public policy advocacy for the professional engineer                                      June 7, 2013

Legislative Update

House subcommittee appropriation chairs released their budget recommendations in committee today with some Chairs indicating they would be willing to consider amendments.  At the time of this writing the Transportation Appropriations subcommittee does not have any amendments so the recommendations in this update will be in the final House proposal.  The Natural and Economic Resources Appropriations subcommittee plans to reconvene after session today so some of the items contained in this report may change. 

The House budget differs from the Senate most significantly in that it does not include any policy changes that do not have an appropriation impact.  Therefore, there is minimal restructuring and reorganization of government contained in the House budget as compared to the Senate. 

The New House budget items are highlighted in Red.

Budget

Natural and Economic 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 House budget moves the Clean Water Management Trust Fund under the management of NCDENR rather than a stand-alone special revenue fund under the administration of an independent board.  The CWMTF direct appropriation is $4 million in the first year and $9 million in the second year.  In addition, the Trust fund will receive 25% of the deed stamp tax proceeds received by the State ($9 million) and special license plate funds ($4 million).  These dedicated revenue sources previously supported the Natural Heritage Trust Fund which is being eliminated.

With the current appropriation for CWMTF (2013) at $10.75, the House budget proposal is not only more favorable than the Senate budget but it provides more funding than the current year budget.  PENC Supports the House proposal for the CWMTF.

  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 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).

The House budget differs from the Senate in that it does not create a new Division of Water Infrastructure in DENR and does not create a new Authority.  The Revolving Funds, for which the match is fully funded, will be administered in the same manner as they are currently as will the federal block grant 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 Economiv 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.  

The House budget keeps the Rural Economic Development Center intact compared to the Senate budget which would have established rural economic development programs under the Department of Commerce.  The Rural Center is funded at the current level of $16.6 in the first year and an additional $3.4 million dollars in the second year.  The Rural Center may spend $2.2 million on administration in the first year and $2.6 million in the second year.  Of the remaining amounts, the Rural Center  may spend $10.8 million in the first year and $13 million in the second year on the Jobs Infrastructure Program and $3.6 million in the first year and $4.3 million in the second year on the Critical Needs Program. 

At this time, with the ongoing reorganization of the Department of Commerce, there is not enough information to determine if rural economic development programs would be better administered under the independent Rural Center or under the Department of Commerce.  Therefore, PENC takes no position on how these grant programs are administered.  However, PENC supports the House proposal as it relates to the funding proposed for this purpose.  

  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. 

The House budget does not transfer the Energy Office to DENR.

PENC takes no position on the State Energy Office. 

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, this 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. 

The House budget increases NCDOT’s outsourcing of all activities performed by the Preconstruction and Technical Services units to 65% in the first year and up to 70% the following year compared to the Senate that proposed 60%. Like the Senate proposal, it excludes the cost of activities performed by the Turnpike Authority, the Structures Design and Management unit and the Bridge program bringing the total outsourcing requirement to 70% in the first year and 75% in the second year. 

Additionally, the House budget requires that the Right of Way, Project Development and Environmental Analysis units increase their outsourcing by 7.5 percent in both years compared to the Senate that proposed 5.0%.    The House version requires that a minimum of 15 filled positions be eliminated to meet the requirements of these provisions.

PENC supports the additional outsourcing requirements recommended by the House.

The House budget also would increase the number of design build projects by 5% each year based on the total cost of construction compared to the Senate which did not make any recommendations for increasing design build projects.

  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 Statewide 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.
  3. Public transportation and passenger rail cannot be considered at the Regional Level – only at the division level.
  4. No state money is included for bike and pedestrian improvements but Powell bill money can be spent on these projects. ($1.2 million)
  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.

The House budget did not include any provisions, other than the shifting of funds, related to the Strategic Mobility Formula, preferring instead for this legislation to be enacted in the stand alone bill – HB 817 which is currently being deliberated in the Senate.  Therefore, the House budget does not contain any reduction to the bike and pedestrian capital project funds, although the Regional Bicycle Planning Grant Program is eliminated.   It is assumed that the House version of HB 817, and its exemption of STPDA from the formula allocation, reflects their intent on this issue.  Their difference with the Senate on this item will be worked out in the House/Senate conference committee that will ultimately be appointed to work out the differences on this bill.  

Additional Transportation items include:

  1. $2.2 million is appropriated from the Highway Fund for a Shallow Draft Navigation Channel Dredging Fund. The House budget recommendation is the same.
  1. Fees for Electric/Hybrids have been included for a total of $1.5 million per year. The House budget does not include fees for Electric/Hybrid vehicles.
  1. Reduces NCDOT staff by 339 positions – all of which are vacant. Reduces NCDOT staff by 631 vacant positions.
  1. Adds $3.1 million in the first year and $4 million in the second year for Economic Development. The House budget appropriates $10.3 million in the first year and $4.0 in the second year for Economic Development.  $6.5 million in the first year shall be used for aviation related economic development projects. 
  1. Allows for tolling as long as it does not reduce the number of existing general purpose lanes. Tolling is not addressed in the House budget.
  1. Eliminates the Turnpike Authority Board but creates a Turnpike Committee of the NCBOT.

The Turnpike Authority Board is not eliminated in the House budget.

Other Items contained in the House Transportation budget and not the Senate:

  1. Recommends NCDOT perform a life cycle cost analysis and report back to the Joint Legislative Transportation Oversight Committee no later than September 1, 2013.  The Senate did not make a recommendation on LCC.
  2. Allows counties to use sales tax revenue for roads – similar to Pennies for Progress in South Carolina.
  3. Authorizes a study of the Global Transpark infrastructure and NC Ports Authority.
  4. Establishes the Freight Rail and Rail Crossing Safety Improvement Fund in the amount of $21.9 million in the first year and $6.4 million in the second year.  The fund receipts are derived from the dividend payments issued by the NC Railroad Company and department-wide administrative savings. 

These recommendations are not final and are subject to amendments by the full House appropriations committee which begins meeting on Tuesday.  Therefore, if there are items you would like to see addressed or changed, please let your House members know immediately and copy me on your e-mail bbailey@penc.org.  You may find the list of your House of Representatives here:  http://www.ncga.state.nc.us/gascripts/members/memberList.pl?sChamber=House.

Final updates on the House budget will be provided early next week so that you will have time to compare the House and Senate budgets.

A status report on bills we are working on or monitoring, including various tax proposals,  will also be provided on Monday.

Your feedback and input is always welcome.

 


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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