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League Bulletin

July 2, 2015

Legislators this week reached agreement on a continuing resolution that will allow the state to continue operating in the absence of a budget agreement. The "CR" provides for state spending through Aug. 14 and funds school enrollment growth. It did leave some uncertainty for the funding of programs like driver's education. The continuing resolution was necessary because legislators have not yet agreed upon a state budget and plan to take next week off before returning on July 13 to begin negotiations in earnest.

Meanwhile, the House Finance Committee met again this week to discuss the finance provisions of the Senate budget. Once again, sales tax reallocation was a major point of discussion. Hickory City Manager Mick Berry addressed the committee and noted that while Hickory's permanent residential population is 40,300, its daytime population is estimated at 100,000, and sales taxes are a primary way of supporting that influx of population. Conover Mayor Pro Tem Kyle Hayman and manager Donald Duncan also spoke before the committee and described the economic development investments that city has made to encourage business activity that generates sales tax revenues, revenues which would be distributed around the state primarily on the basis of population under the Senate plan.

The League thanks all of our city officials for taking the time to contact their legislators regarding this issue, and again thanks House Finance chairmen Bill Brawley and Jason Saine for their thorough consideration of this plan. The League will continue to keep you updated on this issue as budget negotiations progress. Contact: Chris Nida

The Senate Commerce Committee on Tuesday gave its approval to HB 168 Exempt Builders' Inventory, which exempts homebuilders from paying property tax on certain improvements to residential and commercial property for a period of time or until the property is sold. The version of HB 168 that passed the House applied only to residential property, but the version taken up by the Senate committee also includes improvements to commercial property like water and sewer lines and roads, for a period of up to five years, until a building permit is issued, or the property is sold. Estimates by legislative staff produced when the bill was considered on the House side indicated that exemption for both residential and commercial property could cost local governments upwards of $65 million annually in property tax revenue. 

League Government Affairs Director Rose Vaughn Williams expressed cities' concerns about the bill to the committee, noting that local police and fire crews will still respond to a property even before it is fully developed and sold, and that local governments must make investments necessary to accommodate development before that development is complete. Williams also noted that cities' options for generating needed revenue are dwindling, and providing additional property tax exemptions further erodes the only locally-controlled source of city revenue. The N.C. Association of County Commissioners joined the League in expressing concerns about the bill. Supporters of HB 168, though, said that it was needed to spur a homebuilding industry still recovering from the depths of the recession and the additional investment generated by the bill would in fact produce more revenue for cities and counties. Further discussion of the fiscal impact of the Senate's version of the bill is expected when HB 168 is next considered by the Senate Finance Committee. Contact: Chris Nida

Municipal and county officials from around the state joined Gov. Pat McCrory this week as he made another push for legislators to act on his $2.85 billion bond plan to fund road and infrastructure improvements. Local government officials took part in a news conference at the governor's mansion on Tuesday, and later pressed the case for a bond referendum in meetings with legislators. Governor McCrory noted that there is still time to put the issue before voters in November. The governor's plan would support League Municipal Advocacy Goals calling for additional investments for transportation and other infrastructure. Legislative leaders have expressed some interest in a bond proposal to support state building needs, but appear less enthusiastic about a large transportation borrowing plan. Read media coverage about the latest push for the bonds here and here.

A Senate budget provision that would allow citizen-led initiatives to eliminate municipal service districts is receiving new public scrutiny after receiving little when approved by that chamber. The provision (Sec. 15.16B, page 325 of the Senate version of the budget) would allow a referendum by district residents to eliminate the special taxation districts after 15 percent of those residents sign a petition requesting such an election. The NC Insider state government news service first reported on the provision on Wednesday.

Stories from The Insider noted League concerns that these districts are often created at the behest of businesses and may have few residents living there. The publication pointed out that the provision would give no say to those business owners in downtowns and other commercial districts who do not live inside the districts. Rep. James Langdon raised similar concerns as the House Appropriations Subcommittee on Agriculture and Natural and Economic Resources discussed the provision. The League would like to thank Representative Langdon for raising the issue with his fellow House budget writers. League staff will continue to watch this issue and keep you informed about its status as budget neogtiations continue. Contact: Rose Williams

Gov. Pat McCrory officially signed what had been SB 284 Infrastructure Assessments/Extend Sunset into law this week, making it Session Law 2015-121. The bill extends through July 1, 2020, the authority for a financing tool cities and counties can use -- at the request of property owners -- to help facilitate the building of development-related infrastructure. The authority has already been successfully utilized by the Town of Hillsborough and is being considered for use in several other communities around the state. See here for more on this law. Thank you to Sen. Fletcher Hartsell for sponsoring this bill and to legislators across the state for their support of this legislation. Contact: Chris Nida

The Senate Transportation Committee handed down a rare unfavorable committee report for HB 127 DOT Condemnation Changes yesterday, assuring that the bill may not advance further this legislative biennium. In speaking against the bill in committee discussion, both Senators Ralph Hise and Tommy Tucker noted that the city attorneys in their local municipalities had contacted them in opposition to the bill. The League thanks these legislators for their remarks in support of cities and towns, as well as the League members who educated committee members on this measure.

The bill would incentivize litigation in quick-take condemnation cases, and when speaking in previous committee hearings, the League argued that the proposal would enhance plaintiff's attorney fees at the expense of taxpayers. In addition, the measure would have likely delayed public infrastructure projects and driven up borrowing costs during prolonged legal hearings. The N.C. Department of Transportation (NCDOT) and local governments use the quick-take condemnation procedure to more quickly bring online public infrastructure such as roads, water and sewer, and airport projects, saving project costs.

The bill sponsor, Rep. Skip Stam, pushed a variation of this measure twice in the last legislative biennium. Each time, the Senate failed to take up the bill. For more background, read this LeagueLINC Bulletin article. Contact: Erin Wynia

A revised bill that would require new standards of conduct for building inspectors has been given final approval by the House and now goes to Gov. Pat McCrory to be signed into law. HB 255 Building Code Reg Reform was only approved after substantial changes were made involving League input. League staff sought and got changes in both the House and Senate, the last being language clarifying the definition of "full inspection" made in the Senate. The House, when first considering the bill back in April, dropped problematic provisions that could have threatened public safety and created building code compliance issues. 

The final bill continues to subject building inspectors to new, vague job performance standards that could affect the ability of local governments to attract qualified individuals to become building inspectors. Nonetheless, the final version included substantial improvements over the bill as initially filed. The League would like to thank the bill sponsor, Rep. Mark Brody, for listening to municipalities' concerns, and other House and Senate members, who were open to the suggested improvements. Contact: Erin Wynia

After heavy debate, the Senate voted today to approve HB 765 Regulatory Reform Act of 2015, its large omnibus legislative package intended to reform business, state and local government, and environmental regulations. Sen. Trudy Wade presented new language to the bill in a committee Monday, stating the provisions were necessary measures to trim needless regulation and aid business. The bill now moves to the House for its consideration.

A pressing concern for cities and towns in this latest regulatory reform effort is that senators resurrected the piping preference provision originally seen in SB 397 Open & Fair Competition/Water & Wastewater. A few weeks earlier, the League successfully sought the removal of that same provision from the Senate’s local government regulatory reform package, HB 44 Local Government Regulatory Reform 2015. This provision, further amended in today's Senate floor debate, would prohibit public entities from using their judgment in the selection of piping materials for water, wastewater, or stormwater projects. The League opposes this provision and will continue working with a coalition of stakeholders to prevent its passage in the House.

Outside debate over specific provisions in the omnibus bill, HB 765, generated substantial media coverage this week when committee members requested input on the bill from the N.C. Department of Environment and Natural Resources (DENR). While legislative requests for information from affected state agencies are routine, these legislators noted that DENR had actively refused to take a position on this bill and previous omnibus legislation before now. In response, DENR drafted a memo to legislators that detailed numerous concerns with the proposal, which resulted in many amendments offered on the Senate floor to lessen the effects of the bill. Those amendments included one supported by League members to remove provisions that would have limited municipalities’ ability to have a stormwater program that exceeded the State stormwater program. League members supported the removal of this provision because many local programs differ from the State’s program to comply with federally-required mandates. In addition, League members support giving municipalities the flexibility to shape stormwater regulations in a way that make sense based on local conditions. Read more about the complete regulatory reform package and DENR debate from WRAL and The News and Observer of Raleigh.

In other actions related to regulatory reform, the Senate announced its conferees to negotiate agreement on HB 44. As in the House, the Senate conferees for this bill pull from the chamber's budget leaders. Contact: Sarah Collins

The Senate on Thursday approved legislation repealing zoning protest petitions, meaning the bill will now go back to the House for consideration of Senate changes. The Senate voted in favor of HB 201 Zoning Changes/Citizen Input after dropping a House provision that would have still given adjacent property owners 30 days' notice of proposed rezoning. The legislation would repeal current law that requires supermajority votes by municipal govering boards when either 20 percent of nearby property owners or 5 percent of adjacent property owners protest the proposed zoning change.  

On Wednesday, the Senate rejected an amendment from Sen. Mike Woodard that would have preserved the protest petition process, but changed thresholds in the current law. The amendment would have lowered the supermajority numbers, while increasing the property owners threshold required for a protest petition to be valid. The amendment was similar to  language adopted last fall by a League Legislative Action Committee exploring alternatives to the elimination of protest petitions. The League would like to thank Senator Woodard for his support of that approach.

The House and Senate this week approved legislation that would restructure city councils in Greensboro and Trinity, but only after the House initially rejected versions of the bill. After voting 53-50 against a revised version of HB 263 City Elections/Trinity and Greensboro, which would create eight council districts in Greensboro, House members invoked a procedural maneuver to reverse that vote and then passed the plan 57-46. A day earlier, the House overwhelmingly rejected another version of the bill. A number of House members spoke against the legislation, including Rep. John Blust of Greensboro, who had committed to voting for the bill only if it included a local referendum. "I really do think we're going to have to come to grips with what should be the role of the legislature in these local affairs," Representative Blust said. As a local bill, the legislation becomes law without the governor's signature and would affect the upcoming municipal elections in those cities. Even with the latest changes, Greensboro Mayor Nancy Vaughan and other officials there continue to oppose the plan.
The House on Thursday agreed with Senate changes to legislation that alters how gravel-covered surfaces are defined for the purposes stormwater laws. The changes in HB 634 Stormwater/Built-Upon Area Clarification exempt certain types of gravel-covered surfaces from being considered impervious surfaces, meaning they would no longer be included in built-upon area calculations. The League opposed the bill and supported earlier language that resulted from study by the Environmental Management Commission because the changes could affect local stormwater plans and compliance with federal regulations. The bill now goes to Gov. Pat McCrory for his signature. Read earlier League coverage here.

The Senate Judiciary I Committee approved a measure today to provide flexibility to operators of 911 centers, or public safety answering points (PSAPs). HB 512 Amend/Clarify Back-Up PSAP Requirements would allow the 911 center to have made substantial progress on developing back-up 911 call-taking capability by July 1, 2016, preventing funding from being withheld for not having that back-up capability earlier. Read more here.

In addition, the League was successful in amending the bill to include language addressing a League top legislative priority to prevent municipalities from being additionally charged for county services which are funded through county property taxes. The language, similar to that originally seen in HB 730 County Provide 911 Dispatch Services, would make clear that counties cannot charge municipalities for 911 service when municipal taxpayers already pay county property taxes to help fund that service. The League extends it sincere thanks to Senator Louis Pate for offering this amendment. Contact: Sarah Collins

Statewide regulations for ride-sharing companies such as Uber and Lyft advanced out of the Senate Transportation Committee yesterday. Among other things, SB 541 Regulate Transportation Network Companies would place insurance and driver background check requirements on ride-sharing companies, and prevent airports from precluding ride-sharing companies from operating there. An Uber representative told WRAL the company was supportive of the legislation. While the bill prevents local governments from imposing additional requirements on the companies, the League has worked with city officials and legislative staff for months on this legislation to achieve a statewide regulation system that will benefit cities and their residents. The bill now heads to the Senate Finance Committee. Contact: Sarah Collins