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League Bulletin

June 5, 2015

Rumors swirled this week that a revised sales tax redistribution plan would roll out in the Senate, possibly as part of the chamber's budget or part of a bill that has already passed the House, but as the week came to a close no such plan had yet been made public. Indications were the plan could be unveiled next week, possibly in a Senate Commerce Committee meeting scheduled for 11 a.m. Tuesday. Sales tax redistribution may be packaged with other finance elements of the Senate budget, which was originally scheduled to be passed by next Thursday. However, Sen. Harry Brown, one of the Senate's chief budget writers, told reporters yesterday that the Senate budget could be delayed into the weekend or the week beyond.

There has obviously been a great deal of behind the scenes discussion on the issue of sales tax redistribution. We have heard talk of a variety of different plans, including those previously released in Senate bills 369 and 608, and of a "compromise" plan in which 80 percent of sales tax revenues are distributed on a per capita basis and 20 percent are distributed on a point of sale basis. Legislators have also discussed with the League a variety of city revenue options that could be added to the bill. However, there has been no legislative language associated with any of these compromises or revenue options released, and every plan that has been made public repeals the local sales tax as a locally levied revenue and makes local sales tax revenues a state revenue that is shared with local governments. The League will not be able to support a bill that repeals the sales tax as a locally levied revenue source. If such a repeal were to occur, any projections of future gains or losses would be uncertain as total sales tax revenues available to local governments could be reduced by the state at any time.

Please continue to reach out to your Senators, and your Representatives, regarding sales tax redistribution. Outreach by city officials has made a difference already, and we are now likely days away from this plan being discussed at the legislature. As you discuss this issue with your legislators, please let us know what you are hearing, and we will do the same. Thank you for your work on this crucial issue for all of North Carolina's cities and towns. Contact: Chris Nida

Please take action this weekend by contacting your state representatives in favor of League-supported modifications to SB 25 Zoning/Design & Aesthetic Controls, which House leaders scheduled for a key committee vote Monday afternoon. Without any amendments in the House, the bill would head to the Governor for his signature, possibly as soon as Monday evening. League members prioritized a compromise on this issue as a Municipal Advocacy Goal this session. When discussing this bill with House members:

  • Ask them to vote in favor of amendments that would protect the character of existing neighborhoods and nearby home values.
  • Remind them that even with these amendments, the bill would prevent municipalities, with a few limited exceptions, from imposing design and aesthetic controls for residential structures, such as exterior color, roof style, location of windows and doors, and other structural elements.
  • Explain that the amendments would have no effect on new, large subdivision tracts.

Amendments may be considered by the House Committee on Regulatory Reform at its meeting Monday afternoon, or on the House floor. If you would like to provide the specific amendment language to your legislator, or if you would like more background on what the League's compromise language does, please contact Erin Wynia.

Oral arguments took place at the N.C. Court of Appeals this week in the case regarding ownership of the water system of the City of Asheville. The State of North Carolina has appealed a judge's previous ruling that a 2013 state law that would have transferred ownership of Asheville's water system to a regional water and sewer authority is unconstitutional. Current and former legislators, as well as officials from the City of Asheville and a number of other municipalities, looked on as City of Charlotte mayor Dan Clodfelter argued the case on behalf of the City of Asheville. The League filed an amicus brief with the court in support of the City's case. A ruling on the appeal is expected later this year. For more on the hearing, see this article in the Asheville Citizen-Times. Contact: Kim Hibbard
The House Local Government Committee yesterday gave its approval to SB 682 Modify Sunset Re: Contingent Audits, which makes permanent a temporary ban on local contingency fee audits that was enacted in 2013. Contingency fee audits are a form of audit in which an auditor who is looking for taxes that were legally required to have been paid to a government, but were not, is compensated based on a percentage of the unpaid taxes that are discovered. Local governments used these type of audits as a way to save taxpayers money by only paying for audits that actually discovered unpaid taxes, and not spending taxpayer money up front on audits that may provide no benefit. However, opponents of contingency fee audits argue that it provides auditors with an incentive to inflate their findings, although auditors' findings must be confirmed by local governments and there are processes in place to prevent the abuse that these contracts are perceived as potentially incentivizing. The bill now moves to the House Finance Committee for consideration. Contact: Chris Nida
One week from Monday, on June 15, the League will host the fourth in its series of regional meetings examining the future of municipal finance. The latest meeting in this series, entitled A Path Forward: Vibrant Cities Today and Tomorrow, will be held in Greenville. The meeting will examine the financial challenges faced by N.C. cities and towns in the context of policy changes and population shifts at the state level. This meeting will run from 10 a.m. to noon and feature a presentation from League staff as well as a panel discussion featuring representatives from area cities. The meeting is free, and more information and online registration can be found here. We look forward to seeing you in Greenville. Contact: Scott Mooneyham