments approved by the appropriations committees and on the floor itself, all eyes turn to the House, which will ultimately push its version of the budget and finance package forward. While predictions of when the session will end are always dangerous to make, the rumors in the legislative building point to the end June. If true, this would provide just enough time for a vigorous debate between the House and Senate over tax reform and budget priorities before adjourning just before the start of the next fiscal year. It is difficult to determine how this will happen, given the large differences between the competing tax reform plans, and most certainly, there is a large stable full of bills waiting to be approved. Stay tuned. 
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Budget Approved by Senate, Moves to House

The State budget process began in earnest this week as the Senate unveiled and passed its version of the spending plan in SB 402 Appropriations Act of 2013. A full summary of the provisions in the budget affecting cities and towns can be found hereThe revenue assumptions in the budget assume that tax reform legislation will be enacted to reduce taxes by half a billion dollars, but the budget does not include any actual reform proposals. The budget now moves to the House, which is expected to approve its version with the next two weeks. Significant items in the Senate budget are discussed in separate articles below, including a handful of small unfunded mandates. Contact: Karl Knapp
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Possible Unfunded Mandates

The Senate budget contains two provisions that would place unfunded mandates on local governments. The first provision would require that if a State transfer of insurance tax revenue to the Worker’s Compensation Fund for Volunteer Safety Workers is not sufficient to meet the actuarial needs of the Fund, the remainder of the cost would be provided through an assessment of funds from those local governments served by volunteer fire departments and/or rescue squads. We have been told that the elimination of the transfer is planned, which would result in the full costs being placed on local governments. The second provision would take over $10 million per year from the Separate Insurance Benefit Trust, which pays for a modest death benefit and accident insurance for local and state law enforcement officers, and use the funds to pay State Health Plan premiums for State law enforcement officers. Local governments would receive none of the diverted funds, but could be required to replenish the Trust. Contact: Karl Knapp
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Rural Center, Regional Partnerships, COGs Defunded in Senate Budget

The budget passed by the Senate this week would make significant changes to how the state supports economic development efforts. The bill would eliminate all State funding for the Center for Rural Economic Development ($16,619,194), Regional Economic Development Partnerships ($2,151,517), and Councils of Governments ($328,105). It would transfer the economic development responsibilities of these groups to a new Rural Economic Development Division within the Department of Commerce and a new Rural Infrastructure Authority. Senate leaders said that the change is intended to remove an ineffective layer of bureaucracy from business recruitment and force Commerce Department officials to work outside of Raleigh. Contact: Karl Knapp
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Senate Budget Transportation Provisions

In addition to the transportation reform provisions discussed in a separate article below, the Senate budget includes several additional transportation provisions affecting cities and towns. The budget would reduce public transportation operating support funding by two percent, following a cut of 9 percent over the last two years. It also would eliminate the Small Urban Construction program, which provides $7 million each year for urban projects on the State system. The allocation of State maintenance funding could change as the result of a provision that would require NCDOT to assess the the level of congestion on primary highways and use the assessment as one of the criteria for developing its highway maintenance plan. The budget also would adjust MPO/RPO ethics reporting requirements so that only voting members would be covered. This provision mirrors that in SB 411 Ethics Requirements for MPOs/RPOs, which the League has been working on and which passed the Senate prior to crossover. The League thanks the Senate for including this measure in its budget. Contact: Karl Knapp
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Water Infrastructure Funds Would Consolidate Under Budget Plan

Senate budget-writers proposed several policy changes of note in SB 402 Appropriations Act of 2013 that would affect the way the state awards water, wastewater, and stormwater infrastructure funds. First, the budget would consolidate the Clean Water Management Trust Fund and Natural Heritage Trust Fund into a new "Water and Land Conservation Fund." Second, the proposal would move both the Drinking Water State Revolving Fund and Clean Water State Revolving Fund into a new "State Water Infrastructure Authority." Both new funds would be overseen by separate nine-member authorities, who would have the ability to set the criteria for awarding grants and loans to local governments for these infrastructure projects. The oversight bodies would also make decisions on those awards. Other provisions in the environment section of the Senate budget proposal would make the same changes to the N.C. Environmental Management Commission that have been debated in other bills this session, and would allow the state to direct taxpayer dollars to private recycling enterprises. Contact: Erin Wynia


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ACTION ALERT: Transitional Hold Harmless Not in Senate Budget

The budget passed by the Senate this week does not include any extension of the transitional hold harmless payments for cities and counties. If these payments are to continue this year and beyond, it is imperative that they are extended in the budget the House passes and sends back to the Senate. With the House set to take up the budget as soon as next week, now is the time to contact your local delegation and members of the House Appropriations Committee and ask that these payments be included in the House budget. If the transitional hold harmless payments are not included in the House budget, they will likely expire permanently. Contact: Karl Knapp 
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Tax Reform Legislation Still Forthcoming

Tax reform plans backed by the leadership of the House and Senate are still awaiting a hearing in both chambers. Last week the House rolled out a draft of its tax reform plan, which it intends to place into HB 998 as the "Tax Simplification and Reduction Act." Consideration of that plan, which the League analyzed in last week's Bulletin, has not yet taken place. Senate leaders outlined the broad parameters of their plan two weeks ago but have not yet released any tax reform legislation. Sen. Bob Rucho, a primary backer of tax reform in the Senate, told a gathering of county officials this week that Senate legislation would be released next week. As noted above, the Senate budget includes a line item for tax reform projecting a reduction in revenues as a result of any reform. The League will have further analysis of the projected impacts of both tax reform plans when more detailed information becomes available. Contact: Karl Knapp
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Transportation Reform Moving Separately from Budget

Though language enacting transportation reform is included in its budget, the Senate is also moving forward with a separate transportation reform bill. On Wednesday the Senate Transportation Committee gave its approval to HB 817 Strategic Transportation Investments. Both the version of the bill approved by committee and the language in the Senate budget -- which are substantially the same -- would keep the House-approved portion of the bill that makes future Powell Bill funds equivalent to 10.4 percent of gas tax revenues. The League has previously offered its analysis of this change, and we now have city-by-city estimates of the impact of that change to offer as well. Beyond that Powell Bill provision, though, the Senate budget and its version of HB 817 contain several notable differences from the version of HB 817 approved by the House. The Senate's version would require NCDOT to collect lane mile data from each municipality by Dec. 1 of this year and develop at least three options to revise the Powell Bill distribution formula to include this data by March of next year. It would also restrict Powell Bill funding for bicycle and pedestrian projects so that they could only be expended as a match for federal money for these projects, and it would prohibit State funds from being expended on non-federal bicycle and pedestrian projects. The criteria that could be used to rank transportation projects eliminates "Economic Competitiveness" as a criteria and clarifies "Accessibility/Connectivity" as "Accessibility and connectivity to employment centers, tourist destinations, or military installations." Public transportation projects will also now compete for funding at the Division level rather than the Regional level. And finally, Surface Transportation Program -- Direct Attributable (STPDA) funds would be exempt from the bill's allocation formula if they were used for a Regional project, which could require the reallocation of funds between the three levels after funding decisions are made. HB 817 will next be considered by the Senate Finance Committee. Contact: Paul Meyer
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Local Deannexation Bills Move Out of Subcommittee

Two local deannexation bills not supported by the communities they affect were given a favorable report yesterday by the House Finance Committee Subcommittee on Deannexation/Annexation. HB 568 Asheville Deannexation would remove certain property, including the Asheville Regional Airport, from within the City of Asheville's corporate limits. SB 269 Salisbury/Deannex Rowan Cty Airport Property would also deannex airport property, in this case the Rowan County Airport from the City of Salisbury. Both of these bills are legislatively-driven and were not requested by either Asheville or Salisbury. The bills now move on to the full House Finance Committee for consideration. While HB 568 has not yet been heard by the Senate, SB 269 has received Senate approval, meaning that it will become law if it is passed by the House. Contact: Paul Meyer
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Revised Bill on Dix Lease Moves Forward in House

The House Judiciary Committee gave a favorable report on Wednesday to a revised bill that would give the City of Raleigh an opportunity to renegotiate the terms of its acquisition of the Dorothea Dix property from the State. The version of SB 334 Dorothea Dix Lease passed by the Senate would have invalidated the lease of the park property immediately. The version passed out of committee on Wednesday invalidates the lease but does not go into effect until April of next year, giving the city time to renegotiate a lease or sale of the property with the State. SB 334 now also gives the City of Raleigh an opportunity to possibly buy the property where the Governor Morehead School is located, which would provide a geographic link from the city's Pullen Park to the proposed destination park that would be built on the Dix grounds. Representatives from Raleigh and the Governor's office both expressed their support for the bill in committee, and Raleigh mayor Nancy McFarlane and Governor Pat McCrory appeared together at a press conference yesterday (see below) to express their desire to work together on a deal for the Dorothea Dix property. "I appreciate the opportunity to work with the governor over the next year to come to an agreement that will result in the realization of a world-class park on the Dorothea Dix Campus," McFarlane said. In a news release, Senate President Pro Tempore Phil Berger said, in part, "This proposed agreement delays doing the right thing until 2014 -- why not do the right thing today?" SB 334 next moves to the House floor. Contact: Paul Meyer

Governor McCrory and Mayor McFarlane shake hands at a Thursday morning press conference.


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House Commerce Committee Explores Underground Digging

The House Committee on Commerce and Job Development spent 45 minutes debating an underground digging proposal Wednesday. The proposal, SB 9 Utilities/Design/Location Services, would circumvent a more comprehensive overhaul of the state's underground digging laws. These laws are also known as the "811" laws named after the "call before you dig" phone number excavators must dial to notify utilities -- including water and wastewater utilities -- of planned digging activities. The League has participated in a broad stakeholder effort for the comprehensive overhaul, which continues its path through the House, and supports the overhaul bill. After hearing from representatives of the cable, telecommunications, and investor-owned electric utilities industries, committee members voted to re-refer SB 9 to the House Committee on Public Utilities and Energy. Contact: Erin Wynia


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June 4 District Days! ~ Join the 'In' Crowd

The June 4 District Days! is shaping up to be the largest to date. We have more than 20 members registered to participate and we'll take more. Did I mention it's free? RSVP with your plans to participate today.

Tuesday, June 4 is geared toward western N.C. legislators and leadership, but any League member should feel free to come and be part of the day. Let me know you'll be here and I'll set the schedule with your legislators.

District Days! is a coordinated effort to have regional groups of mayors, managers and municipal leadership in Raleigh having meaningful discussions with legislative leadership and your hometown legislators. These one-on-one visits with legislators are making a tremendous difference in accessibility.

Groups should arrive at 9 o'clock June 4 at the Coates building on the League's campus. After a short briefing on the Top 3 Hot Issues, you'll proceed to the legislature. We thank you for getting involved.

Contact: Jennifer Webb; 919.715.1726