Last week, the NC House passed their version of an Appropriations bill that made significant changes to the budget proposed by Governor Easley. The $21.3 billion budget actually spends $183 million less than Easley's plan and does not include as much funding for some of his education initiatives such as his signature “More at Four” pre-K program and full funding for projected enrollment growth. Additionally, the House budget does not include tax increases on cigarettes or alcohol that the Governor was using to increase funding for mental health programs and teacher pay raises. But, the House budget would increase a handful of fees and shift more than $41 million from dedicated trust funds and reserves to balance the budget. The House budget recommends a 3% raise for teachers (Easley recommended 7%) and 2.75% increase for state employees or $1,100 bonus, whichever is greater. Overall, spending in the House budget would increase by 3.2 percent, much smaller than last year's 9.6 percent increase over the previous year. The House plan would also implement a sales-tax holiday in November for energy-efficient appliances and authorize $549 million in debt over the next four years to add 1,000 prison beds, university buildings and other construction projects.

Of particular interest to engineers is a budget provision included in the House budget that will provide $25 million for the North Carolina Turnpike Authority’s Western Wake project and another $24 million in the second year for the Monroe Connector for a total of $49 million. The funding for the Turnpike projects will come from a reduction in the annual transfer of $170 million from the Highway Trust Fund to the General Fund ultimately reducing that transfer to $121 million. Other items in the House budget include $50 million for local government water and sewer grants through the Rural Center along with $10 million for the Rural Center’s Economic Infrastructure Fund.

The Senate will create its own version of the budget beginning this week. Easley ultimately will be asked to sign a compromise budget.

Two bills have been introduced, S1967 (Senator Boseman) and H2138 (Rep. Gibson) that would prevent proposed coastal stormwater rules approved by the Environmental Management Commission and the Rules Review Commission from taking effect. If the General Assembly does not pass a bill to disapprove the rules during the short session, the rules will become effective. The proposed rules will greatly impact the extent of stormwater control required on virtually every development project in the 20 coastal counties covered under the Coastal Area management Act by increasing costs and restricting how property owners can utilize their land. The coastal stormwater rules, as adopted by the Environmental Management Commission, would require developers who have an impervious surface that exceeds 12 percent of the property they are developing to install runoff controls. Such controls could include ponds, rain gardens and cisterns to catch water for reuse. The rules would also require a greater amount of runoff to be captured than is currently required. A stakeholder negotiation process is underway and PENC has not yet taken a position on the bill.

About 200 supporters of new stormwater rules converged on the Legislature last week to urge lawmakers to allow the rules to go into effect as scheduled later this year. Frank Tursi with the N.C. Coastal Federation said the new rules are needed to protect shellfish habitats. "Numerous scientific studies going back 30 years have shown that the more of these impervious surfaces you have the more runoff you have, the more stormwater you have," Tursi said. Such water doesn't get treated or filtered out, the way it would if it sunk into the groundwater, and it carries pollutants into the rivers and streams, he said.

PENC and ACEC are working with legislators on several bills dealing with drought management and the use of reclaimed water. H2501 (Rep. Gibson) and SB 1937 (Albertson) defines “Reclaimed water” as water that remains after waste has been removed from wastewater consistent with the terms and conditions of a permit issued to the treatment works pursuant to G.S.143-215.1. The bill also requires the Environmental Review Commission to establish a program to facilitate the use of reclaimed water and adopt rules to govern the distribution and use and prevent the distribution and use of reclaimed water as potable water. PENC supports this bill as an efficient and safe way to facilitate the use of reclaimed water.

HB 2499 (Rep. Gibson) and SB 1879 (Senator Clodfelter) would implement water management and drought preparedness and response measures. This bill would: 1) change the registration for a proposed water transfer from 6 to 2 months 2) increase fee for those failing to register from $5 to $100, 3) defines “essential water use” 4) changes community water system to large water system as defined by serving 1,000 or more connections or 3,000 or more people 5) deletes the Commission’s responsibility to notify a municipality of water shortage or emergency and deletes the Commission’s Declaration of Water Emergency 6) allows the Commission to establish minimum conservation rules which apply to all 7) gives the department authority to require weekly reports during drought 8) provides that water plans must be approved by department and include audit and leak detection program and interconnection plans 8) provides water shortage emergency powers to Governor 9) requires water system efficiency and 10) provides for the use of graywater under certain conditions. PENC is still studying this bill to determine its impact on the public health, safety and welfare.

HB 2259 (Gillespie) - DWQ/Bridge Culvert Standards – Directs the Division of Water Quality of the Department of Environment and Natural Resources to authorize use of three-sided, open-bottom, or bottomless culverts on private property, based on sound engineering practice, as recommended by the Joint Legislative Transportation Oversight committee. PENC supports this bill sponsored by ACEC.

HB 2504 (Reps. Gibson and Allen) Limit Impervious Pavement in Parking Lots – An act to limit the amount of impervious surface of vehicular surface areas, as recommended by the Environmental Review Commission. PENC is still studying this bill to determine its impact on the public health, safety and welfare. (see commentary on stormwater bills above)

HB 2315 (Cole)/SB 1697 (Jenkins) Toll Road Enforcement/Authority Changes – Provides for the enforcement of tolls at toll facilities operated by the North Carolina Turnpike Authority and modifies laws applicable to the North Carolina Turnpike Authority, as recommended by the Joint Legislative Transportation Oversight Committee. This legislation is necessary before the NCTA can move forward with its first toll project.

SB 1698 (Jenkins)/HB 2313 (Cole) – Express Permitting Review Program – Provides an express permitting review program for connections to the State Highway System, as recommended by the Joint Transportation Oversight Committee. Passed the House Committee on Transportation and referred to House Finance Committee. This bill provides for DOT to develop a fee supported express review program in each highway division to provide express permit and certification reviews in order for an applicant to make a connection to the state highway system for a driveway, street, signal, drainage, or any other encroachment. The DOT may use contracted engineering firms supporting each highway division to provide express permit reviews, comments and recommendations for issuing such permits. No new staff shall be hired for the purposes of implementing an express permit review program. Highway division participation is voluntary. PENC Supports this bill.

Gas Tax Holiday and Reduce gas/diesel fuel – SB 1817 (Forrester) establishes a summer motor fuels tax holiday and HB 2587 (Allred) reduces gasoline and diesel fuel taxes by eliminating the variable portion of the motor fuel excise tax. PENC opposes both of these bills as they would provide minimal relief to the consumer and result in a loss of several hundred million dollars to the highway fund at a time when the state is struggling to keep up with a backlog in highway maintenance and construction and bridge replacement and renovation. The gas tax holiday alone would cost the highway fund $425 million.

HB 2316 (Cole)/SB 1791 (Jenkins)- DOT Contracts for Professional Engineering – Authorizes the DOT to contract for professional engineering services for the “planning, design, maintenance, repair and construction of transportation infrastructure” replacing “highway construction, maintenance, or repair”, as recommended by the Joint Legislative Transportation Oversight Committee. PENC supports this bill.

SB 1894 (Stevens)/HB 2363 (Ross) – Establishes a Congestion Relief and Intermodal Transportation 21st Century Fund, to provide for allocation of those funds to 1) local governments and transportation authorities for public transportation purposes 2) short-line railroads, for assistance in maintaining and expanding freight service statewide 3) railroads for intermodal facilities, multimodal facilities and inland ports 4)make capital improvements on rail lines to allow improved freight service to the ports and military installations 5) expand intercity passenger rail service and to extend common levels of local transit funding authorization to three urban regions, and allow other local governments similar options for local transit funding and to extend the state ports tax credit all as recommended by the 21 st Century Transportation Committee. The legislation would give local voters the opportunity to decide whether to pay an additional half-cent sales tax or agree to additional vehicle registration fees in order to raise money for mass transit projects. If they agreed, the state would then match the money with state grants. There is one little sticking point. The bill doesn't say where the state is going to get the money for the matching grants and Speaker Hackney said it is unlikely that there will be any transportation bond this year. While PENC generally supports additional funding for transportation, the preferred language would allow funds to be used for all transportation purposes and not just transit. However, PENC supports the general concept of the bill.

HJR 2665 (Carney and Coates) - Urge Congress to Provide Highway Funds – PENC supports this Joint Resolution urging Congress to end North Carolina’s status as a donor state of federal highway tax revenues, and to return one hundred percent of the federal highway revenues the state remits to the federal government each year in order for the state to address its urgent transportation needs, as recommended by the 21 st Century Transportation Committee. Although the 2005 SAFETEA-LU federal legislation required that the State would increase its share of federal highway revenue to 92% by 2008-09, the State has so far received only 89.7% of the federal highway tax revenue it remitted to the federal Highway Trust fund. The Federal Highway Trust Fund is projected to be bankrupt by 2010.

HB 2335 (Luebke)/SB Health Benefits Credit extends the sunset on the credit received by small businesses for employee health benefits and increases the credit amount to $300 through 2014. The HB has received a favorable report from the House Finance Committee and will be voted on by the House today. PENC supports this bill that is favorable to business owners.

HB 2610 (Neumann)/SB 2002 (Snow) - Employers Must Use Federal E-Verify Program – This bill would require that employers in this state use the federal E-Verify program or a similar verification of work authorization program; and to appropriate funds to establish and support a position to assist in the implementation and execution of this act. This bill applies to all local government entities and is relevant for a consulting engineering firm in that it states that no city or county may enter into a contract for the physical performance of services within this State unless the contractor registers and participates in the federal E-Verify Program. The penalties for violations include suspension or loss of license. The NC Chamber of Commerce opposes this bill and PENC does not believe that the bill is necessary.

SB 1952 (Hoyle) Business Tax Protection Act would protect small businesses from certain sales and use tax assessments, to help small businesses understand the complexities of the sales and use tax laws by requiring consultation from the Department of Revenue, and to allow all taxpayers to rely on verbal advice from the Department of Revenue. PENC supports this bill that protects the small business owner.

SB 1754 (Hoyle) Establishes an Infrastructure Trust Fund to be used for capital improvements as directed by the General Assembly.