public policy advocacy for the professional engineer                                      June 3, 2013

Legislative Update – URGENT ACTION NEED on BUDGET ITEMS

As House members continue to deliberate over their proposed budget, your action is desperately needed to ensure House budget writers take action to both restore funding cuts contained in the Senate budget and include some provisions that are favorable to the engineering industry. 

Budget

The Senate budget proposal, adopted by the full Senate two weeks ago, contained sweeping changes which many have criticized as being too policy oriented and not more appropriately focused on appropriation changes.  Some of the significant policy changes contained in the Senate budget include the shift of entire divisions within state agencies to other state agencies – moving the Rural Center to Commerce, creating a Rural Economic Development Division, for example. 

While the House appropriations subcommittees review the Senate budget, it is clear that they have some major disagreements with the Senate proposal and it is likely there will be significant amendments proposed.   The House is expected to begin voting on their budget June 10th so there is a small window of opportunity this week for Professional Engineers to take action to let the House members know the changes we would like to see made to the Senate budget.

Below is a list of significant provisions in the Senate budget.  In some cases there are items that we would like for the House to amend, reject or adopt.  And, there are some items on which we have not taken a position. 

Please contact your House members immediately to ask them to consider these recommendations.

Environment and Natural Resources 

  1. The Senate budget creates a new Water and Land Conservation Fund and Grant Program which combines the former Natural Heritage Trust Fund and the Clean Water Management Trust Fund.  The appropriation in the first year of the biennium is $12 million and the second year is $14 million.  The members of the newly appointed Authority board will decide how grants are allocated between land conservation and water conservation. 

The current year appropriation for the Clean Water Management Trust Fund alone is $10.75 million – close to the entire appropriation for the two funds combined in the first year. Therefore, given that the combined total of the two programs has now been rolled into one fund, it is reasonable to assume that the Senate is proposing a cut to grant programs currently being administered by both funds.  CWMTF grants are used to fund engineering projects and the need for these projects continues to increase.  Trust Fund staff state that their application requests for this past year exceeded $50 million.

  1. The Senate budget creates a new Division of Water Infrastructure in DENR which combines the former Division of Water Quality and the Division of Water Resources.  The budget also creates an Authority to oversee grants and loans provided by the new Infrastructure Fund.  One of the gubernatorial appointments to the Authority shall be a Professional Engineer from the private sector. 

The Water Infrastructure Authority will receive a General Fund appropriation of $4 million in the first year and $5.5 million in the second year to fund a water and sewer database and planning and supplemental grants to assist local governments.  The WIA will also administer the Drinking Water and Clean Water Revolving Funds (state match is fully funded) and the Community Development Block grant Infrastructure Grant Program (all federal funds)

  1. The Senate budget creates a new Division within the Department of Commerce for the purpose of addressing the economic development needs of the State’s rural Counties.  The Rural Center, as we know it, will be eliminated but its duties and funding will be administered under the newly created division in Commerce. 
The new Rural Economic Development Division will be responsible for administering the economic development grants and loans awarded by the Rural Infrastructure Authority. 

The Rural Economic Development Division will receive an appropriation of $7 million in the first year and $10.4 million in the second year of the biennium.  The current annual appropriation is $21 million.  Up to 3% of these funds will cover administration.  Additionally the Division will oversee the Industrial Development Fund – Utility Account and the Community Development Block grant for Economic Development funds (federal). 

Nineteen FTEs and additional funding from the regional offices will be reallocated to the Rural Economic Development Division in an effort to enhance regional office presence in rural areas.  

ACTION ALERT:  All of these actions combined have the net effect of reducing funding for Water and Wastewater infrastructure grants to local communities in desperate need of these projects. 

Please contact your House members today incorporating some of the key points below within your own personalized message:

Every North Carolina citizen is entitled to clean water - it is a basic right that we should all enjoy equally.  However, the Senate budget seriously compromises the public health, safety and welfare by further reducing funding available for local water and wastewater infrastructure projects.   At a minimum, all funding sources currently being used for these projects should be increased up to their current year funding levels. 


Professional Engineers oppose funding reductions for rural economic development grants currently administered by the NC Rural Center. The changes proposed for the NC Rural Center require further evaluation – especially given the restructuring of the functions of the Department of Commerce under the direction of the new Secretary.  Absent a thorough and thoughtful study of how rural economic development should be incorporated under the new administration, the change to how the state administers this critical economic development funding through the Rural Center is premature and should be reconsidered.   

  1. The Senate budget transfers the Energy office from the Department of Commerce to the Department of Environment and Natural Resources under the Division of Energy, Mineral and Land Resources. 

Action Alert:  The changes proposed for the NC Energy Office require further evaluation – especially given the restructuring of the functions of the Department of Commerce under the direction of the new Secretary.  Absent a thorough and thoughtful study of how the Energy Office should function under the new administration, the change to how the state administers its Energy programs, which are vital to the economic welfare of the state, are premature and should be reconsidered.   

Transportation

  1. Increase DOT Privatization.  The Senate budget seeks to further increase the outsourcing of DOT’s Preconstruction and Technical Services Units.

Last year’s adopted budget mandated that NCDOT increase its outsourcing to 60%. This requirement would remain in effect.  However, an additional provision would exclude the cost of activities performed by the Turnpike Authority, the Structures Design and Management unit, and the Bridge Program.  Excluding these activities would increase the privatization percentage by an additional 5%.

Additionally, the Senate budget requires that the Right of Way, Project Development and Environmental Analysis and Roadway Design units increase their total cost of outsourced activity by 5% in 2013-14 and by an additional five percent the following year from the current baseline from 2012-13. 

ACTION ALERT:  Please contact your House members today and ask them to support the Senate budget provisions that increase the percentage of activities outsourced to the private sector.  (Part XXXIV. Section 34.2)

  1. The Strategic Mobility Formula (HB 817) allocations have been included in the Senate budget proposal.  Some of the differences from the House version of HB 817 include:
  1. Mid-Currituck, Garden Parkway and Cape Fear Skyway can only be available for StatewideTier funding if they become interstate designated routes.  The “Red Route” is eligible. 
  2.  “Economic competitiveness” is deleted from the funding criteria at all levels:  Statewide, Regional and Division Tiers.
  3. Public transportation and passenger rail cannot be considered at the Regional Tier Level – only at the division tier level.
  4. No state money is included for bike and pedestrian improvements but Powell bill money can be spent on these projects.
  5. STPDA funds received by MPOs (frequently used for Bike/Ped projects) for regions with over 200,000 in population are included in the funding allocation even though this funding has always gone directly to the MPO and qualifying regions have used this at their discretion.

ACTION ALERT:

For Engineering firms that work on Bike/Pedestrian projects:

Please contact your House Members today and ask them to restore the $1.2 million in state money for Bike/Pedestrian projects as this allows for a more favorable federal match.  This is a better investment than if the $1.2 million is rolled into the larger pool of funds available for highways where the federal match is considerably less. 

Please also ask House budget writers to exclude the STPDA allocation from the Division category under the new Strategic Mobility Formula.  The House did this when they passed HB 817 so they should be receptive to this recommendation.  STPDA has been used to fund many local bike/pedestrian projects.  If the STPDA funds are included in the Division allocation and the Division is getting less money under the new formula, local governments will be forced to now use their STPDA funds for roadway projects.

Additional Transportation items include:

  1. $2.2 million is appropriated from the Highway Fund for a Shallow Draft Navigation Channel Dredging Fund.
  2. Fees for Electric/Hybrids have been included for a total of $1.5 million per year.
  3. Reduces NCDOT staff by 339 positions – all of which are vacant.
  4. Adds $3.1 million in the first year and $4 million in the second year for Economic Development.
  5. Allows for tolling as long as it does not reduce the number of existing general purpose lanes.
  6. Eliminates the Turnpike Authority Board but creates a Turnpike Committee of the NCBOT.

If you have any concerns over other provision in the Senate budget that have not been mentioned in this update please contact me immediately as time is running out for PENC to influence any changes.

An additional update, including a review of legislative tax proposals and other significant legislation affecting engineers will be provided later this week. 


If there are questions or you need additional information, please feel free to contact me at bbailey@penc.org or phone 919-834-1144, ext. 1.


Sincerely,

Betsy Bailey
Professional Engineers of North Carolina


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