Sausage

A group of Bulgarian municipal officials visited Raleigh this week. On Tuesday, they attended a meeting at which the Senate Commerce Committee voted to approve legislation that would strip local governments of authority to regulate unwanted billboards in local communities – despite opposition from local government representatives, planners, environmentalists and others concerned about quality of life. As he adjourned the meeting, Committee Chairman R.C. Soles (Columbus) expressed the hope that the Bulgarians had enjoyed and learned from their visit. He made reference to the oft-quoted analogy between sausage and laws – two things not to be watched by consumers as they are made. Sen. Soles concluded that, like sausage, the laws made often turn out to taste pretty good.

Well, no. Both frequently leave a bad taste and, at the very least, give you gas. In this case, the gas will subside, but the bad taste will linger.

Senate Budget Approved

The Senate tentatively approved its version of amendments to the state’s 2004-05 budget on Wednesday.

All told, the Senate’s $15.83 billion general fund budget spends about $20 million less than the House’s version, but adds some tax incentives for small businesses and other economic development measures sought by the governor.

Counties fare well in the Senate’s proposal. All Public School Building Capital Fund (ADM) monies are secured: greater funding is made available for mental health reform ($6.5 million above the House budget); funding for child care subsidies is increased ($6 million above the House budget); and additional state dollars ($8.8 million) are made available for Health Choice, the non-Medicaid health insurance program for poor children. The Senate builds upon the governor’s and House’s proposals for additional school nurses by providing $4 million in state funds and allocating additional federal funds to support 145 new school nurses.

The Senate accepted the House’s special provision to extend legislatively the local government hold harmless payments. The Senate’s sunset date of August 2009 would secure five additional payments beyond current law, while the House plan extends the hold harmless through August 2012.

The “North Carolina Economic Infrastructure Program,” a new economic development program to be administered by the Rural Economic Development Center, would make available $20 million in additional local government grant and business loan funds. The Clean Water Trust Fund would be kept intact. The Senate rejected the House’s proposed transfer of $15 million to clean up leaking underground storage tanks and instead would increase the gas tax allocation going to the LUST fund.

State employees and teachers also fare well under the Senate’s spending plan. Employees would receive the higher of a 2.75 percent or recurring $1,000 increase. Teachers would also receive the 2.75 percent increase. The House proposal contained a 2.3 percent increase. Community college faculty would receive an additional 2 percent, reflecting the House’s plan to move community college faculty salaries to the national average. State retirees would receive a 2 percent cost-of-living adjustment.

Action on the Senate floor removed the most troubling aspect of the budget approved by the Senate Appropriations Committee – a special provision that would compel local school administrative units to use local funds to pay a 13.64 percent employer contribution to the Teachers’ and State Employees’ Retirement Plan for those retired state employees who return to work in public schools.

The Senate rejected the House’s proposal to increase the local schools’ “management flexibility” (budget reduction) by $27.7 million. The Senate halved funding for the governor’s proposal to reduce third-grade classroom size, citing the schools’ inability to attract additional teachers and find more classrooms by school start. Additional funding for More at Four would also be reduced by half and would support 1,000 additional slots instead of the 2,000 contained in the proposals by the governor and House.

The House’s Low Wealth Schools funding increase of $5 million was not included, while $1 million in additional Small Schools funding was. The Senate would also establish a new public school categorical allotment with funding of $12 million for those local school units with the lowest capacity to help disadvantaged students. The “disadvantaged student supplemental funding” could be used to lower classroom size to 15 or fewer students, provide incentives for teacher recruitment and retention, and improve teacher training.

The Senate did not include the House’s special provision to allow county funding of charter school capital facilities. Instead, a Senate special provision calls for a “local school construction financing study” to examine the current system of local financing of school facilities and recommend alternative financing options, including sale lease-back, public-private partnerships and alternative local revenue sources.

The next step in the budgeting process is naming the conference committee to resolve differences between the Senate and House. Legislative calendars still anticipate budget adoption prior to the July 1 start of the fiscal year.

Watercraft Pre-emption Proposal Sent to Committee

Legislation that surfaced last week to preempt local control of watercraft was removed from the Senate calendar and re-referred to the Senate Rules Committee on June 17.

Bills of Interest

PLANNING, DEVELOPMENT AND LAND USE

Updates

H429
“To require local governments to pay monetary compensation for removal of lawfully erected off-premises outdoor advertising signs and to authorize local governments to enter into relocation and reconstruction agreements with owners of nonconforming off-premises outdoor advertising signs.” Rep. Bill Culpepper (Chowan). (Bulletin #03-08, March 20, 2003; Bulletin #03-11, April 10, 2003; Bulletin #03-12, April 17, 2003; Bulletin #04-01, May 6, 2004). This bill was favorably reported by the Senate Commerce Committee on June 22 after being rewritten to incorporate the provisions of S1056, introduced by Sen. Walter Dalton (Rutherford) and reported in Bulletin #04-02, May 13, 2004. As rewritten, the bill would prohibit the use of “amortization” as a method of compensating owners of signs when the signs no longer conform to requirements of local ordinances. Monetary compensation would be paid unless the owner voluntarily agrees to a “phase out,” the advertising is determined to be a public nuisance, or the sign can be relocated by mutual agreement. Compensation would be based on factors generally applicable to valuation of personal property, construction costs, purchase price of rights to erect and maintain the advertising, the income derived from the advertising, the sales price of similar property and the listed value of the property. The bill provides that, unless agreed to by the local government, the amount of monetary compensation could “not exceed five times the average amount of the annual gross revenue associated with the advertising, less any placement or agency fees, over the preceding five years.”

S933
“To require state and local government agencies that acquire land for wetlands mitigation to reimburse the county in which the land is located for its lost taxes due to the acquisition.” Sen. Cecil Hargett (Onslow). (Bulletin #03-11, April 10, 2003; Bulletin #04-07, June 17, 2004). This bill was approved by the Senate on second and third reading June 21. It has been referred to the House Finance Committee.

TAXATION AND FINANCE

Updates

H1465
“To allow farmland owned by a family business to keep its present-use value tax status when leased for farm use.” Rep. Harold Brubaker (Randolph). (Bulletin #04-03, May 20, 2004; Bulletin #04-04, May 27, 2004; Bulletin #04-05, June 3, 2004; Bulletin #04-06, June 10, 2004). After being signed by the governor, this bill has been enacted as SL 2004-08.