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Advocay Angle: At the Legislature, the Small Things Can Add Up 

By Scott Mooneyham, NCLM Director of Public Affairs

In the so-called legislative short session, a lot of attention turns to the state budget, as it should. With less time to meet, big policy legislation is typically put on hold until the next year’s long session. Meanwhile, a state budget is often seen as the most important policy statement that state legislators can make, reflecting the legislature’s priorities for the coming year.

The budget bill has plenty of importance for municipalities. Transportation dollars, water and sewer grants and funds for main street renovations are just a few of the budget areas that can affect the bottom lines of cities and towns.

Walking hand-in-hand with budgets are revenue changes, and even if North Carolina legislators usually meet for only two or three months in even-numbered years, revenue legislation is always a possibility. As cities saw in 2014, with the repeal of the privilege license tax, and in 2015, with legislation that could have redistributed local sales tax revenue, revenue-related bills can have dramatic effects on local budgets.

Leading up to this year’s legislative session, there was considerable talk that the Senate would again seek changes in the revenue structure designed to direct more money to rural areas of the state. But after last year’s bruising fight that ultimately led to a modest change, some House leaders indicated that going another round on revenue changes was not on their card.

If those House sentiments hold up, does that mean that municipalities can look for a legislative session where state policy does not significantly affect their budgets? Not necessarily.

As much as big, headline-grabbing issues like sales tax redistribution or privilege license tax prohibitions can affect municipal budgets, so too can lesser-noticed policy shifts, particularly those that affect environmental regulation. And, in recent years, the legislature has put a big focus on regulation reform, regardless of the year or length of session.

Not all of those changes have been bad for municipalities, as some have recognized that cities and towns have done quite a bit to protect water quality and public health. Other proposals, though, have tied local regulators’ hands. Still others may not be aimed directly at municipalities but can have indirect effects that can add significantly to municipalities’ cost of doing business.

So, when legislators last year made changes to buffer rules, they created the potential for municipal governments to have to take further, costly steps for wastewater and storm water treatment because, as federal discharge permit holders, municipalities share a big part of ensuring that streams and rivers meet nutrient and pollutant thresholds.

When proposals are made to do away with industry fees for computer and TV recycling, it would have been municipalities picking up much of the recycling tab. When proposals are made to not allow local governments to determine the best types of underground piping to use, it would have been local governments paying for repairs when inappropriate piping material was chosen.

Slight changes in environmental regulation and compliance can often mean far bigger costs for municipalities than shifts in revenue policy or a drop in a grant program. That’s why the League staff pays lots of attention to these proposals, whether from Raleigh or Washington, and whether by statute or by rule.

It’s also why it is important for you to remind your legislators that even the best-intended regulatory change can sometimes have unintended consequences. When those consequences involve dollars, sometimes the savings to some just mean costs for others. Sometimes those others are municipal taxpayers.