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League Bulletin

June 15, 2018

WHAT HAPPENED: After completing an override of the governor's budget veto -- putting the spending plan, the biggest piece of the short session, into law -- the General Assembly went on a zipline of committee meetings and floor voting this week to finish up outstanding proposals (some of them more or less new) and move bills to the governor's desk. 

WHAT IT MEANS: The pace is breakneck and the nights are late on Jones Street. Lawmakers have focused on topics like the early voting schedule, land use regulation, water and sewer system development fees and more. The slate also included a technical corrections bill for changes to the new budget.

ON TAP: Things are shifting by the moment and reconfigured bills are carrying new language, including a regulatory reform proposal that was near the finish line at the time of this writing.

THE SKINNY: It's Friday and the General Assembly is firing on all cylinders -- still in progress by publication time here -- but there's enough left on the wishlist to push business into next week. Read on for more detailed coverage. 

The General Assembly is sending Gov. Roy Cooper legislation to sign in flurries. Bills that landed on the governor's desk this week included the Build NC Bond Act​, which would greenlight a new program of transportation bonds as reported in this Bull​etin in recent weeks. Governor Cooper is expected to sign that bill, which received support from the N.C. Department of Transportation. Lawmakers also sent him SB 616 HOPE Act, which provides new leverage over the opioid crisis. Additionally on Governor Cooper's desk is HB 379 Recodification Working Group, which would direct all units of local government to create a list of ordinances enforced as a criminal offense, with a description of that conduct, and submit the list to two legislative oversight committees by a tight timetable of Dec. 1. 
The legislature this week swiftly sent the governor HB 948 Building Code Regulatory Reform, a bill with which the League negotiated changes in the interest of cities and towns and which the June 1 League Bulletin covered. Also of significance to cities and towns, SB 630 Revise IVC Laws to Improve Behavioral Health moved to the governor. That bill would, among other things, revise the process for law enforcement officials that take custody of and transport individuals subject to an involuntary committment order to their first commitment examination and gives officers more flexibility. 
Additionally in the mix is SB 335 Budget Technical Corrections, which received final legislative approval on Friday. It amends the state's recently approved spending plan and includes two provisions of interest to cities. It would rewrite a budget provision that would have effectively prevented any light rail projects from moving forward in the state. Instead, any current projects, such as the Durham-Chapel Hill light rail project, must meet tight deadlines to secure alternative funding sources. The bill also removes a budget provision that had prevented cities from requiring schools to pay for transportation improvements as part of the land use approval process for those developments. That provision, however, is restored in HB 374 Regulatory Reform Act of 2018​. That bill would also place into law numerous provisions and add a new topic to an ongoing legislative water/sewer enterprise study, requiring an investigation into the authority for mandatory connections of certain subdivision-level water/sewer systems. ​Newly filed this week was SB 813 Asheville City Council Districts​, which would change the system of electing city council members in Asheville from an at-large system to a district-based system of representation with one at-large seat, beginning with the 2019 municipal elections. Lawmakers further cast final votes in favor of HB 351 Utilities/Rate Base/Fair Value Determination, which would authorize water and wastewater ​utilities to use a fair value determination when acquiring utilities owned by local governments.
​The House floor calendar at the time of this writing included what's poised to be a great win for cities and towns. That's in HB 573, which would set up a new process called "vacant building receivership" as a tool for local governments to address blight and clean up vacant properties. Last week's Bulletin lays out the steps. The bill from Rep. John Faircloth received unanimous backing in the Senate Commerce and Insurance Committee last week and this week cleared the full Senate. Cities and towns thank Rep. Faircloth for his time and attention on this issue.​
​Otherwise, the word on Jones Street is that lawmakers are putting most immediate attention on bills that need a stop at the governor's desk. While the legislature is in session, the governor has 10 days to take action on a bill -- by either signing it into law, vetoing it, or letting the 10-day window pass with no direct action, in which case the pending becomes law. The legislature, per the size of its majority, can override any of the governor's vetoes. When the legislature is out of session, that 10-day window shifts to 30 days, so it's likely the legislature will put emphasis on those bills needing the governor's action, in the interest of wrapping up the 2018 session. Not all bills need the governor's signature to become law, a local bill being an example. That said, such bills in waiting may receive legislative attention after they dispose of the bills that do require the governor's eyes.

Local governments, in concert with homebuilding interests, saw twin successes on water and sewer system development fees (SDFs) in legislative action this week. First, the League and these other groups promoted a consensus bill to final passage that makes beneficial updates to the comprehensive SDF law from last session. Updates include clarifying the authority to use SDF revenues to repay bonds, shortening the window of time for projects to be included in the financial analysis that informs the fee amount, and stating more precisely the timing for payment of the fees. Cities are especially grateful to SDF champion Sen. Paul Newton​ for leading this bill through the legislative process. With a sign-off this week by both chambers, the bill now heads to Gov. Roy Cooper for his signature.
Significantly and additionally, the League and these same interest groups also worked together behind the scenes this week to resolve a local dispute over SDFs. This dispute had given rise to a potential statutory change that would have upended the SDF deal reached last session and undermined cities’ and counties’ authority to charge the fees. The League is grateful to legislators in both chambers for accepting a non-legislative solution to this local dispute. The provisions of last year’s legislation are just now beginning to be implemented, and the League cautions cities to carefully review the new law’s many complicated provisions before implementing the fee. The law promotes transparency in both setting the SDF and spending proceeds from the fee, and all city actions should be taken in the spirit of utmost transparency. Please contact NCLM Legislative Counsel Erin Wynia with any questions related to this law.


A House bill unveiled late Thursday directly addresses a League policy goal to revise the tier method of measuring levels of economic distress. The League applauds Rep. Susan Martin for putting forward SB 563 Commerce to Assign County Distress Factors. The bill takes meaningful steps to focus the way the state measures economic distress by more effectively targeting symptoms, and it separates the measurements into two factors. The first factor evaluates a local government’s ability to provide necessary services, while the second factor assesses individuals’ ability to provide for themselves. Rather than implement a new system at once, the bill instead directs the N.C. Department of Commerce to rank counties by these two measurements and provide that data to legislators. It also directs all state agencies that rely on the current economic tier system for various funding programs to submit reports to the legislature that justify use of the current tier system in making funding and other programmatic decisions. Contact: Erin Wynia​

Bill language emerged in the House Finance Committee on Friday that would provide firefighters a new post-retirement benefit, but without any mechanism by which local governments could cover the costs. Called a "special separation allowance" and approved by the committee within a larger bill of provisions, it would be in addition to the firefighter's pension and would serve as a gap-filler from the time of retirement until the age of social security eligibility. It would be paid solely by the firefighter's last employer. While the League fully supports our firefighters and is grateful for their roles in the safety of our communities, the language in SB 153 presents a substantial unfunded mandate on local governments, which the League communicated to committee members. It would also create a disincentive for employers to hire late-career firefighters. The League believes the issue should be studied further as to avoid unfunded mandates and unintended consequences.​ The bill must still pass the full House and Senate before it can become law, and we appreciate lawmakers' consideration of these concerns. 

Two proposals to increase broadband infrastructure across the state made incremental progress in the House this week. In the first, members of a local government committee approved a local bill designed to give 14 counties the ability to construct their own broadband infrastructure. Despite a unanimous vote and praise from committee members — some of whom lamented that their own counties could not be added to the bill without violating the numerical limit for local bills — the bill failed to receive a hearing in the House Finance Committee. It very likely will not progress further in the legislative process. However, in the chamber’s second action on broadband this week, the House unanimously approved a broad bill addressing telemedicine policy. This bill included a study on formulating a plan to ensure that all North Carolina residents have sufficiently advanced internet connectivity to receive health care services via telemedicine. (Read more League reporting​ on this bill and the study.) The study focuses on many of the same broadband policy recommendations made by the League in its recent broadband infrastructure report. Senate action on this bill looks unlikely at this point in the session. Contact: Erin Wynia​

Over the League's objections, an omnibus land use bill advanced that significantly curtails the ability of local governments to hold developers accountable for making necessary infrastructure improvements related to development. The bill also makes wide-ranging changes that incentivize litigation at taxpayer expense. While cities appreciate senators removing one egregious provision related to performance guarantees, they still oppose the overall measure. To that end, the League, along with representatives from the N.C. Association of County Commissioners, gave public comments expressing grave concerns about the bill in Senate testimony this week. Despite this opposition, the bill proceeded through two Senate committees with near-unanimous support. While the bill had been calendared for a full Senate floor vote, as of the time of publication, it had been withdrawn from that calendar. Contact: Erin Wynia​

HB 284 25-year LEO Retirement Option​, a bill that would provide an additional retirement option for law enforcement officers, awaits the governor's signature after final legislative approval this week. Under the bill, law enforcement officers could retire after 25 years of service, regardless of age, but would receive a reduced retirement benefit. The proposal also allows the employer to offer and negotiate a separation buyout to an officer who chooses to retire prior to reaching eligibility for the special separation allowance. The League thanks Reps. Gregory Murphy, Allen McNeill, and the other sponsors for working with officers to find an additional retirement option that is revenue neutral for employers.
HB 284 was one of two proposals that emerged this biennium regarding the pension benefits that officers would receive if they retire after 25 years of service, instead of 30 years. SB 199 Law Enforcement Officer Retirement/25 Years was opposed by the League and received no consideration in the Senate. It would provide officers their full pension benefit after 25 years of service, which would have resulted in increased costs to the retirement system -- one that would be paid by employers through a significant increase in the contribution rate they pay to the pension system for officers. 
The retirement system that provides benefits to employees of cities, towns, counties and other entities of local government is the Local Governmental Employees' Retirement System (LGERS). It's funded by investment earnings, employee contributions, and employer contributions. Employers and employees make these contributions so that, upon an employee’s retirement from either system, he or she is able to receive a consistent, defined benefit based on salary and years of service. The fund's fiscal solvency is crucial to public support for a defined benefits system. The Department of State Treasurer is the agency that oversees the administration of North Carolina's pension systems, and many of their requested legislative proposals that related to reducing complexity and promoting the fiscal integrity of the pension systems passed this week and have been presented to the governor, including HB 1055 Retirement Complexity Reduction Act of 2018-AB and HB 1056 FAIR 2018-AB​. Contact: Sarah Collins​

A surprise deannexation bill introduced by Rep. Justin Burr on Wednesday would remove property from three Stanly County towns, including an area that encompasses half of the population of the Town of Badin. If passed, the measure would reduce the town’s finances by at least one-third and devastate its budget, likely leading to severe restrictions on municipal-level services as well as possible property tax increases on remaining residents. The procedure used to gain committee approval of the bill short-circuited the typical legislative procedure for annexation bills. The House initially scheduled this bill for a floor vote Thursday, but then removed the bill from the calendar. Meanwhile, in another example of a deannexation proposal not supported by the affected municipality, the Senate gave its full approval this week to a bill that would deannex property from the Village of Wesley Chapel. According to the village, the property owner desired a rezoning, but had not approached village leaders with the request before turning to bill sponsor Sen. Tommy Tucker​. This bill now awaits a hearing in the House Finance Committee. Contact: Erin Wynia

On the latest episode of Municipal Equation, the League's nationally recognized podcast about cities and towns in the face of change, we look at today's changing status of local media and city hall news coverage. While some markets are trucking along, we're also seeing extinct or shrunken newspapers, online outlets with no print edition and freshly grown media entities that may or may not be objective. What's all this mean for local government? Is a reliable, objective media purely about watchdog dynamics? What about when local government needs to get its message out? What happens when the local government IS the news source? It's too big a topic to solve on a podcast episode, but the experts we've corraled for this one give a lot of insight. Listen now. You can subscribe for free on iTunes​. Contact host/producer Ben Brown with your ideas for the show.