League Bulletin

February 2, 2018

Tax Code Changes Could Impact Duke Energy Rate-Hike Requests
RSVP By Monday for Census Boundary and Annexation Survey Workshops
What's Ahead for E-Fairness Case
President Trump Desires State, Local Aid in Infrastructure Plan
Governor Launches 'Hometown Strong'
Fuquay-Varina Brews More Success on 'Here We Grow'
NC Municipal Leaders Named to Nat'l, State Committees
Cary Seizes on Smart City Grant Opportunity

Tax Code Changes Could Impact Duke Energy Rate-Hike Requests

Duke Energy Corp. says that it is willing to share some savings created by the recently passed federal tax plan as a part of the ongoing rate cases before the N.C. Utilities Commission, cases in which the League has intervened seeking to lower the increases being sought by the utility. The Associated Press on Thursday reported that Duke informed rate-regulators that it would like to adjust its rate-hike requests to reflect the utility’s windfall under the federal tax law changes, but did not specify an amount. In testimony to the Utilities Commission last Friday, a utility rate analyst testifying on behalf of the League said the Duke Energy Carolinas (DEC) case for a rate increase was undermined by the substantial savings coming its way through reduced corporate income taxes. The utility is expected to benefit by $171 million to $210.5 million under the tax change, meaning in turn that DEC's request for a rate increase worth $647 million should be adjusted to minimize impact on customers, said Wilmington-based analyst Brian Coughlan, as reported by the GreensboroNews & Record. Coughlan's testimony was part of the League intervening in DEC's rate case before the Utilities Commission. League members including Burlington City Manager Hardin Watkins also submitted testimony about the potential impacts of a rate increase on communities.

The goal of the League’s action is to reduce the financial burden that an increase in investor-owned utilities' electricity rates would bring upon municipal governments served by the utilities. Increases in electricity rates can significantly impact municipal budgets, particularly in those cities and towns providing such services as water and wastewater treatment, street lighting, traffic signals and recreational facilities. The League also intervened in a separate, similar rate-increase case brought by Duke Energy Progress (DEP), which operates in the eastern part of the state. DEP, too, would benefit from the tax break, the News & Record noted.

Specific issues affecting municipalities in Duke's rate case include the conversion of streetlights to LED technology and associated fees for that conversion. DEC has recommended that high pressure sodium conversion fees be lowered from $54 to $40. The League would like the fee eliminated, and if not, to allow for extended payments to better allow municipalities to absorb the costs. National studies have shown that street lighting can act as a major deterrent to crime, and LED lighting is also more energy efficient, saving DEC money over time. Overall rates and the proposed rate hikes should take into account the burden such an increase would place on local taxpayers and water and sewer utility payers. The Associated Press has reported that utility regulators around the U.S. are weighing reductions to electric rates following the federal tax cuts.

The League also intervened in a 2013 rate case and has jointly held meetings with Duke Energy since to continue exploring the issues surrounding LED streetlight conversion. In its filings in the current case, Duke has acknowledged that costs incurred by municipalities have slowed that conversion.

RSVP By Monday for Census Boundary and Annexation Survey Workshops

The Census Bureau is conducting Boundary and Annexation Survey workshops in three locations across North Carolina in February: Wilmington, Feb. 12; Durham, Feb. 13; and Charlotte, Feb. 14. The workshops will provide an overview of the 2020 Census Geographic Partnership Programs, the 2018 BAS, and demonstrations for creating a digital and paper response for completing the BAS. To register, please RSVP by emailing your name, phone number, workshop location and BAS participation method type to geo.bas@census.gov with a generic subject of: RSVP to [Insert City, State] BAS Workshop, by Feb 5.

What's Ahead for E-Fairness Case

As reported recently by outlets including this Bulletin, the U.S. Supreme Court has agreed to decide the case of South Dakota v. Wayfair, with a possible outcome being the allowance of state and local governments to require out-of-state retailers -- such as those making sales over the Internet -- to collect sales tax. So what's ahead? According to the National League of Cities (NLC), the State and Local Legal Center (SLLC), which assists state and local governments in Supreme Court cases, will file an amicus brief due Feb. 28 with anticipated sign-ons from NLC and other stakeholders. Oral arguments are expected in late April, though the court's calendar for that time period is not yet available. SLLC anticipates holding a webinar to go over the case and oral argument shortly after the fact. The Jan. 19 League Bulletin provides background. The League’s membership supports federal e-fairness action that would close the online sales tax loophole, restore marketplace fairness for competing brick and mortar businesses and create new revenue for state and local governments.

President Trump Desires State, Local Aid in Infrastructure Plan

In his first State of the Union address, delivered Monday at the Capitol, President Trump called for a $1.5 trillion infrastructure plan that would depend significantly on state and local dollars, but without a specific map explaining how to reach that figure. "Every federal dollar should be leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment -- to permanently fix the infrastructure deficit," the president said in his speech. Outlets including Route Fifty reported that officials with the administration had indicated a desire for a package built on $200 billion of direct federal spending over a decade, expanded to the $1 trillion mark with money from state and local governments and the private sector. National League of Cities President Mark Stodola, the mayor of Little Rock, Ark., acknowledged the need for a bold, new plan to tackle the infrastructure deficit (discussed in detail with the League in 2016 on the Municipal Equation podcast). But Mayor Stodola also expressed concern with the Trump plan, noting that cities and towns are already straining to meet infrastructure needs. "City leaders are unable to ignore our nation’s aging infrastructure. Every day, we’re forced to make emergency repairs and often have to raise additional funds where we’re able," Mayor Stodola said. "We are already leveraging every dollar available, and we need our federal partners to pay their share. That’s how we will build for 2050, instead of simply fixing 1950." He added: "As cities work to address the aging physical infrastructure needs in communities across America, we must simultaneously invest in the human capital that makes these projects possible. We urge federal investment in programs that ensure a diverse and skilled workforce and prepare people for the jobs of the future." NLC recently launched its Rebuild With Us campaign calling on Congress to partner with the nation's municipalities to meet needs in transportation, water, Internet and other vital infrastructure. The organization also released a State of the Union breakdown of topics that matter to cities and towns.

Governor Launches 'Hometown Strong'

Gov. Roy Cooper on Thursday announced a new initiative called "Hometown Strong" that would involve partnerships with local governments "to support local economies, improve infrastructure, and strengthen rural communities," according to a press release that calls rural improvement a top priority for the administration. Governor Cooper said partnerships between rural counties and Hometown Strong will be announced in the spring. "Through existing and new partnerships with local leaders from government, business, non-profit organizations, the philanthropic community and others, Hometown Strong will seek to leverage state and local resources to help complete local development projects, convene conversations between state and local agencies, and identify long-term projects that can encourage prosperity in rural communities," the press release explained. Former state legislator Pryor Gibson of Wadesboro and former Department of Environmental Quality policy advisor Mary Penny Kelley of Spring Hope will lead the initiative.

Fuquay-Varina Brews More Success on 'Here We Grow'

The Town of Fuquay-Varina is stepping it up on Here We Grow, the League's hub of crowdsourced stories that show how North Carolina's municipalities are spreading economic success across the state. The Wake County town is racking up its presence at herewegrownc.org, where city officials can submit stories that show their local government's role in job expansions, investments, partnerships and quality of life improvements. This time, it's the story of Aviator Brewing, which is expanding and hiring in Fuquay-Varina thanks partly to teamwork with town government. "I would like to thank the Fuquay-Varina town board for believing in the long-term success we have planned for Aviator Brewing Company,” CEO Mark Doble says in the Here We Grow piece submitted by the town. "We started our business in an airplane hangar nearly 10 years ago and now we have grown to become one of the top craft breweries in the U.S. I appreciate the support and partnership of the town and look forward to working with the town on all our future endeavors.” Town Manager Adam Mitchell says the company's growth is symbolic. "This significant expansion by Aviator Brewing Company demonstrates the importance of Fuquay-Varina’s support for our existing businesses," Mitchell said. "Continuing to support and strengthen the partnership with one of the community’s most dedicated businesses is part of the town’s overall economic development model." Read how it came together at herewegrownc.org. Have a great economic development story from your city or town? Submit it! If you need login credentials, send a request to about@herewegrownc.org, and get inspiration from the map of towns that have already submitted.

NC Municipal Leaders Named to Nat'l, State Committees

The updated, 2018 roster for National League of Cities (NLC) federal advocacy committees includes several names from North Carolina. Sanford City Council Member Sam Gaskins and Wilson City Council Member Derrick Creech have been named to NLC's advocacy committee on energy, environment and natural resource matters. Gaskins and Creech join Morrisville Mayor T.J. Cawley on that committee. "The Energy, Environment & Natural Resources (EENR) Committee is responsible for developing policy positions on issues involving air quality, water quality, energy policy, national wetlands policy, noise control, and solid and hazardous waste management," explains NLC.

Others from North Carolina on the 2018 NLC federal advocacy committee roster include: (Finance, Administration and Intergovernmental Relations Committee) Lenoir Council Member Timothy Rohr; (Human Development Committee) Jacksonville Council Member Angelia Washington (Vice Chair), Charlotte Council Member LaWana Mayfield, Monroe Council Member Surluta Anthony and Greenville Mayor Pro Tem Rose Glover; (Transportation and Infrastructure Services Committee) Winston-Salem Council Member Dan Besse and Chapel Hill Council Member Ed Harrison; (Public Safety and Crime Prevention Committee) Greenville Council Member Kandie Smith; and (Information Technology and Communications Committee) Lenoir Mayor Pro Tem Ben Willis. More information about NLC's committee roles is available at http://www.nlc.org/advocacy/committees.

In other recent appointments, Gov. Roy Cooper named Statesville Mayor Constantine Kutteh to the Mitchell Community College Board of Trustees. Kutteh has been a member of the Statesville City Council since 1989. Governor Cooper also appointed Wadesboro Town Council Member Fred Davis to the South Piedmont Community College Board of Trustees. Davis is the principal at Wadesboro Primary School.

Cary Seizes on Smart City Grant Opportunity

The Smart Cities Council (SCC) has announced finalists for its 2018 Readiness Challenge Grants, and Cary is one of nine national contenders. In March, five will be selected for mentoring and "tailored products and services" to advance their smart-city efforts, according to SCC, billed as the largest coalition of smart-city advocates. The finalists include municipalities, counties and states, from Los Angeles to Virginia. Cary "is already underway with its initiatives such as the Garage for Innovation, the Innovation Analytics Lab, the Simulated Smart City Project and the One Cary platform. That platform will share data between departments, provide better insights, and give citizens digital access to services and information," SCC's list of finalists says. Grants and resource opportunities for smart-city applications in local government and public spaces are likely to grow in focus amid the global push for technological shifts and efficiencies. Cary discussed its smart-city initiatives with the League on an episode of its Municipal Equation podcast last year. SCC also awarded Puerto Rico a special grant to help with its hurricane recovery and ideas to rebuild with smart infrastructure.