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Senate | March 20, 2013 | Committee Room | Finance

Full MP3 Audio File

[Speaker changes.]...for favorable motion...motion favorable report on Senate Bill 152, please say "aye". (Ayes.) Opposed say nay. (Nays.) Ayes have it. Thank you. OK, let's talk about Senate Bill 172, modified Jacksonville Occupancy Tax. Senator Brown. [Speaker changes.] Thank you, Mister Chairman. I think as you all know now on occupancy tax, two-thirds of the money has to be spent toward advertising; maybe that's all I need to say. [Speaker changes.] OK...I've got a favorable motion from Senator Jenkins. Questions? Comments? Seeing none. All in favor...for favorable motion for Senate Bill 172, please say "aye". (Ayes.) All opposed say nay. (Nays.) Thank you very much. Ayes have it. Let's talk about Senate Bill 177, Hooktown???????? Maysville Satellite Annexation. Senator Davis. [Speaker changes.] Thanks, Mister Chair. Members, this is a bill that would simply waive the 10% annexation for satellite for the town of Hookton??????? and Maysville. In the case of Hookton??????, allows them to bring into the jurisdiction a water tower as well as a park area and some other town they own. And then in Maysville, it allows them to bring in a development...and there's all support of this from both communities. [Speaker changes.] Mister Chairman, I move favorable report. [Speaker changes.] Alright, that also had a favorable report from local government, Senator Brown makes a motion for favorable report on Senate Bill 177. Any questions? Any comments? Seeing none, all in favor please say "aye". (Ayes.) All opposed say "nay". Ayes have it. Thank you. Alright, let's talk about Senate Bill 8, Increased Fine for vehicle removal. Senator Meredith?????. [Speaker changes.] Thank you, Mister Chairman. Members of the committee, this would put just current fines for towing of vehicles in line with the Highway Patrol fee. All this does is just make it consistent across the board. In certain counties, there's certain price fees and all this does is put it in line with the Highway Patrol. I'd appreciate your support. [Speaker changes.] OK...I have a favorable report for Senate Bill number 8 from Senator Tillman. Any questions? Any comments? Seeing none, all in favor of a favorable report for Senate Bill Number 8, please say "aye". (Ayes.) Those opposed say "nay". (Nays.) Ayes have it. OK, then we have Senate Bill 71. I have a PCS on amending the irrigation contractor's licensing laws. Senator Tucker. Senator Tucker's a member of the committee and he moves that we accept the PCS for discussion. All in favor. (Ayes.) Thank you. All opposed nay. (Nays.) Two no's. (Chuckles.) [Speaker changes.] INAUDIBLE...set a record straight. [Speaker changes.] You win. [Speaker changes.] No taxes in this. [Speaker changes.] Alright. Senate Bill 71. Senator Tucker, please explain this wonderful bill to us. [Speaker changes.] I'm gonna refer this to "Heather", Mister Chairman, but all it really does is make some technical corrections and takes out the grandfathering clause that's already codified in law. [Speaker changes.] Miss Finelle??????? would you wanna explain it any further? [Speaker changes.] INAUDIBLE. [Speaker changes.] That's what the PCS does. Did that handle the language change in the...is that right, ??????? [Speaker changes.] Yeah. [Speaker changes.] The next one OK...sorry...Senator Tucker's got two. Alright, Senator Tillman. [Speaker changes.] Ask Senator Tucker a question? [Speaker changes.] Yes sir. [Speaker changes.] These technical and clarifying bills that you sent. I handled one of yours on the floor yesterday. (Laughter.) And Senator Davis gave a fourteen minute speech on that and I had thirteen questions on it but I'm gonna listen to your explanation of this bill 'fore I vote on it. (Laughter.) [Speaker changes.] Senator Tillman, just in response to that, I'll be here for this bill so you won't hafta handle it on the floor. All the technical improvements...all the technical changes are all here. Representative LaRoche???? had made some changes last time, we're just trying to correct those. Yes, sir. Yes, sir. [Speaker changes.] Alright, members of the committee, any additional questions for Senator Tucker on Senate Bill 71? Do I have a motion? I have a motion from Senator Curtis (laughing)to...for a favorable report on Senate Bill 71. Any questions? Any comments? Seeing none, all in favor..... [Speaker changes.]

report for Senate Bill 71 PCS and favorable for the PCS and unfavorable for the original please say aye. Those opposed say nay. Aye's have it. Senator Tucker. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Oh, don't go anywhere. This is your next chance. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] Okay, let's explain Senate Bill's 207, Maintaining Water and Sewer Fiscal Health and then explain the language for the change in, we didn't make copies for it, but we'll explain that so that people would understand. I think it will save us a ton of paper, to prevent that, so it will require an amendment. Okay, Senator Tucker. [SPEAKER CHANGES] Thank you, Mr. Chair. Let me explain the bill. This came to me through the treasury, they, you folks remember Princeville and the fact that LGC, they went bankrupt, and then they had some 800 that had water and sewer applications in that town. And so, through that process, I believe it was Edgecombe County, is that right, Mr Genius? Edgecombe County was able to extend the water and sewer services to those folks in Princeville and what this does is it simply allows the treasury to act sooner than current law allows them to if this situation ever comes up again, where they can offer water and sewer services to those people in the bankrupt town. [SPEAKER CHANGES] Members of the committee, any questions to this point? Senator McKissick, question? [SPEAKER CHANGES] Always. [SPEAKER CHANGES] I didn't ask anything about the last five bills. But what I would like to know is the extent to which is it anticipated by the Treasurer's Department or Local Government Commission that there are other towns right now that would fit within the criteria proposed by this bill because it looks like it looks at a three year window of financial problems before they go in and take over. So I'm wondering if there are other communities that are reaching that type of physical crisis at this time? [SPEAKER CHANGES] Senator Tucker, would you like Vance Holloman to handle that question for you? [SPEAKER CHANGES] I can, just in response to Senator McKissick, they did not discuss with me other towns. They said the potential was there but if there are specific towns that want to be mentioned or just a general garden variety statement from Vance, that will be fine. [SPEAKER CHANGES] Yes, sir. Mr. Holloman, would you come forward from the Treasurer's Office, identify yourself please. [SPEAKER CHANGES] Vance Holloman, Deputy State Treasurer of the State and Local Government Finance Division. We are still in the process of gathering all of the numbers from last year's audit reviews but at this time I'd say there are approximately 20 towns this could potentially impact. [SPEAKER CHANGES] Senator McKissick? [SPEAKER CHANGES] Quick follow-up. [SPEAKER CHANGES] Follow-up question. [SPEAKER CHANGES] Let me ask you this, when will we know or have a better sense, I mean, it occurred to me that there probably were quite a few, just based upon small water systems that you have out there, water and sewer systems, when we have a final tally on that and to what extent are there going to be additional resources needed by the Local Government Commission to get in there and send in the teams that would be necessary to get these communities back in track because I know you guys put a lot of time into Princeville because I tracked that, followed it pretty closely. [SPEAKER CHANGES] Traditionally the commission, before, the commission's taken action under 181C and this would be an additional authorization there. There's been a period of attempting to work with the town and have them resolve their own problems without the commission having to take that action. So of those 20, I hope that the majority will be able to move forward with some type of plan to address this and correct this without this authority having to be exercised. What this does is really allows to work more efficiently, whereas in the other cases, Princeville and the other communities where authority has been assumed under item C, you have at that point become responsible for every financial detail of the town, the writing of checks, the receipt of money, the bonding of officials. This would allow the commission staff to concentrate on the problem areas, concentrate on particular fund and what is not working right in that fund. We happen to be much more efficient in handling that. We do not really have the staff to go out and do all 20 of these at one time but we can work with these communities, get them moving forward. Some will need more assistance than others. Some cases, this authority may have to be exercised. Hopefully others would correct the problem without it being necessary. [SPEAKER CHANGES] One last follow-up. [SPEAKER CHANGES] Follow-up question. [SPEAKER CHANGES] Assembly, I hope that in moving forward this story, and I think it's an excellent to empower to move forward and have that flexibility. I hope that they'll be some type of progressive

Warnings that are provided to these communities so they can make appropriate safe guards to get their financial houses in order. [Not only on Princeville says is]. One of the critical things was not only an ageing system, but just poor collections. [SPEAKER CHANGES] Yes, sir, and Princeville also had some other financial issues beyond the water sewer. Yes sir. [SPEAKER CHANGES] Yes. But I think a progressive warning system so you don't have to allocate those resources, because I know your team at one time was spending probably 50% of your time over there at Princeville, and we had 20 different communities that could be impacted we wanna. [SPEAKER CHANGES] Thank you Senator McKissick. Any additional comments? Senator [crosstalk]. [SPEAKER CHANGES] Yeah, Mister Chairman, Senator McKissick, just to overcome the angst I hear in your voice I just did want to share with you that [dumb] is not on that list. [SPEAKER CHANGES] All right. That's no answers required. Senator Clodfelter. [SPEAKER CHANGES] Mister Chairman I have a question for Mr. Hallaman if he's still available. [SPEAKER CHANGES] Yes, sir. [SPEAKER CHANGES] I've had the experience in some other states with water and sewer systems that don't use the modified accrual system of accounting. Do all the local governments in North Carolina use that? [SPEAKER CHANGES] Well what we refer to there is the modified accrual budgetary basis. They are vey close in North Carolina. And what we are referring to here is the budget as adopted by the unit. There's a financial statement in the back that compares those results - those budgeted amounts against those results - and that is the statement we will be looking at to make that determination on item number three. And we'll be cutting - with the amendment - we'll be cutting it off at operations, as opposed to all the way down the sheet. And I believe that cutoff at operations is much more appropriate. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] Follow-up question. [SPEAKER CHANGES] That's helpful. I've seen problems - again not in North Carolina, but in some other states - with systems that don't use the modified accrual system. And I wasn't sure whether you we're going to start requiring that in North Carolina. I think it would be a good practice to start requiring the use of that system of accounting. [SPEAKER CHANGES] Well the budgetary basis is essentially a modified accrual, and we have a very strong law in North Carolina. You're correct. Some states enterprise funds don't have to even adopt budget, they don't have to have balanced budgets. Our law in North Carolina is a model and we're very fortunate to have it in place. [SPEAKER CHANGES] Okay. Questions have been answered. Any additional questions at the moment? Senator Tucker you have an amendment, and would you explain what we're trying to do here to save? [SPEAKER CHANGES] Yes, sir. This is a hand written amendment just to move forward with the bill, and it moves to amend the bill on page one, line 14. And Senator Clodfelter this was ?? about by the city of Charlotte. They looked at this and treasury was in agreement. On line 14 inserting the following, immediately after the word revenue, we put in "from operations." [SPEAKER CHANGES] Is everybody okay with this? [SPEAKER CHANGES] Everybody okay in doing that? In putting those two words in? [SPEAKER CHANGES] All right. Seeing no objections. Amendment is before you, from Senator Tucker. All in favor-- or any questions, excuse me, any questions or comments. Seeing none. All in favor for the amendment from Senator Tucker on Senate Bill 207 please say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All opposed Nay. Aye's have it. All right you have the 207 before you as amended. Members of the committee any additional questions? Senator Hunt. [SPEAKER CHANGES] I have a quick question. For those of us that are maybe not totally up on our accounting procedures, what's the different between a modified accrual and accrual system of accounting? [SPEAKER CHANGES] The modified accrual. [SPEAKER CHANGES] Mr. Hollaman. [SPEAKER CHANGES] Mr. Hollaman, I'm sorry. [SPEAKER CHANGES] I'm sorry sir. [SPEAKER CHANGES] Go ahead, come forward. [SPEAKER CHANGES] The modified accrual system is more of a current assets, current liabilities, and any expenditure has to be budgeted before it can be incurred. The different predominantly would be it does not include depreciation. It does include the principal portion of debt repayments, and that is the most significant. By cutting off at operations, the capital outlay - which also would be an expenditure - modified accrual is not taken into account. Therefore if units are upgrading their system out of their operations as opposed to debt, they're not being penalized by adding in that change to a stack of law bill. [SPEAKER CHANGES] Does that help, Senator Hunt? [SPEAKER CHANGES] A little bit. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] You probably wouldn't wanna use that in your business. [SPEAKER CHANGES] All right. Members of the committee. You have Senate bill before-- Senate 207 as amended before you. Any additional questions, comments? Do I have a motion for a favor report? All right, I have a motion from Senator Woodard for a favor report of Senate bill 207 as amended. Any questions, comments? Seeing none. All in favor say, "Aye." All opposed, "Nay." Aye's have it. Thank you, Senator Tucker. That is [crosstalk]. Passed as favorably. Members of the committee, next week we will.

Meet Tuesday and Wednesday. You’ll have on your calendar, some of it may be informational, but if there are any other comments from the committee? Seeing none, then this meeting is adjourned.