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League Bulletin

September 25, 2015

The longest legislative session in more than a decade is expected to conclude early next week. The Senate this week passed an adjournment resolution that calls for state lawmakers to wrap up their business on Tuesday. The House has not yet acted on the resolution, but that date appears to represent the goal line for ending the session. The resolution also would have legislators return for the so-called short session in 2016 earlier than in the past. The April 25 reconvening date is made more feasible by the decision to move North Carolina's primary elections from early May to mid-March (see below).

The General Assembly has traditionally reconvened in even-numbered years during the week after the May primary. Senate Rules Committee Chairman Tom Apodaca said that he hopes moving up the reconvening date will allow legislators to conclude next year's session more quickly. Read more about the pending adjournment and matters that legislators are still attempting to resolve here.

The Senate this week approved a $2 billion bond package that would go before voters in a combined primary this coming March. The Senate's version of HB 943 Connect NC Bond Act of 2015 was smaller than the version previously passed by the House and focused primarily on university, community college, and state parks projects, without any of the transportation funding included in the House's bond package. However, it does include more than $300 million in local water and sewer funding, which achieves a city Municipal Advocacy Goal of a state bond for local infrastructure.

The League thanks Senate leaders for recognizing the importance of local water and sewer systems to economic development and providing state funding to help address local needs in this area. The $309.5 million for local water and sewer will be split equally between the Drinking Water Reserve and the Wastewater Reserve, with $100 million being used for grants and the remainder being available in the form of low-interest loans. The bond also includes $3 million in matching grants for local parks that can be used to build or adapt facilities for use by children or veterans with physical and developmental disabilities. SB 605 now returns to the House for concurrence.

If the House opts not to concur, the bond would go to a conference committee to negotiate a compromise between the two chambers in the session's final days. The state budget passed last week contains a provision that HB 943 must become law by Jan. 1, 2016, or certain portions of the budget's tax changes will be repealed. Contact: Chris Nida

The House gave its initial approval to SB 605 Various Changes to the Revenue Laws this week, but not before removing a provision that would have provided cities the opportunity to levy a city-only sales tax within their jurisdictions by resolution. The language, which mirrored that filed earlier this session in HB 903 County Tax Flexibility/Municipal Rev Opts., was part of the version of SB 605 considered by the House Finance Committee. After objections by other lobbying groups and legislators on the committee, the provision was removed before the bill was approved.

Authority to levy a city-only sales tax has been a legislative goal of cities for multiple years, and the League has worked to try to secure this and other local revenue options to help provide city leaders other methods of funding local services besides raising homeowners' property tax rates. After losing $62 million in revenue annually last year through the elimination of privilege license tax authority, and seeing the local property tax base further restricted this year through exemptions for in-progress and unsold property, cities are faced with increasingly limited options for funding the services their citizens and businesses request. The League will continue to work with legislators on behalf of all of North Carolina's cities to provide further flexibility at the local level.

SB 605 needs one more vote of approval in the House before being returned to the Senate for concurrence. The bill consists primarily of technical changes requested by the Department of Revenue, though it does provide counties with additional local-option sales tax authority by referendum. Counties already have the authority to levy a 1/4-cent sales tax that stays entirely with the counties and is not shared with municipalities; SB 605 would provide most counties with the authority to levy another 1/4-cent sales tax, with the bill directing that the revenue raised go toward public education and containing no revenue sharing with municipalities. Contact: Chris Nida

The General Assembly this week gave final approval to a package of business recruiting incentives that had been the subject of debate throughout the legislative session. The House gave its final approval on Wednesday to the compromise plan, HB 117 NC Competes Act, that it had negotiated with the Senate, moving the bill to Gov. Pat McCrory to be signed into law.

The bill replenishes the state's primary business incentives program, the Jobs Development Investment Grant program, and increases the value of the grants that the state can commit annually from $15 million to $20 million. It would allow that threshold to be exceeded when a "high-yield" project like an automotive manufacturing plant receives a grant. The bill does include new restrictions and criteria intended to push more economic development to poorer, rural areas of the state. It adds a requirement for local matches in the 20 most prosperous counties.

The bill achieves a League Municipal Advocacy Goal of supporting legislation that provides "the funding for state-level incentive programs necessary to keep North Carolina competitive in its efforts to bring additional jobs and economic development to local communities." The League would like to thank all the legislators who worked on and supported this important piece of legislation critical to bringing jobs to the state, as well as Gov. Pat McCrory and his staff for their efforts to gain passage of the bill. Read media coverage about the bill here. Contact: Rose Williams

A final compromise reached this week on the session's main regulatory reform bill reflected changes made to address several League priorities. For the past several months, the League worked closely with lead negotiators in both chambers, and especially appreciates Senators Trudy Wade and John Alexander and Representatives Pat McElraft, Dean Arp, Skip Stam, and Chuck McGrady for their work to improve provisions of interest to cities in HB 765 Regulatory Reform Act of 2015.

Importantly, the bill called for studies of water/sewer/stormwater piping materials and electronics recycling programs rather than the original language opposed by the League (read previous coverage of these provisions here). In addition, the compromise bill remedied complications with a measure from HB 44 Local Government Regulatory Reform 2015 that required local governments to provide notice of construction projects. Instead, HB 765 would limit the notice requirement only to new projects, not maintenance and repairs of existing facilities such as water lines and roads.

Several sections of HB 765 sought to push forward with overhauling the state's various stormwater programs. Local governments implement both state and federal stormwater requirements, and for the 125-plus cities and towns that hold NPDES stormwater permits, a failure to implement these other programs results in legal penalties and liabilities. This regulatory reform bill would relax stormwater management laws in certain areas, including the state's highest-quality waters, intermittent streams, and isolated wetlands. It also extended a sunset date on an existing exclusion from stormwater laws for cluster mailboxes. Finally, the bill called for two interim stormwater studies that would examine coastal stormwater requirements and the state's overall stormwater regulatory scheme.

The bill must receive a final up-or-down concurrence vote by each chamber (scheduled for Monday night) to become law. It also contains studies of several other topics of interest to municipalities: environmental regulation of linear utility projects like water/sewer lines, coastal flood elevations, and potential drinking water contaminants. In addition, legislators advanced several provisions that would benefit cities, including an exemption from fiscal note requirements when an agency re-adopts a rule that would result in less regulation. Contact: Sarah Collins

The Senate began its deliberations this week of HB 318 Protect North Carolina Workers Act, a bill the House passed in April that would alter E-Verify requirements for local governments. Although the version of the bill considered by the Senate was mostly identical to that passed by the House, new provisions were included that would ban local governments from having "sanctuary cities" policies affecting immigrants.

The current version of the bill includes E-Verify language passed by the House that largely keeps intact the concessions that the League won last session regarding how the state's E-Verify law affects municipalities' purchase of goods. Last year's fix required municipalities to have assurances of contractor compliance for contracts only in the formal bidding range, eliminating paperwork for simple purchases. The House had dropped that language, but then included a League-requested solution that exempts contracts "solely for the purchase of goods, apparatus, supplies, materials, or equipment."

The new provisions related to "sanctuary cities" would prevent cities from adopting ordinances or policies that give limited safe harbor to undocumented immigrants. The prohibitions would include banning local rules that limit when police and sheriffs' deputies can enforce federal immigration law. You can read more about the Senate's discussion of that provision here. The Senate is scheduled to take its final vote on the bill on Monday.

A bill that the League had hoped would address a top legislative priority instead became a "strip-and-replace" vehicle for 911 law changes this week. HB 730 Next Generation 911 passed both chambers, with bill language dropped that would have prevented municipalities from being additionally charged for 911 center-related costs that already are funded through county property taxes. As initially passed by the House unanimously in April, HB 730 would have made clear that counties cannot charge municipalities for 911 service when municipal taxpayers already pay county property taxes to help fund that service. The League will continue working in the short-session to achieve this and other member priorities.

The new provisions were based off recommendations from the N.C. 911 Board and provide necessary accommodations to help the State prepare for "Next Generation 911," including the creation of a new fund that will assist in preparing for state-wide 911 service capable of incorporating modern communications methods. Contact: Sarah Collins

Cities would realize additional cost savings for small-scale construction projects under a provision sought by the League and added to HB 924 Highway Safety/Other Changes this week. The new language raises the dollar thresholds that limit when a municipality can use its own labor for a construction project. The update to the law would permit cities to proceed with projects using their own staff members as long as total costs -- including labor, supplies, design services, equipment, and materials -- remained under $500,000, or labor costs were under $200,000. Under current law, the total cost limit is set at $125,000 and labor costs at $50,000. 

In particular, this change will help cities to save money for utility ratepayers with water/sewer projects and taxpayers with transportation projects. The League appreciates Sen. Jerry Tillman for introducing this change and advancing it through the Senate. Before it can clear the General Assembly, the House must consider the bill in an up-or-down concurrence vote, now scheduled for Tuesday. Contact: Erin Wynia

The House has given final approval to legislation that clarifies the existing authority that cities and towns have to offer grants supporting the preservation of historic buildings. SB 472 Local Incentives for Historic Rehabilitation was approved by the House this week after sitting in the chamber's Rules Committee for almost five months following Senate passage.

House action on the bill follows approval of the state budget, which includes a provision restoring historic preservation tax credits. When cities use this clarified authority, the bill would require that the projects have a public hearing. The bill now goes to Gov. Pat McCrory to be signed into law. Read previous League coverage about the legislation here.

The last week has seen a number of moves by candidates for various state and municipal offices. In Charlotte, Mayor Dan Clodfelter announced that he would seek a primary runoff in the mayoral race after the leading vote-getter, former Mecklenburg County Commissioner Jennifer Roberts, failed to gain the necessary 40 percent of the vote to avoid a runoff call. That election will be held Oct. 6, which is when a number of other municipal elections under various formats will be held. Those races not settled on Oct. 6 will be decided on Nov. 3.

Meanwhile, Spring Lake Mayor Chris Rey is the latest Democrat to announce that he will seek his party's nomination to challenge incumbent U.S. Sen. Richard Burr. State Sen. Joel Ford of Charlotte, state Rep. Duane Hall of Raleigh, and former Rep. Deborah Ross of Raleigh -- all Democrats -- have said that they are considering entering the race, and Ross announced this week that she is resigning as counsel for regional transit agency GoTriangle. Former Superior Court Judge Paul Wright has announced that he will challenge Senator Burr in the Republican primary.

The week also saw state Sen. Josh Stein officially announce his candidacy for state Attorney General, a move that had been expected for some time.

After months of discussions, legislators have approved legislation that will move all primary races next year to March 15. The move to an earlier primary is an attempt to make North Carolina more influential in the selection of the party nominees for president. Legislators had considered moving up only the presidential primary and holding other primary races in early May, when all primaries had traditionally been held.

HB 373 Elections instead moves all the races to March 15, a move that came in response to concerns about the costs of holding primaries on separate dates. Both the House and Senate gave final approval to the bill on Thursday. The shift also would mean that the infrastructure bond referendum will take place on that date. The legislation awaits Gov. Pat McCrory's signature to become law.