Agenda #11
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
Ralph D. Karpinos, Town Attorney
SUBJECT: Consideration of Legislative Program for 2002
DATE: May 13, 2002
Adoption of the attached Resolution A would endorse the N.C. League of Municipalities’ suggested statutory provisions and proposed Constitutional amendment to secure local reimbursements and State-collected local taxes. Adoption of the attached Resolution B would provide the Legislative Delegation with general guidance from the Council regarding the Town’s legislative program for the upcoming session of the N.C. General Assembly.
BACKGROUND AND DISCUSSION
On May 2, the Council met with Senators Lee and Kinnaird and Representatives Hackney and Insko to discuss potential legislative issues of interest to the Town. The discussion focused on the Council’s request to ensure protection of local revenues.
At the meeting, N.C. League of Municipalities’ Executive Director Ellis Hankins presented to the Legislative Delegation and the Council suggested statutory provisions and a Constitutional amendment to secure local reimbursements and State-collected local taxes (Attachment 1). Mr. Hankins said that two areas were the most crucial for local government revenue base: (1) State-collected local revenue (such as utility franchise taxes and beer and wine taxes); and (2) reimbursements for previously-repealed taxes (such as intangibles tax replacements and business inventory taxes). Mr. Hankins presented the League of Municipalities’ suggested options for how the General Assembly could protect local revenues:
1. Statutory provisions – The League’s proposal includes two sections: (A) A provision stating that State-collected taxes are levied “for the benefit of and on behalf of units of local government to the same extent and manner as if the levies were made by the respective local governing bodies.” (B) A provision stating that local governments must be able to rely on State-collected local revenues that the General Assembly has provided” and that such funds collected by the State for local governments shall not be withheld unless the Governor has “exhausted all other sources of revenue of the state including surplus remaining in the Treasury” and “unless authorized by an act of the General Assembly.”
2. Constitutional amendment – The League’s proposal includes a Constitutional amendment stating that the Governor may not withhold funds that have been collected by the State for local governments or otherwise committed to local governments “unless authorized by an act of the General Assembly.”
Following the breakfast meeting, the Manager and Attorney received the attached materials from the League (Attachment 2), encouraging local Mayors and Councils to support legislation as outlined in Resolution A.
On April 8, the Council held a public hearing on proposed legislative items for consideration by the N.C. General Assembly as part of its “short session” (Attachment 3). At that meeting, Mr. Roland Giduz asked for consideration of imposing a luxury tax in the Town and urged the Council to support such a tax. Mr. Giduz proposed a floor of $25-$30 per ticket, above which there would be a tax, with the exemption of certain cultural events (Attachment 4).
The Council had previous discussions earlier this year regarding legislative issues, including a February 25 meeting with the Legislative Delegation to discuss the State’s budget shortfall and its impact on the Town. On March 25, the Council adopted a resolution that included various potential issues for discussion with the Delegation, as noted in the “Legislative Program” section below.
The General Assembly convenes for its “short session” this year on May 28. The deadline for submittal of local bills to Legislative Bill Drafting is 4 p.m. on June 5 for the House and 4 p.m. June 12 for the Senate. Legislative rules require that during this “short session,” the principal sponsor of any local bill certify that no public hearing in the Legislature will be required or requested on the bill; that the bill is non-controversial; and that the bill is approved for introduction by each member of the local delegation.
LEGISLATIVE PROGRAM
On April 8, the Council held a public hearing on potential actions to:
We recognize that these proposals are not likely to be considered by the Legislature given the nature of ongoing budget discussions focusing on spending cuts rather than new revenue. However, we recommend that that Council offer this program as general guidance for the Delegation during 2002 and subsequent legislative sessions.
On March 25, the Council adopted a resolution endorsing selected revenue alternatives suggested by the N.C. Metropolitan Coalition (also with Attachment 3). The additional sources endorsed by the Council were as follows:
NEXT STEPS
Resolution A would endorse the N.C. League of Municipalities’ suggested statutory provisions and proposed Constitutional amendment to secure local reimbursements and State-collected local taxes.
Resolution B would provide the Legislative Delegation with general guidance from the Council regarding the Town’s legislative program for the upcoming session of the N.C. General Assembly. If the Council adopts the resolutions, we would transmit copies to members of the local Legislative Delegation.
RECOMMENDATION
That the Council adopt the attached Resolution A, endorsing the N.C. League of Municipalities’ suggested statutory provisions and proposed Constitutional amendment to secure local reimbursements and State-collected local taxes; and Resolution B, providing the Legislative Delegation with general guidance from the Council regarding the Town’s legislative program for the upcoming session of the N.C. General Assembly.
ATTACHMENTS
RESOLUTION A
A RESOLUTION REQUESTING THAT MUNICIPAL REVENUE SOURCES BE MADE SECURE AND ENDORSING THE NORTH CAROLINA LEAGUE OF MUNICIPALITIES’ SUGGESTED STATUTORY PROVISIONS AND PROPOSED CONSTITUTIONAL AMENDMENT TO SECURE LOCAL REIMBURSEMENTS AND STATE-COLLECTED TAXES (2002-05-13/R-16a)
WHEREAS, the Town of Chapel Hill is required by North Carolina law to operate and maintain a balanced budget and comply with the provisions of the Local Government Budget and Fiscal Control Act; and
WHEREAS, the Town is required to maintain a sufficient fund balance to operate in a fiscally-sound manner and to have adequate reserves in case of emergencies; and
WHEREAS, the Chapel Hill Town Council has a responsibility to provide for the health, safety, and well-being of the citizens of this community by providing necessary services; and
WHEREAS, the ability of municipal governments to borrow for capital infrastructure needs is dependent on reliable revenue sources for repayment; and
WHEREAS, adequate municipal revenue sources are required to carry out the above-mentioned responsibilities;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council respectfully requests that the General Assembly enact legislation that will secure the municipal revenue sources and ensure that these revenues are distributed to local governments on a timely basis as set forth by the State’s General Statutes.
BE IT FURTHER RESOLVED THAT the Council endorses the N.C. League of Municipalities’ suggested statutory provisions and proposed Constitutional amendment to secure local reimbursements and State-collected taxes, shown herein as Attachment 1.
This the 13th day of May, 2002.
RESOLUTION B
A RESOLUTION ESTABLISHING THE TOWN OF CHAPEL HILL’S LEGISLATIVE PROGRAM GUIDELINES FOR THE UPCOMING SESSION OF THE NORTH CAROLINA GENERAL ASSEMBLY (2002-05-13/R-16b)
WHEREAS, the Council of the Town of Chapel Hill held a public hearing on April 8, 2002, at 7 p.m. on proposed items for inclusion in the Town’s legislative program for the 2002 Short Session of the North Carolina General Assembly; and
WHEREAS, the Council conducted a meeting with the Orange County Legislative Delegation on May 2, 2002, to discuss potential legislative issues of interest to the Town and the impact of the State’s budget shortfall on the Town;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby transmits the following as Legislative Program guidelines for consideration by the General Assembly in the upcoming Short Session:
This the 13th day of May, 2002.
ATTACHMENT 1
Suggested Statutory Provisions and Constitutional Amendment to secure the local reimbursements and state collected local taxes
1. Statutory provisions
The language in “A” should be placed in every section levying taxes and distributing all or a portion of the proceeds to local governments¾utility franchise taxes, Powell bill funds, beer and wine tax, etc. It will need to be modified to fit the particular tax section.)
A. This tax [or a portion of the tax] is levied for the benefit of and on behalf of units of local government to the same extent and manner as if the levies were made by the respective local governing bodies.
(Explanatory Note: This language is taken from the previously repealed intangibles tax statutes, G.S. 105-198. The N.C. Supreme Court held in Yokley v. Clark, 262 N.C. 218 (1964), that in using this language the General Assembly had levied a local tax.)
The language in “B” should be added as a new section in the Executive Budget Act.
B. The General Assembly recognizes that it has required units of local government to adopt and maintain annual balanced budgets and take other steps to assure financially sound operations, under The Local Government Budget and Fiscal Control Act and other provisions of G.S. Chapter 159. Accordingly, the General Assembly finds that in order to satisfy those statutory requirements and provide adequate services to their citizens, units of local government must be able to rely on the funds and local revenue sources the General Assembly has provided.
It is the intent of the General Assembly that funds that have been collected by the State for units of local government or that otherwise have been committed by the General Assembly to units of local government by statute or any uncodified act shall not be reduced except as provided in this section. The Governor, in exercising the powers contained in Article III, Section 5(3) of the Constitution necessary to insure that the State does not incur a deficit during the period, or otherwise, shall not withhold from distribution funds that have been collected by the State for units of local government or that otherwise have been committed by the General Assembly to units of local government by statute or any uncodified act, unless he shall have exhausted all other sources of revenue of the state including surplus remaining in the Treasury at the beginning of the period, and unless authorized by an act of the General Assembly.
This section shall not be construed to authorize the Governor to withhold revenues from taxes the General Assembly has authorized governing bodies of units of local government to levy.
(Explanatory Note: The Constitution says that the General Assembly shall provide for the organization and operation of local government units. Article VII, Section 1. The General Assembly has abundant authority under the constitutional scheme to specify the order in which funds may be used or applied by the Governor to carry out his constitutional responsibility to maintain a balanced budget, at least so far as essential funds specifically allocated for local government units are concerned.)
2. Constitutional Amendment to be added to Article III, Section 5(3) of the Constitution
(3) Budget. The Governor shall prepare and recommend to the General Assembly a comprehensive budget of the anticipated revenue and proposed expenditures of the State for the ensuing fiscal period. The budget as enacted by the General Assembly shall be administered by the Governor.
The total expenditures of the State for the fiscal period covered by the budget shall not exceed the total of receipts during that fiscal period and the surplus remaining in the State Treasury at the beginning of the period. To insure that the State does not incur a deficit for any fiscal period, the Governor shall continually survey the collection of the revenue and shall effect the necessary economies in State expenditures, after first making adequate provision for the prompt payment of the principal of and interest on bonds and notes of the State according to their terms, whenever he determines that receipts during the fiscal period, when added to any surplus remaining in the State Treasury at the beginning of the period, will not be sufficient to meet budgeted expenditures. This section shall not be construed to impair the power of the State to issue its bonds and notes within the limitations imposed in Article V of this Constitution, nor to impair the obligation of bonds and notes of the State now outstanding or issued hereafter. The Governor may not withhold from distribution funds that have been collected by the State for units of local government or that otherwise have been committed by the General Assembly to units of local government by statute or any uncodified act unless authorized by an act of the General Assembly.
(Note: The bold underlined language is proposed to be added. The rest is existing language.)
ATTACHMENT 2
May 1, 2002
HIGHEST PRIORITY MEMORANDUM
TO: Mayors, Managers/Administrators/Clerks, and Attorneys
FROM: President Thomas M. Gwyn, Mayor of Elkin
S. Ellis Hankins, Executive Director
Andrew L. Romanet, Jr., General Counsel
SUBJECT: Legislation to protect local revenues
When the 2002 session convenes officially May 28, the League’s top priority will be to protect our local revenue sources, including the reimbursements for repealed local taxes and our state collected local revenues. Clearly the recent actions taken by Governor Easley to withhold local revenues have made this effort even more important.
To accomplish this goal, we will seek the introduction and passage of legislation that will restrict the authority of a governor to withhold local revenues that the General Assembly has provided to units of local government by statute or annual appropriations acts or otherwise. We also will seek a constitutional amendment to accomplish the same goal. We expect to be joined in this effort by the North Carolina Association of County Commissioners and others.
We enclose 1) the suggested revisions to state statutes that would protect our revenues and 2) a proposed constitutional amendment. We will pursue enactment of both, but if only one passes, we will be successful.
Your active involvement is crucial if we are to make your revenue sources secure. Please contact each member of your legislative delegation as soon as possible and secure his or her firm commitment to co-sponsor this legislation, including the proposed constitutional amendment, and to actively support and vote for the legislation. More specific suggestions on steps to take can be found on the attached sheet.
Also, please consider adopting the enclosed resolution and forwarding it to members of your legislative delegation.
|
|
|
I:\PRIVATE\Exec\ELLIS\revenue ltr.doc |
We can be successful in our effort, but only with the active and vocal support of our entire membership!
ATTACHMENT 3
Agenda #2a
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
Ralph D. Karpinos, Town Attorney
SUBJECT: Public Hearing on Potential Legislative Requests
DATE: April 8, 2002
The purpose of tonight’s hearing is to receive public comment on proposals for inclusion in the Town’s Legislative Program for the upcoming “short session” of the North Carolina General Assembly. After tonight’s hearing, we recommend that the Council refer comments to the Manager and Attorney for a follow-up report on May 13.
BACKGROUND
At the January 29 Public Forum on the Budget, the Council identified potential issues for discussion with the Legislative Delegation. The Council met with the Legislative Delegation on February 25 to discuss the State’s budget shortfall and its impact on the Town. On March 25, the Council adopted a resolution that included various potential issues for discussion with the Delegation and established tonight’s hearing for public comment. These items are listed below under the “Potential Issues” section.
The Council is scheduled to meet with the Legislative Delegation at 7:30 a.m. on May 2 at the Sheraton Hotel to review potential legislative requests.
The General Assembly convenes for its “short session” this year on May 28. The deadline for submittal of local bills to Legislative Bill Drafting is 4 p.m. on June 5 for the House and 4 p.m. June 12 for the Senate. Legislative rules require that during this “short session,” the principal sponsor of any local bill certify that no public hearing in the Legislature will be required or requested on the bill; that the bill is non-controversial; and that the bill is approved for introduction by each member of the local delegation.
POTENTIAL ISSUES
On March 25, the Council adopted a resolution calling this hearing on potential actions to:
Also on March 25, the Council adopted a resolution endorsing the efforts of the N.C. Metropolitan Coalition in identifying other sources of funds that could be used as alternatives to the Governor’s escrow of local revenues (also with Attachment 2). The additional sources identified by the Council were as follows:
Notice of tonight’s Public Hearing was published in The Chapel Hill News on Sunday, March 31, and Wednesday, April 3.
NEXT STEPS
The Council may wish to consider adding items to the proposed list during tonight’s discussion.
Following tonight’s hearing, the Council will have an opportunity to consider adopting a legislative program on May 13 in order to submit the Town’s legislative program prior to the June 5 N.C. House deadline and the June 12 N.C. Senate deadline for local bills.
The May 2 meeting will provide an opportunity for discussion with the Legislative Delegation.
RECOMMENDATION
That the Council refer tonight’s public comments to the Manager and Attorney for a follow-up report on May 13.
ATTACHMENTS
ATTACHMENT 1
PUBLIC HEARING BY THE CHAPEL HILL TOWN COUNCIL
ON POTENTIAL LEGISLATIVE REQUESTS
MONDAY, APRIL 8, 2002, AT 7:00 P.M.
Town Council Chambers, Town Hall
306 N. Columbia Street
Chapel Hill, NC 27516
All citizens are invited to attend and speak at a public hearing at 7:00 p.m. on Monday, April 8, 2002, to comment on potential items to be included in the Town Council’s Legislative Program for the upcoming short session of the N.C. General Assembly.
The Council’s previous discussions included these potential requests for legislation:
Comments are also welcome by fax (919-969-2063) or by electronic mail ([email protected] or [email protected]).
ATTACHMENT 2
Agenda #4b
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
Ralph D. Karpinos, Town Attorney
SUBJECT: Resolution Calling a Hearing on Potential Legislative Requests
DATE: March 25, 2002
The attached Resolution A would call a public hearing for April 8, 2002, to receive public comment on potential items to be included in the Council’s Legislative Program for the upcoming short session of the North Carolina General Assembly. Resolution B would endorse the efforts of the N.C. Metropolitan Coalition.
BACKGROUND
At the January 29 Public Forum on the Budget, the Council identified potential issues for discussion with the Legislative Delegation. These items are listed below under the “Potential Issues” section. The Council’s original calendar called for a meeting with the Delegation on February 22, but that meeting was deferred because the General Assembly’s “short session” does not start until May 28. The Council met with the Legislative Delegation on February 25 to discuss the State’s budget shortfall.
The Council now has the opportunity to call a hearing to receive public comment on the issues the Council wishes to consider including in its Legislative Program. The Council could then review potential legislative requests with the Legislative Delegation.
The General Assembly convenes for its “short session” this year on May 28. The deadline for submittal of local bills to Legislative Bill Drafting is 4 p.m. on June 5 for the House and 4 p.m. June 12 for the Senate. Legislative rules require that during this “short session” the principal sponsor of any local bill certify that no public hearing in the Legislature will be required or requested on the bill; that the bill is non-controversial; and that the bill is approved for introduction by each member of the local delegation.
POTENTIAL ISSUES
On January 29, the Council discussed a number of possible legislative matters for consideration as local bills or issues of State-wide concern. As we understand it, the General Assembly normally does not take action in a “short session” on issues that are deemed to be controversial. It is possible that all of the issues listed below may be deemed controversial this year.
The Council’s previous discussions included potential requests for legislation as follows. We have included these items in Resolution A:
Revenues
Protection of Town Revenues
Protection of existing local government revenue sources, including local option sales taxes, utility franchise taxes, intangibles tax reimbursements, beer and wine taxes, business inventory tax reimbursements, and State Fire Protection funds.
Tax on Tickets to University Athletic Events
On February 11, the Council received a petition from Roland Giduz to request a tax on University basketball and football ticket sales to provide additional revenues (Attachment 1).
Beer and Wine Tax
Increase the tax on beer and wine sales and provide greater revenue to cities.
Real Estate Transfer Tax
A Real Estate Transfer Tax would be paid when title of land passes from one owner to another.
Environmental and Transportation Issues
Mandatory Program for Recycling of Bottles and Cans
A State-wide, mandatory program for recycling bottles and cans would increase the quantity of such materials that are recycled.
Vehicle License Requirement for University Students
University students whose residences are in Chapel Hill but whose vehicles are not registered in Orange County would be required to pay a $25 student vehicle registration fee.
Housing and Community Development Issues
Investment Tax Credits for Developers Who Build Affordable Housing
Tax credits for developers who build affordable housing would provide an incentive to construct additional units.
Increased State Staffing for Sedimentation and Erosion Control Enforcement
The N.C. Sedimentation Control Commission has established rules and regulations to protect the environment from sedimentation and soil erosion. A staff is in place to inspect and enforce the sedimentation and erosion control laws. However, the staff is limited, with one technician to enforce dam safety, mining regulations and sediment and erosion control for a three-county area including Orange County. We understand that, on average, each construction site within a region will be inspected once every two or three months for sediment and erosion control compliance. It appears that additional staffing will be necessary because of the volume of University development during the next decade.
N.C. Metropolitan Coalition Issues
The N.C. Metropolitan Coalition, together with the N.C. League of Municipalities and the N.C. Association of County Commissioners, has announced its opposition to Governor Easley’s escrow of local revenues to balance the State’s Fiscal 2001-02 budget. When the Coalition members met with the Governor on February 13, the Governor invited the local government representatives to identify other options to meet his obligation to balance the State budget. The Coalition formed a State Budget Task Force to review other options and identified other sources of funds that could be used as alternatives to the Governor’s escrow of local revenues.
We have included this list as Attachment 2. The list includes the following alternative revenue sources:
The Council may wish to consider endorsing these efforts in the accompanying Resolution B.
NEXT STEPS
The Council may wish to consider adding items to the list of those included in the proposed Resolution A or deleting some of those already listed.
Following the hearing on April 8, the Council will have an opportunity to consider adopting a legislative program on April 22 or May 13 in order to submit the Town’s legislative program prior to the June 5 N.C. House deadline and the June 12 N.C. Senate deadline for local bills. The Council also may wish to schedule a meeting with the Legislative Delegation.
RECOMMENDATION
That the Council adopt the attached Resolution A calling a public hearing for April 8, 2002, to receive comment from the public prior to considering adoption of a legislative program for the Town, with whatever revisions the Council determines.
The Council may also wish to adopt Resolution B, endorsing the efforts of the N.C. Metropolitan Coalition.
ATTACHMENT
1. February 11, 2002 Petition from Roland Giduz (p. 7).
2. N.C. Metropolitan Coalition Information from March 20, 2002 (beginning with email from Beau Mills (p. 9).
RESOLUTION A
A RESOLUTION CALLING A PUBLIC HEARING FOR APRIL 8, 2002, TO RECEIVE PUBLIC COMMENT ON PROPOSALS FOR CONSIDERATION AS PART OF THE TOWN OF CHAPEL HILL’S LEGISLATIVE PROGRAM FOR THE UPCOMING SESSION OF THE NORTH CAROLINA GENERAL ASSEMBLY (2002-03-25/R-2a)
BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council calls a public hearing for April 8, 2002, at 7 p.m. in the Council Chambers of Town Hall on the following proposed items for consideration as part of its Legislative Program for the upcoming session of the General Assembly:
This the 25th day of March, 2002.
RESOLUTION B
A RESOLUTION ENDORSING THE EFFORTS OF THE N.C. METROPOLITAN COALITION STATE BUDGET TASK FORCE IN IDENTIFYING ALTERNATIVE REVENUE SOURCES TO BALANCE THE STATE’S BUDGET SHORTFALL (2002-03-25/R-2b)
WHEREAS, the N.C. Metropolitan Coalition, together with the N.C. League of Municipalities and the N.C. Association of County Commissioners, has announced its opposition to Governor Easley’s escrow of local revenues to balance the State’s Fiscal 2001-02 budget; and
WHEREAS, the Coalition formed a State Budget Task Force to review other options and identified other sources of funds that could be used as alternatives to the Governor’s escrow of local revenues; and
WHEREAS, the Coalition State Budget Task Force identified the following as alternative revenue sources:
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby endorses the efforts of the N.C. Metropolitan Coalition State Budget Task Force in identifying alternative sources of revenue to balance the State’s budget shortfall.
This the 25th day of March, 2002.
Amended 3-26-02.
ATTACHMENT 4
April 8, 2002
To: Cal Horton, Chapel Hill Town Manager
Hello Cal—This is the essence of my personal statement to the Town Council on its consideration of legislative requests. Since this is different from my original written petition in February, I would appreciate your distributing it to the Council members as background information on this issue. –Roland Giduz
To the Chapel Hill Town Council:
For many years I have proposed and you have endorsed local legislation that would permit the town to levy a tax on select "big ticket" entertainment events in Chapel Hill. I still believe strongly in this and urge your continued concern in favor of this proposal. However, I realize that the Legislature will not consider any controversial local bills at its "short" session this year, as I understand you learned from your recent meeting with the local delegation.
Instead, I urge you to request and vigorously seek statewide legislation for the same purpose, which will benefit Chapel Hill just as much, or more. It will also be as financially helpful to all other local governments in the state, proportionately. I have also proposed this to the Governor’s newly-appointed statewide study commission on new revenue sources.
This would be to impose a surcharge on live "big ticket" entertainment event admissions and to share this revenue with the local governments where it was generated. This is the principle involved in the long-standing North Carolina retail sales tax, currently at 6 ½ %, and which greatly benefits ALL local government via the rebate feature.
Such a state-wide surcharge would effectively be added to the price of professional sports teams’ game tickets and also to the major revenue-producing college sports – including UNC-Chapel Hill football and basketball games. Of course it would also cover other live entertainment events, such as major concerts. I would suggest a "floor" of $25 or $30 for the tax coverage, and perhaps some exemption for certain cultural programs.
Such a surcharge on the state’s own long-standing entertainment tax could net millions in revenue for the state and local governments. As a levy on luxuries would relieve the pressure on heavily-taxed necessities. This is the fairest type of tax possible – a voluntary one that nobody would have to pay unless they desired the benefit of that luxury.
A reasonable luxury tax will not reduce attendance at entertainment events and the potential revenue from this source. In the free market of sports competition only a losing record will do that. This is proven historically. I have factual data to show this.
This revenue source is well-established in countries, states, and local governments around the world as a significant source of needed funds. At this time when government is faced with reducing services and raising taxes on necessities, it should look to the significant potential of luxuries for revenue to finance its necessary operations.