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League Bulletin

June 2, 2017

House members, shortly after midnight on Friday morning, approved their $22.9 billion version of the state budget, setting the stage for negotiations with the Senate on a final budget for the 2017-18 fiscal year. In many respects, the budget plans that moved from both legislative chambers represent good news for cities and towns, as there are new infrastructure dollars in each. 

Both plans create a new Site and Building Development Fund that will provide loans to local governments to make improvements to buildings and infrastructure, with $12.5 million set aside for the purpose. Both the House and the Senate also increased total funding for the Clean Water Management Trust Fund to $16.5 million. The House plan would also create an N.C. Ready Sites Fund designed to assist with local infrastructure funding for industrial sites.

The House plan also includes a number of transportation-related policy and funding changes, which you can read about below. Also see how the House would make some tax changes affecting local governments in the piece that follows. And you can click here to view or download a League staff-prepared chart that compares items from each budget plan affecting cities and towns.

Overall, the House plan would increase spending by 2.5 percent over the current-year state budget. Major differences with the Senate plan include how to apply state employee and teacher raises, and a more modest, targeted tax cut of $350 million, compared to $1 billion in the Senate proposal. Read media coverage about the House budget plan here and here.  

Restrictions on local impact fees that were originally included in the House's budget proposal were removed via an amendment that passed by a 58-57 vote on Thursday night. Section 38.11 of the budget would have prohibited cities and counties from charging fees for future water and wastewater system expansion to low-income housing developments allocated a federal tax credit by the N.C. Housing Finance Agency. According to data provided by the Housing Finance Agency, there were 60 such projects statewide in 2016. The League thanks Rep. Jeff Collins for introducing the amendment and thanks all of the House members who supported the amendment as the League continues to work with other stakeholders on a statewide solution to the issues currently surrounding local water and wastewater fees.

Another provision that remains part of the finance portion of the House's budget would provide sales tax exemptions for certain businesses. Sections 38.9 and 38.10 of the budget provide two different sales tax exemptions -- one for "fulfillment centers" (such as an Amazon warehouse) that meet certain job and investment criteria, and another for research and development supplies for "small research and development businesses." Legislative staff estimated that at full implementation, these sales tax exemptions would reduce local sales tax revenues statewide by $6.5 million annually.

An additional budget provision in Section 38.12 would move the effective date of HB 2 Provide Certain Property Tax Relief to July 1, 2018, if it were to become law. Among other provisions, that bill expands the property tax exemption for disabled veterans, but it includes a hold harmless payment from the state to local governments for any revenue lost as a result of this expanded exemption. HB 2 has passed the House but has not yet been heard in the Senate. Contact: Chris Nida

Sections of the House budget proposal dealing with transportation issues packed in numerous policy proposals among the chamber's funding priorities, including many items supported by cities and towns. As part of its 2017-18 Municipal Advocacy Goals, the League's membership prioritized increased state funding for municipal infrastructure needs such as roads and bridges. Cities and towns thank leaders in both chambers for recognizing the importance of continued state support of municipal road projects and other transportation responsibilities with their respective budget proposals.

Of note to cities and towns, the House transportation budget:

  • Creates a new State Infrastructure Bank to provide loans and other financial assistance to local governments and other governmental units (such as toll authorities) for transportation projects, and capitalizes the fund with a $50 million appropriation. The proposal mirrors HB 220 State Infrastructure Bank Revisions.
  • Provides new funding for transportation priorities that do not compete well in the current State Transportation Improvement Program (STIP) process, similar to provisions included in the Senate budget proposal. One provision allocates $30 million in recurring funds to address immediate needs projects, largely at the discretion of NCDOT leaders (Senate budget sets aside $40 million in non-recurring funds for this purpose), while another targets $12 million for low-dollar projects (identical to Senate budget).
  • Maintains Powell Bill dollars at the current $147.5 million appropriation, as with the Senate proposal.
  • Addresses prior shortfalls in funding of regional commercial airports -- many of which are owned and operated by cities -- by allocating an additional $77 million in recurring funds for capital improvements, a sizeable portion of which will assist Raleigh-Durham International Airport in replacing a runway that accommodates international flights (Senate budget provides less funding for these purposes).
  • Advances a policy change that would achieve an NCLM goal to revise the weight given to state transportation engineers and local officials when selecting preferences for transportation projects funded through the STIP process, as in HB 81 STI/Regional & Division Weighting.
  • Reallocates funds to establish 20 new engineer and planning positions within NCDOT that would assist small MPO's and RPO's in defining projects for long-range transportation planning documents.
  • Removes the cap on light rail funding, as in SB 170 Remove Limits on Light Rail Funding.
  • Includes a provision creating a new fund outside of the STIP process for transportation projects "of statewide or regional significance" whose cost exceeds $200 million. This provision, however, will not advance. The Senate voted down an identical proposal in a 1-44 vote on HB 110 DOT/DMV Changes--Megaproject Funding yesterday, and Senate rules prevent a measure from being considered in any other legislation once it fails in a full chamber vote.
Members of the Senate Agriculture, Environment, and Natural Resources Committee approved the addition of multiple provisions to a House omnibus environmental bill Wednesday, including one to exclude from the property tax base land that is subject to specific buffer rules required by the state. This provision was included in the Senate’s version of HB 56 Amend Environmental Laws, which was initially unveiled publicly and discussed in the committee the week before. The bill moved through the committee without an opportunity for public comment despite local governments’ concerns that this would be burdensome for property tax assessors to implement and the proposal acts as an unfunded state mandate that lowers property tax revenue without state compensation.

When it passed the House, HB 56 already included a beneficial section to clarify the reporting of untreated wastewater discharges. The provisions of that section remain in the Senate’s version. They would change reporting requirements to allow a wastewater utility to report after first actual knowledge of a spill, clarifying that the reporting requirement is for any size spill that reaches waters of the state and to a land-reaching spill of more than 1,000 gallons. The Senate added another beneficial provision to give the N.C. Department of Environmental Quality the authority to extend wastewater discharge reporting requirements during extraordinary circumstances which make it impracticable to measure or otherwise collect data regarding a discharge. These circumstances would include major floods, named storms, or extreme weather.

Of interest to coastal cities and counties, the Senate added a section that prohibits a city or county that has accepted state funds for inlet dredging, beach nourishment, or dune construction or maintenance from making any alteration, excavation, or removal of sand in specific areas of sand dune systems. It also requires that a local government certify its compliance with that prohibition when receiving those funds. The bill will next be considered by the Senate Finance Committee. Contact: Sarah Collins

An industry-backed proposal to implement comprehensive procedures for local government regulation of small cell wireless facilities has moved to the Senate after a vote of the full House yesterday. HB 310 Wireless Communications Infrastructure Act passed the chamber with a near-unanimous vote, following adoption of an amendment supported by cities and towns. Small cell facilities typically consist of an antenna, utility pole, and ground-mounted equipment box. The amendment, proposed by Rep. Scott Stone, capped the height of poles in single-family residential areas with utility undergrounding policies at 40 feet.

The bill otherwise limited pole height to 50 feet. The League thanks Representative Stone for recognizing the concerns of communities regarding the height and appearance of small cell facilities. This amendment fell in line with the League's priorities throughout extensive -- and ongoing -- negotiations with the wireless industry on the bill. Throughout these negotiations, the League has sought to ensure that cities would retain oversight over matters of concern such as public safety, space between facilities, aesthetics and appearance, utility undergrounding policies, and historic districts. The League has also negotiated other terms more favorable to cities than in the filed version of the bill, and will continue this work as the bill is considered by the Senate. Contact: Erin Wynia

The cause of the downtown Raleigh fire that damaged League-owned buildings may never be known. Investigators said today that there were a number of potential causes and that various accidental and intentional scenarios could not be ruled out. 

League staff has now settled into temporary office space on the third floor of the Wells Fargo Building at 150 Fayetteville St., and expect to be in this space for many months before League property is ready to be inhabited. On Monday afternoon, the League, N.C. Association of County Commissioners and the Local Government Federal Credit Union will hold a luncheon to honor the 22 local fire departments and first responder agencies that responded to the blaze, kept residents safe and prevented the fire from spreading. Read more about the latest on the fire here.

Plans announced by the U.S. Army Corps of Engineers will provide significant funding for beach renourishment projects affecting a number of North Carolina beach towns. Those plans come even as a White House budget plan puts some of that funding in jeopardy for the future. The projects slated to receive funding include Carolina Beach and Kure Beach, $12.3 million; Ocean Isle Beach, $5.46 million; and Wrightsville Beach, $3.77 million. Another $1.3 million is called for to study Bogue Banks, affecting a number of beach communities in Carteret County. See this article in the Wilmington Star-News to learn more. 

Gov. Roy Cooper indicated on Monday that additional federal relief for victims of Hurricane Matthew is still a possibility after the federal government earlier agreed to grant just $6.1 million of the state's latest $929 million disaster relief request. Governor Cooper made his comments in response to a visit with the state's congressional delegation in mid-May. "I think we all agreed in a bipartisan way that we are going to push together to fight for significantly more assistance for the people in North Carolina who have been hurt so deeply by this hurricane," he told the Wilmington Star-News. The state has provided just over $200 million for storm relief efforts, while the state Senate and House budgets would allocate another $150 million.

The North Carolina Supreme Court will examine the state's legislative districts for a third time after the U.S. Supreme Court this week ordered yet another review. The federal justices called for another look at the legislative maps in light of their ruling last week finding that the state's congressional districts were drawn in a manner that relied too heavily on race. The state Supreme Court had previously upheld the legislative districts. The U.S. Supreme Court has not yet decided whether to take up yet another case also alleging unconstitutional racial gerrymandering in the creation of the districts. See news coverage regarding the case here.  

"At the Town of Ayden, waiting around for growth isn't the answer. That’s why town officials are on their feet in pursuit of an expansive business possibility they've carefully studied for feasibility and assembled partners to win — potentially rippling out hundreds of jobs and giant economic returns over a wide area." So begins Ayden's newly added story on, the online hub of Here We Grow. It's a site compiling stories of growth and success by municipal investments and leverage of resources, and Ayden's addition shows what's possible. Cities and towns from Franklin to Edenton and West Jefferson to Wilmington have already listed their stories. Has your town? It's easy to add your story. Just send an email to for login credentials (reserved for officials of North Carolina cities and towns).

This initiative is based on a simple, powerful idea: when each of us does better, we all do better. It all starts in hometowns across North Carolina — where investments in streets, in water and sewer systems, in historic revitalization, in parks and other amenities, and in downtown redevelopment are creating jobs, fostering business expansion and improving the quality of life. It’s where business owners and municipal officials are working hand-in-hand, at the ground level, to clear a path for prosperity. The result is a stronger economy and more opportunity for every citizen in the state. This is an important story. So we’re empowering cities and towns to tell their own, unique version of it. Doing so, we want to ensure that North Carolina cities and towns continue to have the tools, the resources and the freedom to pursue their visions of the future, and that North Carolinians know about their city or town’s contributions to the state's economic success. Head to to see how it works.