2007 legislative review and 2008 preview
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2007 Legislative Review and 2008 Preview. Dr. Lee Mandell. NC League of Municipalities. Introduction.

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2007 Legislative Review and 2008 Preview

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2007 legislative review and 2008 preview

2007 LegislativeReview and 2008 Preview

Dr. Lee Mandell

NC League of Municipalities


Introduction

Introduction

How much risk is there in the State budget because of the economic slowdown or possible recession? Have fundamental structural problems been resolved? Past budget “surpluses” have been due mostly to 1-time gains and conservative revenue projections and budget execution.

Check on bill language and status at:

  • www.ncleg.net

  • www.nclm.org/Legal/Bulletin/bulletin.html


Topics for discussion

Topics for Discussion

Bills that Passed in 2007

Bills Eligible for 2008

Other Legislative Issues

Tax Issues and Changes

Short Session Questions


Bills that passed in 2007

Bills that Passed in 2007


Taxes and money

Taxes and Money

H1473 - 2007 Appropriations Act (SL 2007-323)

Water and Sewer Grants - Appropriates an additional $100 million to the Rural Economic Development Center for water and wastewater grants to eligible local governments.

To be eligible for a planning grant, the unit must be located in a rural county (one with a population density of fewer than 250 people per square mile), be in an economically distressed area, and be applying for a multi-jurisdictional project involving two or more units of local government.

To be eligible for a supplemental grant, the unit must be located in a rural county and must set the household user fee in the area served by the project at an amount that meets or exceeds the high-unit-cost threshold.


Taxes and money1

Taxes and Money

The Clean Water Management Trust Fund was fully funded at $100 million in each fiscal year of the biennium.  The budget also allocates funds for certain named water resources development projects, and provides the state match for federal safe drinking water funds.

Appropriates $45 million in community development block grants for housing, economic development, and community revitalization. 

Establishes the NC Green Business Fund in the Department of Commerce to make grants to local governments, state agencies, nonprofits, and small businesses to encourage the expansion of small to medium size businesses to help grow a green economy in the state. 


Taxes and money2

Taxes and Money

Land for Tomorrow and Waterfront Access - Authorizes the issuance or incurrence of $120 million in special indebtedness to finance the cost of land acquisition for state parks and the Mountains to Sea Trail; land acquisition to conserve ecological diversity; and acquiring waterfront properties or developing facilities to provide public and commercial waterfront access.

Appropriates $4.7 million for street gang prevention grants.

VIPER Build Out Funds - Authorizes the State Highway Patrol to use up to $10 million in fiscal year 2007-08 to continue the build out of the Voice Interoperability Plan for Emergency Responders.


Taxes and money3

Taxes and Money

Water Quality Permit Fee - Increases state fees for wastewater permits by 20%, including NPDES permits, water quality certifications, stormwater permits, sewer system extension permits, nondischarge permits, and animal waste management system permits. Effective August 1, 2007.

Penalties for Air Pollution - Increases the maximum penalty for violation of air quality laws from $10,000 to $25,000 per day. Applies to offenses committed on or after October 1, 2007.

Erosion and Sedimentation Fee Increase - Provides for an application fee of $65 per acre of disturbed land for the Department of Environment and Natural Resources’ review of an erosion and sedimentation control plan. Applies to applications submitted on or after August 1, 2007.


Taxes and money4

Taxes and Money

Appropriates $21 million in each fiscal year for small construction projects and $15 million in each year for rural or small urban highway improvements and related transportation enhancements. 

Section 27.12 of the budget also states the intention to phase out the annual $172 million transfer to the General Fund from the Highway Trust Fund.  The Highway Trust Fund construction budget (loops and intra-state system) was lower than the previous years due to decreased revenue estimates for the Highway Trust Fund.


Taxes and money5

Taxes and Money

State Assume Medicaid/Sales Tax Swap

Provides that effective October 1, 2007, the state will bear 25% of the nonfederal share of the Medical Assistance Program costs and Medicare Part D clawback payments borne by the counties.

Increases to 50% effective July 1, 2008, and 100% effective July 1, 2009.

Effective October 1, 2008, the state will take over one quarter cent of the local option sales tax authorized by G.S. Chapter 105, Article 44, and effective October 1, 2009, the state will take over the remaining one-quarter cent of that local tax.


Taxes and money6

Taxes and Money

Provides for municipalities to be reimbursed for the loss of their share of these tax revenues, including growth. The first one-quarter cent will be replaced by a payment equal to 50% of the amount each municipality receives from the Article 40 local sales tax, and the second one-quarter cent will be replaced by a payment equal to 25% of the amount each municipality receives for the Article 39 local sales tax.


Taxes and money7

Taxes and Money

Funds for the hold harmless payments to municipalities comes from the counties’ share of sales tax revenues, but the Department of Revenue will make payments directly to municipalities.

There is no expiration date on the hold harmless payments.

Changes the distribution for the Article 42 local option sales tax from per capita to point of delivery distribution, which will affect the total amount of tax proceeds returned to each county area for distribution among the county and the municipalities in that county.


Taxes and money8

Taxes and Money

Authorizes counties to levy either a new one-quarter cent county sales and use tax or a 0.4 percent county land transfer tax, subject to voter approval.

Proceeds may be used for any lawful purpose.

Counties are not required to share proceeds with municipalities.


Taxes and money9

Taxes and Money

H714 - 2007 Budget Technical Corrections Act (SL 2007-345)

Partially corrects an error in the budget bill concerning the calculation of the municipal hold harmless amount for the impact of the change in distribution of the Article 42 local sales tax from a per capita basis to point of delivery.  We are working with General Assembly staff on a further technical correction for the short session that will fully hold cities and towns harmless.


Taxes and money10

Taxes and Money

S1196 - Modifications to Project Development Financing (SL 2007-395)

Expands the purposes for which local governments may use tax increment/project development financing to include school and community college facilities and certain parks and recreation facilities.

Clarifies that project development financing can be used for any service or facility that is authorized to be provided in a municipal service district under G.S. 160A-536, but no such service district need be created.

Deletes provision that required an increase of the project’s base valuation in response to county property revaluation.


Taxes and money11

Taxes and Money

S646 - Enact Waterfront Access Study Commission Recs (SL 2007-485)

Provides a special use value classification system for “working waterfront property” similar to the current agricultural use value system. For property tax purposes, working waterfront property is to be appraised at its present use and not at its true value.

If the property loses its qualification as a working waterfront, the current taxes are based on the true value of the property and the deferred taxes for the preceding three fiscal years become due with interest.

To obtain the working waterfront classification, the owner must apply to the assessor of the county in which the property is located.

Effective for taxes imposed for taxable years beginning on or after July 1, 2009.


Taxes and money12

Taxes and Money

H1688 - Amend Combined MV Registration and PT System (SL 2007-471)

Makes changes to the combined motor vehicle registration renewal and property tax collection system that is slated to go into effect by July 1, 2010.

Establishes a limited registration plate system so that motor vehicle dealers do not collect property tax at the point of sale. The Division of Motor Vehicles is to issue a limited registration plate upon receipt of an application for title and registration fees from a dealer.

The limited plate expires on the last day of the second month following the date of application for the limited registration, and the motor vehicle property tax is due when the limited registration plate expires.


Taxes and money13

Taxes and Money

Exempts vehicles registered under the International Registration Plan from the combined registration and property tax system.

Currently, 60% of the first month’s interest collected on unpaid motor vehicle taxes is transferred to the Combined Motor Vehicle and Registration Account in the Office of the State Treasurer, with the funds to be used to develop an integrated computer system for the combined assessment, billing and collection of property taxes and the issuance of registration plates. Provides that the interest generated by the funds in the account is also credited to the account.

Once the integrated computer system is operational, any funds remaining in the account are to be distributed to local governments on a pro rata basis determined by the amount paid into the account by each local government.


Taxes and money14

Taxes and Money

H1595 - Economic Development Modifications (SL 2007-515)

Authorizes cities and counties to acquire, construct, convey, or lease a building suitable for industrial or commercial use.

Makes technical corrections to provisions regarding how urban progress zones are drawn, making the designation of zones more consistent with local zoning for nonresidential tracts.

Makes clarifying changes to provisions regarding agrarian growth zones.


Taxes and money15

Taxes and Money

Requires a local economic development agreement between a private enterprise and a city or county to clearly state respective responsibilities under the contract and to contain provisions regarding remedies for a breach by the private enterprise.

Remedy provisions must include a “clawback,” or recapture of local funds appropriated or expended by the city or county if the private enterprise creates fewer jobs, makes a lower capital investment, or fails to maintain operations as specified in the agreement.


Taxes and money16

Taxes and Money

H1499 - Property Tax and PUV Changes (SL 2007-497)

Increases the benefit of the property tax homestead exclusion by raising the income eligibility limit from $18,000 to $25,000 and the amount excluded from taxation from $20,000 to $25,000. Effective for taxes imposed for taxable years beginning on or after July 1, 2008.

Creates a new “senior circuit breaker” property tax deferral system and allows eligible taxpayers who qualify for both the circuit breaker benefit and the property tax homestead exclusion to choose between them. The circuit breaker applies to North Carolina residents who have owned and occupied property located in the state as a permanent residence for at least five years and are either 65 years of age or older or totally and permanently disabled.


Taxes and money17

Taxes and Money

The property owner’s income for the preceding calendar year may not exceed 150% of the income eligibility limit under the property tax homestead exclusion.

An eligible owner who made less than the income eligibility limit may defer the portion of tax imposed on the permanent residence that exceeds 4% of the owner's income.

An eligible owner who made 100% to 150% of the income eligibility limit may defer the portion of tax that exceeds 5% of the owner's income.

Deferred taxes accrue interest and become a lien on the taxpayer’s real property.

The circuit breaker provisions are effective for taxes imposed for taxable years beginning on or after July 1, 2009.

Modifies the present‑use value requirements for agricultural land used as an aquatic species farm.


Taxes and money18

Taxes and Money

S1472 - Revised Distribution Of Scrap Tire Disposal Tax (SL 2007-153)

Changes the distribution of proceeds of the scrap tire disposal tax credited to the Solid Waste Management Trust Fund from 5% to 8% and credited to the Scrap Tire Disposal Account from 27% to 22%. Increases the amount distributed to counties from 68% to 70%. Effective July 1, 2007.


Taxes and money19

Taxes and Money

S540 - Revenue Laws & Motor Fuels Tax Technical Changes (SL 2007-527)

Cable Franchise Tax Revised Certification - Statutory language allows a 1-time “true up” of local revenues after the initial certification on 3/15/07, to correct any errors after local audits have been completed.

Deadline is April 1, 2008.


Taxes and money20

Taxes and Money

H1755 - Coordinate Statewide Enhanced 911 System (SL 2007-383)

Revises the system for charging telephone customers for 911 services and repeals existing provisions.

Standardizes all 911 monthly service charges, both wireline and wireless, at a combined level of 70 cents or less.

Consolidates administration of the charges under a single state board. 


Taxes and money21

Taxes and Money

Cities and counties who levied a monthly landline fee for primary public safety answering points (PSAPs) will be eligible to receive these statewide funds. The new system of landline fees will mirror that of the wireless fee on cell phones.

Any wireline fund balance that exists prior to the bill’s effective date would be transferred to the local government’s general fund, to be used for any lawful purpose.  

Holds each public safety answering point harmless at FY 2005-06 revenue levels.


Taxes and money22

Taxes and Money

H4 - Job Maintenance and Capital Development Fund (SL 2007-552)

Creates the Job Maintenance and Capital Development Fund as a restricted reserve in the Department of Commerce, with monies to be used for grants to encourage businesses to maintain high-paying jobs and make further capital investments in the state.

Requires the business to meet specified wage standards, provide health insurance, and be in compliance with occupational safety standards and environmental requirements.


Taxes and money23

Taxes and Money

The Department may enter into no more than five agreements, with the total aggregate cost of all agreements limited to $60 million.

Eligible businesses must invest at least $200 million in private funds in the project within a six-year period; employ at least 2,000 full-time employees and agree to maintain at least 2,000 full-time for the term of the grant agreement; be located in a development tier one area; and ensure that all newly hired employees are US citizens or have proper authorization to work.


Taxes and money24

Taxes and Money

H257 - Streamlined Sales Tax Changes (SL 2007-244)

Makes definitional changes in state law to comply with the national Streamlined Sales Tax Agreement.

Adds definitions of “bundled transaction” and “conditional service contract” and specifies how these transactions are to be taxed.

Modifies definition of “sales price” to clarify how third-party discounts, such as a manufacturer’s coupon, affect the sales price of an item.

Makes other conforming and technical changes in the sales tax laws, as recommended by the Department of Revenue. Effective October 1, 2007.


Taxes and money25

Taxes and Money

S1152 - Interest on Illegally Levied Exactions (SL 2007-371)

Provides that if a city or county is found to have illegally exacted a tax, fee, or monetary contribution for development (or a development permit) that is not specifically authorized by law, the city or county must return the tax, fee, or monetary contribution plus interest of 6% per annum.

Applies to actions filed on or after its effective date (August 2, 2007).


Opeb investments

OPEB Investments

S580 - State Treasurer/Local OPEB Investments (SL 2007-384)

Establishes the Local Government Other Post-Employment Benefits Fund in the Office of the State Treasurer under the management of the Treasurer.

Authorizes local governments, entities eligible to participate in the Local Governmental Employees’ Retirement System, public authorities, and school administrative units to contribute to the Fund.

The assets of the Fund are to be used only to provide other post-employment benefits to former employees (or beneficiaries of former employees) of participating entities.


Opeb investments1

OPEB Investments

Also authorizes local governments, entities eligible to participate in the LGERS, public authorities, and school administrative units to establish other irrevocable trusts to fund post-employment benefits.

The irrevocable trust must be established by resolution or ordinance of the entity's governing board.

Establishes the Local Government Law Enforcement Special Separation Allowance Fund in the Office of the State Treasurer under the management of the Treasurer.

Authorizes units of local government employing local law enforcement officers to contribute to the Fund.

The assets of the Fund are to be used only to provide law enforcement special separation allowance benefits to former local government employees.

Also authorizes local governments to establish other irrevocable trusts to fund special separation allowance benefits. The irrevocable trust must be established by resolution or ordinance of the unit’s governing board.


Environment

Environment

H1370 - Clean Water Grants (SL 2007-185)

Clarifies that a Clean Water Management Trust Fund planning or technical assistance grant for a regional wastewater collection system or regional wastewater treatment works is not subject to the high‑unit‑cost threshold.

Applies to grant applications received by the Clean Water Management Trust Fund on or after January 1, 2007.


Environment1

Environment

S1492 - Solid Waste Management Act of 2007 (SL 2007-550)

S6 - Amend Solid Waste Management Act of 2007 (SL 2007-543)

Enacts a $2 per-ton statewide “tipping tax.” The excise tax goes into effect July 1, 2008 and will be charged on municipal solid waste and construction and demolition debris that is deposited in a landfill in the state or trans-ferred at a transfer station for disposal outside the state.

Proceeds of the tax distributed as follows: 50% to the Inactive Hazardous Sites Cleanup Fund to help pay for assessment and remediation of pre-1983 landfills (including abandoned, unlined city or county dumps), 18.75% to cities on a per capita basis for solid waste management programs and services, 18.75% to counties on a per capita basis for solid waste management programs and services, and 12.5% to the Solid Waste Management Trust Fund for grants to local governments and state agencies.


Environment2

Environment

Allows those who applied for landfill permits before August 1, 2006, and whose applications would be denied under the new standards of the act, to request reimbursement of their reasonable costs in exchange for executing a covenant not to sue the state.

Proceeds of the tax will first be used to pay such costs, so tax revenue will not be available for distribution to local governments or remediation of abandoned landfills for an undetermined period of time after the tax goes into effect. Establishes fees for solid waste management facility permits, including new permits, amendments and modifications. Also establishes annual permit fees for such facilities.


Environment3

Environment

Increases the maximum daily civil penalty for violation of solid waste statutes to $15,000 (nonhazardous waste) and $32,500 (first violation, hazardous waste).

Allows a city to charge an availability fee for additional services provided by its disposal facility, to the extent that those services differ from services provided by a private contractor’s disposal facility in the same city.

Requires discarded computer equipment collectors to ensure that discarded computer equipment received is consolidated at central locations, properly stored, and either held for pickup by the manufacturer or delivered to a facility designated by the manufacturer (effective 1/ 1/2010).

Requires computer manufacturers to register with DENR and to develop a plan to reuse, take back, or recycle discarded computer equipment.


Environment4

Environment

H859 - Nutrient Offset Program Transition (SL 2007-438)

Establishes nutrient offset fees for the Neuse and Tar-Pamlico River Basins.

Requires the Department of Environment and Natural Resources to implement a plan to transition the NC Ecosystem Enhancement Program nutrient offset program from fee-based to one based on the actual costs of providing nutrient credits.

Effective September 1, 2007, with the fee schedule to expire September 1, 2009.


Environment5

Environment

H820 - Amend Interbasin Transfer Laws (SL 2007-518)

Directs the Environmental Review Commission to undertake a study of the broader issue of the state's water policy.

Establishes a new process for applying for interbasin transfer and for determining whether the transfer should be approved.  Some of the new aspects of the process are:

  • increased notice and public hearing requirements;

  • a full environmental impact statement and a public hearing on the EIS;

  • mediation to initiate settlement discussions among interested parties; and

  • preparation of a draft determination by the Environmental Management Commission with a public hearing on the draft


Environment6

Environment

In making its final determination on the petition for transfer, the EMC must consider the necessity and reasonableness of the amount of surface water proposed to be transferred and its proposed uses and find that there are no reasonable alternatives to the proposed transfer. 

The certificate of transfer must include a prohibition on resale of transferred water except under certain conditions.  

The legislation states the policy that the projected future needs of the receiving river basin are subordinate to those of the source river basin.


General government

General Government

H73 - Improve State Construction Process (SL 2007-446)

Raises the formal bid threshold for construction and repair projects from $300,000 to $500,000. Makes a number of other changes applicable to state construction projects.


General government1

General Government

S492 - Political Subdivisions/ Contracts Exemption

Exempts political subdivisions from the formal bidding laws regulating public contracts when purchasing from contracts established by the federal government.


General government2

General Government

S490 - Industrial Machinery – Building Code (SL 2007-529)

Clarifies that nothing in G.S. Chapter 143, Article 9 [building code] shall apply to the regulation of the design, construction, location, installation, or operation of industrial machinery.

Provides that “industrial machinery” means equipment and machinery used in a system of operations for the explicit purpose of producing a product.


General government3

General Government

S1546 - Clarify Public Access to Personnel Records (SL 2007-508)

Amends the statute pertaining to the privacy of municipal employee personnel records to provide that included within the information that is a matter of public record are the terms of any contract by which the employee is employed whether written or oral, past and current, to the extent that the city has the written contract or a record of the oral contract in its possession.

Further provides that the term “salary” as used in the applicable subsection includes pay, benefits, incentives, bonuses, and deferred and all other forms of compensation paid by the employing entity.


General government4

General Government

S1245 - Retainage Payments/ Construction Contracts (SL 2007-365)

Sets forth provisions regulating the amount of retainage allowed on public construction contracts.

Provides that no retainage shall be allowed on periodic or final payments made by the owner or prime contractor on public contracts totaling less than $100,000.

Retainage on projects equal to or greater than $100,000 may not be greater than 5%, and generally, once the project is 50% completed, no further retainage is allowed so long as the contractor continues to perform satisfactorily.

Specifies circumstances authorizing reinstatement of retainage, when retainage shall be released, and how suffi-cient funds may be retained to secure completion of work.


General government5

General Government

Provides for payment and reduction of retainage for those trades that have reached 100% completion of their contract by or before the project is 50% complete.

Provides that the retainage regulations shall not operate to prevent any agency or political subdivision of the state from complying with the requirements of a federal contract or grant when those requirements conflict with the act.

Specifies that the bid documents must state when federal preemption applies.

Provides that noting in the section shall prevent an owner from withholding payment to the contractor in addition to the amounts authorized for unsatisfactory job progress, defective construction not remedied, disputed work, or third-party claims filed or reasonable evidence that a third-party claim will be filed. Effective January 1, 2008.


General government6

General Government

S581 - Building Permit Reductions/ Rebates (SL 2007-381)

Authorizes a city to charge reduced building permit fees or provide partial rebates of building permit fees for buildings that are constructed or renovated using design principles that conform to specified certifications or ratings that recognize energy efficiency.

Provides same authority for counties.


General government7

General Government

S556 - Nonresidential Building Code (SL 2007-414)

Authorizes the governing body of a city to adopt and enforce ordinances relating to nonresidential buildings or structures that fail to meet minimum standards of maintenance, sanitation, and safety established by the governing body.

The minimum standards may only address conditions that are dangerous and injurious to public health, safety, and welfare and identify circumstances under which a public necessity exists for the repair, closing, or demolition of such buildings or structures.

Provides that such ordinances are applicable only within the corporate limits of the city.


General government8

General Government

Sets forth detailed procedures for investigation, complaint and hearing, issuing orders to repair or demolish, and enforcement that are generally similar to provisions for minimum housing codes.

In the case of boarded-up buildings that evidence abandonment of an intention to repair, governing bodies may take further action after two years.

Includes specific provisions regarding repair of vacant manufacturing facilities and vacant industrial warehouse facilities and increases the time frame for further action if such facilities are boarded-up to five years.

Specifies that the powers conferred are supplemental to others conferred by law.

Makes provisions applicable to counties.


General government9

General Government

S211 - An Act To Revise The Law Governing Electronic Signatures By Clarifying That Public Agencies May Use, As Well As Accept, Electronic Signatures (SL 2007-119)


General government10

General Government

H24 - Smoking in State Govt. Buildings/Prohibition(SL 2007-193)

Adds a new article to G.S. Chapter 130A prohibiting, with minor exceptions, smoking in buildings owned, leased or occupied by state government.

Authorizes local governments to restrict smoking in certain defined areas, including buildings owned, leased as lessor, or the area leased as lessee and occupied by local government, and any place on a public transportation vehicle owned or leased by local government and used by the public.

Provides that the only “grounds” on which smoking may be restricted are those of public health or social services departments. Effective January 1, 2008.


General government11

General Government

H1060 - Local Government Surplus Property Donations (SL 2007-430)

Adds a new section providing that a city may donate surplus, obsolete or unused personal property to another governmental unit within the United States, a sister city, or certain nonprofit organizations.

Requires posting of a public notice at least five days prior to the adoption of a resolution authorizing the donation.

Defines and specifies certain requirements regarding a “sister city” and provides that the authority in the section is in addition to any authority granted under any other provision of law.


Personnel

Personnel

H328 - Flexible Payment/Law Enforcement Separation (SL 2007-69)

Allows annual separation allowances for law enforcement officers to be paid beginning in the month the officer retires instead of on the last day of the month the officer retires.

Directs allowances to be paid in equal installments on the employer’s payroll frequency instead of in 12 equal installments on the last day of each month.


Planning and zoning

Planning and Zoning

S831 - Wireless Telecommunications Facilities (SL 2007-526)

Local governments may not require information relating to the business decisions of wireless companies, but may review public safety, land use or zoning issues addressed in its adopted regulations, including aesthetics, landscaping, land-use based location priorities, structural design, setbacks and fall zones. 

Local governments may also require applicants for new wireless facilities to evaluate the reasonable feasibility of collocating new antennas and equipment on an existing structure within the applicant's search ring. 


Planning and zoning1

Planning and Zoning

Creates a streamlined permit approval process for collocations of wireless devices.  For those collocations entitled to streamlined processing, local governments must inform applicants within 45 days of whether an application for a collocation is complete. 

Decisions on streamlined collocation applications must be issued within 45 days. 

Consultants' fees are to be incorporated into a permit or application fee. 

The act is effective December 1, 2007.


Planning and zoning2

Planning and Zoning

S670 - Use of Solar Collectors (SL 2007-279)

Provides that city ordinances, county ordinances, deed restrictions, covenants, and other similar agreements cannot prohibit nor have the effect of prohibiting the installation of solar collectors.  

The act permits regulating the location or screening of solar collectors, provided the ordinance does not have the effect of preventing the reasonable use of a solar collector for a detached single-family residence.  

Permits the prohibition of solar collectors in certain enumerated instances.


Transportation

Transportation

S1513 - County Financing/Powell Bill/City Election (SL 2007-428)

Allows a municipality that qualifies for Powell Bill funds the option to either accept the funds allocated to it for the repair, maintenance, construction, reconstruction, widening, or improving of the municipal streets, or to have some or all of the allocation reprogrammed for any Transportation Improvement Project currently on the approved project list within the municipality's limits or within the area of any metropolitan planning organization or rural planning organization.

Effective October 1, 2007.


Transportation1

Transportation

If the municipality chooses to have its allocation reprogrammed, the minimum amount that may be repro-grammed is that necessary to complete one full phase of the project selected by the municipality or an amount that, when added to the amount already programmed for the project, would permit the completion of at least one full phase.

Allows counties to participate in the cost of rights‑of‑way, construction, reconstruction, improvement, or maintenance of a road on the state highway system under agreement with the Department of Transportation.

Authorizes counties to acquire land by dedication and acceptance, purchase, or eminent domain and make improvements to portions of the state highway system lying within or outside the county limits utilizing local funds that have been authorized for that purpose.


Utilities

Utilities

H1395 - Electric Suppliers/ Electricities Assignment (SL 2007-419)

Provides that territorial disputes between electric cities and electric membership corporations will be resolved by the NC Utilities Commission.

To the extent that the parties have been unable to reach agreement by May 31, 2007, the Commission has jurisdiction to resolve all issues related to the negotiations and either party may petition for the exercise of that jurisdiction. 

The Commission is to consider public convenience and necessity in reaching its decision but may not consider rate differentials between the city and the electric membership corporation.


Utilities1

Utilities

S3 - Promote Renewable Energy/ Baseload Generation (SL 2007-397)

Requires electric cities and electric membership corporations by 2012 to supply at least 3% of their 2011 retail electric power sales through new renewable energy facilities or through savings by implementation of energy efficiency measures.  

The percentage increases to 6% of 2014 sales by 2015 and to 10% of 2017 sales for the year 2018 and thereafter. 

The electric public utilities must meet a similar schedule but they have an additional requirement to supply at least 12.5% of 2020 sales by the year 2021 and thereafter. 

Allow public utilities to recover costs for new nuclear facilities until they are producing energy.


Studies

Studies

H36 - Hazardous Materials Studies (SL 2007-107)

H1005 - Transportation Studies (SL 2007-551)

H1473 - GIS Study (SL 2007-323)

H1473 - Study Gang Activity (SL 2007-323)

H1499 - Property Tax and PUV Studies (SL 2007-497)

S1272 - Transportation Infrastructure Study (SL 2007-524)

S1492 - Solid Waste Studies (SL 2007-550)


Bills eligible for 2008

Bills Eligible for 2008


Short session deadlines

Short Session Deadlines

Certified non-controversial local bills must be submitted to Legislative Bill Drafting by May 21, 2008, and introduced in the House or filed for introduction in the Senate by May 28, 2008.

Certified non-controversial means that no public hearing will be required or requested, and the entire legislative delegation representing the local government has approved the local bill for introduction.


Taxes and money26

Taxes and Money

S1068 - e‑NC Internet Connectivity/Peg Channel

Provides for grants for Community Media Centers as well as PEG channels.

Increases the maximum grant for a PEG channel from $25k to $50k and sets the maximum CMC grant at $250k.

Eliminates the requirement that grants be used only for capital expenditures and instead provides that no more than 50% of a grant may be used for operating costs.

Authorizes broadband connectivity competitive incentive grants, with priority for providers that would serve counties with less access to high-speed Internet.

Makes changes to percentages for distribution of sales taxes on telecom and video programming to provide an additional $5M for PEG channel operating support.

Removes the sunset on the e-NC Authority.


Taxes and money27

Taxes and Money

S1309 - Fairness in PT Values/Lien on Mobile Home

Creates a special class of property under the state constitution which is to be appraised as provided.  If the real property is subject to restriction on the income eligibility of tenants or on rents that may be charged under a state or federal program that provides tax incentives, grants, interest subsidies or loans, the effect of rent restrictions and income restrictions on the true value of the property must be taken into account for purposes of valuation. 

In addition, the value of the tax incentives, grants, interest subsidies, or loans provided to the property must be ignored for purposes of valuation. 

The bill also provides for reappraisals every four years rather than every eight.


Taxes and money28

Taxes and Money

H1889 - Present Use Value System Modifications

Would classify wildlife conservation land as property that must be appraised at present use value.


Taxes and money29

Taxes and Money

S373 - Street Construction/ Developer Responsibility

Passed the Senate as a local bill that applies only to Onslow County and the municipalities therein, but it is likely to be made statewide if it advances in the short session. 

As written the bill would limit the ability of municipalities to plan for and seek appropriate developer participation in the costs of transportation improvements associated with new developments. 

A DOT-backed bill to require municipalities to take responsibility for more streets from the state.


Taxes and money30

Taxes and Money

S1180 - No Monetary Exaction for Development

Would prohibit a city or county from imposing or exacting a tax, fee, or monetary contribution for development, a development permit, or a development agreement, unless specifically authorized by law.

This bill would have an extremely detrimental effect on municipal planning departments that use fees to offset the costs of their regulatory programs. 

The League's core principles state that municipal grants of authority should be broadly construed to include supplemental powers reasonably necessary to carry out the municipal functions, as the courts have recognized.  


Taxes and money31

Taxes and Money

H734 - Urban Area Revitalization Made Uniform

Would remove the population threshold of 150,000 to qualify for the urban revitalization projects and special financing authorities in municipal service districts. 


Taxes and money32

Taxes and Money

S91 - Endangered Manufacturing and Jobs Act

Would provide a variety of tax exemptions and eligibility for economic development grants for textile and furniture manufacturing, regardless of the economic tier of the county where the manufacturer is located. 


Taxes and money33

Taxes and Money

H1740 - School Board Fiscal Accountability Act

Would give school boards independent taxing authority using the property tax and everything else that comes with it.

In its current form, the bill would reduce municipal sales tax revenues in counties that use the ad valorem method of distribution.


General government12

General Government

S1507 - Housing Conditions/Inspections

Would amend the minimum housing and building inspection statutes to eliminate authority for periodic inspection programs and require probable cause before inspecting. 

The League opposed the bill as a serious erosion of local governments' ability to investigate and address dangerous structures, dwellings unfit for human habitation, and abandoned buildings would limit local authority to inspect housing and address unsafe conditions.


Personnel1

Personnel

H1583 - Restore Contract Rights to State/Local

Would eliminate the current statutory prohibition on collective bargaining by public employee organizations that has been in place since 1959.

S963 - City Firefighters/Overtime Pay

An attempt to enact into state law the provisions of the Federal Fair Labor Standards Act that apply to full-time paid firefighters.  We believe the legislation is unnecessary and will only cause confusion.


Personnel2

Personnel

S1271 - Firefighter/EMS Payroll Deductions

Requires employers to make payroll deductions for union dues upon the request of the employee for any firefighter/emergency medical services personnel organization that represents a majority of eligible employees in the employer's department; any law enforcement organization that has at least 2,000 members statewide; and any employee organization or association that has at least 2,000 members statewide, at least 500 of whom are law enforcement officers. 


Planning and zoning3

Planning and Zoning

S212 - Land-Use Permit Appeals

Would apply to appeals of quasi-judicial decisions when the appeal is to the superior court and in the nature of certiorari. 

The bill would set forth rules and procedures regarding standing, intervention, the record on appeal, the scope of review, evidence, and other matters. 

It would also specify that quasi-judicial decisions on whether to approve or deny subdivision plats are subject to these rules and procedures.


Gangs

Gangs

H274 - Street Gang Prevention Act

It defines criminal street gang and criminal gang activity in the state criminal statutes for the first time, and provides increased punishments for crimes committed as a gang member. 

It makes it a felony to be a gang leader or to threaten a person for leaving a gang, and creates a felony offense of discharging a firearm from within an enclosure (drive-by shooting). 

The bill allows seizure of property used in or derived from criminal street gang activity.  It would not apply to juveniles under the age of 16.


Other legislative issues

Other Legislative Issues


Taxes and money34

Taxes and Money

HB 1587 - Local Government Fair Competition Act

The bill would have sharply limited local governments' ability to create their own telecommunications networks and would prevent them from partnering with private telecom providers to establish broadband service. 

The bill was heavily backed by the telecommunications industry and is intended to discourage competition from local government in the provision of communications services. 

Local governments should have the ability to provide citizens with access to high-speed broadband service for the future economic development of our state.  Rural and distressed urban areas should not be left behind.


Retirement

Retirement

The budget bill does not set the retirement cost of living adjustment for the Local Governmental Employees' Retirement System.  The General Assembly left that decision up to the LGERS Board of Trustees as provided in state law.  The Trustees set the COLA for existing retirees at 2.2%.


House select committee studies

House Select Committee Studies

Two studies initiated by the Speaker:

  • Annexation (interim report in 2008, final in 2009)

  • Tort Reform – should local governments still enjoy immunity?


Electric franchise

Electric Franchise

Determine A Different Method For Distributing The Franchise Tax On Electric Power Companies In Order To Simplify The Distribution, Reduce The Administrative Burden Associated With The Distribution, And Prevent Errors In The Distribution.


Tax issues and changes

Tax Issues and Changes


Incentives

Incentives

H487 - Exemption for Baler Twine

H1259 - Historic Rehabilitation Tax Credit

H1473 - Enhance Tax Credit for Research & Development

H1473 - Expand Sales Tax Refund for Aircraft Manufacturers

H1473 - Amend Sales Tax Holiday

H1473 - Cap Variable Motor Fuels Tax Rate

H1473 - Sales Tax Refund for Research Supplies

H1473 - Data Center Sales Tax Exemption

H1473 - Tax Incentive for Railroad Intermodal Facility

H1473 - Firefighter/Rescue Squad Tax Deduction

H1598 - Extend Qualified Business Venture Tax Credit

S1240 - Sales Tax Exemption for Baked Goods

S1272 - Motor Fuel Tax Exemption for Biodiesel


State budget picture

State Budget Picture

Cautious nature of the 2007-08 and 2008-09 consensus revenue estimates should help in meeting 2008-09 and future year spending needs.

Current reserves are the highest in more than a decade.

  • Rainy-day fund amounts to almost $800 million

  • Repairs/renovations funding of $145 million can be pulled back in emergencies

  • Capital appropriations can be reverted if necessary

  • Governor can force agencies to revert more authorized spending


State budget picture1

State Budget Picture

Projected $645 million of budget resources needed to fund:

  • Raises for teacher and state employees ($100 million for each 1%)

  • $100-125 million in incentive compensation for outstanding teachers

  • Additional dollars needed for state health plan and higher education enrollment increases above tentative budget amounts

  • New public school initiatives


State revenues

State Revenues

State sales tax growth, excluding tax law changes:

05-0606-0707-08 9.2% 4.5% 2.9%

Baseline State General Fund revenue growth and budget forecasts:

05-0606-0707-0808-0912.1% 9.2% 4.0% 4.6%

First quarter General Fund revenue came in about $70-$75 million ahead of a $4.5 billion target for the period.


State budget picture2

State Budget Picture

Long-term state budget issues

  • Medicaid Swap

  • Transportation Funding

  • Leandro Litigation

  • Lottery

  • Tax Reform


State and local fiscal modernization commission

State and Local Fiscal Modernization Commission

Top Preliminary Recommendations:

  • Broaden the sales tax base to include services in a revenue neutral manner and lower the sales tax rate;

  • Reduce the top marginal individual income tax rate to a rate that is competitive with other SE states;

  • Broaden the individual income tax base to federal adjusted gross income with minimal deductions and exemptions;

  • Give local governments greater flexibility with respect to how they raise revenue to fund the services they provide. A menu of taxes and fees should be available to LGs and should be consistent across the state. The menu should include but not be limited to: options for sales taxes, real estate and transfer fees, impact fees and vehicle use fees;


State and local fiscal modernization commission1

State and Local Fiscal Modernization Commission

  • Reduce the corporate income tax rate to a rate that is competitive with other SE states;

  • Broaden the corporate income tax base by enacting a combined reporting regime for related entities;

  • N.C. should eliminate differential rates in the sales tax as well as sales tax exemptions (including the food exemption); and

  • Reduce N.C.’s reliance on the individual income tax.


2007 legislative review and 2008 preview

Old Sales Tax Sequence


New sales tax sequence

New Sales Tax Sequence

In 2006, the General Assembly eliminated the semi-monthly sales tax filing system for taxpayers who pay at least $10,000 a month in State and local sales taxes and replaced it with a prepayment system.  The change was effective October 1, 2007 and affected the payments made during October and November.  

During the month of October 2007, taxpayers that had been paying on a semimonthly basis, did not make the payment for October 1-15 sales that would have been due on October 25th.  In November they did not make the payment for October 16-31 sales that would have been due on November 10th. Instead, a payment for all October sales was included with the November 20th return. 


New sales tax sequence1

New Sales Tax Sequence

This return also included a prepayment for November sales, which was equal to at least sixty-five percent (65%) of any of the following: (1) the amount of tax due for October 2007, (2) the amount of tax due for November 2006 or (3) the average monthly amount of tax due during 2006. 

The December 20th return will include a payment for the difference between the November 20th prepayment and the actual tax due for November sales, as well as a prepayment for tax on December sales.  As a result, the December 15th local sales tax distribution of October collections should be lower than in prior years and the January 15th distribution of November collections should be higher.


2007 legislative review and 2008 preview

New Sales Tax Sequence


Dor h2047 issues

DoR H2047 Issues

Based on figures provided by the Department of Revenue, the 3rd quarter video programming distribution should be around $17.6 million, of which $500,000 will be for PEG channel support. 

This compares to distributions of $13.7 million for the 1st quarter and $19.1 million for the second quarter, of which a combined $2 million was for PEG support. 

The video programming revenues have differed by quarter for two reasons.  First, the January collections were for December sales, when the full 7% sales tax rate for cable was not yet in effect, so the 1st quarter collections did not actually reflect three months of full tax.   


Dor h2047 issues1

DoR H2047 Issues

In addition, the Department of Revenue indicates that January-March payments for some cable companies registered in the 2nd quarter rather than the 1st quarter, lowering the 1st quarter figures and raising the 2nd quarter figures. 

Preliminary collections figures for October and November suggest that the 3rd quarter level represents the ongoing level of collections from video programming.  This level is close to the level of collections local governments received from their own franchise taxes. 

The 4th quarter will be also somewhat affected by new sales tax sequence introduction.


Dor h2047 issues2

DoR H2047 Issues

Number of PEG channels certified far greater than expected (295)

Definitional issues with PEG channels for the PEG Channel Certification Form: “shared” PEG channels, PEG channels with “shared” programming, and “qualifying” PEG channels

NCLM and NCACC participating in discussions about improvements


Short session questions

Short Session Questions


Short session questions1

Short Session Questions

Will there be a budget shortfall because of a slowing economy?

Because it is an election year, will there be any new State taxes or “loophole” closings to balance the budget?

Does a menu of local revenue options have a chance?

Will the local government sales tax exemption be back on the table?


Short session questions2

Short Session Questions

Will there be any debate about the trade-off between incentives for economic development and the cost to state and local governments?

Will changes in the annexation statutes be a major initiative?

Will legislation on retirement benefits for special classes of employees come up?


Short session questions3

Short Session Questions

Will the “right to work” law come under attack, either in NC or Congress?

Will municipal broadband networks be curtailed?

Will local government roles and responsibilities (especially streets and roads) be challenged?

Will property tax reform issues (increased values) impact NC local governments?

Will lawsuits about TIF, incentives, and tax-free bonds succeed?


2007 legislative review and 2008 preview

Any Questions?


2007 legislative review and 2008 preview

Thank You!


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