League Bulletin

May 29, 2020

The Weekly Recap
New President, Members Elected to League Board of Directors; Gov. Cooper Addresses Group
State Budget Process Takes Shape, Includes Positives for Munis
Outdoor Dining Bill Generates Controversy on Way to Passage
House Leader Renews Transportation Bond Push
Local Sales Tax Revenues Down 7 Percent for Month of March
Package Delivery Robots Bill Gets Warm Senate Reception
Criminal Law Working Group Would Target Local Rules
Phase 2 of COVID Restrictions-Easing Takes Effect

WHAT HAPPENED: The League has a new president and a number of new members on its Board of Directors. Gov. Roy Cooper addressed League’s annual business meeting in the first part of CityVision 2020. The General Assembly issued a series of budget proposals. An outdoor dining bill caught controversy.

WHAT IT MEANS: Last week, we reported on indications that the legislature would push out individual, focused budget bills instead of the usual omnibus bill. That came true this week as the chambers’ appropriations committees considered a series of spending proposals, inclusive of good news for cities and towns. Separately, anticipating questions about COVID-19 Phase 2 rules, the state issued a general answers document and another one focused on bars.

ON TAP: We’re monitoring the shape of these and other bills as they wind through the process, and you’ll read the latest highlights in this Bulletin so you can be informed and prepared.

THE SKINNY: Take note of the proposals you should encourage your legislators to support, including one that would help stabilize finances at home with individual payment assistance for rent, mortgages and utilities. And read on for the new roster of League

New President, Members Elected to League Board of Directors; Gov. Cooper Addresses Group

Cary Council Member Jennifer Robinson is the new president of the North Carolina League of Municipalities in a freshly elected League Board of Directors, comprising new and continuing members. The election results were announced Thursday at the organization's annual business meeting, held in part-one of the CityVision 2020 virtual conference.

Robinson, a town council member since 1999 and who until Thursday was serving as the League's vice-president, acknowledged her new position as president comes amid a “most surreal and challenging time," with public health and economic concerns in the daily headlines, local to national, and without much precedent to follow. “We don't know how long this is going to last," she said. “We don't know when we should stop sheltering in place. Has it been too long? Is it too soon to stop? We don't know how far our economy will sink or when and how it will recover…. But, what we do know is that the League is looking out for our best interests. It understands the challenges that municipalities, their elected leaders, and citizens are facing. They are bringing us together with one collective voice."

Her words followed a tone similar to that set by Immediate Past President William Pitt of the Washington City Council, who frequently cited the energy of working in unison. “Having served this organization for almost a decade, I will treasure all the friendships and acts of kindness and love," Pitt remarked on the transition. “Even as the work over this issue or that fades, those personal acts will remain. It has truly been a great honor to be your president, and I thank you all." Pitt's perspective on navigating the pandemic as a local elected official is featured in the next issue of Southern City, the League's quarterly magazine.

Gov. Roy Cooper addressed Thursday's meeting attendees with an update on the state's COVID-19 response, which includes the newly activated Phase 2 of restrictions-easing, lifting the stay-home order and expanding business activities. As challenges remain, state officials are tracking activity and letting public health data guide decision-making.

League Associate Executive Director for Public and Government Affairs Rose Vaughn Williams presented on why revenue is so needed for cities and towns to help the state recover from the virus-related economic crisis. “Cities are the economic engines of the state," she said. “Data from the Great Recession from 2008 show that the longer cities go without help in a recession, the longer the recession will last for the state." Williams noted that cities are not in their current financial predicament because of mismanagement; it's the global pandemic, and municipalities will be advocating on the state and federal levels for revenue assistance.

League Executive Director Paul Meyer told the Board of Directors and other members that their response to the coronavirus “has been impressive and effective, and we see that in how the state is weathering the health threat caused by the virus. We see that in your active involvement in addressing the safety of your residents and the economic threats created by this virus."

All the same, Meyer said, the League is here and working on their behalf so cities and towns can come out of this pandemic in shape to help drive the state's economy. “We are working every day to ensure that you receive the resources needed to meet tomorrow's challenges," he said. “This pandemic has created its own challenges for our organization, but I am proud of member and staff efforts to continue our work, which has taken on even more importance."

The League Board of Directors elections results:

President: Jennifer Robinson, Council Member, Cary

Vice President: Karen Alexander, Mayor, Salisbury

Second Vice President: Scott Neisler, Mayor, Kings Mountain

District 1: Don Kingston, Mayor, Duck

District 3: Walter Eccard, Mayor, Shallotte

District 5: Carl Ferebee, Mayor Pro Tem, Roanoke Rapids

District 7: Soña Cooper, Alderwoman, Spring Lake

District 9: Neville Hall, Mayor, Eden

District 11: Stacy Thomas, Alderwoman, Dallas

Director at Large: Ian Baltutis, Mayor, Burlington

Director at Large: Doug Matheson, Councilmember, Blowing Rock

Large City Seat: Larken Egleston, Councilmember, Charlotte

Large City Seat: Mark Anthony Middleton, Councilmember, Durham

Large City Seat: Sharon Hightower, Councilmember, Greensboro

At Large Manager: Jeff Repp, Manager, Boiling Spring Lakes

At Large Municipal Attorney: Kim Rehberg, City Attorney, Durham

At Large Municipal Clerk: Melissa Capps, Clerk Goldsboro

Undesignated Affiliate: David Phlegar, Stormwater Manager from Greensboro who is representing the Stormwater Association of North Carolina.

State Budget Process Takes Shape, Includes Positives for Munis

Last week, we reported on indications that the General Assembly would pass a series of budget bills for various programs rather than come together on a single, omnibus bill. That process got underway this week with themed spending proposals that include focuses of interest to cities and towns. As both chambers held appropriations committee meetings, Rep. Donny Lambeth put forward a bill – which would meet with a League advocacy goal set by cities and towns -- to fund a workforce housing program that wasn’t previously slated for recurring state investments. Representative Lambeth filed HB 1208 Funding for Workforce Housing Loan Program this week. It quickly passed through the full House and now awaits Senate attention.

Another item that cities and towns should ask their legislators to support would contribute to local financial stability efforts, including for utilities. Reps. John Szoka and Jason Saine, leaders in the House majority caucus, put forth HB 1200 Foreclosure Prevention Grants/Rental & Utility Assistance on Wednesday to help people pay bills. Funds from the federal CARES Act would run through the state Housing Finance Agency, which would assess individuals’ financial needs and issue them vouchers for residential mortgage, rent or utility payments. While this assistance isn’t direct funding to municipalities, it would support communities and their governments through preventing foreclosures and stabilizing the local housing picture and enabling payments to utilities that have not been able to disconnect customers for nonpayment.

Separately, on Thursday, the Senate moved forward a bill that would deduct $300 million from the $2 billion reserve of CARES Act money the state received and put it into “continuity of operation needs across state government” at the Office of State Budget and Management. SB 386 State Operations/Increase Federal Funds Use currently sits in the chambers Rules Committee. Essentially, if the bill were to become law, the $2 billion in funds potentially available for various needs including local stability would be replaced with a lesser figure.

Outdoor Dining Bill Generates Controversy on Way to Passage

A measure that would set new rules around outdoor dining sped through the legislature this week, drawing controversy for overriding restrictions contained in either a gubernatorial or local declaration of state of emergency. The controversy over legislative versus executive power came to a head during the House floor debate of HB 536 Temp Outdoor Restaurants for Outdoor Seating on Thursday, where the bill passed on a nearly party-line vote. Before that heated floor debate, according to the Associated Press, Gov. Roy Cooper urged House members to carefully consider their vote, saying, “I know that it’s a tough time for business, and I believe that there will be a time when we can open bars, but that time is not now and I hope that the House will look at this carefully and senators will reconsider their choice about this.” Many cities and towns have already moved to allow expanded dining in outdoor spaces, including on sidewalks and streets. If signed into law, the bill would preempt any local zoning regulation of outdoor dining and beverage establishments that would otherwise apply to those activities on private property.

House Leader Renews Transportation Bond Push

State House Speaker Tim Moore is the lead sponsor of a bill that would put a bond question on the ballot this fall for transportation and education needs. HB 1225 Education & Transportation Bond Act of 2020 surfaced on Tuesday and has a long list of co-sponsors. Of the total $3.1 billion it proposes, it would reserve $1.5 billion for transportation infrastructure projects, including construction and renovation of highways, roads, bridges “and related road infrastructure.” If the bill becomes law, voters would decide whether to spend the money.

The proposal appeared while the N.C. Senate held a series of oversight hearings this week on the cash troubles the N.C. Department of Transportation has been experiencing (covered in recent editions of this Bulletin). The chamber heard hours of testimony from all interested parties, including State Treasurer Dale Folwell, State Budget Director Charlie Perusse, and the department itself.

On the Moore bill – the other primary sponsors being Reps. Jeffrey Elmore, John Torbett and Michael Wray -- Senate leader Phil Berger told the Insider State Government News Service of his past concerns with the idea of a bond, “simply because we had the ready cash to pay for things on a pay-as-you-go basis. What I suspect we’ll see from the consensus revenue forecast, it’s probably time to reassess where we are.” Senator Berger added that he would maintain his reluctance until the revenue picture is certain. Read coverage from the Raleigh News & Observer.

Local Sales Tax Revenues Down 7 Percent for Month of March

Sales tax revenues that will be distributed to local governments for sales made in the month of March will decrease more than 7 percent statewide from March sales in 2019, an indicator of the effect that the COVID-19 pandemic is having on this key local revenue source. This decrease follows 19 consecutive months of year-over-year sales tax growth and is just the second monthly decline in sales tax revenues since the beginning of the 2016-17 fiscal year. Revenues received by counties and cities around the state will be almost $33 million less than those from March 2019 sales. Factoring in the sales tax growth that had been occurring every month of this fiscal year thus far, those losses are even more significant.

The N.C. Department of Revenue provided the League with an early look at these sales tax figures, and we appreciate their partnership and their dedication to making this information available as soon as possible. League members can find the amount their individual jurisdiction is scheduled to receive next month here, and a full breakdown of the individual elements of that total distribution here. As a reminder, sales tax revenues are distributed to local governments three months after the taxable sale is made, meaning these revenues that will be distributed next month are based on March sales. Given that the impact of COVID-19 grew in magnitude over the course of March, and stay at home orders were not issued until the end of the month, it is likely that sales tax losses for April and beyond will be at least twice as impactful as this early number. The League is continuing to work with its state and federal partners for revenue support that is able to be used to help make up for these losses that were incurred as a result of the global pandemic. If you have any questions about any sales tax issues please contact League Director of Research & Strategic Initiatives Chris Nida.

Package Delivery Robots Bill Gets Warm Senate Reception

A proposal to create a regulatory framework for operation of package delivery robots got a warm reception at its first Senate hearing, held Wednesday. Following a brief, lighthearted discussion, the Senate Commerce Committee voted to forward a revised version of the bill, which included many suggestions requested by city officials. The robots, termed “package delivery devices” in the bill, would operate autonomously on sidewalks and streets to make retail deliveries to homes and businesses. (View short videos of the FedEx prototype here and the Amazon prototype here.) Under the bill, local governments would retain the authority to regulate the devices after consulting with companies seeking to deploy them, though local governments could not ban their operation completely. League members will continue to participate in negotiations on the bill as it moves through the legislative process, and city officials extend their appreciation to bill sponsors Sens. Jim Perry, Sam Searcy, and Vickie Sawyer for the ongoing opportunity to provide feedback.

Criminal Law Working Group Would Target Local Rules

A new legislative working group would review penalties for violations of local ordinances, among other tasks related to cataloging and streamlining the state’s criminal laws, under a new proposal introduced this week. The sponsors of the new bill, HB 1226/SB 855 Recodification of Criminal Laws, led past efforts opposed by the League to decriminalize local ordinances. Taking an alternate approach, this year’s bill would establish a nine-member legislative working group to oversee the work of a new Criminal Justice Innovation Lab. The Innovation Lab would be a new entity housed at the School of Government, but which would take direction from and draft legislation on behalf of the working group. Broadly, the bill tasks the Innovation Lab with creating a “streamlined, comprehensive, orderly, and principled criminal code.” Specifically, for local governments, the bill directs the Innovation Lab with presenting policy options for “addressing ordinance crimes” consistent with the goals of the working group. To gain the perspective of local officials, the bill requires the working group to solicit feedback from groups such as the N.C. Association of Chiefs of Police. The group would face an Aug. 15, 2021, deadline for concluding its work.

Phase 2 of COVID Restrictions-Easing Takes Effect

The new “Safer at Home” phase of state-set pandemic-time rules took effect last Friday. Days before, Gov. Roy Cooper issued Executive Order 141, which lifted the previous stay-home order and allowed for more business activity, like on-premises dining at restaurants. "It is important to stay home if you are sick," notes a Frequently Asked Questions document released along with the order. It outlines all of the practical changes. Governor Coopers office also released related guidance on bars.

While the coronavirus remains a public health crisis, the easing of restrictions is based on science, the governor's office said. “North Carolina is using the data to guide our decisions about when to lift COVID-19 restrictions, and overall our key indicators remain stable,” said Governor Cooper in a news release. “Safer At Home Phase 2 is another careful step forward, and we have to continue taking this virus seriously to prevent a dangerous spike in infections.”