Legislative Update David Baker, MPA, PPS Director Local Government Division North Carolina Department of Revenue 1

General Assembly Two year budget Long Session in odd years – 2015 – Budget set in long session – New bills introduced Short Session in even years – 2016 – Budget is adjusted – Only bills that passed one Chamber during the long session can be considered. 2

SB 734 SECTION 7.(b) G.S is amended by adding a new subsection to read: "(d2) Business Entity Representation. – If a property owner is a business entity, the business entity may represent itself using a nonattorney representative who is one or more of the following of the business entity: (i) officer, (ii) manager or member-manager, if the business entity is a limited liability company, (iii) employee whose income is reported on IRS Form W-2, if the business entity authorizes the representation in writing, or (iv) owner of the business entity, if the business entity authorizes the representation in writing and if the owner's interest in the business entity is at least twenty-five percent (25%). Authority for and prior notice of nonattorney representation shall be made in writing, under penalty of perjury, to the Commission on a form provided by the Commission.“ SECTION 7.(c) This section is effective when it becomes law and applies to contested cases and appeals commenced on or after that date. 3

SB 786 Fracking SECTION 18. G.S is amended by adding a new subdivision to read: "(47) Energy mineral interest in property for which a permit has not been issued under G.S For the purposes of this subdivision, "energy mineral" has the same meaning as in G.S " 4

SB 786 SECTION 20. The Local Government Division of the Department of Revenue shall study how other states value energy minerals for the purpose of property taxation. The Division shall establish guidelines for counties to ensure the consistent and fair taxation of energy minerals throughout the State. The Local Government Division shall report its findings to the Joint Legislative Commission on Energy Policy by January 1,

SB 786 SECTION 21. The Joint Legislative Commission on Energy Policy shall study how the development of the oil and gas industry in the State would affect the property tax revenues of local governments. The study shall examine how the presence of energy minerals will affect property enrolled in the present use value program. The study shall also study ways to limit the growth of property tax revenues that result from increased property valuations due to the development of the oil and gas industry in the State. The Commission shall report to the Senate Bill 786-Ratified Session Law Page General Assembly on its findings and recommendations, including any legislative recommendations. 6

H B 1050 SECTION 11.1.(b) G.S reads as rewritten: "§ Appraisal of property of public service companies. (1) Bus line. (2) Motor freight carrier. (3) Airline. (4) Mobile telecommunications company. (5) Tower aggregator company 7

HB 1050 Omnibus Tax Law Changes The LPA fee for the fiscal year will be $1.06. The DMV collection fee will not be changed and will remain at $0.71 for the upcoming year. The Limited Registration Plate is issued by an LPA fee of a $1.27 will not change for the upcoming year. 8

Operational Costs The LPA fee for the fiscal year will be $1.06. The $1.06 fee amount is retroactive for the months March 2014 to June 2014 and for any months from March 2014 to the date the DMV is able to implement the additional fee. For any month that $0.71 was charged will be adjusted to $1.06 and the difference subtracted from future revenues equally over a three month period. The difference has to be calculated by September 1, The DMV collection fee will not be changed and will remain at $0.71 for the upcoming year. 9

Operational Costs An overhead fee is charged on each combined notice and includes but not limited to printing, postage, TEC valuation service, software licenses and maintenance, personnel costs, etc. Overhead Fee$1.21 Collection Fees LPA Collection Fee$1.06 DMV Collection Fee$0.71 LRP Issuance Fee$1.27 Credit Card FeeVariable Debt Card FeeVariable OtherVariable LRP Cost- $0.50 for each LRP notice mailed for taxes due. CPS- Common Payment Service 0.23 per transaction for payment processing 10

Upcoming Session Reappraisals – Reappraisal Committee Standards BOER Education Notices and Forms Notices Appeal process PUV Tax Reform in General 11

State of North Carolina System 12

RENEWAL MONTH TOTAL VPT GROSS COLLECTION SEPTEMBER$22,867,319 OCTOBER$45,801,195 NOVEMBER$42,922,000 DECEMBER$51,147,385 JANUARY$53,763,541 FEBRUARY$56,441,018 MARCH$64,191,510 APRIL$66,084,464 MAY$67,411,659 JUNE$66,000,628 JULY$70,010,647 AUGUST$68,347,080 Total$674,988,447 13

Old System Collections Gross Revenues Data from Treasurer's WebsiteStatewide Totals Total Revenue$570,960, average collection per month$47,580, Tag and Tax collection Gross Revenues Statewide Totals First year average net collection per month $56,249,037 Total Actual Revenue for $674,988,447 Actual Difference (increase) $104,028,094 Last six month average $67,007,665 Estimated Revenue for next 12 months $804,091,977 14

Tax Collection Percentages Tag and Tax System 80% collection rate80.00% 20% 90% collection rate18.00% Statewide Collection Rate98.00% Old System Statewide Collection Rate86.20% 15

Upcoming Events Advance Seminar in September DOR Personal Property School October Listing and Assessor October DOR Tax Admin Class December

Department of Revenue What’s new at the Local Government Division? New organization chart: 17