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League Bulletin

May 20, 2016

Estimates of Senate Bill 846's local impacts are now available. The LeagueLINC Bulletin last week reported that the proposal -- Change the LOST Adjustment Factor -- would impact local sales tax distributions. Beginning in Fiscal Year 2017-18, the bill would eliminate individual county adjustment factors currently in statute for the Article 40 1/2-cent local sales tax and establish adjustment factors based on a county's economic development tier. Beginning in Fiscal Year 2016-17, the bill would eliminate a $17.6 million state appropriation to local sales tax collections that was part of last year's sales tax reallocation plan. The League has received a number of questions regarding the local impacts of the bill, and we can now share with you estimates prepared by the General Assembly's Fiscal Research Division.

These estimates reflect the fact that the local impact of last year's sales tax base expansion is now projected to bring in just over $29 million more in local revenues than had originally been projected. The League will continue to monitor SB 846 and work with legislators and legislative staff on the bill. Please note that at this time, the bill has not been heard in any legislative committees nor scheduled for any hearings. It would still need to pass the Senate and the House and be acted upon by the governor before becoming law. We will keep you informed as the bill makes its way through the legislative process. Contact: Chris Nida.

Legislators met their final bill filing deadline of the session this week, introducing 30 new local bills or pension proposals. For the remainder of session, legislators may only file new bills in very limited, restricted circumstances. Read short summaries of bills filed over the past three weeks in previous LeagueLINC Bulletins (April 29, May 6, and May 13). The bills filed this week of municipal interest include:

  • HB 1126/SB 877 Red Light Cameras/City of Greenville: like a 2014 measure that applied to Fayetteville, gives the city the ability to recoup the costs of operating a red-light camera system and raises the civil penalty by $25
  • HB 1127 Sanford Occupancy Tax Authorization: authorizes the city to levy an occupancy tax of up to 3 percent
  • HB 1128/SB 879 Cornelius Limits/Mecklenburg County Police: adds numerous doughnut hole parcels to the jurisdiction of the Town of Cornelius and makes changes to the ways in which municipalities in Mecklenburg County provide police services in unincorporated areas
  • HB 1131 Town of Andrews/ETJ Authority: limits current authority for the town to exercise extra-territorial jurisdiction powers within one mile of its borders by first requiring approval of board of county commissioners
  • HB 1132/SB 882 Glen Alpine Deannexation: removes one parcel from the town
  • HB 1136 Morrisville/Developm't Fees for Road Projects: allows the town to charge a road project fee for all new construction within the town and its ETJ; directs an "extensive study" prior to the establishment of this fee
  • HB 1138 Wake/Durham Co. Truck Routes/Secondary Roads: authorizes NCDOT to prohibit truck traffic on primarily residential secondary routes in Wake and Durham counties under specific circumstances, including the availability of an alternate route with significantly different land use and density than the residential area
  • HB 1140/SB 885 2016 Governor's Budget: blank budget bill
  • HB 1143 Spencer Mountain Charter: suspends the charter--and therefore all financial operations and elections--of the two-resident Town until June 30, 2019
  • SB 878 Jonesville/Boonville/East Bend/Even-Yr Elec'n: changes the elections in the three towns to even-numbered years and modifies the terms of office for some town officials, including extending the Booneville mayor's term from two to four years
  • SB 886 Retirement Technical Corrections Act of 2016: companion bill to HB 1011, which among other technical corrections conforms LGERS practices to TSERS, directing local units to purchase the employee portion of retirement credit, up to five years, when that employee takes active-duty military leave
  • SB 888 Buncombe School Capital Fund Commission: among other provisions, directs half of the county's local sales tax proceeds into a school capital fund, while specifically stating that disbursements of local sales tax revenue to the County's municipalities must remain unaffected

Influential legislators from the House and Senate joined the N.C. Association of Resort Towns & Convention Cities (RTCC) on Thursday to discuss how tourism destinations are enhancing the economy -- at the state level and locally, from the mountains to the coast. RTCC, a League affiliate, serves to promote statewide legislative support for travel and tourism, ensure equitable distribution of resources for communities whose economies are based on travel and tourism, and strengthen links between resort towns and convention cities.

Rep. Chuck McGrady addresses RTCC

Sen. Norman Sanderson, an Arapahoe lawmaker who co-chairs the Senate Committee on State and Local Government, told the group during a breakfast meeting in Raleigh that mountain towns and coastal towns naturally have differing needs. "But there are a lot of parallels that go with those needs," Sanderson said, adding they must be communicated to the legislature as a whole. Resort towns across the state face infrastructure strains from the significant population swells of tourism, making the upkeep of reliable utilities and roads important, noted Rep. Chuck McGrady, a Hendersonville lawmaker and a top budget writer in the House. "I'm not aware of many tourism areas that don't have that need," McGrady said.

Sen. Norman Sanderson highlights common ground between coastal and mountain towns

Meanwhile, these tourism areas give tremendous payoff to the state, making investments in tourism communities from state government worthwhile, Sanderson and others noted. Last year, tourism in North Carolina generated better than $1.1 billion in state tax receipts and supported more than 211,000 jobs, according to the U.S. Travel Association. "I don't know of many industries that have the return on investment on the dollars that we spend (as tourism does), because it brings in that outside money," said Sanderson. McGrady encouraged unity among all tourism and convention towns for an effective message. He added he was pleased with the House's proposed budget, approved on Thursday, for its investment in travel and tourism. The plan would give an additional $1.5 million to the Economic Development Partnership of North Carolina to increase tourism advertising. Click here to read a blogpost McGrady authored on tourism to North Carolina and how 2015 was a banner year. But neighboring states are spending heavily on tourism as well, and officials here are hopeful the legislature can beat their momentum. "In order to grow travel and tourism in North Carolina ... we're going to have to invest," said Sanderson.

RTCC members outside the House and Senate galleries.

Thursday's gathering of resort towns and convention cities brought out roughly 35 officials from more than 20 municipalities who visited the Legislative Building, sat in on the day's House and Senate sessions, received recognition in the gallery and discussed issues face-to-face with lawmakers. The League would like to thank everyone who made this coordinated event so successful as well as the municipal officials and state legislators who attended. To learn more about RTCC or for questions, email

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:

  • A legislative briefing from the League’s Public and Governmental Affairs Team
  • Meetings with House and Senate leadership
  • Discussions with representatives of state agencies
  • Opportunities to meet individually with legislators from your district, attend committee meetings and observe chamber floor sessions
  • An evening reception with legislators and key state leaders

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.

Legislation was filed in both chambers this week that would make various administrative changes to the State’s retirement systems, including some that will affect the Local Government Employee Retirement System (LGERS). Many aspects of HB 1134 Admin Changes Retirement System/Treasurer and SB 877 Admin Changes/Modernization Retirement System are identical, but the two chambers differ on some provisions. The League is analyzing these bills and will work with legislative sponsors to ensure that legislation is congruent with our advocacy goal of supporting legislation that defends the fiscal integrity of LGERS, promotes reasonable pension reforms, and meets the needs of local employees, employers, and retirees. Contact: Sarah Collins

In an indication of the quick speed with which legislators in both chambers are moving bills through the legislative process this session, both the House and Senate took multiple votes on a municipal service district (MSD) bill this week. Local government committees in both chambers considered an identical proposal recommended by an interim study committee that would expand and strengthen the procedures related to establishing, enlarging and abolishing districts. A MSD is a specialized taxing district created to provide properties in the district with additional services. Most often in North Carolina, municipal boards form them to provide business owners enhanced downtown development services, although many coastal communities use them to finance beach renourishment projects. The bill gained approval by the full House and a Senate committee without amendments, though several House members questioned the need for additional procedures. The League testified during the House Local Government Committee debate, expressing support for the bill and citing its improved transparency in the MSD process. The League appreciates the efforts of bill primary sponsors Sen. Trudy Wade and Rep. Ted Davis for seeking input from numerous cities and towns as this good government bill developed. Because the House was the first legislative chamber to pass the measure, it is likely the Senate will take up the House version of the bill rather than the Senate version. Contact: Erin Wynia

Senior House budget writer Rep. Nelson Dollar explains the spending plan during session Thursday.

The N.C. House finalized its proposed $22.2 billion budget on Thursday and sent it to the Senate for consideration following a strong and relatively swift 103-12 vote. The Senate may call budget committees to order early next week. The House plan recommends several provisions of interest to municipalities. Among them:

  • Maintaining Powell Bill funding at the level budgeted last year, a total of $147.5 million statewide
  • Repealing the $500,000 cap on state funding for light rail projects
  • Providing community colleges with $25,000 in nonrecurring funds to create a continuing education program for local government and public authority finance officers
  • Increasing receipts for the Local Government Commission in order to fund one additional position to assist local governments with financial matters
  • Directing the Department of Environmental Quality to allocate funds for certain water resources programs, including projects in several municipalities around the state

The League has prepared a detailed list of House budget items directly of interest to municipalities. Click here to view it. The House plan also calls for increases in the standard deduction for tax filers. For a more broad look at the budget proposal and other specifics from news outlets, click here and here.

The federal government on Wednesday released its much anticipated "final rule" on overtime regulations, notably raising the threshold for exempting employees from time-and-a-half pay. "Without intervening action by their employers, it extends the right to overtime pay to an estimated 4.2 million workers who are currently exempt," explained the U.S. Department of Labor in an accompanying fact sheet. The UNC School of Government has scheduled a webinar to explore the ramifications and discuss how government employers can meet the rule with limited budget impact. The rule's release follows President Obama’s 2014 order that the U.S. Department of Labor "modernize" overtime regulations. The effective date is Dec. 1.

According to the Labor Department, the final rule:

  • Sets the salary level needed for employees to be exempt at $913 per week, or $47,476 annually (which is twice the former level)
  • Sets the total annual pay requirement for highly compensated employees subject to a minimal "duties test" to $134,004 (previously $100,000)
  • Establishes automatic updates on the pay thresholds every three years, starting Jan. 1, 2020

"No matter what the job, no matter what the type of work, if the employee is paid less than $47,000 a year, the employer must pay overtime," explains an overview prepared by the School of Government, which has scheduled a webinar for June 6, 10-11:30 a.m. According to the announcement, attendees will be supplied with written material beforehand and will have opportunities to ask questions. The fee is $125 per viewing site (but each site may invite groups of any size). Click here to register. Click here for full details on the final rule. Read media coverage here.

At its semi-annual work session Friday in Charlotte, the N.C. 911 Board plans to discuss a variety of topics related to the back-up capability requirement for public safety answering points (PSAPs), or 911 centers. Legislation from last year granted an extension to the 2014 statutory requirement that primary PSAPs have a means for taking 911 calls in the event that they cannot be received and processed in the primary PSAP, but the extension was only for one year and only if the PSAP has made "substantial progress" toward implementation of a back-up plan by the original July 2016 deadline. Planned discussion topics include funding and costs of back-up compliance, potential compliance extension, whether the Board or staff should approve back-up plans, and legislative reporting. The League will make sure to inform members of any decisions the board makes as a result of this discussion Contact: Sarah Collins

The N.C. Supreme Court heard oral arguments Tuesday in the case of Asheville's water system and the level of authority legislators may have over it. The legislature in 2013 passed a law to hand control of the system from city government to a board of regional officials, with Asheville representing a minority of the body. The system serves customers in and outside of the city's borders. The city sued to maintain ownership and won an initial round in court before a successful appeal by the state. Now before the Supreme Court is the question is whether the state can shift such assets from the control of one government to another without compensation, though the Asheville Citizen-Times this week reported that most of Tuesday's discussion focused on whether the 2013 law violates the N.C. Constitution's section prohibiting local laws related to health and sanitation. According to the newspaper, the law doesn't specifically mention Asheville's water system, but its wording concerns that system only, bringing the city to argue that it indeed violates that constitutional provision. The newspaper reported that the justices gave little to no indication as to how they'll rule in the end. Click here for full coverage.

Three North Carolina cities have won spots in a new, national initiative that eyes local collaboration for the betterment of low-income communities. Asheville, Greensboro and Durham are among 50 mid-size cities nationwide – out of 170 that applied – to participate in Invest Health from the Reinvestment Fund and the Robert Wood Johnson Foundation. The program is “aimed at transforming how city leaders work together to help low-income communities thrive, with specific attention to community features that drive health such as access to safe and affordable housing, places to play and exercise, and quality jobs,” says a press release. The 18-month program will begin with a June 7 kickoff.

“Public officials, community developers, and many others have been working in low-income neighborhoods for years, but they haven’t always worked together,” said RWJF program spokesman Donald Schwarz. “Invest Health aims to align their work and help neighborhoods thrive by intentionally incorporating health into development.” Selected cities weighed in with excitement. “Invest Health is a great opportunity for the City of Asheville to engage in the intersection of community development and public health,” said Heather Dillashaw, the city’s community development manager, in a blogpost. “Through this vibrant and innovative community collaborative, we look forward to working with area partners to address health inequities in Asheville and creating long-term, sustainable solutions for our shared community.” Read details about the initiative here.

If North Carolina cities hadn't racked up enough acclaim for fostering tech growth, more national publications this week cheered their names. The bottom line: Tar Heel State municipalities have the creative minds and favorable regulations needed for tech companies to bloom and attract outsiders, the publications say. Real estate resource site Commercial Property Executive this week highlighted Raleigh-Durham on the same short-list as San Diego, Denver, Boston and the Bay Area as the best in the country for tech startups. The website drew from the Innovation That Matters 2016 study, released last week by partners including the U.S. Chamber of Commerce Foundation. It ranked Raleigh and Durham together as fourth nationally for "fostering entrepreneurial growth and innovation" and gave credit to the area's inventive lifestyle and regulatory environment. The Triangle cities "managed to excel in providing business-friendly regulations, strong community ties, and dense startup centers, all of which help local entrepreneurs thrive," reported U.S. Chamber news site Free Enterprise on the findings.

Durham found more love this week from sales and marketing company DataFox. "Silicon Valley may get the lion's share of tech buzz, but entrepreneurs, job seekers and investors take note: Some of the best places for tech are outside of California and New York," the company reported in a national list of top tech spots that ranked Durham seventh. "Durham-based companies ranked in the 93rd percentile for growth, an indicator that its tech sector is comprised of strong companies," said the article, adding the city is "much more affordable" than major tech cores like San Francisco or Boston. The company ranked Charlotte 13th for its "sense of community, the capital and expertise of established companies, and the energy of new ideas...." It also nodded to the city's long-term growth plan.

But towns here are top-ranked for more than just tech. On Tuesday, Becker's Hospital Review reported that Apex was the best place in the nation for physicians to practice -- beating out Austin, Texas. The magazine cited a study by Medscape (part of the WebMD network) that looked at Apex's home affordability, strong job growth and the fact that Money Magazine last year ranked the town as the country’s "best place to live.” This week's accolades didn't stop there. For jobs in general, Raleigh-Durham ranked eighth nationally on Glassdoor's new dataset. "Hot jobs" in the area include registered nurse, research associate and software engineer.