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Waiting Game

Signals are being sent that the end of session is near. The Senate refused to vote on any House bills yesterday and will be shutting down its committees next week, while the House will not be in Raleigh next week and will only hold skeleton sessions. Meanwhile, budget and tax negotiations continue to take place behind the scenes. Assuming a tax deal can be reached by the end of next week (Wednesday), adjournment is likely by the week of July 15th. The Government Affairs team is working very hard to protect cities from late session end-runs on municipal issues. Stay tuned! 
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No Bulletin Next Week; Watch for Special Communications

Due to the July 4th holiday next Thursday, the League will not be publishing its usual LeagueLINC Bulletin. The House has also announced that it will hold no committee meetings and only skeleton sessions next week. That said, in the event that there is news on tax reform or any other issue of widespread significance, we will be in touch to let you know, so please keep an eye on your email. Regular publication of the Bulletin will resume on July 12 and will continue until legislators adjourn for the summer. Thank you for all that you do on behalf of North Carolina's cities and towns, and have a great 4th of July holiday.
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Asheville-Style Forced Transfer of City Owned Utilities Could Spread to Greenville

When the General Assembly forcibly transferred and regionalized Asheville’s water system earlier this year (HB 488 Regionalization of Public Utilities), the action was justified based on the “unique history” of Asheville’s system and legislators stated that there was no intent to interfere with other city owned utility systems across the state.  Now a key provision in HB 488 that limited its scope to Asheville is set to be removed by two bills, HB 94 Amend Environmental Laws 2013 and SB 341 Amend Interbasin Transfer Law, moving through the General Assembly. Removal of this key provision would extend the forced transfer/regionalization provisions of HB 488 to the utilities owned by the City of Greenville once the population served by those utilities reaches 120,000.  The City of Greenville and the League are opposed to any extension of the forced transfer requirement to Greenville, which has no “unique history” that needs to be remedied.  We have been led to believe that the provision is being removed in order to both weaken Asheville’s lawsuit to prevent the transfer of its water system and to allow the Greenville Utilities Commission to become independent from the City. Contact: Paul Meyer
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Tax Negotiations In Full Swing








Senate HB 998







House HB 998







House Offer







"Governor's Plan"







The six-year aggregate effect of each tax plan on municipal revenues are shown above in millions of dollars.

Negotiations on tax reduction legislation have been the primary focus of the General Assembly leadership and the Governor this week. The House leadership made an offer to the Senate for a compromise on the issue. The offer was similar to the House passed-version of HB 998 with regard to municipal revenue, but it did not include an expansion of the sales tax to cover repair, maintenance, alteration, and installation services. As a result, the offer would still increase municipal revenue, just not as much as the House version of HB 998. A plan also circulated this week that was reported to be the Governor's proposal for tax reduction, but State budget director Art Pope has indicated that the proposal was just one of several scenarios under consideration by the Governor. The supposed "Governor's Plan" included the House's expansion of the sales tax to services, but also the Senate's elimination of the ability of local governments to seek sales tax refunds. It did include the Senate's cap on sales tax refunds for non-profit organizations and the Senate's broader elimination of some sales tax exemptions. As a result, this plan would produce additional revenue for cities and towns over the long term, but would result in a shortfall in at least one year. 

Because some of these plans remain tentative, the League does not consider it prudent to issue estimates of the fiscal effect of each plan on individual cities and towns. Municipal officials should continue to let their legislators know the importance of keeping cities and towns fiscally whole as part of any tax plan. Contact: Karl Knapp

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Budget Progress Delayed

Significant progress on the State budget has been delayed until a tax reduction compromise is approved that will set the amount of revenue available. The impasse over the tax bill has led the Senate to stop considering any House bills and the House to cancel all committee meetings for the week of July 1. Because it appeared unlikely that a compromise budget would be approved and signed by the Governor before July 1, the General Assembly adopted HB 336 Continuing Budget Authority, which will extend current spending authority for the month of July. It is not expected that resolution of the tax and budget differences between the House and Senate will take the entire month of July. Contact: Karl Knapp
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General Assembly Thrusts Itself Into Local Issues

The House voted in favor of SB 315 Municipal Services yesterday, following a harsh discussion in the House Finance Committee during a recess in the House session. The bill would annex a large development into the corporate limits of the City of Durham and require the City to provide the development with utilities. The Durham City Council had previously rejected an agreement to provide water and sewer to the 751 South project, prompting the filing of this legislation. In the House Finance Committee yesterday, opponents of the legislation noted that the Durham City Council had previously determined that providing all required services to the project would not be financially feasible in the near future, and questioned whether the General Assembly should be inserting itself into local matters. Proponents criticized the City for using the provision of water and sewer services to stifle economic development and said passage of the bill would bring jobs to Durham County. Some legislators even went as far to say the decision of the Durham City Council to not provide utilities to the property was a "taking." Yesterday's action followed a Monday hearing in the House Finance Committee in which many of the same sentiments were expressed. The bill requires one more vote in the House before it can be sent to the Senate for concurrence. Contact: Paul Meyer

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Reg Reform Bill Surfaces in Senate Committee

After little movement on regulatory reform in recent weeks, comprehensive regulatory reform legislation emerged this week in a new version of HB 94 Amend Environmental Laws 2013 that was approved in the Senate Committee on Agriculture, Environment, and Natural Resources Tuesday. This new legislation does not contain some of the provisions of most concern to municipalities that earlier regulatory reform legislation contained, but several of the provisions would impact cities and towns. The bill:

  • Contains language suggested by the League to ensure that local governments would not be affected by a provision requiring State approval of the purchase of contaminated property.
  • Includes a provision that would help facilitate redevelopment in dense urban areas.
  • Merges the Division of Water Resources and the Division of Water Quality into one "Division of Water Resources."
  • Contains the same provision that arose in a separate bill last week that eliminates the reference to interbasin transfer certificates in determining the applicability of legislation transferring local utility assets to metropolitan sewerage districts. That law currently affects only the City of Asheville (see post above).

HB 94 was scheduled for a vote on the Senate floor yesterday before the Senate opted to remove all House bills from its calendar. Further regulatory reform items are expected to eventually emerge in SB 112 Amend Environmental Laws 2013, which was scheduled for a hearing Thursday before being removed from the House Regulatory Reform Committee calendar. Contact: Erin Wynia

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Governor Signs Transportation Reform Into Law

On Wednesday Governor Pat McCrory signed his transportation reform effort, HB 817 Strategic Transportation Investments, into law. The law revises how transportation funding is distributed in North Carolina, with 40 percent of funding directed toward projects of statewide significance and 30 percent each directed toward regional and division projects. It also ties Powell Bill funding more closely to motor fuels tax revenue, which means that in the future trends in gasoline consumption could have more of an impact on these funds. Going forward decisions on which transportation projects will receive funding will be made through a combination of data-driven criteria and local input. The League is serving on an N.C. Department of Transportation work group that has been developing the specific funding formulae. In a release announcing his signature, Gov. McCrory said, "A tremendous amount of work has gone into this initiative, and I thank everyone from the statewide to the local level who has been involved with making it a reality. It is critical in changing the way we invest in transportation and do business in North Carolina." Contact: Chris Nida
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Transfer of Charlotte Airport Could Be Studied

This week, the bill that would transfer ownership of Charlotte Douglas International Airport from the City of Charlotte to a regional airport authority was referred to the House Rules Committee. Meanwhile, a report from the Charlotte Observer indicated that lawmakers may be considering studying the issue rather than legislatively transferring ownership this session. Another hearing for SB 81 Charlotte Regional Airport Authority is not currently scheduled. Contact: Paul Meyer
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Local Annexation Bills Run Into Legislative Opposition

Two local annexation bills supported by the cities affected and brought forth by members of their delegations were discussed but not voted on this week. Members of the House Finance Committee questioned whether HB 1015 Bessemer City Annexation was an appropriate use of the annexation statutes and opted not to take a vote on the bill. SB 290 Waynesville Annexation, which would bring an area known as the Lake Junaluska Assembly into the Town of Waynesville's corporate limits, was also not voted on by the House Finance Committee. Questions about that bill included why the annexation was being conducted legislatively as opposed to through the voluntary annexation statutes. The House did vote to concur with the Senate-approved version of HB 526 Chadbourn Voluntary Annexation. Contact: Paul Meyer
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Asheville Bill Among Deannexations Moving Forward This Week

Several local deannexation bills were voted on by the House this week, including a bill deannexing the Asheville airport from the City of Asheville that was not requested by the city. One of the sponsors of HB 568 Asheville Deannexation, Rep. Chuck McGrady, said in committee that the bill was moving forward because of the lack of cooperation from the City of Asheville in transferring certain property to the Federal Aviation Administration, but that the City has been more compliant in recent weeks and if they continue to cooperate the bill will not become law. The House gave HB 568 initial approval yesterday afternoon. Also on Thursday, the House gave final approval to HB 421 Marshville Deannexation and HB 567 Lumberton Deannexation, and it gave initial approval to HB 261 Kannapolis/Deannexation. All of those bills were requested by the affected municipalities. Contact: Paul Meyer
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House, Senate Concur on Bill Eliminating Property Tax on Software

The Senate concurred yesterday with the House-approved version of a bill that would cut local property tax revenues by removing custom software from the property tax base. SB 490 Exclude Custom Software from Property Tax had previously passed the Senate but needed a concurrence vote due to the House approving a slightly modified version of the bill. The League opposed the legislation due to the reductions it will cause in revenues for municipalities. SB 490 will now be sent to the Governor for his signature into law. Contact: Paul Meyer
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Committee Considers Vacant Housing Receivership

Yesterday the House Government Committee discussed but did not vote on HB 227 Local Gov'ts/Vacant Housing Receivership. That bill would give municipalities additional options for dealing with vacant housing in their communities that is unfit for habitation and that is owned by individuals who have demonstrated an unwillingness to rehabilitate the property. Under vacant housing receivership, rehabilitating the property is effectively privatized through the appointment of a third-party receiver who becomes responsible for any repairs and future sale of the property. Legislators had a number of questions regarding the bill in committee, and no vote was taken on the bill. Vacant housing receivership authority was chosen by municipalities as one of their advocacy goals for the 2011-12 legislative session, and the League thanks bill sponsor Rep. Marcus Brandon for bringing the bill before committee. See here for more information from the League on vacant housing receivership. Contact: Paul Meyer
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Mayor Foxx Confirmed as Transportation Secretary

On Thursday, the U.S. Senate confirmed the nomination of Charlotte Mayor Anthony Foxx as U.S. Secretary of Transportation.  The League congratulates Secretary Foxx on his new role and looks forward to a strong relationship between North Carolina and the Department of Transportation. For more on the implications of having a Mayor as Secretary, please see this article from Contact: Paul Meyer
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Governor, Legislators Act on Bills Affecting Cities

The House took action this week on SB 127 Economic Development Modifications. The bill would consolidate the Commerce Department's regional offices and services into geographical administrative regions across the state, as well as create a nonprofit to oversee recruitment and expansion of business in the state. The bill received final approval from the House on Thursday and will now go to the Senate for a concurrence vote. (League coverage)

In addition, SB 264 Abate Nuisances/Drug Sales From Stores has been sent to Governor McCrory for approval. If signed, the bill would achieve a League municipal advocacy goal by giving municipalities the ability to use nuisance abatement authority on properties that are the source of regular criminal nuisance activity but also have some legitimate use. (League coverage)

Governor Pat McCrory also signed into law several bills affecting municipalities. The list below contains bills that were signed by the Governor this week, a brief summary of the legislation, and prior League coverage.