public policy advocacy for the professional engineer                                       March 22, 2013

McCrory's Budget
The Governor’s budget released yesterday provided both good and bad news for Professional Engineers.  First, the bad news:

  • Reduces funding for the Clean Water Management Trust Fund.  This fund, at its peak,appropriated $100 million to fund projects that specifically address water pollution problems.  During the recession, Governor Perdue reallocated a large portion of these funds to fill gaps in other areas of the budget. Since that time, the funding cuts have continued ultimately reducing the fund to its current level of $11.1 million.  
Governor McCrory’s budget proposal takes a further swipe by reducing the first year appropriation to $6.7 million and then down to $0 in 2014-15. 
  • Reduces funding for the NC Rural Center by more than 60% or $10 million.  According to the Rural Center’s Director, “if this budget is adopted by the N.C. General Assembly, rural businesses and communities lose the potential for creating 2,000 new jobs in the next year. That loss would be multiplied every year that the reduction continues.”

Now some good news:

  • Provides $300 million in the biennium ($150 million each year) for Repair and Renovation of state owned facilities.  $50 million of this appropriation each year is allocated to the UNC system. 
  • Provides the full match needed to draw down maximum federal dollars for the Drinking Water and Clean Water State Revolving Funds. 
  • There are no tax increases, although the Governor stated he will unveil a tax reform plan very soon.

And some “other” in Transportation:

  • The continued erosion in the motor fuels tax seems to have been taken primarily from the Powell Bill, urban loop, and secondary road construction programs.  The Small Urban Construction program was reduced by $7.0 million and moved to the contingency program, DMV and the new Economic Development line item.  
  • There was a 2% reduction to the aviation, ferry, public transportation and rail programs. The special provisions document that typically accompanies the budget has not yet been released.  These documents should become available next week for all agencies as the appropriations committees hear presentations from the Governor’s office. 
Although most Governors have used their first year budget to make broad, sweeping policy statements, McCrory’s budget doesn’t do this.  He focuses more on pragmatic approaches to fixing what he sees as problems – our failing infrastructure and IT systems, cost overruns in Medicaid, replenishing emergency reserves and the state’s economic development strategy.

Other highlights of McCrory’s budget include:

  • 1% salary increase for state employees
  • Eliminating 3,200 teacher assistants but adding 1,800 additional teachers over two years
  • Reducing the UNC system budget by$136 million spread across 17 campuses and increasing tuition for out of state students
  • Abolishing the estate tax
  • Adding $1.4 million for Saturday hours at 20 DMV offices   

In Other News:

Coastal Highway
A state of emergency was declared Tuesday for a stretch of N.C. 12 in the Outer Banks that frequently has been closed by ocean overwash. Gov. Pat McCrory’s declaration is intended to aid the improvement of the highway in Dare County. “The people there have real concerns about the road they depend on to get to work, school or medical appointments,” McCrory said. The state Department of Transportation wants $20.8 million in federal emergency funds to help repair damage caused by Hurricane Sandy last fall.(Bruce Siceloff, THE NEWS & OBSERVER, 3/20/13).

Toll Roads
The House sponsors of a bill originally designed to lift roadblocks to extending Wake County's 540 Outer Loop are grappling with what to do with it after the Senate attached provisions that would kill three unrelated toll projects. The bill, which now sits in the House Rules committee, would repeal a 2011 law that barred DOT from considering the unpopular Red Route option for the extension from Holly Springs to Interstate 40 near garner. That route calls for bulldozing parks and neighborhoods in Garner. Federal regulators say they will not consider the state's preferred Orange Route, which would go through sensitive wetlands, unless the law is repealed to let DOT conduct full studies comparing both routes. But before the Senate endorsed the legislation on March 7, it expanded the measure to effectively eliminate the Cape Fear Skyway in Wilmington, the Mid-Currituck Bridge in Currituck County and the Garden Parkway in Gaston and Mecklenburg counties. "What we really need is just the Red Route bill enacted as we brought it forward (in the House), so we could move ahead on that issue," said one of the bill's sponsors, Rep. Nelson Dollar, R-Wake. "Obviously, it's a major policy piece that was added to this (in the Senate), and it sort of complicates the considerations." The House could agree with the Senate and kill the three toll projects, or the two chambers could appoint a conference committee in hope of finding a compromise they can agree on. If the two chambers can't agree, the Red Route legislation could die, preventing DOT from getting back to work on the next leg of road.

The $1 billion Cape Fear Skyway already was struggling under predictions that heavy state subsidies would be necessary to compensate for light toll collections. But DOT hoped to start construction in the next couple of years on the Currituck bridge and the Garden Parkway. Both have been delayed by environmental lawsuits and opposition from the Republican-led Senate. Sen. Bill Rabon, a Southport Republican, persuaded the Senate to have the three projects compete for state funding with non-toll roads, based on the merits of their costs and benefits. Supporters have said that shift would make it unlikely that the projects would succeed. The $650 million Currituck bridge is designed mainly for vacationers who now sit through long traffic jams on summer trips to the Currituck Outer Banks. Rabon has blasted it as a "cronyism" project pushed by former Democratic legislators. But the Currituck County commissioners, seven Republicans, reject Rabon's argument and plan to send a delegation to Raleigh next week to lobby for the bridge. "I don't think the Senate is aware of the magnitude and the impact of this bridge on all the northeastern counties," said Paul R. Martin of Currituck, the commissioners' vice chairman.(Bruce Siceloff, THE NEWS & OBSERVER, 3/14/13).

Renewables Requirements
House Republicans on Wednesday introduced legislation that would roll back an energy program that has paid financial incentives to homeowners for buying efficient appliances, solar panels and home energy audits. The bill would end the state's requirement that power companies use renewable energy and promote energy conservation programs. The legislation would stymie future development of renewables by not allowing power companies to charge customers for any extra cost associated with these resources. The bill's leading sponsor, Republican Rep. Mike Hager, is a former Duke Energy engineer who has repeatedly said that energy sources for generating electricity should be chosen on a least-cost basis rather than being selected by government policy. The leading non-renewable options are natural gas, coal and nuclear. “I don't think you should be subsidizing businesses into longevity,” Hager said. Hager said most renewables are not competitive without government support. Solar panels, for example, benefit from state tax credits and federal tax credit that reduce by more than half the cost of materials and installation. In 2007, North Carolina became the first Southern state to require electric utilities to use renewable resources as a matter of policy. The legislation has created a fledgling industry that renewables advocates say is gaining momentum. “The real impact is going to be the loss of jobs, business and investment opportunities,” said Betsy McCorkle, director of government relations for the N.C. Sustainable Energy Association, the state renewables trade group in Raleigh.

As the law now stands, Progress Energy and Duke Energy will have to offset 12.5 percent of retail sales with renewables and efficiency programs in 2021 and thereafter. Under efficiency programs, the companies pay customers financial incentives -- up to $500 a shot -- for buying energy-efficient appliances and adopting other conservation measures. Hager's bill freezes the requirement at 3 percent of electricity sales. It would allow Charlotte-based Duke and its subsidiary, Raleigh-based Progress, to continue charging customers for existing solar farms and other renewables projects already online. Some of the power contracts lock the utilities in for 20-year terms.(John Murawski, THE NEWS & OBSERVER 3/14/13).

Former Durham Mayor Nick Tennyson will start work next month as one of two chief deputy secretaries at the state Department of Transportation. As Transportation Secretary Tony Tata's chief deputy for support, Tennyson will take charge of developing a new statewide 25-year infrastructure plan, which was one of Gov. Pat McCrory's priorities for DOT. He'll step down from a job he has held for 18 years as executive vice president of the Homebuilders Association of Durham, Orange and Chatham counties. Tennyson, 63, a Republican, will start work April 1 at a salary of $123,000. His new position puts him on equal footing with DOT's chief deputy secretary for operations, Jim Trogdon. He'll oversee the Division of Motor Vehicles, finance, intergovernmental affairs, planning and information technology.

Meanwhile, Department of Environment and Natural Resources Secretary John Skvarla has tapped Anne G. Lasley, a veteran state government employee, to head the division of human resources at the department. Lasley has worked for state government for 24 years, directing human resources programs for the Division of Services for the Deaf and the Employment Security Commission. She served as a member of Gov. Pat McCrory's Human Resources transition team.(THE NEWS & OBSERVER, 3/18/13).

DENR Secretary names three senior staff to drive customer service mission
Read More Here

Railroad Money Could be Used for Building Repairs
The North Carolina Railroad Co. would pay the state annual dividends under a bill that cleared the House Finance Committee Tuesday morning.

The company would pay $15.5 million before July 1 and then pay a portion of its annual profits under the bill. Money from the dividend would be paid toward the state's repair and renovation fund, which goes toward the upkeep of state-owned buildings. Read More Here

Falling Gas Tax Collections Mean Less Money for Roads and Bridges
More people are traveling North Carolina highways these days, but they’re pumping less gas and diesel fuel into their trucks and cars. So our fast-growing state will have less money to spend for its transportation needs in coming years. Read More Here

NC Regulators Approve Duke Energy’s Solar Project
N.C. regulators have approved Duke Energy Renewables' plan to build a 20-megawatt solar farm at the Warren Field Airport in Beaufort County.

It would be Duke Renewables' largest solar project to date. The unregulated subsidiary of Duke Energy Corp. (NYSE:DUK) plans to sell the 36,000 kilowatt hours of electricity the project is expected to produce annually to the N.C. ElecrtiCities through the town of Washington's municipal power company. Read More Here

WakeTech:  Morrisville Campus Will have 10 New Buildings and Hold 7,000 Students
With $200 million in bond funds approved, Wake Tech President Stephen Scott is chomping at the bit to begin construction of the community college’s new Morrisville campus. Read More Here

I-95 improvements could take 80 years without tolls
Read More Here

Tata: Tolling can't be ruled out to pay for NC road projects
Read More Here

If there are questions or you need additional information, please feel free to contact me at or phone 919-834-1144, ext. 1.


Betsy Bailey
Professional Engineers of North Carolina

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