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League Bulletin

February 13, 2015

The Senate this week approved a measure intended to stabilize transportation revenue streams while offering an immediate 2.5 cent cut to the gas tax. SB 20 IRC Update/Motor Fuel Tax Changes was approved 35-15 on Thursday, and now goes to the House for consideration. The League is supporting the bill, and urges you to contact your legislative delegation and back this legislation, which is critical to bolster the flow of revenue that supports the building and maintain of North Carolina's transportation networks. The legislation supports several League legislative goals that call for investments in transportation and state infrastructure that benefit municipalities and the broader economy. 

The League's support has been noted by Senate leaders and cited in the media. Read the League's full news release and comments from NCLM President Ronnie Wall here. The bill would stabilize transportation dollars by creating a new, higher floor for the gas tax starting in 2016. As you are aware, cities and towns maintain the majority of road miles within their borders, and roughly one quarter of the money spent for this purpose comes from state Powell Bill funds. If the gas tax remains unchanged, it is expected to fall by as much as 6 to 8 cents per gallon, as it is pegged to wholesale fuel prices. This will lead to an overall drop in transportation dollars of $300 to $400 million, with a significant decrease in Powell Bill money, which was $147 million last year.

Cities and towns stand to lose substantial sums without legislative action. The new gasoline tax floor should provide stability for both state transportation dollars and Powell Bill funds. The new formula also should help those dollars to grow in the future assuming gasoline prices rise at some point. However, the 2.5 cent cut in the tax that is included in the legislation will mean less Powell Bill funds in the coming fiscal year. Under current law, the tax is adjusted every six months to reflect the ups and downs of fuel prices. The current formula sets it as the sum of 17.5 cents plus either 3.5 cents or 7 percent of the average wholesale price, whichever is greater.

The Senate bill would change the formula, setting the tax at 17.5 cents plus either an additional 17.5 cents (to make the minimum rate of 35 cents) or 9.9 percent of the average wholesale fuel price, whichever is greater. It would also set the gas tax once a year, on January 1, as opposed to the current system of reassessing the gas tax every 6 months. The initial 2.5 cents cut to the tax would take effect March 1, while the other changes would become effective Jan. 1, 2016.

Some of the opposition to and criticism of the legislation has focused on the federal tax conformity portions of the bill, which do not involve the gas tax and transportation-related measures. The bill also calls for layoffs within the Department of Transportation. The legislation may represent the best chance to protect state transportation and Powell Bill funding streams over the long-term. Again, please contact your legislators and ask them to support SB 20 to bring stability to transportation dollars. Read more media coverage here and here. Contact: Rose Williams

The House has given its final approval to legislation that will put a constitutional amendment before state voters to limit the use of eminent domain for economic development purposes. HB 3 Eminent Domain passed 113-5 and will now go on to the Senate. If the Senate approves the legislation, voters would decide whether to add the amendment to the state constitution during the primary elections of 2016, on May 3. 

The bill is almost identical to one which passed the House last session, also with almost unanimous support. The Senate did not vote on that bill, but is expected to consider this one. It would limit the exercise of eminent domain to those activities for which there is a "public use," attempting to ban the condemnation of property that is then turned over to another private owner. Similar bills have been considered since the U.S. Supreme Court, in Kelo v. City of New London (Conn.), in 2005, ruled such takings do not violate the U.S. Constitution.  

Legislators, in 2006, already restricted by statute the taking of non-blighted properties in tracts where blighted properties occur for economic development purposes. The law that allows cities to condemn blighted properties would remain on the books, and the change also would not prevent municipalities from purchasing properties for economic development purposes. Read earlier League coverage here. Contact: Erin Wynia

HB 61 Local Control/Land Application of Biosolids was filed Monday and is scheduled for a committee hearing next week. The League opposes this bill because it would limit land application practices and disrupt well-established law that leaves regulation of biosolids at the state and federal levels. By allowing county boards to dictate how residuals from wastewater utilities are disposed, the bill could prove costly for municipal utilities if they are forced to change their treatment processes. The bill is expected to be heard next Thursday in House Committee on Local Government. Contact: Sarah Collins

State budget officials are now projecting a state budget shortfall of $271 million for the fiscal year that ends June 30, but say that number could change based on April tax collections. State General Fund revenue collections through the month of January were $215 million below projections, and forecasts from the General Assembly Fiscal Research Division and the Office of State Budget and Management show that amount growing by $56 million over the next five months. Legislative economist Barry Boardman says the budget gap is the result of slower than expected wage growth that is hurting personal income tax collections. Read more about state revenue collections here.

Expanding high-speed broadband to all parts of North Carolina was the focus of comments by League Executive Director Paul Meyer when he spoke Tuesday at the annual Emerging Issues Forum's Local Government Breakfast. Paul told the attendees that the state's economic future is tied to this critical issue. "We can't keep using the General Assembly as a hammer to prevent conversations and partnerships between city government and the telecom industry to expand high-speed broadband to all parts of North Carolina. It isn't good for our state's economic development future," he said. 

His comments come as the Federal Communication Commission is expected to act later this month to pre-empt North Carolina's 2011 law that restricts the expansion of community-owned broadband. The League filed public comments late last year in support of a petition by the City of Wilson to have the law pre-empted. Read more about the Emerging Issues Forum here and here. Contact: Paul Meyer

Brubaker & Associates will be working with the League throughout the 2015 legislative session. The Government Affairs Team looks forward to advocating on behalf of cities and towns  alongside Harold Brubaker, who served as House Speaker from 1995-1999 and became one the longest-serving state legislators in North Carolina history before leaving the House in 2012.

Don't forget to register for Town Hall Day, scheduled for March 18. The day provides a great opportunity for League members to visit legislators, make municipalities' priorities known to them, and to show strength in numbers when it comes demonstrating the importance of vital cities and towns. Because the agricultural community is also using this day as a lobby day, it is important to make appointments now to meet with members of your legislative delegation, so please do so. The day will include a legislative briefing from the League's Governmental Affairs Team, meetings with House and Senate leaders, discussions with representatives of state agencies, and an evening reception with legislators and key state leaders. Click here to register and come be a part of this great event.

This week, the N.C. Division of Water Resources (DWR) announced the members of its Scientific Advisory Council (SAC) -- which included League nominee Dr. Hans Paerl, a scientist experienced in nutrient cycling and effects on aquatic ecosystems. The SAC will assist in the execution of North Carolina’s Nutrient Criteria Development Plan (NCDP), a roadmap for state regulators to use when developing nutrient management strategies such as the Jordan Lake Rules or Neuse Rules.

Because most regulatory costs of addressing nutrient impairment in the state's waters falls to municipalities, the SAC's role in reviewing proposed nutrient criteria is extremely important to North Carolina cities and towns. At the suggestion of League members, DWR plans to also create a Criteria Implementation Committee that will focus on implementation challenges. Read more here about the NCDP and SAC. Contact: Sarah Collins