North Carolina Association of County Commissioners Government Relations Update NCACC Tax & Finance Steering Committee October 22, 2013

Topics to be covered…. State budget impacting counties NCACC T&F Goal Status Legislation of interest to counties Interim Activities 2

NC State Budget Impacts on Counties & Communities 3

S402 State Budget Spending at $20.6 billion –Revenue growth still below recovery Modest revenue growth of 3.6% v. 5% historic Retail sales at 3.8%--reduced to 2.7% April –Largely reflects Senate priorities Tax reform largely reflects House –No salary increases Fully funds health & retirement cost increases 5 additional vacation days 4

Key County Budget Issues Lottery Funding –Statutory language guaranteeing 40% of lottery funds to counties eliminated –Approp. allocation maintained at $100 M Unfunded mandates –Counties paying for volunteer fire & EMS workers’ comp. costs proposal eliminated Article 44 Hold Harmless payments –Extends for 1 yr at 50% $4 M Federal HAVA Funds –State MOE in yr 2 5

State Govt. Restructures Budget eliminates Rural Center funding, redirects Golden Leaf to general fund, phases out regional ED funding –Creates Rural Economic Div in Commerce & local government grant program –Creates Water Infrastructure Authority in DENR for all water & wastewater grants pgms. –Authorizes Commerce to devise public/private partnership for ED 6

NCACC T&F Goals TF-1: Preserve the existing local revenue base. H998 (Tax Simplification and Reduction Act) protects county revenues & provides some additional local sales tax dollars. S490 (Exclude Custom Software from Property Tax)removes customized software from property tax base TF-2: Oppose unfunded mandates and shifts of state responsibilities to counties. state budget protected counties from unfunded mandates and shifting of state responsibilities. TF-3: Authorize local revenue options. No legislation was introduced. TF-4: Protect county revenues in tax reform consideration. H998 (Tax Simplification and Reduction Act) protects county revenues & provides some additional local sales tax dollars.. 7

NCACC T&F Goals TF-5: Repeal moratorium on contingency fee audits. No legislation was introduced. TF-6: Improve and maintain incentive programs, workforce development and job creation programs, NC's tax credit programs, and increase access to tax credit financing for smaller economic development projects. H439 (Economic Development Jobsites Program) funds JDIG grants & other economic development programs; state budget contains JDIG and JMAC funding. TF-7: Explore and authorize use of alternate, sustainable revenue options and funding sources for beach, inlet and waterway maintenance. State budget establishes shallow channel dredging fund with gas tax & boat registration fees. 8

NCACC T&F Goals TF-8: Replace current non-profit sales tax refund process with a revenue-neutral exemption. Tax reform discussion did not allow for this goal to progress. TF-9: Replace current refund sales tax process for public institutions with a revenue-neutral exemption. Tax reform discussion did not allow for this goal to progress. TF-10: Extend Article 44 hold harmless. State budget includes a one-year extension of the hold harmless at 50 percent of the funding level. TF-11: Allow counties to provide triple credit toward renewable energy portfolios. No legislation was introduced. 9

NCACC T&F Goals TF-12: Authorize greater county oversight of legal electronic gaming operations and support legislation to authorize counties to levy privilege license taxes on these operations. The N.C. Supreme Court has held that the current sweepstakes ban is constitutional. No legislation was introduced. TF-13: Promote county property tax system modernization. Goal was put on hold due to the timing of tax reform. TF-14: Authorize design build option for all counties. H857 (Public Contract/Construction Methods/DB/P3) achieves this goal. TF-15: Require payment of property taxes on manufactured homes and other titled properties before transfer of title. Issue was partially resolved administratively. 10

NCACC T&F Goals TF-16: Clarify centralized listing and assessing of cellular and cable companies. NCACC is working with the Department of Revenue to find an administrative fix. TF-17: Support local county law enforcement and rehabilitation services through an increase in the beer and wine tax revenues. No legislation was introduced TF-18: Preserve scrap tire disposal tax proceeds. County scrap tire fees remain in place. State budget redirected state scrap tire fees to the general fund & appropriates $500K for grants & operations. TF-19: Compensate counties for property acquired by the state and removed from the ad valorem tax base. S372 (County Omnibus) sets up study commission for a state PILT 11

Legislation of Interest to Counties 12

County Inmate Medical Cost Containment,S321 Provide parity with state prison medical cost containment initiatives –Payments to providers limited to 70% of prevailing charges or twice Medicaid rate –Enables counties to pay Medicaid rates for in- patient medical care Counties to fund non-federal share of cost –NCACC to organize county Medicaid claims/payments

Court Fees, H343 Original version to require advancing of court fees Muddled with lapsing special provision & clerks of court not billing for fees Bill sponsor to extend child support exemption in perpetuity ($3 mil+ savings) Counties have 45 days to pay others Signed June 30 Continues RoD fees as is, too 14

Taxpayer Debt Information Action, H248 Provides greater transparency on local government debt documents without endangering validity of local government bond referenda results Sets new reporting requirements to disclose estimated interest payments for proposed indebtedness & new bond ballot language that speaks to required interest and that additional taxes may be levied for bond principal and interest repayment. 15

Tax & Tag Fee Changes, S305 Increases fee for vehicle property tax collection to $1.06 for the first 6 months of program & to $.71 thereafter. Adds $1.27 fee for issuance of a limited registration plate 16

Regulatory Reform, H74 Sets moratorium until 10/14 on local governments enacting environmental ordinances –Unless commissioners’ vote by to approve is unanimous –Legislative environmental committee will study issue Prohibits locals from regulating repair or reconstruction of billboards with a valid DOT permit if square footage not increased. Prohibits county from bringing zoning violation against property owner if use was in effect before zoning in place, grandfathered status of use is terminated, & county does not initiate enforcement within 10 years 17

Regulatory Reform, H74 Directs the Commission for Public Heath to amend smoking ban rules to clarify the definition of “enclosed areas” of restaurants and bars. Directs a legislative committee to study various models that provide water and sewer service to consider if models should be reduced or consolidated. Provides that third party, which could include local government, may contest an air or water quality permit decision of DENR. 18

Regulatory Reform, H74 Requires local health departments to make a determination on a private well application within 30 days, or application is deemed approved Removes minimum distance restrictions between landfills & new state gamelands estbl. after July 1, Requires that vehicles used to transport solid waste be “leak-resistant” as opposed to “leak-proof,” and excludes rainwater accumulation Allows a county to attach a surcharge to the fee charged to other local governments for use of the county’s landfill, and allows the surcharge to be used for purposes other than operating the landfill. 19

Waiting in the Wings… S287 Electronic Legal Notices S236/H726 School Construction H648 Second Primaries 20

During the Interim Studies! –Local environmental ordinances (S74) –PILT (S372) –DMV Tag Agents (S305 & Budget Act) Interim committees Governor’s Transportation Plan Development 21

Questions / Comments Thank You!