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League Bulletin

June 3, 2016

It was the Senate’s turn this week to propose adjustments to the state spending plan, coming out with a $22.2 billion proposal that equals the overall total approved by the House two weeks ago but differs in policy and detail. Most of the headlines focused on the Senate plan’s pay raises for teachers (giving more than what the House proposed), its increase in the standard deduction for taxpayers, and modifications to sales taxes on services. But several additional items in the Senate budget are of interest to municipalities, including a maintained level of Powell Bill funding -- something the House budget agrees with. Other Senate budget items of interest:

  • Local sales tax – The Senate budget would repeal a $17.6 million annual appropriation of state funds to local sales tax collections. That appropriation was established in September 2015 as part of an agreement to reallocate local sales taxes to 79 counties specified in statute. The $17.6 million was appropriated to help ensure that no cities or counties lost revenue under the plan. Revised sales tax projections prepared by legislative staff forecast no cities or counties losing money even without the $17.6 million appropriation. The reallocation that passed last year does not begin until July 1, so it is not known how the proposed change will impact local sales tax revenues. At this point there is no sales tax data to support the accompanying projections.
  • Light rail cap – While the plan would repeal the $500,000 state funding cap for light rail projects (as the House recommended), it would establish a new cap of 10 percent of estimated project costs for “a commuter rail, intercity rail, or light rail project….” The League instead supports the data-driven transportation funding process established by the Strategic Transportation Investments law of 2013, which excludes politics from the transportation funding process. The League supports the House proposal that follows the 2013 law and would repeal all caps on these projects.
  • Nutrient management – The budget recommends repealing the state’s current nutrient management strategies for water quality and replacing them with “a new comprehensive management strategy that includes in situ treatment of impaired water bodies.” (Click here for full details from the League.)
  • Beach value – A provision would study the benefits of beach nourishment and how the coastal economy impacts the state.

Meanwhile, some local-government-related items in the House proposal are absent from the Senate’s, including the House’s one-time $25,000 provision to community colleges to create a continuing education program for local government and public authority finance officers. For another, the Senate plan wouldn’t increase receipts for the Local Government Commission to fund an additional position to assist local governments with financial matters, as the House plan would.

But there are many shared provisions, too. Both plans maintain Powell Bill funding at the level budgeted last fiscal year ($147.5 million), for which the League thanks both chambers. It would also give the Clean Water Management Trust Fund an additional $5 million in non-recurring funds; provide additional funds for the State Broadband Plan; and direct the Department of Environmental Quality to allocate funds for certain water resources programs, including projects in several municipalities.

The Senate approved its version along party lines after floor debates Thursday and early Friday. The two chambers will have to compromise on a final draft before they can send it to the governor for signing. Click here for the Senate’s version and here for the companion spending report.

The Senate's proposed budget is calling for the review -- with possible revision or repeal -- of the state’s Nutrient Management Strategies entirely, along with any other rules imposing riparian buffer requirements for the purpose of nutrient management. (Details of Sec. 14.13 can be found here.) The provision would allocate funds for UNC to study all of the state's nutrient rules, which affect hundreds of cities and towns across the state, and would direct state regulators to use the results of that study as the basis for a rewrite of those rules. This effort would require that rulemaking be completed by December 2020, or would require a full repeal of the rules if the rulemaking remained incomplete by that date. Finally, the provision would further delay any components of the Jordan or Falls Lake Rules that have not currently taken effect.

Although League members likely have differing opinions about this proposal -- evidenced by senators’ comments during the floor debate -- it introduces a level of uncertainty to municipalities regulated by these rules. Further, the proposal does not provide reimbursement for local investments already made, such as wastewater treatment plant upgrades, in reliance on existing rules.

Municipalities, collectively, share the biggest part of the burden of cleaning up and protecting water bodies subject to nutrient management, and face the greatest risks -- with imperiled drinking water supplies -- when they are not protected. Due to the obligation cities have to provide clean drinking water and reduce pollution to water supplies, the League prioritized flexible water body impairment solutions as its top regulatory goal.

Two senators offered amendments during the chamber's floor debate on Thursday. The first, by Sen. Mike Woodard, would have completely removed the provision from the budget. Sen. Woodard noted that nutrient management strategies have reduced nitrogen and phosphorus pollution where actually implemented. In contrast, Sen. Trudy Wade noted that Greensboro and Burlington had already invested more than $125 million in wastewater treatment upgrades to comply with the Jordan Lake Rules with little results shown in the lake. Senators ultimately adopted an amendment offered by Sen. John Alexander and supported by the City of Raleigh that included, among other items, timeline extensions and increased funding for the study.

The League appreciates senators' many comments recognizing the large investment that several municipalities have already made to comply with the existing rules. Read more coverage of this budget provision here and here. Contact: Sarah Collins

It’s hard to overstate the value of participating in the League’s annual Town Hall Day – the premier opportunity for municipal officials to connect in-person with legislators in Raleigh. And it’s just ahead, on June 8. While pre-registration is closed, you can still join in. On-site registration is available bright and early on the day of the event at the Quorum Center, 323 W. Jones St., in downtown Raleigh. Click here for details.

Town Hall Day is organized on behalf of the 540 municipalities represented by the League to ensure that key decision-makers recognize the challenges facing cities and towns. (VIDEO: Why you shouldn't miss Town Hall Day 2016.) The events that make up the day help legislators and state leaders understand that the League is working on behalf of all cities and towns, and help to continue the dialogue between municipal and state officials. Today, that dialogue is needed more than ever.

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.

The League succeeded in negotiating an amendment this week to protect water systems in the final approved bill addressing potential contamination of water supplies from coal ash. Thanks to the support of bill sponsor Rep. Chuck McGrady, the negotiated language emphasized that any electric power company owning a coal ash impoundment must secure a binding agreement with a public water supplier prior to state approval of the particular alternative water supplies. The clarification became necessary when legislators proposed a requirement for impoundment owners to replace the water supply of homes near coal ash ponds -- with a preference given to connection to public water supplies -- but did not include any opportunity for the public water system to evaluate its capability to serve those homes.

The amendment now ensures that a water system may negotiate favorable terms in these agreements, taking into account its financial capacity as well as availability of a raw water supply. As they are able, municipal-owned public water utilities often assist in similar situations that involve contaminated water sources, and the League supported the overall measure to provide properties with a replacement source of drinking water. The bill now awaits action by Gov. Pat McCrory, who has stated his opposition to the bill (for reasons unrelated to replacement water supplies) and has promised a veto. Contact: Sarah Collins

A House committee took action this week to amend HB 1134 Admin Changes Retirement System/Treasurer -- a bill that would make various administrative changes to the state’s retirement systems, including some that will affect the Local Government Employee Retirement System (LGERS). As filed, the bill included a proposal regarding when unreduced retirement benefits are payable to employees hired after Jan. 1, 2017.

A change in retirement eligibility of new hires in the state’s pension systems from service-based (the number of years worked) to an age-based retirement is needed to comply with IRS-proposed regulations. Those regulations define “normal retirement age” for governmental retirement plans and become effective for employees hired after January 1, 2017. However, the House bill originally proposed a minimum retirement age of 55 for general employees, which went beyond the federally proposed age of 50. Bill sponsors said they proposed the higher age because increasing life expectancy means retirees are receiving benefits for a longer period of time, which creates a larger burden on the pension systems. Committee members decided to amend the bill to move the age from 55 to 50, however, and also included a study that the Joint Legislative Program Evaluation Oversight Committee would conduct to examine the total value of retirement benefits for members of the state’s pension systems to those of other states that implement a normal retirement age.

The League knows that the benefits that city employers offer are important to recruitment of new employees and recognizes its member approved advocacy goal that any changes to the LGERS system need to defend its fiscal integrity; promote reasonable pension reforms; and meet the needs of local employees, employers, and retirees. HB 1134 was re-referred to the House Appropriations Committee. Contact: Sarah Collins

The legislative and regulatory goals set during a two-year cycle by the members of the North Carolina League of Municipalities serve to guide our advocacy efforts. More than that, they are a collective statement of the priorities of North Carolina municipalities, big and small, urban, suburban and rural. The process of setting the municipal advocacy goals is an opportunity for each municipality to have a voice in telling state legislators and other state policymaker what is important to them.
The League is now requesting your proposals for legislative and regulatory goals that should be pursued during the 2017-18 legislative biennium.
According to League bylaws, you must indicate on your goal proposal whether it was voted on and approved by your local council or board. As a note, the League also may request that you visit one of our policy committees to further explain your suggested goal, as a part of the goals selection process. Bylaws also set a deadline to receive proposed goals at 45 days from the date of this notice, which will be July 1. Please don’t miss this opportunity and submit yours soon! This year’s Advocacy Goals Conference will be held as a part of CityVision 2016, the League’s annual conference, to be held in Raleigh on October 23, 2016. We hope that this “two-for-one” event will provide more value and, out of respect for tight municipal finances and schedules, will allow more participation. If your city or town has not attended the Advocacy Goals Conference, this is the time to do so.
The League needs your input. With the operating principles generated from the Vision 2030 strategic planning process in mind – which include having municipal governments exercise greater control of revenues, structures and functions, and engage in productive partnerships with other levels of government and the private sector, all by 2030 – the municipal advocacy goals and the process of determining them have never been more important. Proposals may be sent by elected or appointed municipal officials. Again, each proposal should indicate whether the governing body of the municipality has voted to approve the submission of the proposals. Suggested goals can be submitted via the link below as soon as possible, but no later than July 1. This is your policy process, so please give this thoughtful consideration and participate.

As a result of board member requests, the N.C. 911 Board staff has released a much needed update to guidance for compliance with 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. 

In February, since the 2015 legislation did not define "substantial progress" and the board's distribution of funding to PSAPs depends on whether such progress has been made, the board took action to define the term as a PSAP having submitted (1) a back-up plan for approval and (2) a timeline for completion of the plan that accompanies a request for an extension. The new guidance document provides needed, consistent direction and includes information about back-up PSAP requirements, a checklist to assist in completing a back-up plan, a financial worksheet, and a sample letter for requesting an extension.

North Carolina municipalities gathered more national accolades this week, starting with Cary’s recognition as the safest town in the U.S. for drivers. That’s according to the latest data-crunch from personal finance website NerdWallet, showing that Cary, home to roughly 160,000 people, had lower-than-average accident risks, low exposure to automobile-related crime and a fatal accident rate of just 1.3 per 100,000 residents, the lowest of all cities NerdWallet analyzed. The website studied 200 of the most populous U.S. cities to rank the “safest” and “most dangerous” and measured a monetary payoff for those on the good side. “Auto insurance rates are 47 percent more expensive in our most dangerous cities,” the website reported. The average annual insurance rate in the 20 most-dangerous cities was $1,721, while $1,169 in the 20 safest. “In Detroit, our most dangerous city for drivers, you’ll pay 642 percent more, on average, for car insurance that in our safest place, Cary, North Carolina,” NerdWallet noted. Meanwhile, Forbes’ 2016 list of “Best Cities for Mid-Career Professionals” ranked Raleigh fourth in the nation (in a tie with Cincinnati, Ohio) and Charlotte 12th (in a tie with Silicon Valley). The magazine explains: “There comes a time for many people in the middle of their careers when they look around and ask a critical question: is living here still worth the price? We took a numbers-based approach to find cities where mid-career workers – especially those with families – would be more likely to answer ‘yes.’”