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League Bulletin

August 21, 2015

As legislators continue to discuss budget and tax issues, please continue to contact them regarding municipalities’ need for revenue flexibility and revenue options. This week, the House overwhelmingly rejected the Senate’s version of HB 117 NC Competes Act, which included the Senate’s plan to reallocate sales taxes, as well as business recruiting incentives favored by the House and Gov. Pat McCrory. It remains uncertain whether that bill will emerge from conference negotiations as a compromise measure with revenue, incentives and rural aide provisions, or whether those discussions will now shift solely to the ongoing budget negotiations.
What is clear is that legislators are now deciding major budgetary and finance issues that will affect the state for the next two years and potentially for decades to come. These discussions present an opportunity for the General Assembly to address the needs of cities and towns in the wake of revenue losses associated with the repeal of the business privilege license and other legislation that will affect property tax collections.

Since the legislative session began – at Town Hall Day, on Legislative Action Committee Lobby Days, and while utilizing other opportunities including legislative committee meetings -- League members and staff have made the case for revenue proposals to help municipalities. The League staff knows that many of you have renewed and intensified your communications with your legislators over the past week, discussing critical financial issues facing your city or town. We have heard stories about these contacts, their responses, and their receptivity to revenue options such as a city-only sales tax or a capped business registration fee. Please continue to contact League staff with information regarding your interactions with legislators on this topic, and please continue these contacts. If you have not spoken to your legislators about the need for revenue options for cities, please do so now. If you need more information regarding revenue flexibility proposals or assistance contacting legislators, please contact me. Contact: Rose Williams.

Following weeks of little to no action on the state budget, Gov. Pat McCrory announced in a release this week that House and Senate leaders had agreed on a total spending number for that budget, allowing negotiations on additional details to move forward. The total state budget for FY2015-16 will be approximately $21.735 billion, which TWC News reports is $265 million more than the Senate spent in its initial proposal and $415 million less than the House spent. Agreement should allow budget subcommittee chairs from each chamber to meet with each other to discuss the particulars of their subcommittee areas, but the state may still need an additional continuing resolution, as the current one is set to expire one week from today.

Meanwhile, there was less agreement on the Senate's version of HB 117 NC Competes Act. That bill, as approved by the Senate, contains a plan to shift local sales tax distributions to a 50% per capita-50% point of sale plan, while also including state incentive funding and other tax changes. The House, many of whose members have expressed opposition to the various sales tax reallocation plans, voted 111-2 not to concur with the Senate's version of HB 117. That bill will now go to a conference committee, with the negotiators from the House and Senate trying to strike a compromise. Just yesterday the House appointed its conferees, led by Rep. David Lewis as chairman. The Senate had not yet appointed conferees as of this morning. Contact: Chris Nida

After hearing input from city officials, members of the House Judiciary II Committee approved amendments Wednesday to significantly improve a proposal to revamp some aspects of the historic property approvals process. The committee then voted to advance the revised version of HB 799 Zoning/Changes to Hist. Preserv. Procedures for its third committee stop, the House Finance Committee. The League supported the most significant amendment to the bill, which eliminated a provision that would have allowed any party appealing a Board of Adjustment decision in historic district cases to force the local government into binding arbitration, preventing an appeal to Superior Court. This legal remedy was unprecedented in land use disputes, and coupled with an automatic award of attorney's fees created by this section bill (also now removed), would have incentivized litigation at the expense of municipal taxpayers. The League extends a special thanks to Rep. Stephen Ross for proposing the removal of this provision, as well as to Rep. Rick Glazier for successfully proposing two other clarifying amendments to the bill.

The version of HB 799 approved this week added new language to create a procedure for any historic district property owner to petition for removal from the district. The decision about whether or not to grant the petition would ultimately rest with a city council. Although they ultimately voted to include this provision, some committee members expressed concerns that it would result in "snaggletooth" or "Swiss cheese" historic districts that lacked a unified character, thereby defeating the purpose of a such districts.

The bill also creates a new piece of evidence, called a "renovation report," for historic property owners to present during disputes. The report would list applicable local historic guidelines and materials that a property owner could use during renovation, and it would become part of any litigation record as historic commissions would have to take it into account when considering certificates of appropriateness. The next House committee hearing for this bill has not been scheduled. Contact: Erin Wynia

After passing the Senate in late July, statewide regulations for ride-sharing companies such as Uber and Lyft advanced out of the House Finance Committee this week. SB 541 Regulate Transportation Network Companies next heads to the full House for consideration. Read more details about the bill in last week's LeagueLINC Bulletin. Contact: Sarah Collins.

Two studies approved by the House Local Government Committee this week as part of HB 430 County Omnibus Legislation would look at issues that could impact local property tax revenues. One section of the bill would re-establish the State Payment in Lieu of Taxes Study Commission, with the League able to recommend two members of the commission. The Commission is to study issues related to the state making a payment in lieu of taxes to local governments for state-owned land exempted from property tax. The commission was first established in 2013 but was never fully appointed and did not issue a report.

Another section of the bill would direct the Revenue Laws Study Committee to study issues related to the financial impact on local governments when a nonprofit purchases property that was previously taxable. A frequently cited example is the purchase of a doctor's office by a large nonprofit hospital, which makes the office exempt from property tax. HB 430 was originally placed on the House calendar this week, but it was removed before consideration and assigned to the House Rules Committee. Contact: Chris Nida

The Senate this week agreed to House changes in legislation that may move local governments closer to using drones for certain purposes. SB 446 Dealer Loans/Unmanned Aircraft/Brunswick Co. gives the state's chief information officer some authority and guidance in approving unmanned aircraft flights for purposes that include law enforcement and emergency management. The bill, which now goes to Gov. Pat McCrory to be signed into law, will not allow those flights immediately. That's because federal rules still prohibit them in most circumstances. It is anticipated that the federal government will set up rules that allow more widespread drone flights soon, and state governments around the country have been considering the issue in anticipation of that move. Meanwhile, privacy advocates continue raising questions about their use and some near-collisions with passenger and other air flights explain the caution on the federal level. You can learn about the FAA approving Duke Energy testing of drones here.
Former Raleigh Mayor Paul Coble has been hired as the new Legislative Services Officer. He replaces George Hall, who retired after more than three decades in the position. The position is responsible for the logistical, day-to-day operations of the Legislative Building, involving oversight of everything from bill drafting to the operations of the legislative cafeteria. Coble was Raleigh mayor from 1999 to 2001. The League congratulates him and wishes him well in his new role. Read more about his appointment here.