A bill filed this week in the House of Representatives would give North Carolina cities the option to levy a quarter-cent city-only sales tax by resolution, achieving a long-standing League advocacy goal. HB 903 County Tax Flexibility/Municipal Rev Opts. grants counties additional authority for a sales tax that is not shared with cities, but it also would for the first time allow cities to levy a sales tax that applies only within their borders and which they keep all of the revenue from. Projections of the revenue that could be derived from such a tax are not yet available, but it would almost certainly be more than enough to make up for the loss of privilege license tax revenues. It could also help to offset some of the city losses projected under sales tax reallocation plans.
For multiple sessions, cities have asked for this authority to help stabilize local revenues and allow property taxes to remain low. The League thanks Rep. Jason Saine for his leadership in sponsoring HB 903, as well as Reps. Elmer Floyd, Howard Hunter III, Susan Martin, Chuck McGrady, Robert Reives, Stephen Ross and Michael Wray for signing on as co-sponsors to the bill. Please contact your legislators and let them know of the importance of a city-only sales tax as a municipal revenue source and ask them to support HB 903. Contact: Chris Nida
Pineville was the scene Monday of the League's third in a series of regional meetings on the future of municipal finance, which again provided a glimpse into the unique challenges of municipalities in different areas of the state. The meeting series, A Path Forward: Vibrant Cities Today and Tomorrow, garnered more media attention with this Charlotte Observer op-ed from Charlotte City Councilwoman Patsy Kinsey. Councilwoman Kinsey also participated in a panel discussion during the meeting. She noted that many cities and towns were only able to avoid layoffs during the Great Recession by freezing salaries and hiring. She pointed out that there is growing evidence of rising turnover among municipal employees as cities face more financial challenges even as the larger economy continues to recover.
Comments from Pineville Manager Haynes Brigman reinforced that one-size-fits-all solutions from Raleigh are not adequate to address municipalities' problems. Mr. Brigman discussed Pineville's unique mix of a relatively small population but substantial retail presence. "What other town in North Carolina with 8,500 residents has 38 police officers?" he asked. Pineville stands to lose more than $500,000 with the pending repeal of the privilege license tax. The other panelists -- Albemarle City Councilwoman Martha Sue Hall and Matthews Town Manager Hazen Blodgett -- discussed those municipalities' unique challenges while making the point that they are part of a larger regional economy that Charlotte helps to drive.
Prior to the panel discussion, Chris Nida, the League's Director of Research and Policy Analysis, delivered a presentation examining longstanding state tax policy, recent changes and proposed changes to that policy, and comparisons with others state. Speaking at the end of the program, Sen. Jeff Jackson of Charlotte said North Carolina must address the economic woes in rural areas of the state, but cited a Colorado program that does so with substantial investments through competitive economic development grants.
The League would like to thank the Town of Pineville for hosting this important event intended to foster an ongoing public conversation about the future of municipal finance. We also thank the panelists, Kannapolis Mayor Darrell Hinnant for offering opening remarks, Senator Jackson and all of those who attended. Contact: Scott Mooneyham
The House this week gave its approval to legislation that would affect how building inspectors go about their jobs, but only after one provision that could have threatened public safety and created building code compliance issues was removed. The League continues to have concerns about two problematic provisions in HB 255 Building Code Reg. Reform, but would like to thank Rep. Mark Brody, the bill's primary sponsor, for working with League staff on the bill. Representative Brody agreed to drop a provision that would have eliminated authority to conduct plan review for residential construction prior to the start of construction.
With the bill now before the Senate, the League will continue to advocate for changes to one provision that would subject building inspectors to new, vague job-performance standards that could imperil their certification and another that could create more work for inspectors based on what constitutes a "full inspection." Read previous League coverage regarding the legislation here. Read media coverage about the bill's passage in the House, including League comments, here. Contact: Erin Wynia
This weekend is the time to contact legislators and ask them to keep in place local authority to regulate billboards. HB 304 Revisions to Outdoor Advertising Laws, originally calendared for a committee discussion Wednesday before being removed from the agenda, would overrule all local rules governing existing billboards. Under the proposal, an existing billboard could be moved from its current location to any other non-residential zone in the city, regardless of a local community's restrictions on location. Further, those relocated billboards could be enlarged, made taller, or converted to digital displays, even if the municipality's ordinance stated otherwise.
In addition, the proposal would change the calculation for compensation owed to billboard owners during condemnation actions. This change would drastically increase the amounts taxpayers would pay to billboard owners when condemning for public infrastructure projects because it would take into account future earnings that the owner might receive if the sign had continued in use. No other class of property owners is given this special consideration in condemnation actions.
Please describe to legislators how different your community might look if this proposal became law, using specific examples. The bill will likely receive a hearing in the next two weeks, first in the House Committee on Commerce and Job Development, then in the House Finance Committee. You can read media coverage about the legislation here. Contact: Erin Wynia
The League's Governmental Affairs team wishes a sad good-bye and best of luck to intern Shawnda Martin. Shawnda has been working with the Governmental Affairs team since last summer and has provided invaluable assistance in covering legislative committee meetings, monitoring bills, and researching issues. She will graduate this spring from North Carolina Central University School of Law. We wish her all the best as she prepares to take the State Bar exam and in all her future endeavors, having no doubt that Shawnda will be successful in her pursuits.
Governmental Affairs Intern Shawnda Martin
House members submitted 314 bills this week to meet the last two major bill filing deadlines of the session. Corresponding Senate deadlines passed last month, with senators filing a total of 712 bills this session. Therefore, legislators have now made public the bulk of this year's proposals. Among the new House measures filed this week--a full one-third of the 941 total filed bills--the following bills were of interest to municipalities:
The second bill that would increase employer contribution rates to the to the Local Government Employees Retirement System (LGERS) was filed this week. HB 759 Retirement System COLAs would provide both LGERS and Teachers' and State Employees' Retirement System (TSERS) retirees with a 2% cost of living adjustment (COLA) effective July 1 of this year.
Although a fiscal note by the General Assembly has not yet been released, the higher COLA called for in this legislation would increase each participating local governments' contribution rate for general employees. That rate had been previously set at 6.67 percent, but would rise to approximately 7.00 percent under the bill.
HB 616 Local Governmental Employees’ Retire. COLA that was filed last week is scheduled to be heard by House Pensions and Retirement Committee on Tuesday and would provide LGERS retirees with a 1% COLA (read more here).
Both these bills come after the Local Government Employees Retirement System Board of Trustees voted in January to provide a fiscally responsible COLA to retirees by relying solely on existing funds available through the system's recent investment gains. Specifically, the Board approved the League- and the N.C. Association of County Commissioners-supported COLA of 0.625%. Contact: Sarah Collins
A bill filed in the House this week would offer some municipalities relief when it comes to paying for utility relocation costs due to state road construction, advancing one of the policy goals prioritized by the League membership for this session. HB771 DOT/Utility Relocation Costs would force the state to pay for all or some of the relocation cost of municipal water and sewer lines for municipalities with a population under 50,000 when state road construction forces those relocations. Currently, the state pays those costs only for towns with a population of 5,500 or less. The bill would set up a tiered system where municipalities with a population of 10,000 or less would pay no costs, those with a population greater than 10,000 but less than 25,000 would pay 25 percent of the cost, those with a population of 25,000 but less than 50,000 would pay 50 percent of the cost. The legislation is sponsored by Rep. Phil Shepard of Jacksonville, Rena Turner of Olin, Pat Hurley of Asheboro and George Robinson of Lenoir. The League would like to thank the sponsors for this important bill. Contact: Erin Wynia
Two separate bills were filed in the House on Thursday that would legalize and regulate video sweepstakes games in North Carolina, and both would allow city governments to impose excise taxes on the operations. HB 922 Video Sweepstakes Regulation and Taxation and HB 938 Comprehensive Gaming Reform would each legalize video sweepstakes games, and allow municipal and county governments to impose excise taxes of $1,000 per operation and $500 per gaming machine in each. County and city governments could not both impose the tax on the same business.
League members established a legislative goal in December opposing legalization of Internet sweepstakes operations, but in the event of their legalization, calling for the ability to make land-use decisions governing their location and levy taxes on the operations. The state Supreme Court, in 2012, issued a ruling declaring that a legislative ban of the games was enforceable despite subsequent modifications to the games by video sweepstakes operators. In the aftermath of that decision, most operations in the state shut down, but some have continued to operate with the claim that other modifications have put them in compliance with the law.