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League Bulletin

May 15, 2015

House budget writers rolled out much of their state budget plan during subcommittee meetings on Thursday, a proposal that includes many provisions that will be of interest to municipalities. Some significant portions of the budget bill -- including any provisions involving non-transportation tax and fee changes, and state employee raises -- have yet to be unveiled. All of the provisions are subject to being amended as House leaders plan to move the combined bill through the full House Appropriations Committee and House Finance Committee early next week and onto the chamber floor later in the week.

The state's strong revenue picture allowed House budget writers to increase funding in a number of key areas, including increasing public school funding by 3.3 percent, or $269 million. A look at some key transportation-related provisions in the budget plan follows in the pieces below. Non-transportation-related provisions of importance to municipalities include:

  • $500,000 in additional recurring dollars and $11.5 million in recurring money to the Clean Water Management Trust Fund. The additional appropriation would bring total program funding for the biennium to $52 million. The separation of the National Heritage Trust Fund from the CWMTF would pull $750,000 from it. 
  • $5 million for Water Resource Development projects, dollars that would be used around the state to match federal grants. 
  • a $478,825 cut to the Drinking Water State Revolving Fund, leaving $4.5 million for the program. 
  • $5.1 million for the Clean Water State Revolving Fund, enabling federal funds to be drawn down.
  • an additional $3.27 million in recurring dollars and $10 million in non-recurring for state water and waste water infrastructure grants. The money is part of $38.2 million in total funding for the purpose over the biennium.
  • $900,000 in additional non-recurring money for aquatic weed control.
  • $1 million for state matching grants for the Main Street Solutions program to providing planning for downtown revitalization. 
  • an additional $500,000 in non-recurring funds for Grassroots Arts Grants, bringing total funding to $2.8 million.
  • the establishment of a $10 million, competitive library grants program in the Department of Cultural Resources.

Read media coverage about the House budget plan here, here and here.  

The proposed House transportation budget unveiled yesterday cuts the state's gas tax on non-diesel motor fuels to 33 cents per gallon on Jan. 1, 2016, which is projected to cost cities and towns nearly $7.7 million in road funding in Fiscal Year 2016-17. Because municipal Powell Bill funding is now derived solely from motor fuels tax revenue, any change to that tax impacts city road funds. The transportation budget incorporates portions of HB 927 which shift the state's transportation funding sources to rely less on the gas tax and more on fees.

Legislators discussing HB 927 and the transportation budget emphasized the uncertain and unstable future of the gas tax as a long-term revenue source. Cities agree, and are asking for the source of Powell Bill funds -- which account for approximately 25 percent of city spending on streets -- to be similarly diversified. Also of note in the transportation budget is a special provision on Page 5 that would now require cities and counties to repay the Department of Transportation for improvement projects that they requested. Contact: Chris Nida

The League membership thanks House budget writers for including in the chamber's transportation budget proposal (pg. 28, line 42) an important item prioritized by the League members as a 2015 Municipal Advocacy Goal. That item would provide financial relief to cities under 50,000 in population by requiring DOT to pay some or all of the costs of relocating municipal water and sewer lines when state road construction forces those utility lines to be moved. The provision would set up a tiered system where municipalities with a population under 10,000 would pay none of the costs and those between 10,000 and less than 50,000 would pay either 25 or 50 percent of the costs.

Current law requires all cities over 5,500 in population to pay the full costs of utility line relocation, while other types of entities, including counties, water authorities, and other utility districts, share none of these costs. The League-supported budget provision would implement the tiered system proposed in HB 771 DOT/Utility Relocation Costs, approved last month by the House Transportation Committee. The League especially appreciates the efforts of HB 771 sponsors Reps. Phil Shepard, Rena Turner, Pat Hurley, and George Robinson, for supporting this effort and its inclusion in the House budget. Contact: Erin Wynia

This week, representatives from all three of the League's Legislative Action Committees traveled to Raleigh to discuss cities' legislative priorities with lawmakers. We sincerely appreciate the many League members from around the state who took the time  to be with us in Raleigh this week, as well as the Representatives, Senators, and legislative staff who made time in their schedules to meet with city officials. Mayors, council members, managers, and others sat down and talked about key city issues such as city-only sales tax authority with House Finance Committee chairmen Rep. Bill Brawley, Rep. Jason Saine, and Rep. Mitchell Setzer, and sales tax redistribution with Senate Finance Committee chairman Sen. Jerry Tillman.

Those issues, as well as other top municipal priorities like city design standard authority and DOT utility line relocation, were also topics of conversation with representatives from the staffs of Speaker of the House Tim Moore and Senate President Pro Tempore Phil Berger. Once again, thank you to all the legislators and staff who met with our members this week. If you are interested in coming to Raleigh to talk with legislators about issues important to your city, please contact League Grassroots Coordinator Vickie Miller, and see here for more information about serving on one of the League's policy committees. Contact: Chris Nida

The U.S. House passed legislation this week that would force the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers to withdraw their current rule defining the scope of the Clean Water Act (CWA) and issue a revised rule after extensive consultation with stakeholders. H.R. 1732 aligns with a League member-approved federal advocacy goal that seeks clarification of EPA's proposed definition of "waters of the United States" to address municipalities' hope that municipal separate storm sewer systems and human-made ditches are exempted from jurisdictional water definitions. The League submitted legal comments last fall also requesting that the final rule be clarified and exclude many aspects of stormwater systems. President Obama has threatened to veto the bill. Contact: Sarah Collins

Jacksonville Mayor Pro Temp Michael Lazzara, a small business owner and member of the League Board of Directors, penned an op-ed published in The News & Observer this week describing the benefits of local aesthetics-based design standards for residential homes. In "How NC design standards protect home investments," Lazzara told the story of how his hometown's standards helped preserve the value of homes bought by young military families in Jacksonville. The piece also mentioned how these standards enabled other coastal communities like Duck and Nags Head to properly plan for sewer and trash services to gigantic vacation rental homes built in single-family neighborhoods, and how similar standards in large cities protected the property values of surrounding properties when small-scale infill occurred in existing neighborhoods.

Published on the heels of an editorial in the Winston-Salem Journal two weeks ago, Lazzara's piece comes at a time when House leaders are deciding whether to take up SB 25 Zoning/Design & Aesthetic Controls, which passed the Senate in April. The bill has been assigned to the House Committee on Regulatory Reform. The League supports compromise language, rejected by the Senate, that would allow new construction of single-family developments to occur with no municipal regulation of home color, type of materials used, roof style, location of windows and doors, and other design elements. In advance of the House debate on this bill, please continue to give your representatives examples of how your town's standards preserve the property values of existing homes. For copies of the League-supported compromise language, please contact Erin Wynia.

Another bill providing government retiree cost-of-living increases will not affect local governments after all. HB 759 Retirement System COLAs, which in its original form would have provided both Local Government Employees Retirement System (LGERS) retirees and Teacher and State Employees Retirement System (TSERS) retirees with a 2 percent cost-of-living adjustment (COLA), passed the House Pensions and Retirement Committee Tuesday with major revisions. The proposed committee substitute adopted by the committee removed LGERS from the bill and decreased the TSERS COLA to 1 percent. The League thanks Rep. Larry Bell for recognizing that HB 616, which already passed the House, would provide LGERS retirees with a 1 percent COLA and that revised provisions related to LGERS in HB 759 would be duplicative. Contact: Sarah Collins

On Thursday, the N.C. Environmental Commission (EMC) approved the "listing methodology" used in deciding the state's 2016 impaired waters list ("303(d) list"), deciding to keep the methodology significantly similar to what was used in 2014. Some  minor changes were included to reflect recently approved state water quality standards. This action showed that the EMC was not going to change its methodology based on the U.S. Environmental Protection Agency's (EPA) decision to add waters to the state's 2014 303(d) list. EPA added waters to the 2014 list because of a difference of opinion with the EMC regarding how the state should list waters based on toxic parameters.

The 303(d) list is named after Section 303(d) of the federal Clean Water Act, which requires states to evaluate the health of their waters and list those exhibiting impairments every two years. Once listed, impaired waters most often become subject to water pollution restrictions for the affected watershed, usually in the form of a Total Maximum Daily Load (TMDL). Local governments, as the holders of wastewater and stormwater discharge permits, bear responsibility for reducing their discharges to waters under a TMDL, often a costly requirement. The League submitted comments in September regarding the proposed 2016 listing methodology, requesting that the State retain the 2014 approach. Contact: Sarah Collins

Municipal solid waste and recycling trucks would be added to the list of parked or standing vehicles that motorists must change lanes or slow down for under the state's "move over" law. HB 102 Utility Vehicles/Move-over Changes now goes to Gov. Pat McCrory to be signed into law. The legislation does require the vehicles to have a flashing yellow light for workers to qualify for the protection. The bill also allows law enforcement officers, emergency personnel, and some municipal and county employees to operate utility vehicles on some public highways.