HomeMy WebLinkAboutAgenda - 08-30-2007-4ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: August 30, 2007
Action Agenda
Item Noe 4
SUBJECT: Update on Legislative/General Assembly Actions
DEPARTMENT: County Manager, Budget, Tax PUBLIC HEARING: (Y/N) No
Assessor
ATTACHMENTS: INFORMATION CONTACTS:
As listed in "Background" Laura Blackmon, (919) 245-2300
Donna Coffey, (919) 245-2151
Greg Wilder, (919) 245-2314
John Smith, (919) 245-2101
PURPOSE: To discuss various .legislative actions that occurred during the 2007 session of the
North Carolina General Assembly.
BACKGROUND:
Members of the NC General Assembly adjourned their 2007 legislative. session on August 2,
2007. Just prior to adjournment, legislators adopted the 2007-09 State Biennium Budget. The
accompanying materials provide reference materials regarding the impacts.
~: Orange County's 2007 Legislative Priorities
o Reference: Attachment 4-1 -Orange County 2007 Legislative Goals Results
Summary
~ House Bill 1499 -Homestead Exemption and Senior Circuit Breaker
o Reference: Attachment 4-2 -Changes to Homestead Exemption Program
o Reference: Attachment 4-3 - "Senior Circuit Breaker Property Tax
Benefit" (affecting fiscal year 2009-70)
~- Impacts on County Services/Functions and Schools
o Reference: Attachment 4-4 -August 21, 2007 E Mail from Rebecca
Troutman, NC Association of County Commissioners
o Reference: Attachment 4-5 -August 24, 2007 E Mail from Lee Mandell, NC
League of Municipalities
-~= Medicaid Relief/Sales Tax Swap
o Reference: Attachment 4-6 -Medicaid Relief/Sales Tax Swap StaffAnalysis
o Reference: Attachment 4-7 -Excerpts from General Assembly Budget (pages
256 through 262 -State Assume Medicaid Responsibilities)
~~= Local Revenue Options
o Reference: Attachment 4-8 -Excerpts from General Assembly Budget (pages
262 through 264 -Local Option County Taxes)
o Reference: Attachment 4-9 - North Carolina Association of County
Commissioners, Estimated Additional County Revenue Authority
FINANCIAL. IMPACT: County staff has analyzed, to the extent that time would allow since
August 2, how the new State budget will affect County and School operations. The results of
analysis-to-date are included in the background information above.
RECOMMENDATION(S): The Manager recommends that the boards discuss the issues noted
and provide direction to staff, as appropriate.
~-~-~c~+~1~rn~.vt.-~. -~-- - l
Ol~l®TGE C®ITl~TTY 2007 LEGISLATIVE G®A,I~S
,S'UL7',S" S~T1V~19~.AI~I'
(Results as provided by appr•vpr'iate County staff ar•e noted as
"AUGUST 30, 2007 UPDATE" irz bold italic below each r'tern.)
LEGISLATIVE ISSUES
TOI' PRIORITIES
Medicaid Relief - Seelc pei7nanent Medicaid relief for cotulties to cover the full
cost of Medicaid expenses to be paid by state government.
AUGUST 30, 2007 UPDATE - Drlr'irzg the 2007 session of the General
Asserzzbly, legislators approved a three year plan fvllereby the State will assrlrrte
corlrzty Medicaid expenses. As the State assrsrzzes t/zese ~vperzses, it will, irr tur•rz,
talre aver a portion of the local optivrr sales tax r'everzues.
Fur'tller• sta ff' explarzatiorl arzd Board discussion ar•e scliedzlled for' the August
30, 2007 Board ivor•Ic session.
School Construction -Support legislation to provide state assistance to local
goverrunents to meet school constriction needs caused by increased enrollment
and mandated reductions in class size through a statewide referendum on a bond
issue and/or through authority for cotmties to raise additional revenues to meet
school facility needs.
AUGUST 30, 2007 UPDATE - While Legislator's did trot approve cr. statewide
school construction bvrzd rflrriug the most r'ecerzt legislati~~e session., the General
Assembly did grant collrlties the choice, slrbject t0 voter approval, of err.actirag a
.4`% land tt'arrsfer tax or arz additional % cent sales tax. Use of the rzew
r•everzlces rlre riot r•estr•icted.
I'urtlzer staff' explanation and Board disclrssiorl are scheduled foa• the Alrgust
30, 2007 BOllr'rl worlf SG'S5i0)l.
Revenue Options for Local Government -Support legislation that authorizes a variety
of revenue options for local govermnents to fund local government services. An
overarching principle is that aazy local government revenue source that is presently
2
available to one or more local governments in the state should be available to all local
govermnents uniformly tluoughout the state. All local govenunents should, on a
reasonable basis, have the authority to levy local option sales taxes, apply impact fees
and/or taxes, utilize real estate transfer fees and/or taxes, etc.
Orange County specifically notes its support for the ability of all local governments to
apply impact fees and/or taxes and to implement real estate transfer fees and/or taxes.
AUGUST 30, 2007 UPDATE - Tlr.e General A.ssernbly granted counties the
choice, subject to voter approval, Of G'11aL'ting a .4% land transfer ttrx vr' an.
additional % cent sales tax. Use of the rzerv revenues ar'e not restricted:
Frrr"tiler stuff ~rplarzativrz arld Board discussion. are scheduled for" the tirlglrst
30, 2007 BoarrC wor'lr. sessior2.
Orange County also expresses support for the authority to institute Court Facility Fees to
allow cotuities to collect additional facilities fees to help fiend capital, operational and
other needs associated with ever-increasing judicial activities.
AUGUST 30, 2007 UPDATE -Altlrorrgtl a dumber of court costs were increased by the
Legislature effective August 1, 2007, r2o increase to tree facilities fee arnourats occurred.
Clerlti of'Cozzrt Janres Stanford and Coun.tJ~ staff ar'e not uwar'e of'any legislationZ
lrltr'OdrrCG'd tills S6SSi0rt COrlCG'r"I?.rrlg COlll2ty arltllOl'lty fOl' facilities fees to srlpport
,judicial activities.
Mental Health -Support Mental Health Reform and seek legislation that assures local
capacity to serve the needs of citizens. The state must support local govenunent, both
financially and statutorily, to equip itself with adequate tools for crisis intervention and
appropriate housing for the mentally ill to allow their integration into local communities.
AUGUST 30, 2007 UPDATE -Hoarse .Bill 1473, signed by Governor Easley on July
31, 2007, is expected to leave a sigrlificarat irrapact for' the public rnerltal health systeral.
The Legislative Oversight Cornmittee,for Mental Health R..eforrrz cvrztirzrred t0 be ver3~
invested irz stabilizing the systerzz and while rrzental Health fvill not receive a large
irz frrsiorz o f rletiv rrtorr.ey as lrapperzed last year, there was a sharp focus on the role atad
firrzction of the local n2anagenlerrt entity (LM. E),arzd critical services err the local
conln2lrrlities . Area merztaX health authorities, such as ®PC, have not yet received arz
crllocatiorr Zetter: for" SFY07-OS as of this date, nor leas the Division O f'Merztal Health
had time tv finalize expectations related to other' aspects of the legislation. YVithvrrt
these details, it is impossible to predict fire impact Of the state budget at the local level,
particularly given the "realignrnerxt" of mental Irealtlz, rlevetoprrterltal disabilitJ~ arzd
substance abuse ser't~ice dollar's that is expected tv occur'. Corcrzty and OPC staff will,
3
of coarr,se, beep tlae Bour'd of Carrzrnissioners informed as we stove frcrtlaer irlt0 the
fiscal yeur•.
OTHER PRIORITIES
Employment Anti-Discrimination Legislation (Statewide) or Local Ordinance
Enabling Legislation -Support legislation creating a statewide employment anti-
discrimination law and providing for local government enforcement through appropriate
mechanisms; or, in the alternative, support legislation allowing local governments to
enact ordinances prohibiting employment discrimination.
AUGUST 30, 2007 UP1~ATE - Orte hill; House Bill G13, was filed to provr'de COr[)atieS
crrtd rriutaicipulities flee rurtlcority to adopt ordinances to establish or' reestablish.
pt•ogr•arzzs to pro/zibit discri»zirtatiora era errzploynzerzt or otlzer•rvise regadate trade or
labor. It was referred to the Hoarse Contrrzittee orz Corrarrterce, SnaalC Bzrsiness arzd
Erztr•epr•ertercrslaip arzd no firrtlrer• action occarrrerl.
Sales Tax Exemption -Support legislation to exempt counties, cities, school boards,
community colleges, and the Orange Water & Sewer Authority from payment of state
acid local sales taxes on purchases within North Carolina. The legislation should contain
a provision permitting the state to repay the last refund over amulti-year period to
minimize state budget impacts: Alternatively, Orange County supports legislation to
fii11y restore public schools' access to sales tax refimds.
AUGUST 30, 2007 UPDATE -Staff is raot aware of arty actions datring the 2007 North.
Carolina. General Assembly session addressing sales tax eYenrptions or school refirrads.
North Carolina Housing Trust Fund -Support legislation providing appropriations by
the General Assembly authorizing recurring fiends for the North Carolina Housing Trust
Fund to provide new home ownership opportunities and affordable rental homes for those
qualified tinder the North Carolina Housing Trust Fund, while looking to enhance federal
fiu~ding opporhuuties where appropriate.
AUGUST 30, 2007 UPDATE -The Hoarsirzg Trnst I'urzd actzrally received less firradirtg
than the preniazcs year, but did receive arz. increase era its recurt•irzg appropr'iatiorz,for
the fast tirrte since securing tlae initial $3 rrailliora nzarcy years ago. Tlie decreased
rattmber is dice to less rrzortey appropriated to tlr.e Hoarsing 400lnitiutive. The specific
numbers are: NC Hoarsirzg Trzrst. Farrarl - $SNI (Recrct•r•irtg) increase for total of $8NI
(Reczar•rirag) & $7.SM (Nora-Recacr'r•irag) far•.Hoacsing 400 har'tiative -TOTAL - $1 S.SI~I
(Soarrce: NC Hoatsing Coalition)
4
Land for Tomorrow -Support legislative appropriations and/or bond funding to protect
the state's land, water, and special places, before they are irreversibly lost, by increasing
funding to the state's existing conservation trust funds which provide grants for land and
water conservation projects in every coLUZty.
A UGIIST 30, 2007 UPDATE - The state budget for' 2007-08 irzclzcdes $128 rtzillion over
two years for land arld water conservation. -less than. the reyzrested $1 billion over five
year's, but enoug{r to denzorlstrate corizrnitrrzertt arzd to help meet inlrrtediate deeds. T/zis
includes:
^ $'100 rrcillion in COPs (Certificates of Participation) to be distribozted to the
Natzor•al Heritage Trust Furr.d arzd tl:e Par•Ics arld Recreation Trzcst Fzzrld (to
be paid back. tin°ocogli those same ficrzds)
^ $20 n1r'llion in COPS to Divisiort o, f Marine Fr'slzeries for water f °orzt access
projects (to be paid bacJc tllrougli file Parks and Recz°eatiorz Trarst Fzrrtd)
^ $8 million of appropriations to file Agricultural Development arzd Far'nzlarzcl
Preservation Trzcst Fzcrzcl
Two of the fiorzds Xisted above are regularly used to match local dollars. .Tlie Parks arzd
IZecr'eatiorz Trust Fund (PARTF) fz-nded several pcrr•Iclarul and park facility projects irz
Orange CoccrttJ~, lrlcllldlrlg Little River Parlr. and recently Nor'tlterrz Par•It The
Agriczoltzcral Developrrzerzt arzd Farnalarzd preservation Trzcst Furr.d.is a recor:figzcratiotz
and replenislznzerzt of the state's progr•arrz for far•rrtlar?d preservation, rzow ittclzcdirzg
cagricocltcoral ecorxonr.ic developrrcerrt as well. It. has been largely urzfzcrcded since 2002
(tlze County's initial agricultural corzservatiorz easerrzerzt. with Victor Walters was
fronded by orze of file last major grants from this program in 2001). Tice C`ourztJ~ also
benefits,fr'orrz,finzdirzg to the Natural Heritage Trust Ftcrtd, fvlticlt is lirrtited to state
agencies (which sometimes fccrld local priorities of state significance).
Open Burning/Burning Permits -Support amending the statutes (G.S. 113-60.31)
related to open btulung to remove the open burning prohibition exemption that is
currently available during periods of hazardous forest fire conditions, during drought
periods, or during air pollution episodes; or, in the alternative, granting local
governments the authority to prohibit open blueing without the State's declaration of a
hazardous condition since local fire authorities are best suited to assess local conditions
and determine the best courses of action related to btu~ning activities.
AUGUST 30, 2007 UPDATE -One bill, .House .Sill 1653, was filed to allow corcrzties
by orclirlarzce to adopt a corcrzty~vide ban or1 open brcrrzirzg arzd pr•oh.ibit file isszcarzce of
liurnirzg per'nr.its in corcnties having such an ordircarlce. It was referred to the House
Judiciary .ZI Committee arzd rco further action vccrcrrecf
Solid Waste Services -Oppose any legislation to further weaken the authority and/or
ability of local governments to operate and administer Solid Waste services, including
opposition to legislation similar to Senate Bi11951 (2006) and any other legislation that
would limit local governments' opportunities in their solid waste service delivery to
reduce costs, improve the quality of service, and/or meet local waste reduction goals.
AUGUST 30, ZD07 UPDATE -Senate Bill 1492 -The Solid Waste Managerrzen.t Act of
2DD7 -ryas aclopted itc t/ae roar:ing Jzorrrs of'tlze 2007 legislative session after rrtzccla.
diSCraSSlOlr arad debate. The bill ryas a result of a 2006 short session Bill that created a
naOrator'LraraZ ort landfill per•uzittirtg, dr'rected various studies, and required that rterv
legislation be considered pr'ior• to tlae expiration of the rrzorator•iurn orz Augzast 1, 2DD7.
Tlae gG'rtG'r'aZ LarcdG'r'Standl/Zg of S-1492's original purpose runs to deter waste front
entering Nortlt Carolina Porn other states, to increase the State role in local landfill
Sitilag dG'CLSLOIZS, to prevent ZargL nZG'ga-laladfi"ZIS, t0 trzsrrre that arry ~r[t-Of-state' W(rStL'
that erzteretl.lVor'tlz. Carolina complied with arzy landfill bans/prolaibitivrzs, crud to
strengthen. fzraancial resporzsibiliry regrrirerraerzts for landfill permit holders.
Tlae legislation that runs adopted runs mach more corrzpr'eliensive rand wide-r•rrrzging
tlaarz expected 1t will potentially (cave sigraific~crct irrcpact orr local government
provision of waste nacaraagetrzerztseroices, irzclzcding increasing costs. The Department
of Erc vironrrzerat arad 1Vatzcr•al Resources (DENR), the Association of CourltJ~
Corrzrraissioraer•s 1VCACC), tlae League of Municipalities (NCLM), grad other
pr•gfessiorzcrl and irulrrstry organizations are presently trying to interpret this
complicated bill and evaluate its inrplicativr:s and corzsegzrerzces. It is likely tli.at tlae
law will r'egrzir•e corrective rer~isioras in tlae 2008 legislative session.
As specifically regards BOCCpriorities, it will becvrne rrzucla more dif~carlt to site arzd
per'rrzit solid waste facilities due to sigraifzccrrztly increased teclarr.ical regrriremerzts. Tltis
will add cost, tirrre, anal comple:~iry to an already stringent siting/permitting process.
Tlae bill also requires the Ern~ir'orzmeratal Review Cvnrntission to rer~ierv issues related
to tlae frarcchisirzg of solid waste rnaraagerrterztfncilities by units of local goverrunent,
with the aclcnoivletlged irctentiora of expanding the role of tlxe State ira. solid waste
fraraclaisiug at tli.e expense of local gover•rtrrzeratprerogntives.
TILL' bill lrrZpOSes a $2.00 per' tort tax t0 Ilotlc trrrrrriclpal SOZId rVClste arzd L'Orastr'ractl0rl. arzd
demolition tivaste, effective Jrrly .l, 2008. Tlae cost to Orange Cozrrzty landfill users, if
added to the existing upping fee, will be approximately $148,D00 arzd will be paid by
schools, TrlstltlatiOlaS, goveruntertts, businesses, etc. Tlae bill also imposes a series nf'
permitting, fees that will add corzsider'able costs to existing pending applications, rzerv
applicatr'oras, and artrtzaal fees for sirrzply rnaiutainirzg eristirag permits. Over the nest
frve years, staff estimates that Orange Cotrrzry will pay appr'oxirnately $110, D00 as a
r•eszclt of tlce rzerv fees.
Tlrer•e rraay be negative impacts orz recycling arul waste redractiora statewide as a result
of the rzerv fees. Horvever•, Orange County's progrrarzzs will not be impacted to arty
significant degree due pr'imar'ily to the Corarcry's alternative rrzetlzod of fiartding
recycling services (3-R Fee) arzd the rrrzivccvering cornmitrnerat to waste redzcctiorz
locally. Elservlzere, tivhL'i°e larz~'fill fees fzrrid recycling, increased costs of disposal
operations rrzay come at tlae expense of waste r•edzzctiorr programs. Ira Orange Corarzry,
6
the irnpacts to Solid 1%Vaste Marzagerrzerr.t ~t~ill likely be a potential orae tirtze $3.00
increase irz tipping fees to fund tlae raew cvsts/taa/fees arld a rzzucli trlore corzzplex arr.d
derriarzdiug set of solid -vaste facilirJ~ rzrles arad protocols.
Firurfly, it is expected that a rrzajor• cvnsequeuce of dais larv is a ficrtlzer dirtzirr.ishirag of
available farzdfill capacity?, a futcrre shortage of irz-state Landfill capacity rnaliirag
transfer of waste more experasi~~e, forager Izazrliug of wastes, arad a discouragetrterat of
partraer•irag/ralultiple jurisdictional local gv~~ernmerat fircilities.
Homestead Exemption Revision -Support revision of the Homestead Exemption
provisions of the Machiliery Act to 1) provide greater opporttiulities for low-income
seniors to remain in their homes and not be displaced due to property tax burdens; 2)
eliminate the discriminatory features of the exemption provisions relating to couples; and
3) address the ineffectiveness of the exemption provisions in communities where
property vahies increase at substantial rates over short periods of time.
AUGUST 30, 2007 UPDATE - Tfie General tlsserrcbly r•atifr`ed House Bill 1499
during dais past session. Staff Izas arzalyc:ed the irrzpacts of tlae bill vrz
laorraeowraer•s arad playa to s/tare tlae results of the analysis during tlae August 30,
2007 Board fvork session.
FUNDING RE(,~UESTS
Construction and Start-up Funding for a Model Regional Shared Use Value-Added
Processing Center
Orange County has worked diligently to forge a regional public-private partnership for a
potential Model Regional Shared Use Value-Added Processing Center. A Center would
enable farmers from the region to meet local market demand for year-round locally-
grownproducts. A Center would also be a model for the state as a whole. Four counties
(Alamance, Chatham, Durham, and Orange) and two private businesses (Weaver Street
Market and Whole Foods) have partnered together and secured the necessary fiulds for a
feasibility study, and the partners are moving forward with commissioning that stLtdy.
The study will be condl~cted by the Center for Assessment and Research Analyses at
Mars Hill College, with lead researcher Smithson Mills, who has expertise in value-added
facilities. The sttiidy report, which will take four to six months to complete, will include
information on potential site needs for a 1Vlodel Center, potential product lines, marketing
opportunities, and numerous other factors.
For the 2007 General Assembly session, Orange County, on behalf of its five partners,
requests $1.5 million for the construction of a Model Regional Shared Use Value-Added
Processing Center and an additional $500,000 for the Center's start-up costs.
A.IIGZIST 30, 2007 UPDATE - Tlaree bills were filed, one ire the Senate and tivo in flee
House, wlz.iclz. would have provided fruzdirzg for a Regional Valise Added Agricultural
Processing Center^ irz. or^ near Orange Coeerety. Senate Bill 512 arecl House Bill 1100
proposed $1 million irz funding. House Till 413 proposed $2.5 million irz funding. All
three bills were referred to Apps^opriatiore Connrzittees and were not approved by the
House or^ Senate.
Funding for Establishment of a Model Community Historical Documents
Preservation Effort/Orange County Heritage Center
Discussions during the last several years regarding future library planning for Orange
County have inchtded a proposal for the establishment of an Orange County Heritage
Center to preserve, catalog, and house historical dociunents that otherwise would be lost
due to age/deterioration or misplacement. Orange County requests $112,000 in matching
fiords from the General Assembly to establish an Orange County Heritage Center. The
Heritage Center would serve as a model for fiiture duplication by other local
governments/entities across the state for the preservation of historical documents. A11 of
the fiinding would be used for the establishment of and equipment for the Heritage Center
and for the actual preservation/digitizing/archiving/cataloging/etc. of historical materials.
AUGUST 30, 2007 UPDATE -Staff is not aware Of arty acti0/rS deerlreg the 2007 Nor^tIz
Carolina General Assembly session to provide nzatcli.ing frzrzds, for• this initiative.
Transportation Funding For Orange County
There are two related transportation fiuiding issues the Orange County Board of
Commissioners would like to bring to the attention of ot~r legislative delegation.
Right now, Orange County is getting relatively little in funding for transportation,
compared with other counties in this region and in the state. Therefore, it would be
helpfiil if the coiulty could receive some assistance from ot~r legislative delegation in
obtaining snore money for Orange County transportation needs.
AUGUST 30, 2007 UPDATE -The General Assembly did not approve arey legislation
Heat would increase funding for trarzspor^tatiorz pr^ojects or change the egraitJ~ for^nzula
used bar IVCDOT to allocate fizredirzg to NCD®T.Divisiorzs/Counties. The
Appropriations Act of 2007 corztirzeres the tr^arzsfer of 1 S% (approximately) of State
Highway Trust Frrrzd to the General Fernd, rvleicle redzcces feereding for transportation.
House Bill 65, which remained ire House Committee on Finance, rvozcld leave capped
the variable wholesale component of the motor fuel tax r^ate at its crzrrent rate. Most of
the pr^oceeds frorrz the motor' firels tax are allocated to the Highway Fund aced the
Higlz~vay .Trust Frrrzd: Tleis legislation had flee potential to r^esult irz less rrzorzey for^
those transportation funding sources.
1VCDO.T allocates firrzrlin~; to seven regions, each rrzade zsp of t-vo NE'DOT High rvay
I~ivisioras, based on arz. "eyrrity"forrnulrc. The equity formula allocates fiends
accordingly:
® SO% of totaX, finads are allocated to each region based ors the percentage o f the
total State population that resides ira eraclz r•egiora;
® 25% of total fzrnds are allocated according to the rznrrzber of rrziles that 7xave not
lieera corrrpleted irz irztr•astate systerrz projects as a percentage of total intrastate
system (tlze intrastate system is a 3,600-mile road network that is being
"upgraded" to a rnrrlti-lrute raerivor•li); arzd
® 25% of total frsrzds rrre allocated per erlrurl share to each region.
Because of tlae regional fizradirag arzcC costs of projects, the allocations per division and
coznat~~ will vary frorrz year to year depertding ore wlaerz rrzrrjor projects are pr•ogranzmed
for each. 1VCT~OT atterrapts to even ozst the funding over tune; liotivever, that does not
tslivays prove successful..
Ftuidin~ for Altenlative Modes of Transportation
Compared to highways, t17e funding for alternative modes of transportation is quite
restricted. If the legislature could provide additional funding for alternative modes of
transportation, including bicycle and pedestrian projects, transit projects, and park and
ride lots, it would help Orange County in its quest to enhance these alternative modes. A
more robust funding stream for alternative modes could be a long teen issue, but one we
would like to our legislators to pursue.
AUGUST 30, 2007 UPDATE - NC'D®T fur:ding corrzes,fr•onz three sources: tlae State
flightivay Frsnd, tlr.e State Hightivay Trust Furrd and .Federal Airl. For FY2008,
transportation firrzds are ~2% State Hig/r.way Fztrzds, 31 % State Higltraay Trrest Furr.ds
arzd 27% Federal Airl. Eacla of those furadirzg sozrr•ces•fir.rzd differ•err.t programs, so it
frill take legislation to change Iaofv each firrzding source is used. .Feder°al Aid firrzds
allocate 3% of total fiends to Congestion. Mitigation arzd Air ®ualitj~ projects arzd YO%
ofSrrrface Trarzspor•tation firrzds (Surface Transportation frsrzds are 30% gftotal
Federal Aid firrzds) to trarzspor•tatiorz errlr.rarzcenrerzts that fisrzd transit, bicycle grad
pedestrian programs, laradscrrpirzg grad direct attributable frsrading to rrzetropolitarz areas
/iavirzg 200,000 or greater poprrlatiort. T/ze ,~`tate Hig/away TrsrstFrsnrl, minus a
srrpplerrzent, for Secondary Road corzstr•zsctiorz and State (transpor•tatiorz)Rid to
Municipalities, cars be used only for urban loops and tlae Intrastate Program. The
Higlzrvay Frsrzd is zsserl for rrzain.teraarrce of'tlze road rtetworlc grad for capital arzd
operations for•_ ferries, pzzblic transit, rail arzd the Depar•tnaerzt of Motor• Vehicles.
Potential Ftuzdin for Specific Projects
Although we have not requested funding for any specific prof ects, we would also
appreciate any guidaazce oitr legislators could give us concerning how to pursue such a
request and what sorts of projects might receive favorable attention.
We would be particularly interested in funding alternative modes of transportation.
We look forward to any advice our legislators could give us on these two issues.
-~--~,, ~--a
Changes to the Homestead Exemption Program
On August 2, 2007, the General Assembly ratified House Bill 1499. The bullet points below
highlight changes to the Homestead Exemption Program.
~ Effective January 1, 2008, the following changes will take place with regard to the
current Homestead Exemption program
o Taxpayer Income Thresholds -Currently qualification for Homestead
Exemption is based on Adjusted Gross Income (AGI is defined as income
(including wages, interest, capital gains, income from retirement accounts,
alimony paid to you) adjusted downward by specific deductions (including
contributions to deductible retirement accounts, alimony paid by you); but
not including standard and itemized deductions.
^ Effective January 1, 2008, qualification for the program will be
based on Gross Income (Gross Income is defined as income
(including wages, interest, capital gains, income from retirement
accounts, alimony paid to you) not adjusted downward by specific
deductions.
• Maximum Qualifying Income -Currently, the maximum qualifying
income totals $20,000 (adjusted gross income)
o Effective January 1, 2008, the maximum income equals $25,000
(gross income)
® Taxpayer Reapplication Process -Since House Bill 1499 changes the
income base from Adjusted Gross Income to Gross Income, all taxpayers
who currently qualify for the exemption will need to re-apply since their
adjusted income may be less than their gross income
o Currently there are about 1,000 property owners in Orange County
who qualify for Homestead Exemption based on their Adjusted
Gross Income
o The Tax Assessor's office plans to contact taxpayers who are
currently in the program to make them aware of the reapplication
process
o All participants will be asked to file new applications for exemption
between now and June 2008
o It is likely that some percentage of homeowners who currently
qualify for the exemption will no longer qualify.
3R Fee Exemption -Currently the 3R qualification mirrors the existing
Homestead Exemption qualifications
o Beginning January 1, 2008, if the qualification process mirrors the
Homestead Exemption outlined in House Bill 1499, it is likely that
fewer taxpayers would qualify for 3R exemption
Property Owner Qualification for Homestead Exemption
The chart below compares current Homestead Exemption thresholds with those that will become effective January 1, 2008
Prior to Janua 1 2008 Be innin Janua 1 2008
(1) 65 years of age or totally and (1) 65 years of age or totally and
ermanentl disabled ermanentl disabled
(2) Income for preceding calendar year (2) Income for preceding calendar year
Qualifying Homeowner of not more than the income eligibility of not more than the income eligibility
limit limit
3 North Carolina resident 3 North Carolina resident
Adjusted Gross Income (Federal
Income Tax Return) -Adjusted Gross
Income (AGI) is defined as income Gross Income (Federal Income Tax
(including wages, interest, capital gains, Return) -Gross Income is defined as
income from retirement accounts,
d
income (including wages, interest,
Income Determination alimony paid to you) adjusted downwar capital gains, income from retirement
by specific deductions (including accounts, alimony paid to you) not
contributions to deductible retirement adjusted downward by specific
accounts, alimony paid by you, health deductions
savings account deductions); but not
including standard and itemized
deductions.
Maximum Qualifying Income Adjusted Gross Income of $20,000 Gross Income of $25,000
The chart below compares the impact of House Bill 1499 on a 65 year old or older taxpayer and a qualifying disbled homeowner who would
qualify for Homestead Exemption under the current legislation based on his/her AGI but would not qualify beginning January 1, 2008 based on
his/her gross income.
Prior to Janua 1, 2008 Be innin Janua 1, 2008
Income $19,000 Adjusted Gross Income $25,900 Gross Income
Qualifies for Homestead Yes No
Exemption
Total Valuation of Home $200,000 $200,000
Value of Homestead
Exemption (equivalent to 50% ($100,000) $0
of total valuation
Taxable Valuation After
Allowing for Homestead $100,000 $200,000
Exem tion
Taxpayer's County Tax Bill $950 $1,900
Liabili
A~ ~t-3
"Senior Circuit Breaker Property Tax Benefit" (affecting fiscal year 2009-10)
® Beginning January 1, 2009, property owners will have the opportunity to choose
which exemption/deferral program they would like to participate -Homestead
Exemption or Circuit Breaker
o Property owners cannot participate in both programs
® In accordance with the new legislation, property owners who qualify for
Homestead Exemption but choose to participate in the Circuit Breaker deferral
program can have only a portion of their tax bill deferred based on the following
formula
Tax bill minus (Income X .04) =Tax Bill Amount Deferred
® Maximum income for the Circuit Breaker qualification equals $25,000 (gross
income) -the maximum qualifying income for Homestead Exemption
o $25, 000 multiplied by .04 equals $1,000
o Under this provision, the tax bill would not exceed $1,000 and the
difference between the actual tax bill and would be deferred.
o Taxpayers who qualify for Homestead Exemption in every way
except income, but their income does not exceed the maximum by
more than 150%, can elect to defer payment of a portion of their
property tax bill according to the following formula
Tax Bill minus (Income X .05) =Tax Bill Amount Deferred
® Under this scenario, the maximum income could be $37,500.
® $37,500 multiplied by .05 = $1,875
^ Under this provision, the tax bill would not exceed $1,875
and the difference would be deferred.
® This means that some homeowners could get decreases in their tax bills
that exceed the 50% exemption allowed under Homestead Exemption.
® The deferment period is three years meaning that there will never be more
than three years on the tax books. (After being in the Circuit Breaker
program for four years the first years deferred amount disappears, after
five years the first two years disappear, and after six years the first three
years disappear
® There will never be more than three years (plus interest) that could be
recouped by the County and other taxing authorities
® On or before September 1 of each year, the assessor shall notify the
participant of the accumulated sum of deferred taxes and interest.
® Further, should the taxpayer choose to no longer participate in the Circuit
Breaker or the taxpayer no longer qualifies for the deferral program, there
are no requirements for repayment of the funds previously deferred. That
repayment could be held indefinitely until the property is sold or the
individual is deceased.
4 Areas of concern. related to the Circuit Breaker include 10-year statute of
limitations, accruement of interest for over three years, lack of notification
of qualifying individuals being deceased.
® Research reveals that normally less than 60% of individuals deceased
have an estate filed, and in many cases, children, or other family members
then occupy the real property.
• At the time allowed by statute for the roll back to take place, the Collector
cannot pursue collection for a period of nine monfihs. However, the law is
not clear as to whether that is nine months from death or from discovery of
death.
Message
Donna Coffey
~~a~m~~-- ~ V~ age 1 of 7
From: Rebecca Troutman,[rebecca.troutman@ncacc.org]
Sent: Tuesday, August 21, 2007 12:23 PM
To: County Managers; County Finance Officers
Cc: NCACC-legislative
Subject: NCACC 2008 State Budget Analysis
Dear Managers, Finance Officers, and Budget Officers,
Please find following the Association's synopsis of the 2008 state budget, highlighting county impacts.
Rebecca Troutman, Intergovernmental Relations Director
NCACC
919.715.4360
-~~ to ~~ q__i ~ fR ~twv i LN~Fk `~.I:: ~"":~
County Medicaid Relief, Additional Revenue Authority Drive Budget Discussion,
Adoption
After 8 weeks of continuous negotiation largely centered on county Medicaid relief and additional county revenue
authority, the House and Senate agreed to.the budget conference report on H1473, adopting the state's 2007-08
$20.7 billion budget on July 30, 2007, with a signing by Governor Easley the following day.
The budget provides for athree-year phase-out of county Medicaid expenses in exchange for a gradual
assumption of a half-cent local sales tax. In the first year alone, counties will enjoy more than $86 million in
Medicaid relief, with $19 million in additional state aid to guarantee that all counties receive at least $500,000 in
benefits under the plan. To help offset some of these new state costs in the first year, the General Assembly is
withholding roughly 50 percent of the Public School Building Capital Fund (ADM Fund) for 2007-08 only. Counties
will make up the difference through their Medicaid savings (Secs. 10.36 (a); 31.16).
When fully implemented in 2010-11, counties will be relieved of $671 million in Medicaid costs by foregoing $410
million in revenues. Any county in which the sales tax revenue stream exceeds its Medicaid expense would be
held harmless in perpetuity based on actual Medicaid expenses and actual foregone revenues, with a guaranteed
benefit of at least $500,000, providing an additional $42 million in state funding to counties. Counties would hold
cities harmless - $153 million in 2010-11, with growth included in their hold harmless payments mirroring that of
the remaining local sales taxes.
The General Assembly and the Governor's Office also recognized the need for additional revenue authority for
counties to meet their growing infrastructure demands for schools, courthouses, jails and other critical capital
investments. To manage the expected influx of newcomers and to renovate and restore existing infrastructure, the
budget includes authority for counties to levy either a 0.4 percent land transfer tax, estimated to generate $310
million annually, or a quarter-cent sales tax, estimated to generate $250 million annually, subject to voter
referendum (Sec. 31.17).
The 2007 legislative session is truly a banner year for counties! In one fell swoop, the three priority goals adopted
by our membership in January -permanent Medicaid relief, additional infrastructure funding, and additional
revenue authority -were made available to all 100 counties. Now onto other budget news.
8/28/2007
Message Page 2 of 7
The' budget appropriates $350 million of anticipated lottery proceeds to education, with 40% or $140 million set
aside for school construction (no change in allocation to school construction or formula for allocation to school
districts). A slight wording change in the lottery legislation allows additional monies to be provided in prizes,
thereby generating greater sales (Sec. 5.2). (The actual 2006-07 lottery proceeds for school construction totaled
$130 million.)
The budget makes permanent the °/4 state sales tax which was set to expire this fiscal year but sunsets the upper
income tax bracket as scheduled. To provide tax relief for the working poor, the budget authorizes a 3.5%
refundable earned income tax credit in the 2008 tax year. Additional tax credits are provided for long-term care
insurance, adoption, and a number of economic development tax adjustments.
In compiling the budget plan, the House and Senate contemplated eliminating state positions vacant 6 months or
more to free up recurring dollars through lapsed salaries. As adopted, the state's budget office must eliminate
enough vacant positions to save $10 million, excluding UNC, community college, and school positions from
consideration. Sec. 6.18 does require a study of the uses of lapsed salaries.
Teachers receive salary increases averaging five percent, with a step increase plus a flat $1,240, to bring their
salaries above the national average by 2008-09. New teachers paid at step 0 are eligible for. $250 bonus, an
additional step is added to the teacher salary schedule, and teacher assistants must be paid at salary grade 56.
School administrators receive ah average 4.44 percent increase. UNC and Community college faculty and
professional staff receive 5 percent. State employees see a 4 percent increase in their salaries. All told, state
salary enhancements consume $500 million in recurring expenses.
State retirees were bumped up to a 2.2 percent COLA, requiring a $35.7 million appropriation. No mention is
made to the local retiree's 2.2 percent increase, since this is an action of the board of trustees absent action by
the General Assembly. State employer contributions for employee and retiree health costs would cost $233
million, including hefty co-payments and deductible increases. Employer contribution rates for retirement and
other benefits are set at 7.83 percent, while annual contributions for health coverage are $4,183 for indemnity and
$4,052 for ppo. The budget eliminates the state's health indemnity plan in 2008-09.
The General Assembly agrees to a capital appropriation of $231 million with an additional $436 million in COPS,
principally for prisons and university facilities.
The following highlights those budget items of interest to counties.
Education
Much of the new funding is targeted to education initiatives and increased enrollment in public schools,
community colleges and universities.
Additional moneys are provided for More at Four, the Governor's educational initiative, drop out prevention grants,
the House's educational initiative, and a focused education reform pilot program, the Senate's educational
initiative. The budget also contains greater public school allotment funding in the academically gifted and talented,
children with disabilities, instructional supplies, and small LEA allotments, with additional non-recurring funding for
low wealth. No additional funding is provided for school resource officers.
The governor's plans for Learn and Earn expansion moves forward with the budget providing $4,000 in college
tuition grants to eligible students. General funds for the scholarship program of $27.6 million in 2007-08 and $60
million in 2008-09 is supplemented by $40 million from the Escheats Fund in 2008-09.
Sec. 7.16 in the special provisions sets forth six objectives by which the state board of education is to evaluate
charter schools and Sec. 7.31 creates the Joint Legislative Study Committee on Public School Funding Formulas.
Public Schools 2007-08
• Fully fund enrollment increase of 26,265 additional students or 1.83
ercent increase in enrollment Continuation
• Full fund ABC teacher bonuses at current incentive levels $70 million nr
• Maintain k at 18:1 teacher/student ratio; replaces lottery funds not
realized in 2006-07 $37.5 million nr
8/28/2007
Message
Page 3 of 7
• Increase disadvanta ed student su lemental fundin • $17.6 million
• Double literac coaches in 100 additional middle schools 200 total $5.7 million
• Learn and Earn high school initiative to 9 additional high schools; 15
planning grants •
• $2.4 for 9 schools ready, to
implement
$700k nr
• Implement Learn and.Earn online tuition, fees, technology for
12,000 community college classes & 8,000 UNC classes by high
school students $6.5 million
$5 million nr
• Enhance school connectivit fundin with riorit to Learn & Earn $12 million
• Add 10,000 More at Four slots & increase $400 per slot funding;
28,653 total slots $56 million
• Increase instructional su lies allotment to $50.44 ADM • $2.8 million
• Increase AIG fundin to $1,042.53/student 4% of ADM $1.8 million
• Increase children with disabilities allotment to $3,199.57/student
171,617 students $5 million
•
• Increase small county supplemental funding by $48,715 per LEA
Additional $784,703 for declinin count LEAs Sec. 7.7 • $2.1 million
• Establish dro out revention com etitive grants. ro ram $7 million nr
• Create focused education ilot ro ram • $4.4 million
• Increase low wealth to restore 75% of each LEA's decrease $5.4 million nr
• Reduce re lacement school buses b 170 $4.5 million nr
• Reduce teacher assistants' fundin ~ $5.5 million
*nr =non-recurring
Communit Colle es 2007-08
• Fully fund enrollment growth (NCACC goal for enhanced funding)
• Set aside enrollment rowth reserve for hi h rowth cam uses Increased by $3.3 million for
new enrollment estimates
$2 million nr
• Raise tuition b 6.3% $7.5 million)
o Increase data connectivit & fund connectivit consultant • $3.8 million
• Increase fundin fore ui ment needs • $10 million nr
• Provide advanced capital planning funds in anticipation of statewide
bond $8 million nr
• Provide funds for com etitive rants for facilities & e ui ment $15 million nr
Sec. 8.6 calls for a study of community college access to determine if the current structure provides geographic
access while minimizing overhead costs. Sec. 8.8 elaborates study components to the community colleges' FTE
funding formula, including equipment funding per FTE.
Human Services
The budget delays implementation of the governor's plan to cover the working poor ahd directs the N.C.
Department of Health and- Human Services to study how best to expand health insurance coverage to children
whose family incomes are between 200 percent and 300 percent of federal poverty standards. NC Kids' Care
would provide a limited benefit medical assistance program, upon federal approval of Medicaid waivers (Sec.
10.48 outlines DHHS areas of study for the new program).
Mental health dollars are realigned in keeping with the new cost model. Reductions in the Dix and Umstead
hospitals budgets are offset by the opening of the Central Regional Hospital in late Fall 2007.
The budget sets aside millions for preventive health care, screening and monitoring-many of these programs
provide additional funding to county health departments.
Human Services 2007-08
• County Medicaid Relief (Sec. 10.36 (a)):
o State assumes 25 percent of county costs, beginning $86.2 million
with claims paid on or after Oct. 1, by reducing county
8/28/2007
Message
Page 4 of 7
share to 11.25 percent
o States assumes 50 percent of county costs, beginning . $271.2 million 2008-09
Jul 1, 2008, b reducin count share to 7.5%
• Study how best to expand health coverage to children between 200 $368k
percent & 300 percent poverty • $7 mil in 2008-09
• Ex and Medicaid to cover foster children 18-20 ear olds • $216k
• Increase Health choice fundin to cover ro'ected shortfall $7.5 million
• Increase child-care subsid NCACC le islative oal • $8.4 million
• Purchase 634k treatment courses for andemic influenza $8.3 million nr
• Ex and Child Welfare Oversi ht of count DSS CWS ro rams • $132k
• Provide state funding for health information system development $5.1 million, most nr
NCACC le islative oal
• Increase recruitment of doctors and dentists in rural areas • $349k
• Fund community health-care competitive grants program for $5 million nr
reventive care
• Assist rural hos itals with o erations and infrastructure maintenance • $2 million nr
• Increase Area Agencies on Aging funds (NCACC legislative goal) $536k for block grant
• Set aside funding for senior center general purposes $300 k
• $200k nr
• Fund ilot for adult care home ualit im rovement • $264k nr
• Increase Smart Start local initiatives fundin $1.3 million
• Increase health de artment fundin NCACC le islative oal • $2 million
• Establish Health Carolinians for local health de ts. $1 million nr
• Fund additional school nurse positions (NCACC legislative goal) $2.7 million
• 54 nurses
• Increase state/county special assistance rate from $1,148 to $1,173 $1.9 million
(NCACC legislative goal to phase out county participation) • Count cost = $1.9 million
• Reduce Medicaid provider inflation increase ($35.4 million)
• Implement further Medicaid cost containment activities • ($25.2 million)
• Count $8.9 million
• Increase Medicaid in-home services rate • $1.9 million
• Increase CAP-MR/DD slots b 300 reali ned dollars $4.5 million
• Mental Health realignment & funding increases
• LME administrative cost model (most from realigned) $500k & $4.9 million in 2"d year
• Regional purchase, local-host SA programs (realigned) $6 million
• Drug treatment court • $2 million
• Crisis services per LME 2007 crisis plans (realigned) • $13.7 million
• Supported employment (realigned) • $2.5 million
• Housing people with disabilities $7.5 million nr
• Housing operating cost subsidy $3.5 million
• Hospital utilization pilot (realigned) $2.5 million
• TASC • $2 million
• Earl autism intervention ilot reali ned • $2 million nr
A special provision calls for an inventory of state and local health department activities that address health
promotion and disease prevention with an eye to combining these functions into a single funding stream allocation
to local health departments (Sec. 10.25). Sec. 10.28 calls on DHHS to develop child support performance
measures for state and county child support offices. Sec. 10.45 directs that families pay part of CAP-MR/DD
services.
A general special provision regarding mental health authorities clarifies terms and conditions of a LME director
(Sec. 6.20). Other mental health programs and LME administration are covered in numerous special provisions-
each looking to build community infrastructure (Sec. 10.49). Sec. 10.49 (d) allows a LME to use up to 1 percent of
its substance abuse treatment funds to provide nominal incentives for consumers who achieve treatment
benchmarks, while (f) requires LMEs to work with county health departments and sheriffs to provide medical
8/28/2007
Message Page 5 of 7
assessments and medication for inmates housed in county jails who are suicidal, hallucinating, or delusional. A
designated LME employee is to be responsible for screening the daily jail log. Sec. 10.49 (i) requires DHHS to
develop a transitional residential treatment service to provide 24-hour residential treatment and rehabilitation.
Sec. 10.49 (I) clarifies LME primary functions.
LMEs must report monthly on remaining gaps in crisis services and reductions in acute admissions to state
psychiatric hospitals (o). DHHS must develop a reporting system to provide LMEs information on all visits to
community hospital emergency departments by crisis individuals (r). Sec. 10.49 (s) requires the department to set
up a pilot program to test whether holding a LME clinically and financially responsible for psychiatric hospital use,
coupled with greater resources to build community capacity, will reduce hospital use.
The Mental Health Trust Fund is limited to increasing community-based services and can only be allocated to
area programs (w) after 2007-08. Any additional savings from consolidating state psychiatric hospital beds can be
used to fund LME administration (w2). Sec. 10.49 (y) requires DHHS to designate 4 additional LMEs to receive all
state allocations through a single funding stream, while (z1) calls on the Joint Legislative Oversight Committee to
study the appropriateness of LMEs acting as service providers. Sec. 10.49 (bb) appropriates mental health
services and supported employment funds based oh a LME's percentage of population below the federal poverty
level to the state's total.
Sec. 10.49 (ee) attempts to reign in community support services by requiring DHHS to immediately conduct an in-
depth evaluation of the use and cost of community support and implement management practices to increase
oversight, monitoring, and prior authorization. DHHS is also directed to include standards for determining LME
capability to perform utilization review and must adopt by Jan. 1, 2008, statewide standardized authorization
procedures and processes for Medicaid utilization review. Before July 1, 2008, up to six LMEs that meet these
standards may, under contract with the outside vendor, complete the utilization review.
Finding that counties budget nearly $121 million to LMEs, LMEs must report annually to the Division on all county
fund expenditures and collect income data for all individuals receiving services (ff). Sec. 10.49 (gg) states that the
General Assembly intends to eliminate the LME administrative deficit through hospital downsizing and that the full
funding should be available by the 2009-2011 biennium, while (hh) prevents the DHHS secretary from designating
another entity to perform LME activities. Sec. 10.49 ((kk) requires DHHS to ensure that each LME receives no
fewer service dollars than it expended in 2006-07, when allocating administrative funding .
DHHS must also rework the revised system of allocating state and federal funds to area authorities to better
reflect projected needs rather than historical allocation practices and spending patterns (Sec. 10.51 (b)). Sec.
10.52 requires pre-authorization for all multiply-diagnosed adult services except emergency services.
Justice and Public Safety
The Senate increases court fees by $36 million to fund 540+ new court positions and recurring dollars for court
technology. Counties are required to fund courthouse telephone .systems meeting AOC specifications out of
facilities fees (Sec. 14.16). Traditionally, state appropriations funded telephone systems and state coordination
and funding grow increasingly important as telephone systems merge with computer networking infrastructure. To
free up recurring dollars and to ensure greater program oversight, the budget substitutes non-recurring dollars for
recurring in a number of programs, and requires a "continuation review," to be led by the Appropriations
Committee meeting off-session (Sec. 6.21). Of concern to counties are the Criminal Justice Partnership and
Juvenile Crime Prevention Programs.
2007-08
8/28/2007
Message
Page 6 of 7
Justice and Public Safet Ex ansion
• Continue statewide warrant repository (NCAWARE), Casewise $7.9 million
and other court technology initiatives • $1.9 million nr
• Add new deputy clerks of courts: $4.2 million
0 150 10/1/07 $330k nr
0 147 7/1 /08
• Add new district court judges & new support staff $634k
0 6judges 1/1/08; 3judges 1/15/09 $87k nr
0 9 support 1/1/08; 1 1/15/09
• Add new superior court judges & new support staff $221 k
0 2 judges 1/1/08 $20k nr
0 2 support 1/1/08; 3 7/1/08
• Add new magistrates $683k
0 21 10/1/07 • $85k nr
0 217/1/08
• Establish 2 new family courts in additional districts $522k
• $47k nr
• Add new assistant district attorneys, investigators & new $3.9 million
victim/legal assistants $243k nr
0 30 ADA 10/1/07; 28 ADA 7/1/08
0 40 asst 10/1/07; 40 asst. 7/1/08 ,
0 7 invest. 10/1/07; 7 invest. 7/1/08
• Add 3 new DNA processors $280k
• $133k nr
• Creates Piedmont Triad Regional Crime Lab $432k
• $156k nr
• Add 5 new Medicaid fraud investi ators • $85k
• Continue replacement of statewide automated fingerprint ID $2.7 million
s stem
• Continue implementation ofVIPER-statewide 800 megahertz $2.3 million
voice system HP can spend up to $10 mil
• A ro riation throu h Hi hwa Fund im lementation
• Shift Juvenile Crime Prevention Council funding to nr Shifts $22.7 million to nr
• Sub'ect to continuation
• Shift CJPP.funding to nr Shifts $9.2 million to nr
• Sub'ect to continuation
• Increase Hazmat res onse team a ui ment $250k nr
• Continue floodplain mapping project • $1.7 million
• $2.4 million nr
• Fund ille al immi ration ro'ect thru rant to Sheriff's Assn. $750k nr
• Support gang intervention & suppression grants (NCACC $4.8 million nr
le islative oal
Special provisions call for study of available prosecutorial resources and the use of those resources, including
caseload management, adequacy of space and equipment, geographical equity, criminal prosecution,
automation, cost management practices and how current use impacts access to justice, accountability, timely
resolution, complexity, and reduction in backlogs (Sec. 14.15). Further, AOC must measure the impacts of the
state's additional funding, including performance measurements and caseload standards (Sec. 14.18).
Natural and Economic Resources
Funds are provided for the Agricultural Development and Farmland Preservation Trust Fund to preserve the
state's farmland and to protect natural resources, wildlife habitat and water resources. The budget establishes a
UNC cancer research fund, funded in part from an increase in the tobacco products (10% of the cost price,
excluding cigarettes) and eight million in Tobacco Trust Funds (Sec. 6.23). In lieu of a transfer of all research
stations to the university system for oversight and consolidation, a special provision calls for a study of a transfer
8/28/2007
Message Page 7 of 7
(Sec. 11.4). The budget contains level funding for the Clean Water Management Trust Fund at $100 million.
A general special provision, effective October 1, 2008, limits any new parking lot surface to 80% impervious (Sec.
6.22).
The budget extends and establishes some economic development activities such as film industry recruitment,
viticulture promotion, home furnishing marketing, and the NC Green Business. The One NC Fund -for economic
development incentives -would receive $14 million, and $4.8 million is set aside for matching federal program
funds for small business development. The Rural Center receives an additional $19 million to establish and
implement the rural economic transition program, a grants program to "carry out transformative economic
development and agricultural enhancement, projects...with priority to applicants in tier one areas" (Sec. 13.14).
One hundred million is made available to the Rural. Center to distribute grants for water ($50 million) and
wastewater ($50 million) improvements (Sec. 13.13). Sec. 13.17 directs the state's regional economic
development authorities to seek supplemental funding from local governments.
Natural and Economic Resources Ex ansion 2007-08
• Levy $2 per ton tipping fee to assess & correct unlined landfills &
inactive hazardous waste sites via H1492
• Continue private well water safety program's incentive grants to
counties • $300k nr
• Expand state enforcement of sediment and erosion control and
rovide local overnment incentives to artici ate in ro ram $473k supported by fees
• Improve municipal wastewater compliance and review and update
of water standards Increases water quality fees by 20
ercent
• Fund 20 percent state match for federal wastewater and drinking
water rant match re uirements • $9.4 million nr
• Increase A . Devel. & Farmland Preservation Trust $8 million nr
• Fund biofuels center • $5 million nr
•
• Provide recurring funding for One NC fund
Match federal small business innovation ro rams • $14 million nr
$4.8 million nr
• Ex and Rural Center's economic infrastructure fund $19 million nr
• Increase council of governments funding by $10,000 per COG
NCACC le islative oal • $170k nr
• Land for Tomorrow; waterfront access • $120 million via COPS nr
• Fund water & wastewater capital improvements through Rural
Center $100 million nr
General Government 2007-08
• Fund the NC Housing Trust Fund (NCACC goal) $5 million
• Fund the home rotection ilot ro ram •. $1.5 million nr
• Expand arts funding $1 million basic
• $1 million grassroots
• $1 million caring & sharing nr
• Increase aid to public libraries (NCACC legislative goal to make $475k nr
new funds recurrin
• Rea last installment to retirements stem $45 rnillion nr
The budget allocates an additional $200,000 or $425,000 from each disposal tax program -scrap tire and white
goods - to the Department of Revenue for administrative expenses (Secs. 24.1 and 24.2). It also changes the
allocation of the "Grassroots Arts Program," distributing 20 percent of the total equally among counties, with the
remaining 80 percent allocated based on county population (Sec. 21.1). Section 22.1 directs the NC Housing
Finance Agency to continue its development of a pilot "Home Protection" program, directed at residents in
counties with greater than 7% unemployment, same as the House provision. Once a homeowner qualifies under
the program, the mortgage holder cannot begin foreclosure or other legal action. A special provision in the
transportation category, Section 27.12, states the General Assembly's intent to phase out general fund transfers
from the Highway Fund and the Highway Trust Fund, 2009 - 2013.
8/28/2007
~.,~-~hm~~ Page 1 oft
4 -5
Donna Coffey
From: LEE MANDE~L [LMandell@NCLM.ORG]
Sent: Friday, August 24, 2007 2:27 PM
To: The nclgba mailing list '
Subject: [nclgba] Medicaid Tax Swap
Many of you have been asking for an explanation of the local sales tax impact of the Medicaid
Swap provisions in the budget bill (HB1473). What follows below is from the League's GA
Session Wrap-Up Legislative Bulletin, the full version of which is now available on our website:
http_//www. ncl_m~org/Legal/Bulletin/2007/08-24-07. htm.
Lee
Lee M. Mandell, Ph.D.
Director of IT and Research/CIO
NC League of Municipalities
PO Box 3069
Raleigh, NC 27602-3069
Phone: 919.715.3933
Fax: 919.733.9519
The big news in the budget, of course, was the Medicaid relief package and "sales tax swap" that was used to
'accomplish it. With passage of the state budget, the General Assembly adopted aphased-in take over of the
county share of Medicaid expenses. As the state assumes county Medicaid expenses, it will, in turn, take over a
portion of the local option sales tax revenues.
The last one-half cent local option sales tax--Article 44--is the affected tax. The state will take over one-half of
this tax (that is, one-quarter cent) effective October 1, 2008 and take over the remaining one-quarter cent
effective October 1, 2009. Municipalities currently receive a share of the proceeds from the Article 44 sales tax
and will be reimbursed for the loss of those revenues. The method of replacement includes a growth factor. The
first one-quarter cent lost will be replaced by a payment equal to one-half of what each municipality receives from
the Article 40 local sales tax. The Article 40 tax is a one-half cent tax distributed back to the county level on a per
capita basis, so the first hold harmless, which begins October 1, 2008, is equal to half of this one-half cent - in
other words, aquarter-cent, just like what is being taken away. Since there is growth in the Article 40 tax
proceeds, there will be growth in the hold harmless payments.
Effective October 1, 2009, municipalities will receive a second hold harmless payment equal to one-quarter of the
one-cent Article 39 local sales tax. This is a tax distributed back to the county area on.point of delivery, just like
the tax being taken over by the state. Again, the hold harmless payment is tied to the amount received from an
existing revenue source so any growth will be included.
The money for the hold harmless payments to cities comes from the counties' share of sales tax revenues. The
NC Department of Revenue will make both hold harmless payments directly to cities, and there is no expiration
date on this hold harmless.
In a related measure, the state budget changed 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. [This change does not affect the method that counties
choose to distribute tax proceeds among the county and its municipalities -either per capita or ad valorem.]
8/28/2007
Page 2 of 2
All of these changes were adopted in the final days of the session, and we are still working with the staff of the
General Assembly on detailed information about implementation. Section 14.4 of HB 794 - 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.
The General Assembly also gave counties authority to levy either a new one-quarter cent sales tax or a 0.4
percent land transfer tax, subject to voter approval. Discussions mentioned using the new tax to pay for school
construction, but use of the proceeds is not restricted. The General Assembly did not require counties to share
proceeds of the new tax with municipalities, despite significant and growing municipal infrastructure needs,
including roads, stormwater, water and sewer and others.
8/28/2007
The Nortll Carolina League of Miuucipalities
Page 1 of 16
~~ ~~_~_ ~,riti _C~~~~ d,~~ a~~ , a ti= t`i;~'; ;,_,~, ~~r ~~'~`i,~_-1~~._ ,~.~~.`i i_.,1 ,~-i~ ,E~.~,~ _t~. _
_.
~' ?.~~"_
I~n~j7':7 ~ li,~'~7~uIJi?~'~7~ '~7
'7 U~a~l~~.`~i~
~~.~~~i~r l ,ta,~ '.{:,i:~
~I'~ r:rIJ~.1r~_,: !~_`l!~7~i;rt,_
-- _ _ _
QveFVi~w ~~ Legal~~Advc~ca~;y ~ lntargovernlnental ~~ ~nvironmear~+l ~~ [nsurance ~~ [nd'svitlual ~~
q NORTH CAROLINA LEAGUE OF MUNICIPALffIES
y :, } ~}
ELECTRONIC EDITION
NC GENE.R.AL ASSEMBLY
Bulletin #29
August 24, 2007
~~ ~ei'>oei'af ASSC,1'1~1~f,/ ACO~®l,ll'1'1S
Legislative Wrap-Up
The General Assembly adjourned its 2007 Regular Session on Thursday, August 2. In the final few days
of the session, the legislature passed Medicaid relief for counties, restored municipal growth to the "sales
tax swap" in the budget, enacted new landfill regulations with accompanying statewide tip fee, and passed
new rules on interbasin transfers.
When the dust settled, there were some disappointments, but the League had also accomplished several of
its major legislative priorities for the session. Of particular note are new authority for cities and towns to
deal with substandard nonresidential buildings and new authority to set up special trusts to handle non-
pension benefits for municipal retirees, acost-savings measure.
Over 3,600 bills were introduced during the 2007 session-a record number. The League monitored over
1,100 of them and fought many battles to preserve municipal revenues and authority. We were successful
in avoiding a number of bad bills during the session and were involved in improving many others.
We very much appreciate the hard work of our legislators, and we thank the many members of the
General Assembly who supported the municipal position on bills and worked with us in various ways. We
express our thanks as well to the leaders of the two bodies, House Speaker Joe Haclrney and Senate
President Pro Tem Marc Basnight, and the members of their staffs, for their many courtesies during the
session.
We also appreciate the willingness of other members of the House and Senate leadership to work with us
on municipal issues. It would be impossible to list the many members of the House and Senate that
worked with us during the legislative session but we have attempted below to give special recognition to
those who sponsored or provided special assistance on legislation of interest to municipalities.
The following are highlights of the state budget and of actions taken on priority municipal issues by
category. If you need a copy of these or any other bills, please contact the Legislative Printed Bills Office
at 919-733-5648 or the League office. Remember that bills and legislative calendars are available on the
internet at http://wtivw.ncleg.net. Please feel free to contact the League staff if you have any particular
interest or concern regarding-any piece of legislation.
Note on Status of Legislation
Throughout this Legislative Bzdletin, legislation that has become law is delineated with its session law
chapter number after the bill title (e.g. SL 2007-1). Even though these acts have become law, some have
delayed effective. dates, so always check the legislation itself.
Some bills mentioned below were ratified by the House and Senate but have not yet become law. Bills
are presented to the Governor on the day following ratification for approval or veto. During the session, if
the Governor signs the bill or takes no action on it within 10 days after presentation, the bill becomes law.
http://www.nchn.org/LegaUBulletin/2007/08-24-07.htln 8/28/2007
The North Carolina League of Municipalities
Page 2 of 16
After adjournment of the General Assembly session, however, the Governor has 30 days from the date of
adjournment to veto ratified legislation, sign it into law, or allow it to become law without his signature.
Note that most local bills are not presented to the Governor for approval and become law upon ratification
by the General Assembly.
2007 Budget Overview
After many weeks of negotiation, the General Assembly passed the state budget on July 30, and Govemor
Easley signed it into law on July 31. HB 1473 - 2007Appropriatior:s Act (SL 2007-323) approves a $20.7
billion budget for the FY 2007-09 biennium.
The big news in the budget, of course, was the Medicaid relief package and "sales tax swap" that was
used to accomplish it. With passage of the state budget, the General Assembly adopted aphased-in take
over of the county share of Medicaid expenses. As the state assumes county Medicaid expenses, it will,
turn, take over a portion of the local option sales tax revenues.
The last one-half cent local option sales tax--Article 44--is the affected tax. The state will take over one-
half.ofthis tax (that is, one-quarter cent) effective October 1, 2008 and take over the remaining one-.
quarter cent effective October 1, 2009. Municipalities currently receive a share of the proceeds from the
Article 44 sales tax and will be reimbursed for the loss of those revenues. The method of replacement
includes a growth factor. The first one-quarter cent lost will be replaced by a payment equal to one-half of
what each municipality receives from the Article 401oca1 sales tax. The Article 40 tax is a one-half cent
tax distributed back to the county level on a per capita basis, so the first hold harmless, which begins
October 1, 2008, is equal to half of this one-half cent - in other words, aquarter-cent, just like what is
being taken away. Since there is growth in the Article 40 tax proceeds, there will be growth in the hold
harmless payments.
Effective October 1, 2009, municipalities will receive a second hold harmless pa}nnent equal to one-
quarter of the one-cent Article 39 local sales tax. This is a tax distributed back to the county area on point
of delivery; just like the tax being taken over by the state. Again, the hold harmless payment is tied to the
amount received from an existing revenue source so any growth will be included.
The money for the hold harmless payments to cities comes from the counties' share of sales tax revenues.
The NC Deparhnent of Revenue will make both hold harmless payments directly to cities, and there is no
expiration date on this hold harmless.
In a related measure, the state budget changed the Article 421oca1 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. [This change does not affect the
method that counties choose to distribute tax proceeds among the county and its municipalities -either per
capita or ad valorem.]
All of these changes were adopted in the final days of the session, and we are still working with the staff
of the General Assembly on detailed information about implementation. Section 14.4 of HB 7l4 - 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 421oca1 sales tax from a per capita basis to point of delivery. We are wonting with General
Assembly staff on a further technical correction for the short session that will fully hold cities and towns
harmless.
The General Assembly also gave counties authority to levy either a new one-quarter cent sales tax or a 0.4
percent land transfer tax, subject to voter approval. Discussions mentioned using the new tax to pay for
school construction, but use of the proceeds is not restricted. The General Assembly did not require
counties to share proceeds of the new tax with municipalities, despite significant and growing municipal
infrastructure needs, including roads, stormwater, water and sewer and others.
Although we are disappointed that our efforts to obtain a municipal share of the new revenue sources were
not successful, we express our appreciation to House Speaker Joe Hackney, Reps. Bill Owens, Paul
Luebke, Lucy Allen, Beverly Earle and Deborah Ross, and Sen. Dan Clodfelter for trying to help us secure
a designated share for municipalities. We also appreciate Sen. Tony Rand and the other Senate and House
leaders for protecting our growth in the sales tax hold harmless.
Other items of interest in the budget bill are mentioned under subject categories below.
http://www.nchn.org/LegalBulletin/2007/08-24-07.htln 8/28/2007
The North Carolina League of M>ruzicipalities
Alcoholic Beverage Control
Page 3 of 16
Modifications were made to several statutes relating to alcoholic beverages. HB 267-ABCLarv
Changes (SL 2007-402) allows the ABC Commission. to issue off-premises malt beverage and unfortified
wine permits to establishments located in any incorporated municipality that has voted to permit the sale of
mixed beverages. The ABC election law was amended in SB GGI -ABCElection -Cities in Two
Counties (SL 2007-386) to allow a city located in two or more counties to hold a mixed beverage election
if the city has at least 500 voters and a municipality in either county in which the city is located operates
an ABC store.
Annexation
More than two dozen bills were introduced to restrict, modify or eliminate authority for city-initiated
annexations. A few were local bills requiring referenda or prohibiting cross-county annexations in specific
counties; most were statewide bills requiring referenda with a favorable vote by residents proposed for
annexation or changing the service requirements or development criteria: HB 32, HB 5G, HB G0, HB 8G,
HB87,HB104,HB243,HB315,HB378,HB379,HB457,HB549,HB741,HB921,HB1495,HB
I GOB, HB 1893, HB 1958, SB 214, SB 255, SB 479, SB 571, SB 572, SB. 647, SB 650.
In June, a subcommittee of House Rules held a hearing on one of the bills, HB 8G - Strrdy Mrzr:icipal
Azzrzexatiorz. More than 200 showed up for the late afternoon hearing, with annexation opponents citing
violations in the current law and asking legislators to limit or end city-initiated annexations.
The General Assembly did not enact the annexation study, nor any of the other annexation-related bills.
As far as the League staff can determine, these bills are not eligible for consideration in the 2008 session.
However, annexation remains a volatile and divisive issue that we will see again. We urge you to continue
discussions with your legislators and others regarding the importance of annexation to your city or town.
Elections
A number of bills affecting election laws were considered by the General Assembly. HB 1743 -Election
Auzenduzents (SL 2007-391) is an omnibus bill that makes numerous changes to the election laws.
Among those is a new provision requiring that the results of all municipal elections be reported to the State
Board of Elections within 30 days of the certification of the election. HB 1517 -Voter-Ozvrzed Electior:s
Pilot establishes a pilot program to provide certain candidates for council of state offices with the option of
financing their campaigns from a publicly supported fund. The act applies to elections for Auditor,
Superintendent of Public Instruction, and Commissioner of Insurance in 2008 and thereafter. Under HB
91-Registration and Voting at One-Stop Sites (SL 2007-253) an individual may now register in person
and then vote at a one-stop voting site in the person's county of residence during the period for one-stop
voting. SB 1218 -Candidate Felony Disclosure (SL 2007-369) requires a candidate (including a
candidate for municipal office) to file with the notice of candidacy a statement as to whether he or she has
ever been convicted of a felony. If so, the candidate must name the offense, the date of conviction, the
date of restoration of citizenship rights, and the county and state of conviction. A conviction need not be
disclosed if it was dismissed as a result of reversal on appeal or resulted in a pardon of innocence or
expungement. The disclosure is to be available as a public record in the office of the board of elections.
The act becomes effective January 1, 2008.
Environment
Grants-SB 1468 - Proszote Innovative Water Protecfiorz Efforts allows the Clean Water Management
Trust Fund to finance innovative efforts, including pilot projects, to improve stormwater management, to
reduce pollutants entering the state's waterways, to improve water quality, and to research alternative
solutions to the state's water quality problems. HB 1370 - Clearz Water Gr•az:ts (SL 2007-185) specifies
that a Clean Water Management Trust Fund planning grant or technical assistance grant for a regional
wastewater collection system or regional wastewater treatment works is not subject to the high-unit-cost
threshold.
Interbasin Transfer-Legislation to revise the state's approval process for the transfer of surface water
between river basins was ratified in the waning hours of the session. HB 820 - Auzeud bzterbasin
Trar:sfer Larvs began as a bill on an entirely different subject. Once it passed the House, the text was
replaced by the Senate with substantive provisions on interbasin transfer that had previously been
approved in Senate committee. The House refused to concur in the changes and a conference committee
worked out the final version. A number of muriicipalities had positions on the issue, both pro and con, and
the League's Board of Directors, acting on a recommendation from a League legislative action committee,
littp://www.nchn.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The North Carolina League of Municipalities Page 4 of 16
asked for additional study so that more cities could reach middle ground.
The enacted bill removed some of the proposed changes to interbasin transfer, instead calling for a study
of the broader issue of the state's water policy. The bill directs the Enpironrnental Review Commission to
undertake this study, but also 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
In malting 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. Section 43.7C of SB 613 - 2007 Teclzrzica[ Corrections Act amends the effective date to provide
that the bill will apply to any petition for an interbasin transfer certificate for which preparation of an
environmental assessment or an environmental impact statement has begun on or after the date the act
becomes law.
Interconnection-Legislation allowing DENR to require the interconnection of water systems and the
EMC to require the interconnection of sewer systems was introduced but not debated this year. SB 541-
bztercorzr:ectiorr of Public Water Syste»zs would also have required analysis of reasonable alternatives
before construction or alteration of systems. It remained in Senate Agriculture and Environment, but fees
were added so that the bill remains eligible for further consideration in 2008.
Nutrient Offset-Legislation to implement consultant recommendations on the appropriate amount of
nutrient offset payments in the Neuse and Tar-Pamlico river basins passed as HB 859 - Nrrtrier:t Offset
Prograuz Ti•arzsitiorz. The bill establishes nutrient offset fees of $28.35 per pound of nitrogen in the Neuse
basin, $21.67 per pound of nitrogen in the Tar-Pamlico basin, and $28.62 per tenth of a pound of
phosphorus in the Tar-Pamlico basin. It requires DENR 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. The provisions are effective September 1, 2007, with the fee schedule to
expire September 1, 2009.
Slope Constzuction-Legislation affecting nineteen counties in the western part of the state was
discussed in committee but did not advance. HB 1756 -Safe Artificial Slope Construction Act would
have required counties to adopt ordinances regulating site planning, design, and construction with regard
to any land-disturbing activity that creates or changes a slope. Legislators indicated their intention to turn
the bill into a study.
Solid Waste-In one of its last acts of the session, the General Assembly passed two bills to make
sweeping changes to the way that landfills are regulated. SB 1492 -Solid Waste Martagerr:er:t Act of
2007 and SB 6 - Anzend Solid Waste Mar:ageuzent Act of 2007 together add a $Z-per-ton statewide
"tipping fee," among other things. This 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 transferred
at a transfer station for disposal outside the state. Proceeds of the new tax are distributed as follows: 50%
to the Inactive Hazardous Sites Cleanup Fund to help pay for cleanup of pre-1983 landfills (many of which
were old city or county dumps), 18.75% to cities for solid waste management programs and services,
18.75% to counties for solid waste management programs and services, and 12.5% to the Solid Waste
Management Trust Fund. Unfortunately, proceeds of the tipping tax will first be used to pay costs of the
private firms that were in the planning stages of major landfills and were stopped by this legislation, so tax
revenue may not be available for distribution to local governments or remediation of old landfills for some
time after the tax goes into effect.
The legislation imposes new landfill technical standards, such as a liner requirement for construction and
demolition landfills and provisions on leachate collection systems. The legislation increases to 200 feet
the distance that new landfills must be set back from perennial streams or wetlands, and prevents
construction of a landfill within five miles of a national wildlife refuge, two miles of a state park or one
mile of state gameland. The legislation also requires computer manufacturers that sell more than 1,000
pieces of equipment a year in the state to develop a plan to reuse, take back or recycle discarded computer
equipment. The League opposed the tip tax, but when its passage became likely, successfully worked to
include liability protection for local governments for assessment and remediation of old unlined dump sites
and to get a larger share of the proceeds distributed to cities. The League also helped get provisions to
grandfather existing facilities, preserve the use of an alternate test for local govemments to comply with
financial assurance provisions, clarify envirommental compliance review requirements, and remove a
http://www.nclm.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The North Caiolina League of Municipalities Page 5 of 16
double-liner requirement for municipal solid waste landftlls.
Stormwater-A provision of the budget bill, HB 1473 (SL 2007-323), states new requirements for paved
parking areas. Section 6.22 provides that any area designed for use as a vehicle parking area, except for
covered or multilevel vehicle parking areas, cannot exceed 80% built-upon area. The remaining portiori of
the vehicle parking area must meet design requirements for a permeable pavement system under DENR
guidance documents, or other design requirements for Stormwater management approved by DENR such
as the use of grass or bioretention ponds. It directs the Environmental Review Commission to study issues
related to the use of pervious surfaces for vehicle panting areas. It is effective as to any area designed to
be used for vehicular parking for which an application for a building permit, a request for a zoning
reclassification, or a subdivision plat is filed in the county or city in which the area is located on or after
October 1, 2008.
Wastewater Fees-Section 30.3(a) of the budget bill, HB I473 (SL 2007-323), increased state fees for
NPDES permits, water quality certifications, sewer system extensions, and other wastewater permits by
20%. The increases were effective August 1, 2007.
Finance & Taxation
Several pieces of legislation of importance to local government in the area of Finance and Taxation were
acted upon this session.
911 Charges-The system for charging telephone customers for 911 services was overhauled this
session. Currently, wireless enhanced 911 is administered by the state Wireless 911 Board and wireline
enhanced 911 is administered by local governments for their jurisdictions. Effective January 1, 2008, HB
1755 -Coordinate Statewide Err/ranted 911 System (SL 2007-383) consolidates the administration of 911
charges under a single state 911 Board. It standardizes all e-911 monthly service charges--both wireline
and wireless--at 70 cents, or a lower amount set by the 911 Board. Charges will apply to each active voice
communications service connection capable of accessing the 911 system, including VoIP. Proceeds are to
be placed in a new 911 Fund, to be allocated for monthly distributions to primary public safety answering
points (PSAPs), for PSAP grants, and for reimbursement of commercial mobile radio service (CMRS)
providers. The bill holds each PSAP harmless as to a-911 revenues at FY 2006-07 levels. Distribution to
PSAPs is calculated as a base amount (the amount the PSAP received in FY 2006-07) plus a per capita
amount. Use of these funds is expanded to include in-state training of 911 personnel. Any wireline fund
balance that exists prior to the bill's effective date is transferred. to the local government's general fund, to
be used for any lawful purpose. The bill expressly notes that revenues in the 911 Fund are not state
expenditures under the state constitution and may not be withheld or reduced by the Governor.
Cable/PEG Channels-Section 28 of SB 540 - Rever:ae Laws Tec/tr:ical Cl:mrges resolves a problem
under the current video programming statute (G.S. 105-164.44I) of local governments not having a
mechanism to correct errors in their March 15, 2007 certification of cable television revenues. Such
corrections are most likely to come to light through audits that could not be completed by the due date for
submitting the information. Under SB 540, if a city or county determines that the amount of cable
franchise tax it imposed during the first six months of FY 2006-07 differs from the amount certified to the
Secretary of Revenue, the city or county may submit a new certification revising the amount. Revised
certifications must be submitted on or before April 1, 2008 to adjust the local government's base amount.
Since the future distributions of video programming revenues to cities and counties are initially based on
these certified amounts, ensuring that they are accurate means a fairer allocation of funds to all. SB 1068 -
E-NC Iirteruet Corzr:ectivity/PEG Chaenel passed the Senate and was in the House Appropriations
Committee at the end of the session. The current version of the bill removes the sunset on the e-NC
Authority and increases the distribution to local governments of the sales tax on telecommunications and
video programming services for PEG channel support. The League will continue to support the bill in the
short session.
Economic Development-It was a relatively quiet session for economic development. The budget bill,
HB 1473 (SL 2007-323), appropriates $45 million in community development block grants for housing,
economic development, and community revitalization. The budget also 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. The fund is to focus on the biofuels industry, the green building
industry, and environmentally conscious clean technology and renewable energy products.
Some of the other legislation that was ratified included HB 1595-Ecor:oaric Development
Modifications to correct some errors in how Urban Progress Zones are drawn, malting the designation of
zones more consistent with local zoning for non-residential tracts. It also requires local economic
http://www.Helm.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The Nortll Carolina League of Municipalities
Page 6 of 16
development incentive agreements to include a "clawbaclc" of any local funds from a private enterprise if
the business fails to meet the job or investment goals in the incentive agreement. SB II96 -
Modificafions to Project Development Financing (SL 2007-395) made minor amendments to the
requirements for base property values and broadened the uses of tax increment financing/project
development fmancing. HB 1761 - Job l~laintenartce ar:d Capital Developrrsent Fruzd was created to
provide incentives for companies with 2,000 or more employees that are expected to invest more than
$200 million over the next five years. The annual appropriation was set at $3.5 million for up to 10 years.
Some bills of interest that were not enacted include: HB 1663 - Cor:frdentiality Agreeutents Void which
would have prohibited local elected officials from signing agreements that would prevent them from
discussing or disclosing information about specific economic development projects. It was thoroughly
debated in the House but was re-referred to House Commerce. SB 91- Errrlar:gered Manufacturing m:d
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. The earlier iterations of the bill included a property tax exemption that the
League opposed. That provision was removed before the bill passed in the Senate, and we appreciate Sen.
Jim Jacumin, bill sponsor, for responding to our concerns. The bill remains eligible in the 2008 session.
HB 734 - Urbarr Area Revitalization Made U~:iforu: would remove the population threshold of 150,000
to qualify for the urban revitalization projects and special financing authorities in municipal service
districts. The bill passed the House and is eligible for consideration in the short session.
Exactions/Fee Authority-Legislation that would have the effect of prohibiting cities from imposing
regulatory fees passed the Senate towards the end of the session. SB 1180 - No Mor:etary 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." The North Carolina courts have recognized city authority to charge regulatory fees by
applying the broad interpretation provisions of G.S. 160A-4, but such fees are not specifically authorized
by statute. 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. The bill remained in the House Finance
Committee at adjournment but is eligible in the short session. A related bill, SB 1152 - bnterest on
Illegally Levied Exactions (SL 2007-371), was enacted. It provides that if a local government is found to
have illegally exacted a tax, fee, or monetary contribution for development that is not specifically
authorized by law, the local government must return the tax, fee, or monetary contribution plus interest of
6% per annum. The act applies to actions filed on or after its effective date.
Infrastructure Funding-As discussed under 2007 Bardget Overview above, cities did not get a share of
newly authorized local option sales or land transfer taxes for their infrastructure needs. Bond bills were
proposed for a number of infrastructure purposes; including water and sewer, open space land acquisition,
affordable housing, and schools, but none of the bills advanced. In the state budget, HB 1473 (SL 2007-
323), $100 million was appropriated to the Rural Economic Development Center for water and sewer
grants, and $120 million in certificates of participation funding was authorized for acquisition of state park
lands, conservation areas, and land for waterfront access. 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 drinlting
water funds.
Local Option Taxes-Although the legislation was not enacted, we thank Rep. Jennifer Weiss for
introducing HB 1982 -Local Option: Land Transfer Tax, which would have provided fora 1 % land
transfer tax and included a municipal share, and Rep. Mickey Michaux for introducing HB 153 -Local
Option: Tax Merttn, providing a menu of local option taxes that could be enacted by cities and counties.
Motor Vehicle T ax-HB 1688 -Amend Combined MV Registration and PT System makes changes to
the combined motor vehicle registration renewal and property tax collection system that is slated to go into
effect in 2010. To respond to concerns of automobile dealers, it establishes a limited registration plate
system so that dealers do not collect property tax at the point of sale. The limited plate expires on the last
day of the second month following the date of application for the limited registration. The motor vehicle
property tax is due when the limited registration plate expires. 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. The legislation 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.
http://www.nclm.org/LegaUBulletin/2007/08-24-07.ht1n 8/28/2007
The North Carolina League of Municipalities
Page 7 of 16
OPES-A bill with positive financial implications for local governments, SB 580 -State
Treasurer/Local OPEB Ltvest~~te~tts (SL 2007-384, was enacted into law this session. The act establishes
the Local Government Other Post-Employment Benefits Fund in the Office of the State Treasurer and
authorizes local governments to contribute to the fund. The Treasurer will be able to make investments
that are likely to allow a greater rate of return than would be achieved by local investment. The
accumulated contributions are to be used to provide other post-employment benefits to former employees
of participating local governments and beneficiaries of former employees who are entitled to other
employment benefits. The bill also authorizes local governments to establish other irrevocable trusts to
fund post-employment benefits and provides similar authority for the law enforcement officers' Special
Separation Allowance.
The bill was a top priority of the League and was strongly supported by municipal finance officers.
Standards for local government accounting and financial reporting require that cities accrue the liability for
post-employment benefits such as health insurance and life insurance costs. Cities must show the present
value of these future benefits for current employees on their balance sheets. The accrued liabilities can be
quite large, and local governments need additional options for investments if they choose to pre-fund the
benefits.
Property Tax-Property tax relief was an issue on many legislators' minds this session. Numerous
proposals were introduced but ultimately HB 1499 -Property Tax aad PUV Ckaxges and Studies was
the one that passed. It increases the benefit of the property tax homestead exclusion by raising both the
income eligibility limit and the amount excluded from taxation to $25,000. The bill authorizes the
Revenue Laws Study Committee to study whether and how to index the minimum amount that is excluded
from tax. The bill also provides for a property tax deferral benefit for 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. The amount of taxes deferred would be
based upon the income eligibility limit of the property tax homestead exclusion. Under this "circuit
breaker" system, an owner who met the eligibility requirements and made less than the income eligibility
limit could elect to defer the portion of taxes imposed on the permanent residence that exceeds 4% of the
owner's income. An owner who met the requirements of the circuit breaker benefit and made between the
income eligibility limit and one and one-half times the income eligibility limit could elect to defer the
portion of taxes imposed on the permanent residence that exceeds 5% of the owner's income.
Taxes deferred via the circuit breaker benefit would accrue interest and become a lien on the real property
of the taxpayer. The general rule is that these deferred taxes would be carried forward until the death of
the owner or until the owner transfers the property, at which time the amount of taxes for that year with no
circuit breaker benefit plus those taxes deferred for the preceding three fiscal years, together with interest,
would become due and payable within nine months after the date of death or transfer. An exception to this
rule allows the deferral to continue when the residence is transferred to the owner's spouse, if the spouse
qualifies for the circuit breaker benefit, occupies the property as a permanent residence, and elects to
continue deferral.
If the owner ceases to use the property as a permanent residence for a reason other than a temporary
absence for reasons of health or an extended absence while confined to a rest home or nursing home while
the residence remains either unoccupied or occupied by the owner's spouse or other dependent, the owner
loses the benefit of the circuit breaker, and the deferred taxes become due and payable at the same time the
tax levied on the residence in that year is due. If the owner fails to qualify for the circuit breaker benefit
for a taxable year but continues using the property as a permanent residence, no deferral is allowed for that
year but deferred taxes from earlier years do not become due. The circuit breaker provisions are effective
July 1, 2009.
Finally, the bill modifies the present-use value requirements for agricultural land used as an aquatic
species farm and authorizes the Revenue Laws Study Committee to study various modifications and
expansions to the present-use value system.
SB 646 -Enact WaterfroiitAccess Study Cou:utission Recon:arendations provides a special use value
classification system for "working waterfront property" similar to the current agricultural present use value
system. Working waterfront property is described as property that has, for the most recent three-year
period, produced an average gross income of at least $1,000 and is either a pier that extends into coastal
fishing waters and limits access to those who pay a fee or is land that is adjacent to coastal fishing waters
and is primarily used for a commercial fishing operation or fish processing, including adjacent land that is
under improvements used for one of these purposes. Another proposal on present use value, HB 1889 -
Present Use Value System Modificatioas, was not enacted but it passed the House and will be eligible in
2008. It would classify wildlife conservation land as property that must be appraised at present use value.
http://www.nchn.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The North Caroluza League of Municipalities
Page 8 of 16
A modified version of the low-income housing builders' property tax exemption unexpectedly surfaced in
the waning hours of the session. After a floor ainendrnent in the Senate, SB 1309 - Fairrfess irz PT
valrzes/Liezz ozz Mobile Honze 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 maybe 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. The bill passed the Senate and was
in House Finance when the session ended.
Sales Tax-Please see 2007 Bzfdget Overview above for discussion of the "sales tax swap" and municipal
hold harmless provisions. In other legislation affecting sales tax, HB 257- Streamlined Sales Tax
Cltar:ges (SL 2007-244) made two definitional changes in state law to comply with the latest amendments
to the national Streamlined Sales Tax Agreement. One change is to add a definition of "bundled
transaction" and specify how these transactions are to be taxed. The other change is to modify the
definition of "sales price" to clarify how third-party discounts, such as a manufacturer's coupon, affect the
sales price of an item. The act also makes several other conforming and technical changes in the sales tax
laws, as recommended by the Department of Revenue. None of the changes should materially impact
local sales tax revenues.
General Government
Apartment Solid Waste Collection-Companion bills to requires cities and counties to provide a
"reasonably equitable" level of service to all single-family and multi-family dwellings did not advance
from committee and do not appear to be eligible in the short session. Under HB I229 - Cozzzzty/City Solid
Waste Collection and SB II33 - Coruzty/City Solid Waste Collection, if the local government funded the
service through the property tax, it could not charge multi-family dwellings any additional fees for services
not also charged to single-family dwellings. The League opposed these proposals.
Appointment Reporting-Revisions to the requirements for reporting the gender of individuals appointed
to boards and commissions clarify which local appointments are subject to the reporting requirement. HB
824 - Lzzprove Gender Equity Reporting Statute (SL 2007-167) now specifically lists those local
government boards for which a report is necessary. Forms for reporting are available online and are due to
the Department of the Secretary of State on or before September 1 each year. Our thanks to Secretary of
State Elaine Marshall for her assistance on this matter.
Bidding Laws-HB 73 - Iuzprove State Corzstructiorz Process includes a provision that raises the formal
bidding threshold on construction or repair projects to $500,000 (previously $300,000). SB 320 -
Statewide Certification: of HUBS (SL 2007-392) directs the Secretary of Administration to develop and
administer a statewide uniform program for the certification of a historically underutilized business for use
by state agencies and local govermnents and create and maintain a database of the businesses certified. It
requires state agencies and local governments to use only the historically underutilized businesses listed in
the database for minority business purposes in the bidding process. SB 492 -Political
Subdivisiozzs/Cozztracts Exeu:ptiorzs (SL 2007-94) exempts from the bidding laws purchases of supplies or
equipment from contracts established by the federal government, if the contractor is willing to extend the
same or more favorable prices, terms and conditions as under the federal contract.
Building Inspections/Permits-Industrial equipment was exempted from the building code in SB 490 -
Industrial Mac/finery-Building Code. If an electrical inspector has concerns about the safety of a piece of
industrial machinery, the inspector may refer the matter to the OSHA Division of the NC Department of
Labor but may not withhold the certificate of occupancy or mandate third-party testing of the machinery.
A clarification of the certification of inspectors appears in HB 700 -Standards for Code Er:forceu:eut
Officials (SL 2007-120). The act provides that the qualifications board is to issue a standard certificate for
each of the following types of building code enforcement officials: building inspector, electrical inspector,
mechanical inspector, plumbing inspector, fire inspector. One individual may hold more than one
certification but may only practice code enforcement within the inspection area and level described on that
individual's certificates. Local governments are authorized to reduce or rebate building permit fees as a
means of encouraging sustainable building techniques under SB 581- Brrilrlinrg Permit
Reductions/Rebates (SL 2007-381).
Construction Plan Review-HB 735 - Coz:strrzctioff Plaz: Review (SL 2007-303) increases the
threshold size of public buildings whose plans must be approved by the Commissioner of Insurance. It
provides that plans for buildings comprising 20,000 square feet or more for the use of any county, city, or
school district must be approved by the Commissioner as to fire safety (was 10,000 square feet). The act
http://www.nclm.org/LegaUBulletii~/2007/08-24-07.htm 8/28/2007
The North Carolina League of Municipalities Page 9 of 16
applies to plans submitted to the Commissioner for approval on or after October 1, 2007.
Disposition of Property-Cities were granted additional authority with regard to the donation of surplus
property in HB 1060 -Local Governuzer:t Surplus Property Donations. The bill provides that a city may
donate surplus personal property to another governmental unit within the United States, to a sister city, or
to an incorporated nonprof t organization. The governing body must post a public notice at least five days
before adopting a resolution approving the donation. This legislation will help to clear up questions of
authority that arise whenever a natural disaster sh•ilces in another state or country and local governments
wish to donate supplies and equipment.
Electronic Signatures-SB 21I -Electronic Signatures/Public Agencies (SL 2007-119) simply clarifies
that public agencies can use, as well as accept, electronic signatures.
Eminent Domain-A bill to amend the state constitution to address eminent domain passed the House
and remained in the Senate Ways and Means Committee at the end of the session. HB 878 -Eminent
Doznain proposes a constitutional amendment to be placed on the ballot at the next statewide primary or
election to prohibit the use of eminent domain for economic development. It states, in part, that "Public
use does not include the taking of property for the purpose of thereafter conveying an interest in the
property to a third party for economic development."
We believe that state law (as amended and clarified last session) adequately addresses the issue by
expressly prohibiting the use of eminent domain for general economic development purposes. The
legislature can further tighten and clarify those statutes as needed. A constitutional amendment, once in
place, is very difficult to change in order to correct any ambiguities that are created or unintended
consequences that may result.
Ethics-Two bills were enacted during the last days of the session modifying provisions of the state ethics
laws passed in 2006. HB 1110 -State Government Ethics Act Technical Changes (SL 2007-347) makes
technical changes to the State Government Ethics Act, the Legislative Ethics Act and the Lobbying Law.
A second bill, HB Illl -Clarify State Goverrznzent Et/tics Act (SL 2007-348) makes additional
clarifying and policy changes to those same laws. HB 1111 recognizes that a contract city or county
attorney appointed as required bylaw is deemed a city or county employee when acting on matters
pertaining to their offices and public duties for purposes of exemption from the lobbying laws. A related
bill, HB 1737 -Legal Expense Frrrrds (SL 2007-349) regulates legal expense funds of elected officers and
provides for disclosure of contributions and expenditures. SB 659 -Officials For felt Perzsiorzs for
Felonies (SL 2007-179) provides that elected officials who are members of the Local Governmental
Employees' Retirement System or any of the state govemment retirement systems forfeit their pensions
upon conviction of a state or federal offense involving public corruption or a felony violation of election
laws.
Minimum Housing-Legislation that would limit local authority to inspect housing and address unsafe
conditions passed the Senate and remains eligible in 2008. SB 1507-Horrsir:g Corzditiorzs/Lzspectior:s
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.
Nonresidential Buildings-With enactment of SB 556 - Nonresidential Building/Structure Code (SL
2007-414), cities and counties now have an additional tool for dealing with dilapidated and deteriorating
structures. The act authorizes local governments to adopt and enforce minimum sanitation and safety
standards for nonresidential buildings. The bill is patterned after the minimum housing code and uses
similar procedures for ordering repairs or demolition of dilapidated structures. This was a priority item on
the League's advocacy agenda, and we appreciate Sen. John ICerr's leadership on the bill. We also thank
Reps. Bill Daughtridge and Edith Warren for their assistance on the House side.
Open Meetings-A bill to amend the notice requirements for special and emergency meetings remained
in House Local Government I and is not eligible for further consideration. Among other things, HB 311-
Notice of SpeciaUEuzergerzcy Meetings would have required eight days' notice of special meetings (rather
than 48 hours) if the only newspaper that has requested notice publishes weekly.
Public.Records-Several bills addressing public records issues were enacted this session. HB 36 - Haz.
Materials Tas/r Force Recou:u:er:datiorts (SL 2007-I07) clarifies that municipal 911 data, and data in a
"reverse 911" emergency notification system, is confidential and not a public record. SB 1546 -Clarify
Prtblic Access to Persor:r:el Records specifies that the terms of an public employee's employment contract
is a public record. It clarifies that an employee's "salary" for purposes of the Public Records Act includes
pay, benefits, incentives, bonuses, and deferred and all other forms of compensation paid by the employing
http://www.nchn.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The Nol-th Carolina League of Municipalities
Page 10 of 16
entity. HB 1439 - Misdeu:eanor/Not Produce Public Record did not advance from committee and is not
eligible in 2008. It would have made a records custodian guilty of a Class 2 misdemeanor for failing to
allow records to be inspected or promptly furnish copies.
Replacing Officials-Procedures for appointing a temporary replacement for a local elected official
called to active military duty are spelled out in HB 671 - Rep[acirrg Officials Called to Active Drrty. It
allows any elective or appointive county or municipal official to obtain an unpaid leave of absence from
the official's duties when he or she enters active duty in the armed forces or the national guard. It specifies
that no vacancy is created by a courity or municipal official obtaining a leave of absence under the
provisions. If the official will be on active duty for a period of at least 30 days, a temporary replacement
for the official may be appointed by the governing body. No temporary replacement official may be
appointed if the official will be on active duty for a period of less than 30 days. Temporary replacement
.officials have all the authority, duties, perquisites, and emoluments of the official temporarily replaced.
The appointee must possess all the qualifications required by law for holding the office.
Retainage-The amount of funds that a municipality can withhold from periodic payments on a
construction contract was the subject of several bills this session, and the League worked on amendments
to make SB I245 - Retaiuage Pay»rents/Construction Contracts (SL 2007-365) acceptable. As enacted,
the bill prohibits retainage on public construction contracts in which the total project costs are less than .
$100,000. For projects above that threshold, it allows cities to retain up to 5% of partial payments until the
contract is 50% complete, if the contractor is performing according to contract. The legislation defines
what 50% complete means. If the project is funded by a federal grant or loan and federal provisions on
retainage are different, federal law prevails. The League was successful in adding a provision to the
legislation stating that nothing in the bill prevents a city from withholding payments for unsatisfactory job
progress, defective construction not remedied, disputed work, or third-party claims. The act is effective
January 1, 2008 and applies to contracts entered into on or after that date.
Smoking in Public Buildings-Some of local governments' authority to regulate smolting was restored
in HB 24 - Sn:olcing in State Gov't Buildings/Pro/tibitiar (SL 2007-193). The legislation will allow
municipalities to restrict smoking in buildings owned, leased as lessor, or leased as lessee and occupied by
the municipality and any place on a public transportation vehicle owned or leased by the municipality and
used by the public. Under previous law, those local governments that did not have smolting regulations in
place by October 15, 1993 were preempted and required to set aside 20% of the interior space of
government buildings for smolting areas. A bill that would have allowed local governments to ban
smoking in restaurants and workplaces, HB 259 - Prohibit Smo/ring in Public and Wor/r Places, failed
second reading in the House.
State Land Acquisition-When the state seeks to acquire certain land by purchase or gift, it will be
required to notify the county and any municipality in which the land is located. For purchases or gifts of
land with an appraised value of at least $25,000 (other than land for transportation purposes), SB 1167-
Notify Corrrrty Before State Larrd Acgrrisitior: (SL 2007-396) requires notification to the governing body
and the manager, if any, and allows the local governments to provide written comments on the acquisition
that will be forwarded to the Governor and Council of State.
Street Closings-A bill to change the procedure for closing a public street passed the House and is
eligible in 2008. HB 469 -Reduce Notice Tirrre/Met/tod for Street Closures would change the type of
notice for street and alley closures from publication of a resolution for a total of four weeks to publication
of a notice in a paper of general circulation at least three times beginning not more than thirty-five days
from the date set for the public hearing.
Personnel
Criminal Record Checks-Local fire chiefs, county fire marshals, and local emergency services
directors were added to those who can request criminal histories from the Department of Justice for
applicants to paid or volunteer positions under HB 1322 -Fire Chiefs/EMS Director: Crirrr. Regrrests.
Police Disciplinary Procedures-The "police officers' bill of rights," HB 980 - Laty Errforcenrerrt
Officer Disciplir:e, cleared House committee this session but stalled on the House floor. It was returned to
House Judiciary I and is not eligible for consideration in 2008. Municipal employers must maintain the
ability to make basic employment decisions, consistent with the current requirements of state and federal
law, and for that reason the League opposed the bill.
Union-Supported Bills-Legislation on various union-related issues was of concern this session. HB
1583 -Restore Contract Rig/:ts to State/Local would eliminate the current statutory prohibition on
collective bargaining by public employee organizations that has been in place since 1959. It passed one
http://www.nchn.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The North Carolilia League of Municipalities
Page 11 of 16
House committee and ended the session in House Appropriations, remaining eligible for further
consideration in 2008. SB 1271- Firefig/tter/EMS Payroll Deductio~:s 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. The bill passed the Senate and remains eligible in 2008. SB 963 -City
Firefighters/Over•tiute Pay also passed the Senate and remains eligible for further consideration. The bill
is 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. SB
990 -Workers' Corap/Firefighter Occupational Disease failed to advance and is ineligible for
consideration in the short session. The legislation would have created a special presumption that
respiratory disease, hypertension, heart disease, and certain cancers and infectious diseases are
occupational diseases for firefighters employed by local governments that are covered by the workers'
compensation act. The League opposed the legislation.
Planning & Zoning
Cell Towers and Radio Antennas-As introduced, SB 831- Wireless Telecoutmu~iications Facilities
would have preempted municipal authority to determine where cell towers are located. After a concerted
effort by municipal officials and League staff, the bill that was enacted preserves essential municipal
authority. 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 alson 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. The bill creates a streamlined perniit 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. We thank Sen.
David Hoyle, sponsor of the bill; for allowing us the time and opportunity to work out this much-improved
version.
HB I340 -Auiatenr Radio Antennas (SL 2007-147) requires any city or county ordinance that regulates
the placement, screening or height of amateur radio antennas or support structures to reasonably
accommodate amateur radio communications and represent the minimum practicable regulation necessary
to accomplish its purpose. This is generally a codification in state law of a Federal Communications
Commission ruling. The act also provides that the ordinance may not restrict antennas or support
structures of amateur radio operators to 90 feet or lower unless necessary to achieve a clearly defined
health, safety or aesthetic objective.
Extraterritorial Jurisdiction-Legislation to allow residents of the extraterritorial jurisdiction to vote in
municipal elections, HB 261-ETJ Votir:g, "remained in the House Rules Committee at the end of the
session. Under General Assembly rules, it is not eligible for further consideration in the 2008 short
session.
Land Use Appeals-A bill to establish statutory procedures on the appeal of land use decisions passed
the Senate and remains eligible in the short session. SB 212 -Lair[ Use Per~~:it 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. In the interim
between sessions, a committee of municipal attorneys will be reviewing the proposal.
Solar Collectors-SB 670 -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. The act further permits the prohibition of solar collectors
in certain enumerated instances.
State Buildings-SB 1313 -Zoning Near State Capitol requires the consent of the Council of State in
order for any zoning ordinance to apply to state-owned buildings within six blocks of the State Capitol.
http://www.nchn.org/Legal/Bulletin/2007/08-24-07.htm 8/28/2007
The North Carolilza League of Municipalities Page 12 of 16
Public Safety
Court System-The state budget, HB 1473 (SL 2007-323), includes funding for 58 assistant district
attorneys, 14 investigators, 80 victim witness legal assistants, 297 deputy clerks, 42 magistrates, 9 district
court judges, 2 special superior court judges, and additional judicial support staff. Funds are also provided
to continue technology modernization and to replace expiring federal grants to support drug treatment
court positions.
Emergency Response-HB 767-ATt~UseforErzzergezzcies authorizes law enforcement officers and
fire, rescue, and emergency medical services personnel throughout the state to use motorized all-terrain
vehicles on some public highways while acting in the course and scope of their duties. The person
operating the ATV must observe posted speed limits and carry official identification or a badge, and the
ATV itself must be equipped with operable front and rear lights and a horn. The bill also allows other
employees of certain named municipalities and counties to operate ATVs, repealing existing local acts on
the subject. The provisions become effective October 1, 2007 HB 1321- Weight acrd Size Exerrzptiorz
for Fire Response (SL 2007-290) provides a weight and size exception to federal, state and local agencies
transporting overweight and oversized vehicles to respond to forest fires, wildfires, and other emergencies
or disasters. It further authorizes DOT to issue an annual or single trip permit for oversize and overweight
commercial vehicles used in emergency response and a special single trip permit for oversize or.
overweight vehicles or vehicle combinations responding to an emergency event.
Hazardous Materials-The General Assembly enacted additional regulations on commercial facilities
that store hazardous waste, based on recommendations of a task force appointed by the Governor after a
chemical warehouse fire in Apex resulted in evacuation of surrounding residential areas. HB 36 - Haz.
Materials Task Force Recouurzendatioas (SL 2007-107) requires more frequent inspections of facilities
that store hazardous materials. Such facilities would be required to provide information about the types of
chemicals in storage, consult with local governments about emergency response plans, provide financial
assurance for cleanup should a release occur, do additional monitoring, and provide notification to nearby
property owners. Our thanks to Rep. Jennifer Weiss for her work on this bill.
Missing Persons-A bill to establish a "Silver Alert" system for individuals with dementia (similar to the
"Amber Alert" for missing children) contains a provision prohibiting law enforcement agencies from
establishing or maintaining a policy that requires a waiting period before accepting a missing person
report. See HB 38 -Silver Alert Systeur/Missieg Persons Alert.
Park Safe Zones-Effective December 1, 2007, SB 8 -Expand Safe Zozzes/Sebools, Parks, Cbild
Cezzters (SL 2007-375) increases the "safe zones" near child care centers and school grounds regarding
illegal drug sales from 300 to 1,000 feet of the property line. It expands the "safe zone" for public parks to
include all public parks, not just those with playgrounds, and increases the distance of those safe zones
from 300 to 1,000 feet.
Police Procedures-A number of bills this session affected law enforcement procedures. SB 1211-
Require Fisgerpritttiag for DWUDWLR (SL 2007-370) requires police to fingerprint and photograph
anyone charged with impaired driving or driving while license revolted if the revocation was for impaired
driving, if the person cannot be identified by a valid form of identification. A provision of HB 454 -
Iderztity Tlieft authorizes photographs to be taken of a person who operates a motor vehicle on a street or
highway if the person is cited by a law enforcement officer for a motor vehicle moving violation, the
person does not produce a valid drivers license upon request, and the officer has a reasonable suspicion
concerning the true identity of the person. The bill specifies how and where photos can be taken and how
long they may be retained. HB 1500 -DNA EviderzcelPreserve & Access by Deferzdarrt requires police to
preserve any physical evidence that is reasonably likely to contain any biological evidence collected in the
course of a criminal investigation or prosecution. Evidence must be preserved in a manner reasonably
calculated to prevent contamination or degradation of any biological evidence that might be present,
subject to a continuous chain of custody, and securely retained with sufficient official documentation to
locate the evidence. The legislation specifies how long evidence must be kept. HB 1625 Eyezvitizess ID
Reforrrz Act specifies procedures that must be followed for conducting both live and photo lineups of
suspects. HB 1626 - Enharzee Reliability of Interrogations requires police officers conducting a
custodial interrogation in a homicide investigation to make an electronic recording of the entire
interrogation. HB 1617-Ievestigatiorzs of Deadly Force (SL 2007-129) provides that anytime a private
citizen is killed by a police officer's use of a firearm in the line of duty, the district attorney must, upon
request of the citizen's spouse or family, request an SBI investigation of the incident. HB 1330 - Exe»:pt
Larv Erzforcen:er:t Frouz Baclrseat Belts (SL 2007-289) exempts persons in the custody of a police officer
and being transported in the baclcseat of the law enforcement vehicle from seatbelt requirements. SB 806
- Iizcrease Hold For Iterr:s By Parvrzbro/rer (SL 2007-415) allows the designee of the chief of police to
inspect and pickup pawnbroker records and allows for electronic reporting by fax or online if authorized
by the chief.
http://www.nchn.org/LegalBulletin/2007/08-24-07.htm 8/28/2007
The North Carolina League of Mulucipalities
Page 13 of 16
Pyrotechnics-HB 189 - Pyrotec/zrzics Per»:its by Cities (SL 2007-38) allows cities to issue permits for
fireworks exhibitions in the corporate limits when authorized by the board of county commissioners.
Street Gangs-The state budget, HB 1473 (SL 2007-323), contains $4.7 million for street gang
prevention grants. HB 274 -Street Garzg Prever:tiorz Act passed the House and remains eligible for
further consideration in 2008. It defines "criminal street gang" and "criminal gang activity" in the state
criminal statutes for the first time, and provides increased punishments for ci7mes 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.
Gaining more tools to combat the growing gang problem is a top priority for the League and the
Metropolitan Coalition and we will be pushing for passage in 2008. Mayors, city officials, and police
chiefs from throughout the state worked hard on the bill and spent tune in Raleigh and in their hometowns
meeting with legislators to discuss local gang problems and the need for the legislation. Without their
efforts, the bill would not have gotten as far as it did. We thank Rep. Mickey Michaux, sponsor of HB
274, for his work, as well as Sen. Malcolm Graham, sponsor of the similar SB 1358.
Street Solicitation-SB 942 -Prohibit Restricting Newspaper Distribrztior: passed the Senate and will
be eligible for consideration in 2008. It would prohibit local governments from enacting ordinances that
restrict the news media from distributing newspapers while standing on any street, highway or right-of-
way.
Traffic Control-A provision of HB 563 -Traffic & Personal Safety Changes/Protests (SL 2007-360)
authorizes cities and counties to adopt ordinances regulating the time, place, and. manner of gatherings,
picket lines, or protests by pedestrians on state roadways and state highways.
laetirement
Death Benefit-,S'B 720 - Operz E~zrolluzer:dCorztributory Death Benefit (SL 2007-388) directs the
Retirement Systems Division of the Department of State Treasurer to allow for an open enrollment period
in the contributory death benefit for retired members of LGERS and the state retirement plans. This open
enrollment period begins February 1, 2008, and ends May 31, 2008. The Retirerrient Systems Division is
to send notice to all retirees who elected not to be covered under this benefit or who failed to make any
election at the time of their retirement. The contribution rate for retirees electing coverage during the open
enrollment period is increased by 11.1 % of the rate established for retirees who elected coverage when
first eligible at retirement. HB 779 - Lzcrease Contributory Dent/t Benefit raises the amount of the
benefit from $9,000 to $10,000.
LGERS Purchase of Service-HB 1025-Local Governn:erztRetireu:enUPurcbase of Service (SL
2007-304) permits an employer to amortize the cost of probationary employment for members of the Local
Governmental Employees' Retirement System when it has elected to pay all or a part of that cost.
LGERS Retirement COLAS-The budget bill does not set the retirement cost of living. adjustment for
the Local Govemmental 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%. •
Police Officer/Firefighter Retirement-As in many previous sessions, a number of bills to provide
additional retirement benefits to particular classes of employees, including police officers, firefighters and
emergency medical services personnel, were introduced. These bills would have provided preferential
benefits, such as full pension benefits with 25 years of service and separation allowances for firefighters
and rescue squad workers: HB 1114, HB 1433, SB 1142, SB 1238, SB 1409, SB 1444. None of these
were enacted, Uut retirement issues remain eligible in the 2008 session. HB 328 -Flexible Pay»zer:dLafv
Enforceu:ent Separation (SL 2007-69) did not increase the special separation allowance benefit. It
simply provides that the allowance is to be paid in equal installments on the payroll frequency used by the
employer (rather than in 12 equal installments on the last day of the month).
Transportation
Infrastructure-The state budget, HB 1473 (SL 2007-323), 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
http://www.nclm.org%LegalBulletin/2007/08-24-07.htm 8/28/2007
The North Carolina League of Municipalities
Page 14 of 16
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 infra-state system) was lower than the previous
years due to decreased revenue estimates for the Highway Trust Fund.
There is considerable "buzz" about the potential for a Special Session of the General Assembly for
transportation issues. Whether a special session is called (either by the Governor or the required 2/3
majority of legislators), or a "special commission" is appointed, there is near universal agreement that
transportation needs were not adequately addressed in this last session. The challenge now will be to
ensure municipal transportation needs are well-defined and a central part of whatever public dialogue or
deliberations do take place.
Private Roads HB 976 - Przblic Vel:icrrlar Areas Defzrzed adds gated community roads to the
definition of public vehicular areas for purposes of North Carolina law and clarifies that emergency
service vehicles are to be granted immediate access to such roads.
Street Construction/Maintenance Responsibility-A major departure from the past appears in SB 1513
- County Ti•mzsportatiou Financing and Mru:icipal Powell Bill, which allows counties to participate in
financing, acquire land, use eminent domain and make improvements to the state highway system (not
municipal systems). Heretofore, counties did not have general authority to participate in transportation
programs in North Carolina. The legislation also allows municipalities, if they choose to do so, to
reprogram municipal Powell Bill funds to complete State TIP projects. HB 1576 - Coordinated Traffic
Signals/Reduce Energy Use permits municipalities or MPOs to develop traffic control plans that
coordinate traffic lights on state roads that become part of a municipal street system. This bill passed the
House and is eligible in the short session. SB 373 -Street Cor:strrzetiorr/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. ADOT-backed bill to require municipalities to take
responsibility for more streets from the state, HB 1462 - Mrrrzicipal Street Provisior:s, did not come up in
committee this session and did not advance.
Study-HB 1005 -Various Ti•mzsportation Changes/Study, passed on the last day of the session, added
transportation to the responsibilities of the state's Debt Affordability Advisory Committee and required
DOT to present a study to the Joint Legislative Transportation Committee by October 1, 2007 that
recommends any legislation for improving transportation, including alternative funding. It also authorized
the State Budget Office to spend $1 million to prepare a "statewide logistics plan" for commerce,
transportation, and long teen economic growth and to report its findings to the Joint Legislative
Transportation Committee by April 1, 2008.
Utilities
Electric Service Territories-Territorial disputes between electric cities and electric membership
corporations will be resolved by the NC Utilities Commission under HB 1395 -Electric
Srzppliers/Electricities Assig~zzz:ezzt (SL 2007-419). 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. Electricities successfully fended off various
unfavorable provisions and the League supported their position.
Liability-Legislation that passed the Senate would help to clarify a water utility's liability for water
characteristics that do not violate drinking water standards. SB I259 - No Liability/Water Meets Water
Stazzdards specifies that the water provider is not deemed to be an insurer of the quality of the water so
long as the water meets or exceeds the standards in the state drining water statutes. The provider of the
water is not deemed to be giving a warranty under the Uniform Commercial Code. The bill remains
eligible for further consideration in 2008.
Renewable Energy-Legislation created a renewable energy and energy efficiency portfolio standard for
electric power suppliers, including municipalities. SB 3 - Pro»:ote Renewable ErzergyBaseload
Cer:eratiorr (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. The bill also includes provisions that allow public utilities to recover costs for
new nuclear facilities until they are producing energy.
http://www.nchn.org/LegalBulletin/2007/08-24-07.htm 8/28/2007
The North CaroluZa League of Municipalities
Page 15 of 16
Telecommunications Services-Municipal officials spoke loudly and legislators responded on HB 1587
-Local Governn:eut Fair Coz~:petition Act. The bill was designed to keep cities and' counties from
providing telecommunications services, such as high-speed broadband service. As originally written, it
would have placed significant barriers, including requiring referendum approval before a city could
provide communications services such as cable, telephone, electronic voice, data or Internet access. The
League dubbed it a "no competition" bill, and municipal officials kept up a steady stream of contacts with
legislators. Despite backing and heavy lobbying by major telecommunications companies, the bill was
turned into a study with a final report not due until the 2009 session. Although the bill was not enacted
and no comprehensive study bill passed, the issue still could be studied by a standing legislative
commission. Our thanks to all the municipal officials who responded to our action alerts on this bill.
New Towns
The General Assembly passed three incorporation bills this session. The incorporation of the Town of
Butner in Granville County was effective July 27, 2007. The incorporation of the Town of Eastover in
Cumberland County must first be approved under Section 5 of the Voting Rights Act of 1965 by the US
Department of Justice and, if so approved, is subject to a referendum to be held within 150 days of the
approval. The incorporation of the Town of Hampstead in Pender County is subject to a referendum to be
held on November 6, 2007.
Studies
The General Assembly adjourned without enacting a studies bill. Some studies were authorized in
individual bills as reported above. The Speaker of the House and the Senate President Pro Tem may
choose to appoint select committees to study various issues, and some issues could be taken up by ongoing
study commissions such as Revenue Laws and Environmental Review. The League will monitor these
studies, provide information, and participate in shaping their recommendations as appropriate.
Looking Ahead to 2008
The 2008 Session of the General Assembly (the "short" session) will convene at 12:00 noon on Tuesday,
May 13, 2008. As is usually the case in short sessions, matters that maybe considered are limited. The
adjournment resolution, SJR 1573 -Adjournzuent Resolution (Res. 2007-68), specifies that the following
maybe considered in the 2008 Session: bills directly and primarily affecting the state budget;
constitutional amendments; bills introduced in 2007 that passed one chamber and were received in the
other in accordance with the rules; recommendations of study commissions and certain other named
committees; certified non-controversial local bills submitted by the deadlines noted below; appointments
to state boards and commissions; matters authorized by joint resolution passed by atwo-thirds majority of
the members present and voting in each chamber; bills primarily affecting any state or local pension or
retirement system; and bills to disapprove administrative rules. "Blank bills," those without substantive
provisions, are prohibited from introduction in the House.
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.
Final Thoughts
The League staff expresses our appreciation to League President Robert Partin, Mayor of Scotland Neclc,
for his leadership and assistance during this session. We also thank the other League officers and
members of the Board, and the chairs and members of the standing legislative action and technical
advisory committees. These municipal officials provided inspiring leadership and tools an active hand in
the League's legislative efforts. The core principles they identified and the two-year advocacy agenda they
developed are the foundation of the organization's success. And our very special thanks to all municipal
officials across the state that supported the League's efforts during this session to obtain our main
legislative goals and to defend the interests of municipalities. Once again you heeded our call for your
active involvement and, as always, that made all the difference.
Our Digest ofMuzzicipal Law will be in two parts again this year. We compiled summaries of important
local government cases decided by the state and federal courts in the past year, arranged by subject matter
topics. This Digest ofMuzzicipal Law, Part I.• Case Law will be sent to city attorneys, managers and others
in August.
http://www.nchn.org/LegaUBulletin/2007/08-24-07.htm 8/28/2007
The North Carolilza League of Municipalities
Page 16 of 16
We will follow up with our Digest ofMazzzicipal Law, Part II.• Legislatiozz, to be distributed in the fall. We
hope these publications will be useful and that you will retain them for quick future reference. But Ip ease
examine the actual language of ratified bills or court opinions, consult your attorney, or call us before
acting on any information contained in these publications. Effective dates are important, and some of the
bills reported herein have been ratified but not yet signed by the Governor. (See Note ozz Statzzs of
Legislatiozz above). League staff will be happy to try to answer any questions you may have and we look
forward to hearing from you.
Ellis Hankins, League Executive Director, also thanks Andy Romanet, ICim Hibbard, John Phelps, Anita
Watkins, Gregg. Schwitzgebel, Lee Mandell, Beau Mills, Charles Archer, and Margot Christensen for their
professional and effective representation of your interests and their good work in keeping you and your
legislators informed about our municipal issues and needs. They worked tirelessly on your behalf during
this session. ~Thanlcs also to the many other League staff members who had a hand in assisting with
various aspects of our legislative efforts this session.
S. Ellis Hankins Andrew L. Romanet, Jr.
Executive Director General Counsel
NC General Assembly Information
Main Number (Any Legislator)
Printed Bills Office
Bill Status Desk
,Legislative Building
2599
Raleigh, NC 27601-1096
Legislative Office Building
3113
Raleigh, NC 27603-5925
(919)733-4111
(919)733-5648
(919)733-7779
fax (919) 733-
fax (919) 733-
(NC General Assembly Website)
(NC League of Municipalities
bsite
http://www.nchn. org/LegaUBulletin/2007/08-24-07.htm
8/28/2007
SL2007-0323
Page 256 of 272
~-~-~h r~-, ~n+ ~-- - -1
AMEND SALES TAX HOLIDAY
SECTION 31.14.(a) G.S. 105-164.3 reads as rewritten:
"§ 105-164.3. Definitions.
The following definitions apply in this Article:
(37b)
37d
School instllictional material. -Defined in the Streamlined Agreement.
School sLipply. - An item that is commonly used by a stLident in the coLirse of
study and ~s considered a 'school
n=,,~.,-=~,-~-sunnly or school art suanly Linder the Streamlined
Agreement.
SECTION 31.14.(b) G.S. 105-164.13C(a) reads as rewritten:
"(a) The taxes imposed by this Article do not apply to the following items of tangible
personal property if sold between 12:01 A.M._ on the first Friday of AugList and 11:59 P.M. the
following Sunday:
(1) Clothing with a sales price of one hLUldred dollars.($100.00) or less per item.
2 School sL~pplies with a sales price of one hundred dollars ($100.00) or less per
item.
2a School_ instructional materials with a sales Brice of three hundred dollars
(3) Computers with ya sales price of three thousand five hundred dollars ($3,500)
or less per item.
(3a) Computer supplies with a sales price of two hundred fifty dollars ($250.00) or
less per item.
(4) Sport or recreational equipment with a sales price of fifty dollars ($50.00) or
less per item."
SECTION 31.14.(c) This section becomes effective October 1, 2007, and applies to
sales made on or after that date.
CAP THE VARIABLE WHOLESALE COMPONENT OF THE MOTOR FUELS TAX
RATE FOR TWO YEARS
SECTION 31.15.(a) Notwithstanding G.S. 105-449.80(a), for the period July 1,
2007, through June 30, 2009, the variable wholesale component of the motor fiiel excise tax rate
may not exceed twelve and four-tenths cents (12.4¢) a gallon.
SECTION 31.15.(b) This section is effective when it becomes law.
STATE ASSUME MEDICAID RESPONSIBILITIES
SECTION 31.16.1.(a) Effective October 1, 2007, twenty-five percent (25%) of the
nonfederal share of Medical Assistance Program costs and Medicare Part D clawback payments
borne by the counties, excluding administrative casts, shall be borne by the State.
SECTION 31.16.1.(b) Effective July 1, 2008, fifty percent (50%) of the nonfederal
share of Medical Assistance Program costs and Medicare Part D clawbaclt payments borne by
the counties, excluding administrative costs, shall be borne by the State.
SECTION 31.16.1.(c) Effective July 1, 2009, G.S. 108A-54 reads as rewritten:
"§ 108A=54. Authorization of Medical Assistance Program.
The Department is authorized mn~-e~`ere~~to establish a _ _ _ _ ' - __ _ ._ . '. Medicaid
7 Ca. ~. ~._ ___ J
Program in accordance with Title XIX oft e federal Social Security Act. ~fi-~rrr~f~e~e±~_.; .~ ____ _ __,_
-epartment may adopt rul
oral share of the costs c
le for the county's cost c
the
SL2007-0323 Page 257 of 272
- - - „
SECTION 31.16.1.(d) Subsection (a) of this section becomes effective October 1,
2007, and applies to Medicaid claims paid by the State on or after that date and ends with claims
paid by the State through May 31, 2008. Subsection (b) of this section becomes effective June 1,
2008, and applies to Medicaid claims paid by the State on or after that date and ends with claims
paid by the State through May 31, 2009. Subsection (c) of this section becomes effective June 1,
2009, and a plies to Medicaid claims paid by the State on or after that date.
SECTTION 31.16.2.(a) ADM Funding Adjustment. -Notwithstanding G.S. 115C-546.2
(a), the amount that would otherwise be allocated to counties under that subsection for fiscal
year 2007-2008 from the Public School Building Capital Fund is reduced as follows:
(1) If the amount of a county's Medicaid payments that are assumed by the State
for fiscal year 2007-2008 under Section 31.16.1.(a) of this act exceeds the
allocation the county would receive under this section based on its per average
daily membership, the amount of the county's allocation from the Fund is
reduced by sixty ppercent (60%) of the amount the county would receive based
on its average daily membership.
(2) If the amount of a county's Medicaid payments that are assumed by the State
for fiscal year 2007-2008 under Section 31.16.1.(a) of this act does not exceed
the allocation the county would receive tinder this section based on its per
average daily membership, the amount of the county's allocation from the Fund
is reduced by an amount e ual to sixty percent (60%) of the couunty's Medicaid
payments that are assumed~y the State for fiscall year 2007-2008.
SECTION 31.16.2.(b) Restriction. - In fiscal year 2007-2008, a county must use a
portion of the revenue that is available to it, as a result of the assumpption by the State of part of
the county's Medicaid payments, for the purposes set out in G.S. 115C-546.2(b). The portion
that must be used for these purposes is an amount equal to the difference between what the
county would receive under G S. 115C-546.2(a) based on its per average daily membership and
the adjusted amount it receives under subsection (a) of this section.
SECTION 31.16.2.(c) County Hold Harmless. - If the amount of the county's
Medicaid costs and Medicare Part D clawbaclc payments assumed by the State for fiscal year
2007-2008, less the amount by which the county's ADM funding is reduced under subsection (a)
of this section, does not equal or exceed five hundred thousand dollars ($500,000), the State
must reimburse the county for the difference, but not less than one hundred dollars ($100.00).
The Secretary of the Department of Health and Human Services must certify to the
Secretary of Revenue the amount of the county's Medicaid costs and Medicare Part D c awbaclc
payments assumed by the State under section 31.16.1.(a) of this act. To obtain the revenue for
the hold harmless distribution, the Secretary of Revenue must withhold from sales and use tax
collections under Article 5 of this Chapter the amount needed to make the hold harmless
payments.
The Secretary of Revenue must estimate a county's hold harmless amount and send
the county ninety percent (90%) of the estimated amount with the sales tax distribution made
under G.S. 105-472 for March of 2008. At the end of the 2007-2008 fiscal year, the Secretary
must determine the county's actual hold harmless amount for the 2007-2008 fiscal year and
send the remainder of the county's hold harmless amount to the county by August 15, 2008.
SECTION 31.16.2.(d) This section is effective when it becomes law. Subsections (a)
and (b) of this section apply to allocations from the Public School Building Capital Fund for
fiscal year 2007-2008..
SECTION 31.16.3.(a) Notwithstanding the provisions of Article 44 of Chapter 105
of the General Statutes that authorize one-half percent (1/2%) local sales and use taxes, the tax
rate for a tax imposed under that Article for the period October 1, 2008, through September 30,
2009, is one-quarter percent (1/4%) rather than one-half percent (1/2%): A resolution enacted
by a county under Article 44 before October 1, 2008, to levy one-half percent (1/2%) local sales
and use tax is considered to be a resolution authorizing the levy of one-fourth percent (1/4%)
local sales and use taxes under that Article, as amended by this section.
SL2007-0323 Page 258 of 272
SECTION 31.16.3.(b) G.S. 105-520 reads as rewritten:
"§ 105-520. Distribution of taxes.
(a) Point of Origin. -The Secretary must, on a monthly basis, allocate to each taxing
county -___-'___'~' _~` the net proceeds of the tax collected in that county under this Article. If the
Secretary collects taxes under this Article in a month and the taxes cannot be identified as being
~ _yr.
attributable to a particular taxing county, the Secretary must allocate ~--er_ t e net
proceeds of these taxes among the taxing counties in proportion to the amount of taxes collected
m each county under this Article in that month.
(c) Distribution Between Counties and Cities. -The Secretary must divide and distribute
the funds allocated under this section each month between each taxing .county and the
municipalities located in the coLUlty in accordance with the method by which the one percent
(1 %) sales and use taxes levied in that county ppursuant to Article 3 9 of this Chapter or Chapter
1096 of the 1967 Session Laws are distributed. No municipality may receive any fiends under
this subsection for a month if it is not entitled to a distribution under G.S. 105-501 for the same
month."
SECTION 31.16.3.(c) G.S. 105-521 reads as rewritten:
"§ 105-521. Transitional local government .hold harmless for repealed
reimbursements.
(a) Definitions. -The following defmitions apply in this section:
(1) Local government. - A county or mumcipality that received a distribution of
local sales taxes in the most recent fiscal year for which a local sales tax share
has been calculated.
(2) Local sales tax share. - A local governrrient's percentage share of the two-cent
(2¢) sales taxes distributed during the most recent fiscal year for which data are
available.
(3) Repealed reimbursement amount. -The total amount a local government
would have been entitled to receive during the 2002-2003 fiscal year under
G.S. 105-164.44C, 105-275.1, 105-275.2, 105-277.001, and 105-277.1A, if
the Governor had not withheld any distributions under those sections.
3a
the 1967 Session Laws other than revenue from the sale of food that is
subject to local tax but is exempt from State tax under
G.S. 105-164.13B.
(4) Two-cent 2¢) sa es taxes. -The first one-cent (1¢) sales and use tax
authorized in Article 39 of this Cha ter and in Chapter 1096 of the 1967
Session Laws, the first one-half cent (pl/2¢) local sales and use tax authorized
in Article 40 of this Chapter, and the second one-half cent (1/2¢) local sales
and use tax authorized in Article 42 of this Chapter.
(b) Distributions. - On or before August 15, ~8f3-'3; 2008, and every August 15 through
August 15, 2012, the Secretary must multiply each local government's local sales tax share by
the estimated amount of replacement revenue that all local governments ~~c~~1-he-are expected
to receive during the current fiscal
Hits-r4r~el~~f~~= year. If the resulting amount is less than one hundred percent (100%) of the
local government's repealed reimbursement amount, the Secretary must pay the local
government the difference, but not less than one hundred dollars ($100.00).
b. Twentv- eve percent 25%) of the amount of sales and use tax revenue
SL2007-0323 Page 259 of 272
On or before May 1 of each fiscal year through May 1, 2012,
the Department of Revenue and the Fiscal Research Division of the General Assembly must
each submit to the Secretary and to the General Assembly a final projection of the estimated
amount of replacement revenue that all local governments would be expected to receive during
the upcoming
~fer-th~e-fiscal year. If, after May 1 and before a distribution is made, a law is enacted that would
affect the projection, an updated projection must be submitted as soon as practicable. If the
Secretary does not use the lower of the two final projections to make the calculation required by
this subsection, the Secretary must report the reasons for this decision to the Joint Legislative
Commission on Governmental Operations within 60 days after receiving the projections.
(c) Source of Funds. - 'The Secretary must draw the funds distributed under this section
from sales and use tax collections under Article 5 of this Chapter.
(d) Reports. -The Secretary .must report to the Revenue Laws Study Committee by
January 31, 2004, and each January 31 through January 31, 2013, the amount distributed under
this section for the current fiscal year."
,SECTION 31.16.3.(d) G.S. 105-472 is amended by adding a new subsection to
read:
~~(1,11 (''.~,,,r,1-~r 1?a.i„r+t;nn Fnr (''itc~ ~-Tnlrl ~Tarn~laee - 'T'1-it~ CPrYPtarcT rni~et rar371r~a Park
G.S. 105-522. This reduction does not affect the amount allocated to municipalities under this
SECTION 31.16.3.(e) Section 9 of Chapter 1096 of the 1967 Session Laws, as
amended, is amended by adding a new paragraph at the end of that section to read:
"The Secretary of Revenue must reduce the amount distributable to Mecklenburg County
under this section by the amount set in G.S. 105-522. This reduction does not affect the amount
allocated to municipalities under this section."
SECTION 31.16.3.(f) Article 44 of Chapter 105 of the General Statutes is amended
by adding two new sections to read:
"~ 105-522. City hold harmless for repealed local taxes.
~~ LG1111161V11~. - 1111+ 1V11V W111 ~' U1~11111L1V11~ u~J~Jly 111 bluo ~7VV61Vi1. '
Eligible municipality. - A municipality that was incorporated on or before
October 1 2008 and receives a distribution of sales and use taxes under
G.S. 105-472.
(~ H-chess amount. -Fifty percent ,50%) of the amount of sales and use
tax revenue distributed under Article 40 of this Chapter to the municipality for
a month other than revenue from the sale of food that is subject to local tax but
is exem t from State tax under G.S. 105 -164.138.
~b Requirement - county is requrre to o tee 1gl e municipalities in the county
harmless from the repeal of the local sales and use taxes formerly imposed under this Article.
The . Secretary must add an eligible municipality's hold harmless amount to the amount
distributed to the municipality under this Subchapter. To obtain the revenue for the hold
harmless distribution, the Secretary must reduce each county's monthly allocation under
G.S. 105-472(b) or under Chapter 1096 of the 1967 Session Laws by the hold harmless amotiults
hold harmless for
~tive costs of Medicaid.
Definitions. -The follo~
Hold harmless tr
and Medicare P
G.S.108A-54 fc
aled local taxes.
itions annly in this
ve
the State under
thousand dollars
SL2007-0323
tax under G.S. 105-
Page 260 of 272
G.S. 105-472 for March of that year an amount equal to ninety percent (90%) of its estimated
SECTION 31.16.3.(g) For fiscal year 2008-2009, the repealed sales tax amount
determined under G.S. 105-522 and G.S. 105-523, as enacted by this section, is calculated
based on fifty percent (50%) of the amount distributed to a municipality or county under Article
40 of Chapter 105 of the General Statutes on or after October 2, 2008, less the amount
distributed to the municipality or county on a per capita basis under repealed G.S. 105-520(b) in
October, November, and December of 2008.
SECTION 31.16.3.(h) G.S. 105-164.4(a), as amended by Section 31.2 of this act,
reads as rewritten:
"(a) A privilege tax is imposed on a retailer at the following percentage rates of the
retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is rte1
.four and one-half percent 4.5% ."
SECTION 31.16.3. i Section 1 5-2 9.1 rea s as rewritten:
"(b) Distribution. -The Secretary must distribute a portion of the net use tax proceeds
collected under this section to counties and cities. The portion to be ~ distributed to all counties
and cities is the total net use tax proceeds collected under this section multiplied by a fraction.
The numerator of the. fraction is the local use' tax proceeds collected under this section. The
denominator of the fraction is the total use tax proceeds collected under this section. The
Secretary must distribute this portion to the counties and cities in proportion to their total
distributions under Articles 39, 40, ~z-42.~ and 43 of this Chapter and Chapter 1096
of the 1967 Session Laws for the most recent period for which data are available. The provisions
of G.S. 105-472, 105-486, and 105-501 do not apply to tax proceeds distributed under this
section."
SECTION 31.16.3.(j) Subsection (c) of this section becomes effective January 1,
2008. The remainder of this section becomes effective October 1, 2008. Subsections (a) and (h)
of this section apply to sales occurring on or after that date. The remaining subsections apply to
distributions for months beginning on or after that date.
SECTION 31.16.4.(a) G.S. 105-515, 105-516, 105-517, 105-518, 105-519, and
lOS-520 are repealed.
SECTION 31.16.4.(b) G.S. 105-501 reads as rewritten:
"§ 105-501. Distribution of additional taxes.
~ Method. -The Secretary s3.~zrl~znust, on a monthly basis, allocate to each taxi
coun the net proceeds of the additional one-half percent (1/2%) sales and use taxes i~i~eel
c~d in that county under this _"_`' _'__ `- `'- - `---~~- - ----`- -- --- - -- ___ ____.~... ,_.~...~. __~__- _
le to a particular taxing county, the Secretary must ,
~~ the taxing counties in nronortion to the amount of
SL2007-0323
Page 261 of 272
The Secretary must divide and distribute the funds allocated to a taxm cg_ ounty eacn montn
under this section between the county and the municipalities located in the county in accordance
with the method by which the one percent (1 %) sales and use taxes levied in that county
pursuant to Article 39 of this Chapter or Chapter 1096 of the 1967 Session Laws are distributed.
No municipality may receive any funds under this section if it was incorporated with an
effective date of on or after January 1, 2000, and is disqualified from receiving fiends Colder
G.S. 136-41.2. No municipality may receive any funds under this section, incorporated with an
effective date on or after January 1, 2000, unless a majority of the mileage of its streets are open
to the .public. _ _ _
b~.--) Deductions. - In determining the net proceeds of the tax to be distributed, the
Secretary ~?h~~nust deduct from the collections to be allocated an amount equal to one-twelfth
of the costs during tie preceding fiscal year of:
(1) The Department of Revenue in performing the duties imposed by
G.S. 105-275.2 and by Article 15 of this Chapter.
(la) Seventy percent (70%) of the expenses of the Department of Revenue in
performing the duties imposed by Article 2D of this Chapter.
(2) The Property Tax Commission.
3) The School of Government at the University of North Carolina at Chapel Hill
in operating a training program in property tax appraisal and assessment.
(4) The personnel and operations provided by the Department of State Treasurer
for the Local Government Commission.
SECTION 31.16.4.(c) G.S. 105-522(a), as enacted by Section 31.16.3(f) of this act,
reads as rewritten:
"(a) Definitions. -The following definitions apply in this section:
(1) Eligible municipality. - A municipality that was incorporated on or before
October 1, 2008, and receives a distribution of sales and use taxes under
G. S: 105 -472.
(2) Hold harmless amount. -The sum of the following:
a. Fifty percent (50%) of the amount of sales and use tax revenue
distributed under Article 40 of this Chapter to the municipality for a
month, other than revenue from the sale of food that is subject to local
tax but is exempt from State tax under G.S. 105-164.13B.
b. Twenty-five percent (25%) of the amount of sales and use tax revenue
the 1967 Session Laws other than revenue from the sale of food that is
subject to local tax but is exempt from State tax under
G.S. 105-164.13B.
c. e amount etermined under sub-subdivision a. of this subdivision
su tracte om t e amount etermine un er su -su lvision . o t is
one-auarter percent (.25%) tax on the basis of point of origin instea o
SECTION 31.16.4.(d) G.S. 105-523(a), as enacted by Section 31.16.3(f) of this act,
reads as rewritten:
"(a) Definitions. -The following definitions apply in this section:
(1) Hold harmless threshold. -The amount of a county's Medicaid service costs
and Medicare Part D clawbaclc payments assumed by the State under
G.S.108A-54 for the fiscal year, plus five hundred thousand dollars
($500,000).
(2) Repealed sales tax amount. -The sum of the following:
a. Fifty percent (50%) of the amount of sales and use tax revenue
distributed to a county under Article 40 of this Chapter, other than
revenue from the sale of food that is subject to local tax but is exempt
SL2007-0323 Page 262 of 272
from State tax lu~der G.S. 105-164.13B.
b. Twenty-five percent (25%) of the amount of sales and use tax revenue
G.S. 105-164.13B.
c. e amount etermined under sub-subdivision a. of this subdivision
su tracte om t e amount etermine un er su -su ivrslon. . o t 1s
one-quarter percent (.25%) tax on the basis of point of origin instead of
SECTION 31.16.4.(e) For fiscal year 2009-2010, the repealed sales tax amount
determined under G.S. 105-522(2)(a)(2)b, as enacted by this section, and G.S. 105-523(a)(2)b,
as enacted by this section, is calculated based on twenty-five percent (25%) of the amount
distributed to a municipality or cotuzty under Article 39 of Chapter 105 of the General Statutes
or Chapter 1096 of the 1967 Session Laws on or after October 1, 2009, less the amount
distributed to the municipality or county on the basis of point of origm under repealed
G.S. 105-520(a) in October, November, and December of 2009.
SECTION 31.16.4.(f) The title of Article 44 of Chapter 105 of the General Statutes
reads as rewritten:
"Article 44.
~~ .Local Government Hold
Harmless Provisions."
SECTION 31.16.4.(8) G.S. 105-164.4(a), as amended by Sections 31.2 and.31.16.3
(h) of this act, reads as rewritten:
"(a) A privilege tax is imposed on a retailer at the following percentage rates of the
retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is four and
.three- uarters percent 4.75% ."
SECTION 31.3~4~is section ecomes effective October 1, 2009. Subsections
(a) and (g) of this section apply to sales occurring on or after that date. Subsections (b), (c), and
(d) of this section apply to distributions for months beginning on or after that date.
SL2007-0323 ~°~~ ~ gPage 262 of 272
LOCAL OPTION COUNTY TA~_XES
SECTION 31.17.(a) Chapter 105 of the General Statutes is amended by adding a
new Subchapter to read:
~iC+TT'~!'~T7 A DTTi'T) Y T !1!'r A T lI~TTl1l~T !"~l1TT1~TTV T A'~7Ti'C~
SL2007-0323 Page 263 of 272
;ion of the tax must become effective on the
until the end of the fiscal ear in which the
of a land transfer tax, or re uction of its rate,-
a
liability for a tax that attacriea. netore the el:~ective aate oz ine repeal or reaucilcn, nur u~c~ 1~
1L - ---~- -- -'-
"~ 105-535. Short
Calr~c and TTea Tax
Sales and Use Tax Act.
sales and use tax under
purpose.
"~ 105-604. Repeal or reduction>
reduction."
SECTION 31.17.(b) Subchapter VIII of Chapter 105 of the General Statutes is
amended by adding a new Article to read: ~~ ^ ~, ^~ Q ^ ~
SL2007-0323
accordance with the rocedures of G.S. 163-287.
c Ballot question. -The form of t e qu
election concerning_the levy of the tax authorized
Local sales and use tax at the rate of
other State and ocal sa es an use taxes.'
Limitation. - A tax levied under this
same time as a tax levied under Article 60 of this
"~ 105-538. Administration of taxes.
Page 264 of 272
.25%) in addition to all
under this Article does not apply to the sales price of food that is exempt izom tax pursuant to
G.S. 105-164.13B. The Secretary shall not divide the amount allocated to a county between the
coon and t e mumci a~ities wit~im t e coon Notwlt stan~m the rovlslons of
G.S. 105-467(c), during t e 2008 calendar year a tax levied under this Article may become
__
least 60 days' advance notice of the new tax ew.
SECTION 31.17.(c) G.S. 105-164.15A reads as rewritten:
"§ 105-164.1SA. Effective date of rate changes for sir: services 'and items taxed at
combined general rate.
~ Services. -The effective date of a rate change for a service taxable under this Article
is administered as follows:
(1) For a rate increase, the new rate applies to the first billing period that starts on
or after the effective date. For a service billed after it is rovided, the first
billing period starts on the effective date. For a service billed before it is
provided, the first billing period starts on the first day of the month after the
effective date.
(2) For a rate decrease, the new rate applies to bills rendered on or after the
effective date.
~b Combined Rate Items -The effective date of a rate change for an item that is taxable
under this Article at the combined~eneral rate is the effective date of any of the followuz~:
The effective date of a change in the State general rate of tax set in
G.S. 105-164.4.
~2) For an mcrease in the authorization for local sales and use taxes, the date on
~ . .Y t t C__1_ _7_ ___a. ___ T TTTT _-. 1'x.7...,. rl, .....4....
(~ For a repeal in the authorization for local sales and use taxes the effective date
of the repeal."
SECTION 31.17.(d) This section is effective when it becomes law.
ALTERNATIVE FOR ADDRESSING A CORPORATION'S ATTEMPT TO AVOID
STATE TAXES THROUGH THE I.TSE OF A REIT
SECTION 31.18.(a) G.S. 105-130.5(a) is amended by adding a new subdivision to
read:
" 19 The dividend paid deduction allowed under the Code to a captive REIT, as
defined in G.S. 105-130.12."
SECT - 0.5(b) is amended by adding a new subdivision to
read:
" 23 A dividend received from a ca tive REIT, as defined in G.S. 105-130.12."
. c rea s as rewritten:
"§ 105-130.12. Real estate investment trusts.
SL2007-0323
Page 265 of 272
_ .. .~ . ., . r ,, -
trust.
SECTION 31.18.(d) The Department of Revenue must report to the Revenue Laws
Study Committee by May 1, 2009, on the amount of corporate income tax revenue generated in
the 2007 taxable year by the addition to corporate income required by G.S. 105-130.5(a)(19), as
enacted by this section. Based upon this report, the Revenue Laws Study Committee must
determine the revenue-neutral corporate income tax rate and include this information in its
report to the 2010 Session of the 2009 General Assembly.
SECTION 31.18.(e) This section does not affect the authority of the Department of
Revenue under G.S. 105-130.6, G.S. 105-130.16, or any other statute to require a corporation
to file a consolidated return or to determine the net income of a corporation properly attributable
to this State. The General Assembly fords that an alternative method of addressing a
corporation's attempt to use a real estate investment trust to shift income between entities and
avoid State taxes is to require a captive REIT, as defined in G.S. 105-130.12 as amended by this
section, to add to its federal taxable income the dividend paid deduction otherwise allowed
Linder the Internal Revenue Code.
SECTION 31.18.(# This section is effective for taxable years beginning on or after
January 1, 2007.
ENI3ANCE 529 PLAN INCOME TAX DEDUCTION
SECTION 31.19.(a) Section 27 of S.L. 2006-221 is repealed
SECTION 31.19.(b) Section 24.12(b) of S.L. 2006-66 reads
"SECTION 24.12.(b) This section is effective for taxable years
January 1, ,
"(d) Other Adjustments
as rewritten:
after
C it
G.S. 105-134.6(d)(4) reads as rewritten:
- The following adjustments to taxable income shall be made in
calculating North Carolina taxable income:
(4) A taxpayer
-----.. i~_.._a ._ ,.,..~_ ---, , __~_~_
1~-}esy~-ti~r`~- _._______ ____ ._ __ __~ . __ _ _ ~~-~~~~ay deduct from taxa e
income the amount, not to exceed ,moo
thousand five hundred dollars ($2,500), contributed to an account in the
Parental Savings Trust Fund of the State Education Assistance Authority
established pursuant to G.S. 116-209.25. In the case of a married couple filing
a joint return, the maximum dollar amount of the deduction is gin- - ___ _ _
.five thousand dollars ($5,000
Eii-S~~s
SL2007-0323
Page 266 of 272
T141~~~ .~tO,Q~Qr1Q
T T 7 r'T~7r~~~~ 1 1 w~ 1~ i~1IIl ~IIviv ~l
J~"'O_ _ ~~~~V~~V__~~, V~~VppV
• ~V~IIII"
SECTION 31.19.(d)~ Effective for taxable years beginning on or after January 1,
2012, G.S. 105-134.6(d)(4), as rewritten by subsection (c) of this section, reads as rewritten:
"(d) Other Adjustments. -The following adjustments to taxable income shall be made in
calculating North Carolina taxable income:
(4) A taxpayer whose adiusted gross income (AGI~ as calculated under the Code,
is less than the amount listed in this subdivision may deduct from taxable
income the amount, not to exceed two thousand five hundred dollars ($2,500),
contributed to an account in the Parental Savings Trust Fund of the State
Education Assistance Authority established pursuant to G.S. 116-209.25. In
the case of a married couple filing a joint return, the maximum dollar amount
of the deduction is five thousand dollars ($5,000).
Filing Status AGI
Married filing jointlX 100 000
Head of household 80,000
Single 60,000
Married, filing; separately 50,000"
SECTION 31.19.(e) Subsection (c) of this section is effective for taxable years
beginning on or after January 1, 2007. The remainder of this section is effective when it
becomes law.
SALES TAX REFUND -RESEARCH SUPPLIES
SECTION 31.20.(a) G.S. 105-164.3 is amended by adding a new subdivision to
read:
"§ 105-164.3. Definitions.
The following definitions apply in this Article:
33a Analytical services - Testing laboratories that are included in national
industry 541380 of NAICS or medical laboratories that are inchided in national
industry 621511 of NAICS."
SECTION 31.20.(b) G.S. 105-164.14 is amended by adding a new subsection to
read:
11~
a
the amount ny wnlcn sales ana use tiaxe5~7A.1U Uy 1.11G LCLX~1GlyG1 111 61ll1 ~.76Q.LG 111 6116 11A1Ja1 yGat
exceed the amount aid b the tax a er in this State in the 2006-2007 State fiscal ear. A
request or a re n must e m writm~ an must me u e any 1 ormanon an ocumentation
that the Secretary requires A request for a refund is due within six months after the end of the
State's fiscal year Refunds applied for after the due date are barred."
SECTION 31.20.(c) Subsection (b) of this section becomes effective July 1, 2007,
and applies to purchases made on or after that date. The remainder of this section is effective
when it becomes law.
WORK OPPORTUNITY TAX CREDIT
SECTION 31.21.(a) Article 3B of Chapter 105 of the General Statutes is amended
by adding a new section to read:
"~ 105-129.16G. Work Opportunity Tax Credit.
le year is allowed a credit against the tax imposed by this Part. The credit is
North Carolina Association of County Commissioners
Estimated Additional County Revenue Authority
County .4% Land
Transfer 1/4 Cent Point
Sales Tax
Alamance 3,251,750 3,841,857
Alexander 451,304 467,394
Alleghany 434,558 204,203
Anson 267,848 313,232
Ashe 1,126,440 549,707
Avery 1,332,874 543,762
Beaufort 1,113,084 1,186,875
Bertie 213,012 205,275
Bladen 313,386 458,603
Brunswick 14,041,34$ 3,112,319
Buncombe 9,894,652 8,436,602
Burke 1,054,402 1,590,672
Cabarrus 6,860,952 5,267,593
Caldwell 1,217,068 1,476,042
Camden 276,154 158,392
Carteret 6,262,066 2,552,628
Caswell 189,664 168,401
Catawba 3,386,124 4,836,544
Chatham 2,671,990 994,185
Cherokee 1,691,628 845,047
Chowan 388,200 304,496
Clay 942,798 212,267
Cleveland 1,159,962 1,906,886
Columbus 443,968 934,330
Craven 3,030,396 2,400,049
Cumberland 5,911,688 8,141,461
Currituck 1,966,616 929,877
Dare 4,318,868 3,153,888
Davidson 2,432,254 2,748,945
Davie 1,016,194 658,486
Duplin 666,810 822,800
Durham 10,281,965 9,206,212
Edgecombe 537,170 782,520
Forsyth 8,295,714 11,418,327
Franklin 1,336,866 785,570
Gaston .3,718,896 4,445,691
Gates 128,564 98,974
Graham 253,202 151,697
Granville 1,052,944 842,627
Greene 119,616 173,320
Guilford 13,596,148 15,673,853
Halifax 612,078 1,135,918
Harnett 1,877,684 1,505,336
Ha ood 2,246,888 1,613,812
Henderson 4,214,018 2,553,967
Hertford 196,466 528,074
Hoke 828,736 341,644
Hyde 231,896 133,649
Iredell 6,855,846 4,908,336
Jackson 3,616,940 1,035,437
Johnston 4,496,488 3,428,087
Jones 91,770 88,575
~-I-{~"ac~en~- 4- ~
North Carolina Association of County Commissioners
Estimated Additional County Revenue Authority
County .4% Land
Transfer 1/4 Cent Point
Sales Tax
Lee 958,334 1,517,896
Lenoir 388,390 1,307,049
Lincoln 2,310,316 1,489,937
Macon 2,269,592 1,230,402
Madison 830,008 227,647
Martin 166,492 496,596
McDowell 812,310 815,667
Mecklenburg 44,781,832 33,040,341
Mitchell 485,242 368,970
Montgomery 712,956 428,562
Moore 3,244,290 2,473,222
Nash 2,408,390 2,834,317
New Hanover 13,079,966 8,719,284
Northampton 521,768 187,597
Onslow 4,498,396 3,934,310
Orange 4,013,532 3,031,453
Pamlico 801,322 194,740
Pasquotank 1,214,384 1,167,495
Pender 2;895,160 826,380
Perquimans 495,932 151,188
Person 848,096 745,479
Pitt 3,523,972 4,584,613
Polk 1,091,696 274,500
Randolph 1;832,268 2,442,154
Richmond 460,416 877,791
Robeson 769,832 2,239,943
Rockingham 1,115,628 1,673,750
Rowan 1,975,422 2,597,696
Rutherford 1,857,998 1,296,835
Sampson 443,496 1,080,272
Scotland 352,708 761,301
Stanly 813,774 1,344,973
Stokes 546,106 518,731
Surry 862,388 1,931,278
Swain 674,546 244,696
Transylvania 1,628,876 848,348
Tyrrell 826,656 51,858
Union 9,621,680 3,672,624
Vance 3,051,514 1,037,014
Wake 40,208,802 27,963,291
Warren 530,804 192,708
Washington 371,358 202,305
Watauga 2,932,426 1,844,185
Wayne 1,425,674 2,570,523
Wilkes 985,352 1,397,974
Wilson 1,132,588 2,016,771
Yadkin 287,880 541,171
Yance 801,096 329,720
Total 310,779,617 250,000,000
Notes:
Land transfer based on actual 2005-06 deed stamp receipts
Estimated sales taxes excludes food.
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: August 30, 2007
Action Agenda
Item No. 5
SUBJECT: Proposed 2008-18 Capital Investment Plan and 2008-09 Budget Timeline
DEPARTMENT: County Manager, Budget PUBLIC HEARING: (Y/N) No
ATTACHMENTS: INFORMATION CONTACTS:
Fiscal Year 2008-09 Timelines and Laura Blackmon, (919) 245-2300
Milestones Donna Coffey, (919) 245-2151
PURPOSE: To approve the proposed 2008-18 Capital Investment Plan and 2008-09 Budget
timeline and discuss strategies for setting Board and community priorities.
BACKGROUND:
During the Manager's review in June 2007, she proposed timelines for the upcoming 2008-18
Capital Investment Plan (CIP) and 2008-09 Budget. Since that time, staff has modified the
original timeline slightly -more specifically by moving the CIP presentation from October 9,
2007 to October 23, 2007.
The Manager has also proposed a facilitated '/2-day workshop for the Board to engage with
County staff and focus on long-range plans by identifying goals and priorities. Should the Board
approve Item 2 on this agenda (Changes in BOCC Regular Meeting Schedule for 2007), the
workshop will be held on the afternoon of September 14, 2007 and will be facilitated by Dr.
Phillip Boyle. This initial workshop, to be held at the Link Government Services Center in
Hillsborough, will allow the Board to identify driving forces and challenges that currently or will
soon face the County and then look for ways to navigate policy issues, balance choices and
make collective decisions.
FINANCIAL IMPACT: The approved 2007-08 General Fund budget includes funds to cover the
anticipated facilitation cost.
RECOMMENDATION(S): The Manager recommends that the board approve the timeline and
milestones for fiscal year 2008-09, discuss strategies for setting Board and community
priorities, grid provide direction to staff, as appropriate.
-~}-~a.c.h ~m end 5 -- I
~ asisoio~
,~ j,,
~-~ i
~ ~ ~ ~ ~,~ ~~~ ~' r 2008-09 Timelines and Milestones
Fiscal Yea
~~
FY 2008-18 Capital Investment Plan (CIP)
On April 24, 2007, the Board approved a plan that would change the timing of the
Board's review and decision-making timeline with regard to the County and
School Capital Investment Plan (CIP). Staff plans to expand the CIP review to
include annual operating impacts of staffing, maintaining and repayment of debt
in addition to capital infrastructure costs associated with new projects. The plan
that follows gives a rough idea of what the 2008-18 CIP timeline will look like.
August 30
2007 BOCC Work Session -preliminary capital revenue
, projections
2007
September 25 Joint School/County Work Session -preview of
, 2008-18 school capital needs
October 23
2007 Presentation of Manager's Recommended 2008-
'
, Capital Investment Plans
18 and Schools
November 5, 2007 '2008-18 CIP Public Hearing
2007
November 13 BOCC Work Session - 2008-18 Schools and
, County Capital Plans
2007
December 3 BOCC Approval of 2008-18 School and County
, CIPs
February/March 2008 Formal Adoption of School and County Capital
Project Ordinances
i
2008-09 Budgef Process
08/30/07
The Tax Goal that the Board approved in January 2007 provided staff with a tax
rate increase target for fiscal year 2007-08. That goal was a good first step in
balancing School and County needs with maintaining taxes at a level that many
residents could afford. A natural progression might be to expand the 2008-09
Tax Goal to include other guidelines and priorities that the Board may see as
necessary.
September 14, 2008 Board Work Session with Phillip Boyle -Strategic
('/2 day work session) Direction and Policy Navigation
Financial Forecasting and Preliminary Budget
Work Session -Examples of topics include:
® Year-to-Date Fiscal Update for Fiscal Year
2007-0$
5-Year revenue and expenditure projections
5-Year fund balance projections
October 18, 2007 ~ Anticipated 5-Year Tax rate projections
® Future Debt Capacity
® Preliminary discussions about budget/tax goal,
future budget assumptionsJguidelines/priorities
® School Funding Guidelines
® Future budget drivers (new facilities, debt
service, etc)
® Outside Agency Funding Guidelines
November/December BOCC Retreat -adopt budget/tax goal/budget
2007 priorities
School Collaboration Meeting to discuss BOCC
JanuarylFebruary 2008 adopted budget/tax goal and budget
assumptions/guidelines; impact on school funding
Budget Work Session -Examples of topics
include:
February 2008 FY 2008-09 and 2009-10 Revenue Projections
® Proposed Fee Schedule Changes
® 2008-09 and 2009-10 Budget Drivers
08/30/07
2008-09 Budget Process (continued)
Budget Work Session -Examples of topics
include:
Review New Program Proposals
March & April 2008 New Staff Resource Requests
® 2008-09 Pay & Benefits Plans
® Outcome of Pay, Classification and Benefit
Study
Outside Agencies
April 2008 Joint BOCC and School Work Session -School
Boards present budget to BOCC
Mid-May 2008 School Collaboration meeting to discuss
preliminary recommendations on school funding
Mid-May 2008 Present Recommended Budget to BOCC
(including recommended School funding)
Late May Budget Public Hearings
Early to Mid June 2008 Budget Work Session -County Departments
Annual Operating Budgets
Early to Mid June 2008 Joint School/County Work Session to discuss and
negotiate school funding for fy 2008-09
`Mid June 2008 Work Session for Final Budget Negotiations and
Adoption of Resolution of Intent
Final June 2008 BOCC Budget Adoption
Meeting
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: August 30, 2007
Action Agenda
Item No. 6
SUBJECT: County Capital Funding Policy and 2008-18 Capital Plan Revenues
DEPARTMENT: County Manager, Budget, PUBLIC HEARING: (Y/N) No
ATTACHMENTS: INFORMATION CONTACTS:
County Capital Funding Policy (adopted Laura Blackmon, (919) 245-2300
April 24, 2007) Donna Coffey, (919) 245-2151
PURPOSE: To discuss the County Capital Funding Policy and how various elements of the
policy affect future capital plan revenues.
BACKGROUND:
On April 24, 2007, the Board approved the County's current Capital Funding Policy (see
attachment 1 of this agenda abstract). Examples of areas outlined or addressed by the policy
include:
~: NC Education Lottery Proceeds -Per the April 24, 2007 adopted County Capital
Funding Policy beginning in FY 2007-08, the County planned to budget Lottery proceeds
"in arrears" -meaning that funds would be budgeted in the year after the State distributes
them. For example, lottery proceeds distributed to the County during 2007-08 FY would
be budgeted in FY 2008-09. In addition, beginning in fiscal year 2008-09, each school
district will have the option to dedicate its share of Lottery monies as either additional
pay-as-you-go funding to address facility renovation needs or to repay debt service for
debt issued after fiscal year 2006-07 to address school facility renovation needs.
However, during the 2007-08 budget planning process, Commissioners agreed to
deviate somewhat from that policy and allow School Boards to allocate 50% of
anticipated 2007-08 Lottery proceeds for projects for completion within the .fiscal year.
Staff is not aware of a final decision regarding how each district plans to use their share
of future lottery funds -whether they plan to use them to offset future debt service or as
annual pay-as-you-go revenue for projects.
-~ Dedicated Ad Valorem Property Tax for Debt Service - In accordance with County
Capital Funding Policy adopted by BOCC on April 24, 2007, property tax revenues are
dedicated to repay debt service on 1988, 1992, 1997, and 2001. voter approved bonds as
well as alternative financing programmed on the debt issuance schedule approved by the
Board on May 5, 2004 and any subsequent updates to that schedule as the Board has
approved.
-~ Dedicated Ad Valorem Revenues for Recurring Capital - In the County's Capital
Funding Policy adopted April 24, 2007 Commissioners declared their intent to dedicate
2
the equivalent of 3 cents on the annual ad valorem property tax to fund recurring School
capital expenditures plus the equivalent of 1 cent on the annual ad valorem property tax
to fund recurring County capital projects. However, the Board also acknowledged that
there will be times when the "County will be bound fiscally and unable to achieve full
funding. During those times, Commissioners may find it necessary to depart from the
Capital Funding Policy." The Policy further states that the Board of County
Commissioners will consider a timetable for phasing in the additional two cents
necessary to fund the recurring capital component of the Policy.
~: Public School Building Funds (PSBF) & School Construction Impact Fees (SCIF) -
The County's Capital Funding Policy dedicates PSBF and SCIF to repayment of .school
related debt.
Since the adoption of the policy in April 2007, a number of events have occurred that ultimately
affect current and future capital revenues. For example, 2007 NC General Assembly budget
action related to the Medicaid Relief/Tax Swap reduces PSBF monies anticipated in the
County's current year budget by $457,024 thereby causing a revenue shortfall in the County's
2007-08 General Fund budget. In addition, the State plans to fund Medicaid Relief by
rescinding Article 40 sales tax authority and redistributing a portion of Article 42 sales tax. The
distribution change associated with Article 42 (beginning in fiscal year 2009-10) will have a
negative impact on future County and School capital funding.
The General Assembly also gave counties authority to levy either a new one-quarter cent sales
tax or a 0.4 percent land transfer tax, subject to voter approval. As of the date of this work
session, Commissioners have not decided on their choice of moving forward with voter approval
of one of these new revenue options. Should the Board choose to pursue the recently
authorized revenues, Commissioners could also elect to use the funds for annual operating
costs; debt service or capital infrastructure since the legislation does not restrict the use of
these funds.
Other future capital considerations relate to retirement of debt. Beginning in fiscal year 2010-11,
annual payments for school related debt decreases due to payoff of the following debt
McDougle Elementary in FY 2010-11, Cedar Ridge High in FY 2011-12, .and Scroggs
Elementary and a portion of 1988 and 1992 voter approved bonds in FY 2012-13. With the
retirement of this debt come additional policy considerations for Commissioners such as impact
on the ad valorem tax rate.
FINANCIAL IMPACT: Following the Board's direction to staff regarding current and future
capital revenues, staff will provide analysis of the fiscal impacts.
RECOMMENDATION(S): The Manager recommends that the boards discuss the County
Capital Funding Policy and issues noted and provide direction to staff (1) with regard to the
Public School Building Fund revenue shortfall in the current fiscal year and (2) with regard to
future capital revenues.
Adopted 04/24/2007
Orange County Board of Commissioners
Approved
Capital Funding Policy
Preamble
This capital funding policy is the product of extensive analysis and deliberation. The intent
of this policy is to reflect greater priority than there has been historically on providing
funding for County projects, with particular emphasis directed at enhanced upkeep of
existing County facilities. The policy reflects the implementation of the Board of
Commissioners' resolution of November 16, 2004 that the Board "does hereby adopt in
principle a policy of allocating a target of 60 percent of capital expenditures for school
projects and 40 percent of capital expenditures for county projects over the decade
beginning in calendar year 2005': This policy continues the County's principle and
historical practice of funding all School and County related debt service obligations before
allocating any other School or County capital funds for other purposes.
Long Range Capital Investment Plan
During October of each fiscal year, the County Manager shall present, to the Board, ten-
year County and School capital needs and funding plans in the form of a Capital
Investment Plan. Each year, the Board of Commissioners shall conduct a public hearing
on the Manager's Recommended CIP during November and subsequently adopt a ten-
year Capital Investment Plan (CIP).
The first year of the adopted ten-year Capital Investment Plan shall become the basis for
the annual capital budget and incorporated into the next annual operating budget
recommended by'the County Manager.
County and Scho\\ol recurring capital needs will be identified and reviewed during each
annual operating budget cycle, and recurring capital appropriations will be approved by the
Board of Commissioners as an element of each annual Orange County Budget
Ordinance.
The ten-year plan for long-range capital funding shall include:
• Anticipated County capital expenditures costing $25,000 or more (excluding
equipment)
• Anticipated school capital expenditures costing $50,000 or more (excluding equipment)
• Equipment costing $5,000 or more
Sources of Funds
The County will allocate the following sources of funds for County and School debt service
and long-range and recurring capital:
• All proceeds from the Article 40 and Article 42 half-cent sales taxes.
(The North Carolina General Statutes require that 30 percent of the Article 40
(NCGS§905-487(x)) and 60 percent of the Article 42 (NCGS§105-502(x)) sales tax
Adopted 04/24/2007
revenue be earmarked for public school capital outlay as defined in NCGS§105-426(1,
or to retire any indebtedness incurred by the county for these purposes)
• School Construction Impact Fees for each school system.
Public School Building Capital Fund monies
o Property tax revenue sufficient to pay all debt service on remaining 1988, 1992, 1997,
or 2001 bonds, or refinancings thereof, as well as alternative financing programmed in
the debt issuance schedule approved by the Board an May 5, 2004 and any
subsequent updates to that schedule as the Board may approve.
It is the intent of the Board of County Commissioners to dedicate the equivalent of four
cents on the annual ad valorem property tax to funding recurring capital expenditures
for schools (three cents) and county (1 cent). However, there will be times when the
County will be bound fiscally and unable to achieve full funding. During those times,
Commissioners may find it necessary to depart from the Policy. During the 2008-18
Capital Investment Plan development .process, the Board will consider a timetable for
phasing in the additional two-cents necessary to fully the recurring capital component.
of this policy.
(This 4-cent rate may, but need not, be adjusted with each quadrennial revaluation to a
"revenue neutral" earmarking)
• Beginning in fiscal year 2007-08, the County will budget NC Education Lottery
proceeds "in arrears" -meaning that funds will be budgeted in the year after the State
distributes them. For example, lottery proceeds distributed to the County during the
upcoming 2007-08 fiscal year would be budgeted the following fiscal year, 2008-09.
Debt Service
All County and School related debt service obligations would be funded prior to allocation
of programmed funding for any other capital purposes.
All proceeds from annual allocations of North Carolina Public School Building Capital
Funds will be earmarked explicitly to pay for eligible school debt service.
Orange County Schools' impact fees will 'be earmarked explicitly to pay for debt service on
projects that involved the construction of new school space in the Orange County Schools
system. Chapel Hill-Carrboro City Schools' impact fees will be earmarked explicitly to pay
for debt service on projects that involved the construction of new school space in the
Chapel Hill-Carrboro City Schools system.
NC Education Lottery Proceeds
Beginning in fiscal year 2008-09, each school district will have the option to dedicate its
share of the annual NC Education Lottery monies either (1) to repay debt service for debt
issued after fiscal year 2006-07 to address school. facility renovation needs or (2) as an
additional revenue to the districts pay-as-you-go funding to address school facility
renovation needs. If either district chooses to dedicate Lottery proceeds to repay debt
service, Lottery proceeds, sufficient to cover annual debt payments for .principal and
interest, will be dedicated for the life of the financing.
Adopted 04/24/2007
Beginning in fiscal year 2008-09, during the first quarter of each year, County staff will
request, from the State, the amount of monies accumulated in the Lottery fund for both
school districts with the intent of expending those funds during the fiscal year for either
debt service payments or individual School capital projects as identified by each districts
during their annual update of their ten-year capital plan.
Allocation
With the exception of the revenues earmarked for School and County recurring capital and
the Construction Management function, the net proceeds of all programmed revenue
sources after debt service obligations have been satisfied will be allocated on the basis of
60% to schools and 40% to the County.
Capital funding for each ten-year capital planning period will be allocated between the two
school systems based on certified student membership as of November 15 each year.
Capital Project Ordinances -Form and Purpose
All funds allocated to capital projects are to be accounted for in a Capital Project Fund as
authorized by a Board of County Commissioner approved Capital Project Ordinance.
The Capital Project Ordinance will include a detailed break down of each major cost
category related to the project.
In accordance with the Board of County Commissioners November 2000 adopted "Policy
on Planning and Funding School Capital Projects", whenever School capital project bids
are either higher or lower than originally projected, or any other factor affecting the project
budget occurs, the affected school system is expected to work with County Management
and Budget staff to present revised capital project ordinances for adoption by the Board of
Commissioners. The same expectations shall be applicable for changes to County Capital
project budgets.
Community Use of Schools
It is the intent of the Board of County Commissioners to evaluate each new proposed
school in both School Districts for joint community use opportunities, including, but not
limited to, park and recreation use.
Recurring Capital
As outlined in the "Sources of Funds" section of this policy, recurring capital funding for the
Schools and County will be based on the estimated proceeds of 4 cents on the annual
General Fund property tax rate. The proceeds from 3 cents will be earmarked for schools,
with funds allocated to each school system for the next fiscal year based on each system's
respective share of the student membership as of November 15 immediately preceding
the next fiscal year. Proceeds from 1 cent on the tax rate will be earmarked for County
recurring capital needs.
With regard to County Equipment and Vehicle acquisitions accomplished using third party
financing, the Board of County Commissioners will determine the source of funding to
repay the associated debt service at the point that the Board approves the financing
arrangement.
Adopted 04/24/2007
Construction Management Function
Beginning with the 2005-06 fiscal year, the Board of Commissioners will appropriate
funding to establish a Construction Management function to oversee County and School
capital projects. In fiscal years 2005-06 through 2007-08, $100,000 will be allocated
annually to fund this function. The source of funding for the Construction Management
function will be split on a 60/40 basis with each school district sharing the schools portion
of funding (60%) in accordance with certified student membership as of November 15
each year. Each entity's share of this function will be deducted from its share of long-
range capital funding prior to allocating capital funds.
Schools Adequate Public Facilities Ordinance
Orange County's Schools Adequate Public Facilities Ordinance (SAPFO) and Memoranda
of Understanding (MOUs) between the County and its municipal and school partners
establish the machinery to assure that, to the extent possible, new development will take
place only when there are adequate public school facilities available, or planned, which will
accommodate such new development. The Board of County Commissioners is committed
to the principle that new school space documented as needed through the annual SAPFO
technical review process will be reflected in the next adopted CIP, and will be funded so
as to be constructed to be available before the relevant level of service threshold is
exceeded.
Rescission
This policy rescinds the Orange County Board of Commissioners Capital Funding Policy,
as originally approved on December 7, 1996 and as amended on February 3, 1998 and
June 23, 2005. .
Approved April 24, 2007.