Legislation that would alter the distribution of local sales taxes, and change the sales tax reallocation plan agreed to in last year's budget, was filed this week in advance of the bill filing deadline. SB 846 Change the LOST Adjustment Factor, sponsored by Sen. Harry Brown, would make two significant changes affecting the sales taxes received by local governments. One section of the bill would eliminate adjustment factors now in local sales tax statutes and instead adjust sales tax distributions based on a county's economic development tier, beginning in 2017. Currently, the one-half cent of local sales tax in Article 40 is distributed to counties based on their population. Before distribution, adjustment factors are applied that increase some counties' share of the sales taxes and decrease others. SB 846 would eliminate individual counties' adjustment factors and instead make consistent adjustments based on whether a county is designated as Tier 1, Tier 2, or Tier 3. For counties like Dare and Brunswick -- and the municipalities in them -- that currently have a high adjustment factor, this could result in sales tax reductions beginning with the next fiscal year. Counties with a lower adjustment factor would likely see an increase in sales tax revenues beginning in Fiscal Year 2017-18.
The second section of the bill eliminates $17.6 million in state funds that were set to be contributed to local sales taxes to help ensure no counties or cities lost money as a result of sales tax reallocation that was agreed to last year. Under that plan, $84.8 million was to be allocated to 79 counties based on percentages listed in statute beginning in Fiscal Year 2016-17. Of that $84.8 million, $67.2 million was projected to come from expansion of the sales tax base. The $17.6 million that is now being proposed for elimination was to help fund the remainder of the reallocation. Under SB 846, the $17.6 million contribution would be eliminated as of July 1, 2016, causing revenue uncertainty for cities and counties at a time when many have already prepared their budgets for the coming fiscal year. The only fiscal estimates for the bill currently available show a projected loss of $17.6 million statewide for cities and counties in the coming fiscal year. However, it is also possible that last year's expansion of the sales tax base will bring in more revenue than projected and could help to offset the elimination of this $17.6 million in state funds.
The League is working closely with legislators and legislative staff on this bill and assessing its potential impact. When we have further information to share as to projected local effects of this legislation, we will do so. In the meantime, if you have any questions please feel free to contact League Director of Research & Policy Analysis Chris Nida.
Register now to attend Town Hall Day 2016. Scheduled for June 8, Town Hall Day is the premier opportunity for League members to visit legislators and make known their views on issues important to municipalities. It represents the best chance to show strength in numbers and draw attention to the many serious legislative issues facing cities and towns.
For those already planning to attend, now is the time to contact your legislators and make appointments to see them that day. Late morning is likely the best time to schedule those appointments.
Town Hall Day will include:
Nothing can replace the positive impact of in-person conversation on legislators’ votes. More than 400 municipal officials had their say at last year’s Town Hall Day, which generated plenty of media coverage as well. Make sure you don’t miss this year’s opportunity. Click here to register.
Mostly to beat Tuesday's deadline to file budget, finance, and study bills, legislators introduced 132 bills this week. Looking ahead to next week, the Thursday deadline for filing local bills represents the last major opportunity for new bill introductions this session. For this week, bills filed of interest to municipalities include:
House budget subcommittees convened on Thursday to craft updates to the state’s spending plan and agreed on several provisions for the chamber's final draft. The House and Senate will have to agree on the document’s details before they can send it to the governor for signing, but Thursday's work included House support for:
The League would especially like to thank legislators for their commitment to continuing the $147.5 million Powel Bill funding level approved last year.
Budget writers in the House and Senate have already agreed on a total spending cap for 2016-17 at $22.225 billion. That's slightly less than the amount that Gov. Pat McCrory proposed in April, but media outlets report that the House plan does include several of the governor's requests, including more funds for tourism marketing. House Rules Chairman David Lewis, in a blogpost, said the House and Senate's spending-level agreement "moves the budget process along much faster than usual because appropriators are starting at the same figure and do not have to negotiate a final number before looking at sub-committee budgets." House lawmakers hope to see a consolidated plan next week.
A Senate bill filed this week would halt road and school funding for municipalities determined to be out of compliance with a new state law banning so-called sanctuary cities. Senate Bill 868, sponsored by Republican Sens. Norman Sanderson of Arapahoe and Buck Newton of Wilson, would establish a process for the attorney general to investigate alleged noncompliance with state immigration laws and would set out consequences. A municipality, county or law enforcement agency determined to be not complying with the law could lose Powell Bill money and capital funds for schools for at least one fiscal year under the Senate proposal. Read media coverage of the bill here.
A News & Observer report about the bill notes that a separate, immigration-related proposal filed in the House on Tuesday would allow local governments to request moratoria on refugee resettlement and require that they hold public hearings before notifying the state Refugee Assistance Program of their ability to settle additional refugees. The bill would ban local governments from requesting additional refugee settlements until they have documented capacity and held related public hearings.
Another headline week for House Bill 2 included the filing of several lawsuits and direction from the Obama administration that all public school districts nationwide should let transgender students use the bathrooms that fit their gender identity. After word from the U.S. Department of Justice that the new state law and its bathroom restrictions violate the federal Civil Rights Act, Gov. Pat McCrory filed suit against USDOJ. So did Senate President Pro Tem Phil Berger and House Speaker Tim Moore, asking the Eastern District of the federal court to find HB2 is not in violation. USDOJ, whose finding on HB2 could mean the loss of billions of federal dollars for the state, is in turn suing North Carolina over the law.
The White House, meanwhile, said federal agencies won't block money for the state while the legal proceedings play out, according to the Associated Press. Letters that USDOJ sent the state last week centered on employment discrimination issues related to the bathroom provisions of HB2, requiring individuals in public facilities, including schools, to use only the bathrooms aligned with their biological sex as defined on their birth certificates, as opposed to giving preference based on gender identity. Another lawsuit came from a nonprofit representing public school students and parents who want to prevent the potential loss of federal education dollars per USDOJ’s HB2 finding. The University of North Carolina system is reportedly not enforcing HB2’s bathroom mandate. Meanwhile, House Democrats have filed a bill that would add sexual orientation and gender identity to the state’s list of statuses protected from discrimination. In addition to the bathroom provisions, HB2, signed into law after a one-day special session of the legislature in March, also prohibits local governments from regulating discrimination in places of public accommodation and affects the requirements they can place on contractors.
Triennial Review. After almost a full year, the U.S. Environmental Protection Agency responded to the EMC’s submittal of amendments to the state's surface water quality standards. This rulemaking started in 2007 and is required by the federal Clean Water Act. The League was actively involved in the triennial review process because of the impact the standards have on wastewater treatment costs. NCLM supported the EMC’s rulemaking because it reflected a reasonable balance of water quality protection and environmental regulation. In its 50-page response, EPA disapproved some of the League-supported aspects of the suggested standards, including the retention of action levels. The N.C. Department of Environmental Quality (DEQ) is still negotiating with EPA on the EMC’s behalf regarding implementation of the disapproved parts of the amendments and there will be a larger discussion of the effects at the July meeting of the EMC’s Water Quality Committee.
Legislative Reports. The EMC moved forward in approving reports regarding (1) in-lake strategies for mitigating water quality impairments and (2) the benefits of the state’s riparian buffer program, taking action to reject revisions that had been proposed by DEQ that would have removed valuable scientific information. These reports will be submitted to the legislative Environmental Review Commission as required by 2015 legislation.
Legislative and regulatory decisions to address nutrient impairment of state waters are important to municipalities because most of the regulatory costs of addressing such impairment falls to municipalities -- which assume a primary responsibility for implementing the requirements of the federal Clean Water Act.
In related news, DEQ decided last week to terminate the controversial SolarBee project on Jordan Lake after 21 months of data indicated there was no significant improvement in water quality from the use of that type of circulator in-lake technology. The project grew from years of legislative frustration over the Jordan Lake Rules, and since the project's inception in 2013, the legislature appropriated over $3 million dollars to it. Although it is likely that the 2016 budget will return any remaining funds designated for the SolarBee project to the Clean Water Management Trust Fund, it remains unclear whether the legislature will continue to delay the implementation of the Jordan Lake Rules. Read media coverage about actions related to the termination of the SolarBee Project here and the report's approved by the EMC here.
The future came into view this week for members of the China Grove Town Council. The Salisbury Post reports that a group of first-graders from China Grove Elementary School on Tuesday presented their municipal leaders a series of model developments that could represent what's in store for the Rowan County town. According to the newspaper, examples included the "Fun For Everyone Mall" and the "All You Can Get Bank and Grocery," planned at specific locations in town. The students' ideas followed lessons learned in class about the town's past, present and where it might be headed. "One goal was for the students to figure out how to make a small town better," the newspaper reported. Read the full story here.