Skip Ribbon Commands
Skip to main content

League Bulletin

February 5, 2016

Speaking to members of the Joint Transportation Oversight Committee, League Director of Public and Government Affairs Rose Vaughn Williams this morning emphasized the importance of cities' flexibility in using Powell Bill dollars. Rose's presentation can be found here. The League was invited to present by committee co-chairs Rep. Frank Iler, Rep. John Torbett, and Sen. Bill Rabon, and vice chair Sen. Kathy Harrington, and we thank them for the opportunity to speak with the committee regarding this important source of municipal street funding.

The League was asked for any recommendations they had regarding the Powell Bill program, and fielded questions from legislators regarding a suggestion that any maintenance activities done in conjunction with a resurfacing project be classified as resurfacing expenditures for the purposes of cities' Powell Bill reports. After speaking with local officials around the state, the League believes such a clarification would promote reporting consistency and more accurately reflect the amount of Powell Bill funding being spent on resurfacing projects. Sen. Rabon, who admitted to trying to "wake people up" shortly after 9 a.m. on a Friday morning, also threw out the idea of a cap on Powell Bill distributions, or some other adjustment to the formula that distributes Powell Bill funds based on population and street mileage. The League will continue to follow up with legislators on both of these topics.

Again, we appreciate the opportunity to discuss the Powell Bill program with the committee. If you have any questions about the League's Powell Bill presentation or any related issues, please let us know. Contact: Chris Nida

Building on a January legislative committee discussion of ways to better account for economic distress in the state, the N.C. Department of Commerce yesterday recommended an index to replace the state's current economic development tier system. The index would measure a county's level of economic performance against the state average. Much of the legislators' reactions to the proposal centered on the yardsticks chosen to measure an area's level of economic prosperity.

The push for a new system came on the heels of recent tax reforms that eliminated the 1996 tax incentive program for which the tier system had been created. However, because many state economic development programs relied on the tier system when making grant awards, the legislature recognized a need to keep some form of a measuring system in place. Now, Commerce uses the tier system's rankings when deciding how to fund applications to its CDBG, Industrial Development Fund, Economic Infrastructure, and Building Reuse programs. Municipalities submit project applications to all of these funding programs.

According to Commerce, its proposed index would avoid measuring symptoms of economic distress. Instead, the index would take into account causes of distress such as an area's unemployment rate, median household income, average annual wage, and population without a high school diploma (read more in this presentation). After hearing an explanation of Commerce's proposal, Rep. Ken Goodman suggested that the index could also look at the number of people within a county with a bachelor's degree, stating that an area might have a high graduation rate but, due to a lack of professional jobs, a relatively small number of residents with advanced degrees. Other legislators urged Commerce to build flexibility into the tool to account for sub-county areas of economic distress within otherwise prosperous counties. (See below, "Panel Grapples with Urban, Rural Economic Distress," for more details on accounting for sub-county economic conditions.) The Joint Legislative Economic Development and Global Engagement Committee will likely recommend a bill for the upcoming short session to rework the state's current three-tier system of measuring economic distress. Contact: Erin Wynia

After hearing legislative staff frame its committee debate as one viewed through an urban-versus-rural lens, members of an interim economic development panel stated their preference yesterday for addressing economic distress that existed everywhere in the state, regardless of its urban or rural character.

"We need to be one North Carolina and share prosperity and enjoy it," said Sen. Tamara Barringer, a Wake County legislator who said she saw communities experiencing major economic distress within her otherwise prosperous county. Stating that the "urban-rural divide" rhetoric used in the committee's discussions caused her concern, Barringer suggested that the Joint Economic Development and Global Engagement (EDGE) Committee consider developing proposals that encourage the state's more prosperous counties to partner with less-prosperous areas. She said she had explored such programs in the past with fellow legislators.

Barringer's comments built upon those of committee member Rep. Rena Turner, an Iredell County legislator who also represents an area that has a large urban/rural-influenced wealth disparity within the county. Turner urged the committee to consider sub-county economic conditions when measuring a county's economic distress. In response to this suggestion, a N.C. Department of Commerce analyst stated that typical sources for sub-county data, such as the U.S. Census, contained high error rates and were not reliable. The EDGE Committee will likely recommend a bill to rework the state's current three-tier system of measuring economic distress. While recognizing the data challenges in identifying pockets of economic distress within the state, both Turner and Barringer urged the committee to build flexibility into the new tool that would take into account levels of distress on a sub-county level. Contact: Erin Wynia

Extending high-speed Internet access to all 100 N.C. counties was one of the top two ways legislators could spur economic development in the state, N.C. Department of Commerce (Commerce) Secretary John Skvarla told lawmakers yesterday. The second change that would make the biggest impact, he said, was for the legislature to enact policies that would give small businesses more access to capital in their early stages of development.

Legislative members of the Joint Legislative Economic Development and Global Engagement (EDGE) Committee explored Sec. Skvarla's broadband suggestion at length, ultimately deciding to continue the discussion at a future meeting. Noting that past legislative efforts to encourage a broadband network build-out throughout the state fell flat, EDGE members questioned Commerce officials about their proposal. Commerce Assistant Secretary of Rural Economic Development Pat Mitchell told legislators that the department had identified $5 million in de-obligated CDBG funds and that they would ask the legislature to approve a statute change to direct those funds toward building broadband infrastructure in underserved areas.

Mitchell was careful to note that Commerce would not be involved in any decisions about which entity would provide the service. Debate between private and public broadband providers has occurred for years, and current N.C. law largely prohibits public bodies from providing new or expanded broadband service. A Federal Communications Commission order has preempted state restrictions including North Carolina's, but private providers are suing to try to block the ruling.  

The legislative discussion of government's role in encouraging broadband infrastructure development in underserved areas of the state comes at a time when the N.C. Department of Information Technology (DIT) is putting the finishing touches on a state broadband plan. League and county officials met with DIT staff regarding this plan last week. The discussion centered on steps the state could take to build on the broadband infrastructure backbone built by the non-profit MCNC throughout the state's rural areas. The department will likely finalize this plan before the April 25 short session start date.


League, NCACC, and state Department of Information Technology officials meet last week

With respect to Sec. Skvarla's second suggestion of increasing small business' access to start-up capital, many North Carolina cities already operate programs to address this need. A League poll last fall revealed that the number-one priority respondents thought city governments should address was encouraging and supporting small businesses. For example, the City of Asheville last week prioritized the creation of a small business revolving loan fund that would provide Asheville small businesses with start-up capital. The Asheville City Council planned to seed the revolving loan fund with a $1 million investment. Contact: Erin Wynia

A panel of lobbyists and political consultants told city and county managers this week that there is no substitute for personal relationships when it comes to effectively making the case to  legislators about local government needs. The panel discussion was a part of this week's N.C. City and County Management Association Winter Seminar held in the Research Triangle Park. The panelists were former state House Speaker Harold Brubaker, who is a contract lobbyist for the League; former Raleigh City Councilman and attorney Philip Isley, a contract lobbyist whose clients include the City of Raleigh; longtime political consultant Bob Rosser; and former political director of the N.C. Republican House Caucus and political consultant Matt Bales. The discussion was moderated by League Associate Director of Public and Government Affairs Rose Vaughn Williams and N.C. Association of County Commissioners Director of Government Affairs Johanna Reese.

Brubaker told the packed room of city and county managers that they each need to enjoy the kind of relationship with their legislators where they have access to their cell numbers and that those legislators would take their call on a Sunday evening. "You are the technical experts. They respect you," he said. The panelists acknowledged that the legislature had changed, and that the change is not just ideological, with more legislators elected as single-issue candidates and fewer having local government experience.

Rosser said the result is that it is more important than ever for cities and towns to tell positive stories about what they are doing on the ground. "Tell your story. Find something that sounds good -- and that common ground -- and tell your story," he said. The seminar also included legislative updates from League Executive Director Paul Meyer and Legislative Counsel Erin Wynia. The seminar, running from Wednesday to today, covered a range of other topics, from public sector marketing to construction to preparing for developing trends. 

The North Carolina Supreme Court, on Friday, agreed to hear the City of Asheville’s appeal  of a state Court of Appeals ruling upholding the General Assembly’s transfer of the city’s water system to a regional water authority. The decision by the state’s high court means that the city will maintain control of the system while the court decides the case on its merits. The Supreme Court also agreed to allow the League to file an amicus brief in support of the city’s position.

The Court of Appeals had reversed the trial court, which ruled in 2014 that the General Assembly exceeded its authority on three separate constitutional grounds when approving the water system transfer. The Court of Appeals rejected each of the trial court’s findings. It ruled that the 2013 law was not an impermissible local act; that it did not violate the “law of the land,” or equal protection, clause of the state constitution; and that the General Assembly’s action did not amount to an illegal taking.

The League, because this case could have widespread ramifications for municipalities, filed an amicus curiae brief with the Court of Appeals in support of the City of Asheville. More recently, in December, the League filed a conditional motion with the Supreme Court seeking to pursue an amicus curiae brief before that court. In that motion, the League referenced the case’s importance to municipalities throughout the state. “Given that municipalities are the primary providers of water systems for the benefit of the local citizenry, movant League respectfully submits that this honorable Court’s consideration of the broader municipal perspective would be desirable for a complete understanding of the complex issues and applicable law,” the motion stated. The motion contends that the Court of Appeals erred in rejecting the City of Asheville’s arguments and that trial court was correct in concluding that the city is afforded the same protections as private individuals and private corporations when it comes to such a transfer.
No dates have been set for oral arguments before the Supreme Court. You may wish to share this information with your council members or managers if they have been following this case. Contact: Kim Hibbard

Members of a legislative oversight panel heard a push Tuesday for increased legislative control of agency rulemaking, modeled on stalled federal legislation. That federal proposal, the Regulations from the Executive in Need of Scrutiny Act (REINS Act), would require Congress' blessing of proposed agency rules with major economic impact. Without that approval, the proposed rules would not move forward.

Staff from the John Locke Foundation suggested to the legislature's interim administrative procedures panel that, to apply a similar concept in North Carolina, the state should use a $1 million threshold for when a rule would need legislative approval. This additional mechanism would layer on top of existing N.C. legislative oversight of state agency rulemaking, which includes (1) a mandate for legislative consideration of rules to which 10 or more people register objections; (2) a "review of rules" process that requires both agency and legislative scrutiny of all state rules on a 10-year cycle; and (3) a requirement that most water environmental rules receive a legislative okay before moving forward. John Locke Foundation staff told lawmakers that the additional legislative oversight of agencies would protect against decisions made by unelected agency staff "who lack direct accountability to the people" (slide 8).

Legislators did not commit to moving forward with the proposal, and if they did, it would likely add to a current debate of legislative versus executive power. Just last week, the N.C. Supreme Court ruled that the N.C. General Assembly infringed upon the executive branch's constitutional duty to implement and enforce laws by appointing a majority of the members of three state environmental rulemaking boards. (Read more about that decision below in "Supreme Court Rules Legislature Usurped Executive Branch Power.") Contact: Erin Wynia

The state Supreme Court has ruled that the General Assembly unconstitutionally usurped the governor's power when it controlled a majority of appointments on three environmental commissions and then gave to those commissions powers delegated to the executive branch. The case specifically looked at the Coal Ash Commission, the Oil and Gas Commission, and the Mining Commission. The Oil and Gas Commission has authority over hydraulic fracturing, including oversight on whether local government land-use planning rules might act as a de facto ban on the activity, something prohibited under the legislation that legalized the drilling. The Supreme Court ruled that the legislature's ability to control a majority of appointments to commissions that have "final executive branch authority" prevents the governor from "performing his express constitutional duty to take care that laws are faithfully executed." Read media coverage about the decision here and find the full decision here

Google Fiber announced this week that it will bring its high-speed Internet service to residents of all public housing properties it connects to for free, with neither local housing authorities or residents charged for the service. The company said it is launching the free service initially in Kansas City, which was the first city in the country where Google Fiber was deployed. The company is now building high-speed Internet systems in the Raleigh-Durham area and Charlotte. Read more about the announcement here.