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General Assembly Off to the Races; Budget Meetings Begin

The third week of legislative activity saw an increasing number of bill introductions, and the initiation of joint appropriations committee meetings. We are expecting many more bill introductions over the next three weeks, so it is a great time to visit with your legislative delegations back home or here in Raleigh.


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State Budget Process - Possible Powell Bill Changes

The House and Senate Joint Appropriations subcommittees began their work on the State budget by hearing staff presentations this week. At a transportation subcommittee meeting, legislative staff suggested that funding for State construction projects could be increased in part by changing the funding source for Powell Bill distributions. Powell Bill funds currently come from both a 1-3/4 cent gas tax through the Highway Fund and from 6.5 percent of Highway Trust Fund revenues, which include a variety of revenue sources. The legislative staff suggested that more money could be made available for construction through the Highway Trust Fund if the Powell Bill was funded at the current level, but solely from gas taxes through the Highway Fund. This change would tie growth in Powell Bill funding more to the change in gas consumption than under present law, which could limit future funding. In addition, staff suggested that the Powell Bill distribution formula, which currently doles out 75 percent of funds based on municipal population and 25 percent on local road mileage, could be changed to provide more of the funding based on mileage. Estimates of the effect of these potential changes on individual municipalities were not provided by the legislative staff. 

The Governor is expected to deliver his proposed budget in mid-March and the Senate plans to approve its version in early May.  The House hopes to have its version completed by the end of May and then work out any difference with the Senate so that the budget can be presented to the Governor by mid-June. Contact: Karl Knapp

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Elimination of State Income Tax on Pensions Proposed

HB 96, "Equal Tax Treatment of Gov't Retiree Pensions," would eliminate the tax status distinction made by Bailey v. State of North Carolina and render all state and local pensions state income tax-free, irrespective of when an employee became vested in the retirement plan. Bailey said that retirement benefits of any state or local employee vested prior to August 12, 1989 would not be subject to NC state income tax. The proposed legislation phases in the change from 2013 to 2022 to reduce the impact to the state budget. Contact: Paul Meyer


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Senate Weighs in on Local, State Hydraulic Fracturing Taxes

The Senate Finance Committee gave an initial hearing Wednesday to SB 76 -- Domestic Energy Jobs Act, a bill introduced Monday that, among other changes, lays out a system of state and local taxation of the hydraulic fracturing industry. An initial version of the bill prohibited all local government taxation of various activities associated with hydraulic fracturing. However, committee members accepted an amendment allowing cities and counties to collect Article 11 property taxes on the related activities listed in the bill. In addition to the taxation issues, the bill would allow hydraulic fracturing permits to be issued after March 1, 2015, which would end the current moratorium on the activity. It also proposes a wide variety of other changes to the processes and boards overseeing hydraulic fracturing and energy development in the state. Read more in Energy bill that would lift fracking moratorium advances (News & Observer). Contact: Erin Wynia


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NC Municipal Energy Group (NC-MEG) Files Successful Rate Case Intervention

Nearly 100 cities and towns across the state have chosen to participate in the League's N.C. Municipal Energy Group (NC-MEG), which will contract with specialized outside counsel to represent cities and towns in negotiations with the utilities and the N.C. Utilities Commission (NCUC). For the first project supported by NC-MEG members, the League filed a petition to intervene in Progress Energy’s recent filing for a rate increase. The petition was accepted by the NCUC Wednesday. The goal of the League’s intervention is to reduce the financial burden that an increase in investor-owned utilities' electricity rates would bring upon municipal governments served by the utility. Duke Energy has also recently filed for a rates increase that would impact the municipal governments served by Duke, and with the support of NC-MEG, the League plans to intervene in that case as well. It's not too late to participate in the program -- contact Sarah Collins if you would like to take part . Contact: Sarah Collins


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Unemployment Insurance Reform Heads To Governor

On Wednesday the Senate gave final approval to House Bill 4, which would make significant reforms to the state's unemployment insurance system. The bill now heads to the desk of Governor Pat McCrory, who has indicated his support for the bill and is expected to sign it into law.

HB4 allows the State of North Carolina to repay its $2.5 billion debt to the federal government more quickly by making a number of changes to the unemployment insurance system, including raising unemployment taxes on employers and limiting the amount and duration of unemployment benefits claimants can receive. The bill would also change how municipalities participate in the unemployment insurance system. Under the terms of HB4, beginning in Fiscal Year 13-14 municipalities would be required to maintain a reserve equivalent to 1 percent of their total unemployment insurance taxable wages paid. Quarterly prepayments designed to build up the reserve would begin this fall. Municipalities would also no longer have the option of paying 120 percent of claims and requesting noncharging of benefits.

If the bill is signed into law, the League will soon afterward release more detailed information on how the new requirements for municipalities will be implemented. Be on the lookout for this communication from the League. Contact: Karl Knapp

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Bill Would Delay Votes After Public Hearings

SB 85 -- Ordinance First Reading Vote, filed by Sen. Dan Clodfelter (D-Mecklenburg), would require councils to wait seven days after public hearings to vote on the matter discussed during the public hearing. This bill would cause unnecessary delay on council decisions and impact councils that meet infrequently, such as on a monthly basis. The bill has been referred to the Senate Rules Committee.  Contact: Jordan Smith


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District Days Are Coming!

Grab your jacket and your green tie or scarf and get ready for "District Days" in Raleigh. New for 2013, we are organizing groups by League District to meet with legislators in Raleigh and attend relevant committee meetings. Watch your email for more details on your district's visit. District Days kicks off April 9. Contact: Jennifer Webb


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Lori Moye Leaves Government Affairs Team

After almost four years of stellar service to League members, Lori Moye has left our staff this week. We congratulate her on new beginnings and thank her for all the wonderful things she did for cities and towns. We will miss her positive attitude, strong work ethic, meticulous attention to detail, and tireless effort to improve the quality of League programs and services. We will miss you Lori!