July 28, 2004

MEMORANDUM

TO: CWMTF Trustees, Advisors, Friends, and Staff

FROM: Bill Holman

Re: 2004 General Assembly

The 2004 General Assembly adjourned on July 18. It continued the state’s investments in land and water conservation.

2004 Budget

HB 1414, 2004 Appropriations Act, appropriated $62 million to the Clean Water Management Trust Fund and fully funded the Natural Heritage Trust Fund and the Parks and Recreation Trust Fund in fiscal year 2004-2005. No funds were appropriated to the Farmland Preservation Trust Fund.

Key provisions of HB 1414 are:

• Section 6.31(a) authorizes the Board of Trustees of the Clean Water Management Trust Fund to “allocate up to $4.1 million to match federal, State, local, and private farmland preservation and forestland preservation funds and to acquire permanent conservation easements on working farms and forests” in fiscal year 2004-2005.
• Section 6.31(b) directs the Department of Agriculture and Consumer Services to prepare a master plan for farmland preservation and report its findings no later than March 15, 2005.
• Section 6.4 establishes a new, independent Commission on State Property “to identify State-owned real property that is (l) both surplus and suitable for sale on the private market or (2) suitable for sale and leaseback…”
• Section 6.24 increases reporting requirements by non-state entities that receive state funds, such as non-profit land trusts, and increases sanctions for non-compliance (SB 1008 also strengthens reporting requirements of non-state entities receiving state funds).
• Section 10.26A directs the State Property Office in consultation with the City of Raleigh to develop a Master Plan for the Dorothea Dix property in Raleigh and appropriates $100,000 for that purpose.
• Section 12.3 provides 24-hour access to holders of Fort Fisher vehicle permits from September 15 – March 15 of each year (fishing season) and directs the Division of Parks & Recreation to study vehicle use at Fort Fisher State Recreation Area.
• Section 12.4 directs the Director of the Budget and the State Controller to “establish accounts, or make any changes to existing accounts, of the Wildlife Resources Commission as needed to segregate revenue affected by the requirements or conditions of federal law from revenue that is not affected by the requirements or conditions of federal law…”
• Section 12.7B establishes a new Under Dock Oyster Culture permitting program in the Division of Marine Fisheries.
• Section 12.8 appropriates $6,900,000 from DENR’s General Water Supply Revolving Loan Account to match federal Safe Drinking Water Act funds and appropriates $776,680 from the Department of Commerce’s Industrial Development Fund to DENR to match federal Safe Drinking Water Act and federal Clean Water Act funds (federal drinking water and wastewater funds).
• Section 12.11 requires the Wildlife Resources Commission to provide a one-time grant of $37,500 to Swain County for the loss of ad valorem taxes associated with the purchase of the Needmore game lands.
• Section 12.16 appropriates funds to the Division of Marine Fisheries to implement the new Saltwater Fishing License, enacted by HB 831.
• Section 19.8 transfers the 1094-acre Light Ground Pocosin in Pamlico County from the Department of Administration to the Wildlife Resources Commission.
• Section 30.10 appropriates about $32 million from the Highway Fund to the commercial and non-commercial leaking petroleum underground storage tank clean up funds.
• Sections 30.19 and 30.21 add a number of new projects to the Highway Trust Fund, including Gastonia Outer Loop, expanding the Raleigh Outer Loop, expanding the Wilmington Outer Loop, and adding a new bypass of Shelby (and therefore increase EEP mitigation needs).
• Section 30.20 appropriates $15 million in transportation funds for “a stormwater pilot project to clean up State-maintained ocean outfalls and associated outlets through new and innovative technologies and filtering mechanisms.”
• Section 31.13 provides for an increase in salary of most state employees of $1000 or 2.5% whichever is greater.
• Section 32.1 appropriates $43,192,000 in capital funds, including $26,492,000 to the Division of Water Resources for water resources development projects (which include funds for dredging projects, funds for studies, $3.5 million for the Neuse Water & Sewer Project in Lenior County and $700,000 for environmental restoration projects).

Many House-passed provisions to HB 1414 were deleted in the House-Senate Conference Report including:

1) authorization for CWMTF and EEP to compensate Swain County $75,000 for loss of ad valorem tax revenues associated with the purchase of the Needmore property,

2) prohibition on CWMTF providing new grants to the Wildlife Resources Commission to acquire game lands,

3) requirement that the Wildlife Resources Commission operate the beaver control program with no new appropriations,

4) appropriation of $15 million from CWMTF to bail out the commercial and non-commercial leaking petroleum underground storage tank programs, and 5) appropriation of $50,000 from CWMTF to pay for groundwater monitoring at the Texfi site in Cumberland County.

Senate provisions to HB 1414 to require stormwater management at state government facilities and to stabilize dairy farmers were also deleted in conference.

HB 1352 appropriated $20 million to the Department of Commerce for the One North Carolina Fund and $20 million to the Rural Economic Development Center for water, wastewater and other infrastructure projects earlier this year.

Important Land & Water Conservation Legislation

HB 1264, Finance Vital Projects, authorizes the issuance of up to $468 million in debt over two years to finance construction of university facilities and juvenile justice facilities. It includes $45 million ($32 million is authorized for 2004-2005 fiscal year and $13 million for 2005-2006.) to acquire critical and time-sensitive properties to expand state parks and to protect our military bases from encroachment. CWMTF, NHTF, and PARTF funds would be used to retire the debt. The Governor and Council of State have to approve the issuance of any debt-financed projects. Senator John Kerr and Representative Gordon Allen were the primary sponsors. Representatives and staffs of CWMTF, NHTF, and PARTF will need to meet and develop a process on how to fund these projects.

HB 1602, Extend Sunset on Conservation Income Tax, by Representative Danny McComas, delayed the cap on pass-through entities for the conservation income tax credit one year until 2006. HB 1602 also authorized the legislature’s Revenue Laws Study Commission to review the program and make recommendations for improvement to the 2005 General Assembly.

Environmental Legislation of Interest

HB 831, Saltwater Fishing License, by Representatives Prior Gibson and Danny McComas, requires recreational anglers to obtain a saltwater fishing license ($15/year) and establishes a new Saltwater Fishing Fund. A nine-member Board of Trustees will fund projects, including resource and habitat enhancement, restoration and enhancement of submerged aquatic vegetation, and creation and restoration of oyster habitat. The Saltwater Fishing Fund could become a funding partner with CWMTF.

HB 1112, Phosphorus Nutrient Management at Animal Operations, makes state wastewater permitting requirements for animal operations consistent with federal regulations, including the requirement that land application of phosphorus be managed at agronomic rates.

HB 1574, Lower Haw River State Natural Area, by Representative Joe Hackney, adds this natural area in Chatham County to the State Park System and directs DENR to study establishing a State Recreation Area at Blewett Falls Lake on the Pee Dee River in Anson and Richmond Counties.

SB 859, NC & SC Catawba/Wateree and Yadkin/Pee Dee River Basin Commissions, by Senator Dan Clodfelter, establishes bi-state advisory commissions.

SB 933, Compensate Some Counties for Wetlands Mitigation, by Senator Cecil Hargett, requires EEP, private mitigation bankers, and others to compensate Tier I and Tier II counties for 20-years of ad valorem property taxes when stream and wetland mitigation projects are acquired or constructed in their counties for impacts in other counties.

SB 1152, Studies Act of 2004, by Senator Tony Rand and Representative Bill Culpepper, authorizes many legislative studies including:

1) size and scope of boards & commissions,

2) state-local government relationships,

3) growth strategies,

4) encroachment on military bases,

5) tax incentives to promote conservation of open space,

6) floodplain mapping information,

7) stormwater,

8) Clean Air Trust Fund,

9) condition of the dairy industry,

10) hurricane evacuation standards and transportation,

11) stream mapping,

12) debt financing for the Wilmington bypass,

13) 21st Century Revenue System, and

14) Executive Budget Act.

The Property Tax Subcommittee of the legislature’s Revenue Laws Study Commission is already examining taxation of property under conservation easements and compensation to counties when properties are acquired for conservation.

SB 1210, Implement Phase II Stormwater Rules, by Senator Dan Clodfelter, makes the Environmental Management Commission’s temporary Phase II Stormwater Rule the standard for acting on the first round of Phase II stormwater applications from local governments with some exceptions. (The US Environmental Protection Agency has adopted Phase II stormwater rules for mid-size cities and counties.)

The 2005 General Assembly will convene on January 26, 2005.

Thanks to Robin W. Smith, Steve Wall and Johanna Reese of the Department of Environment & Natural Resources for their analysis of many of these bills and budget provisions.