GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 1060

Short Title:  City-County Taxation/Finance.	(Public)

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Sponsors: Representative McComas.

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Referred to:  Finance.

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May 11, 1995

A BILL TO BE ENTITLED
AN ACT AMENDING THE GENERAL STATUTES RELATING TO THE CONSOLIDATION OF CITIES AND COUNTIES AND CONSOLIDATED CITY-COUNTY TAXATION AND FINANCE.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 160B of the General Statutes is amended by adding a new Article to read:
"ARTICLE 1A.
"Consolidated City-County Powers and Governance.
"§ 160B-2.1.  Powers of consolidated city-county.
(a)	A consolidated city-county shall have and may exercise the powers, duties, functions, rights, privileges, and immunities granted to:
(1)	A county by general law, throughout its jurisdiction; and
(2)	A city by general law, within an urban service district.
(b)	Outside the boundaries of an urban service district, the consolidated city-county shall have and may exercise the same powers, duties, functions, rights, privileges, and immunities granted to a city by general law that can be exercised outside of city boundaries.
"§ 160B-2.2.  Organizational meeting; preparation of budget.
The governing board of a consolidated city-county shall have its first organizational meeting as provided in the charter or applicable local acts of the General Assembly, but not later than the first business day on or following the effective date of the consolidation.  Unless otherwise provided, the organizational meeting shall be held at 12:00 noon at the regular meeting place of the previous board of county commissioners.  Prior to the effective date of consolidation, any interim governing board designated or appointed in the charter or applicable local acts may meet to discuss business and take action as appropriate, including preparation of a proposed budget for the next fiscal year.  In addition, any such interim governing board may take any action which is specifically authorized by this Chapter to be taken by an interim governing board.  Meetings of any interim governing board during this period are subject to all applicable notice and meeting procedures required by general law."
Sec. 2.  G.S. 160B-4 reads as rewritten:
"§ 160B-4.  Definition of urban service districts to replace municipalities abolished at the time of consolidation.
(a)	The governing board, by resolution, may define an urban service district within the boundaries of the largest municipality that existed in the county before consolidation and within the boundaries of any other municipality abolished at the time of the establishment of the consolidated city-county. Any urban service district so defined shall comprise the total area of the abolished municipality as it existed immediately before the effective date of consolidation. The resolution shall take effect upon its adoption.
(b)	Prior to the effective date of consolidation, an interim governing board of a consolidated city-county by resolution may define an urban service district.  The resolution defining the urban service district shall take effect upon the effective date of the consolidation."
Sec. 3.  Chapter 160B of the General Statutes is amended further by adding a new Article to read:
"ARTICLE 5.
"Effective Date of Consolidation and Assumption of Obligations.
"§ 160B-16.  Referendum approval of certain debt assumption required for consolidation; effective date of consolidation.
(a)	Referendum Approval of Certain Debt Assumption Required for Consolidation. – For the consolidation of a city with a county to be effective, the assumption by the consolidated city-county of all general obligation and any other debt secured by a pledge of faith and credit of said city outstanding at the effective date of consolidation must have been approved by referendum (which referendum approval may occur at different times for different portions of said debt.)
(b)	Effective Date of Consolidation. – Subject to the requirement of referendum, approval of certain debt assumption for consolidation as provided by subsection (a) of this section, the consolidation of a city with a county, shall be effective upon the later of:
(1)	Sixty days following publication of notice of the enactment of the consolidation by the General Assembly;
(2)	Sixty days following publication of the statement of result of the latest referendum relating to the consolidation or to the assumption of obligations in connection with the consolidation; or
(3)	Any effective date of the consolidation set by the General Assembly.
In addition, upon adoption of concurrent resolutions by the governing board of each unit to be consolidated, or by the interim governing board of the consolidated city-county, the effective date may be delayed further, but no later than July 1 of the next calendar year.
(c)	Limitation of Local Acts. – No special, private, or local act, including any enactment of a consolidation of a city with a county, enacted after July 1, 1995, may be construed to modify, amend, or repeal any portion of this section unless it expressly so provides by specific reference to this section.
"§ 160B-17.  Referendum on assumption of certain debt; right to issue certain authorized but unissued debt.
(a)	In connection with a city-county consolidation, if there is at the effective date of the consolidation (i) any outstanding debt secured by a pledge of faith and credit of a consolidating city or (ii) any authorized but unissued debt of said city to be secured by a pledge of faith and credit the right to issue which debt is proposed to be assumed by the consolidated city-county, then there shall have been held a favorable referendum on the question of the assumption of that faith and credit debt and, if applicable, there shall have been held a referendum on the assumption of the right to issue that authorized but unissued faith and credit debt.
(b)	The referendum on the question of the assumption of faith and credit debt or, if applicable, the assumption of the right to issue authorized but unissued faith and credit debt may be included in the proposition submitted to the voters in a referendum called by a consolidation study commission under G.S. 153A-405.
(c)	If the General Assembly provided for a referendum on the question of consolidation instead of a referendum called by a consolidation study commission under G.S. 153A-405, the governing bodies of the units proposed to be consolidated, by resolution, may add to the ballot proposition the assumption of faith and credit debt question and, if applicable, the assumption of the right to issue authorized but unissued faith and credit debt question.  In either event, the proposition shall be substantially as provided in G.S. 153A-405(b)(3).
(d)	If the city-county consolidation is authorized by the General Assembly without a referendum or if there otherwise has not been a referendum on the question of the assumption of any faith and credit debt or, if applicable, the question of the assumption of the right to issue any authorized but unissued faith and credit debt, the governing bodies of the units proposed to be consolidated, by resolution, may provide for a referendum on said questions.  In addition, any interim governing board for the consolidated city-county, by resolution, also may provide for such a referendum.  The proposition submitted to the voters shall be substantially in the following form (and may include part or all of the bracketed language as appropriate and any other modifications as may be needed to reflect the issued debt of any of the consolidating units or the portion of the authorized but unissued debt of any of the consolidating units, the right to issue which is proposed to be assumed by the consolidated city-county):
'Shall, in connection with the consolidation of the City of   with the County of   , the consolidated unit to assume their obligations, including general obligation and any other debt secured by a pledge of faith and credit, [the right to issue authorized but unissued general obligation and any other debt to be secured by a pledge of faith and credit [(including any such debt as may be authorized for said city or county on the date of this referendum)] and any of said authorized but unissued debt as may be hereafter issued,] and be authorized to levy taxes in an amount sufficient to pay the principal of and the interest on said general obligation or other debt secured by a pledge of faith and credit?
[  ]  YES
[  ]  NO'
(e)	To be approved the proposition must receive the votes of a majority of those voting in the referendum.  In connection with the proposed consolidation of one or more cities with a county, if the assumption by the consolidated city-county of outstanding faith and credit debt of the consolidating city and, if applicable, the right to issue authorized but unissued faith and credit debt of the consolidating city was approved by the votes of a majority of those voting in the referendum, the vote on that referendum shall constitute the approval by a majority of the qualified voters who vote thereon as required by Article V, Section 4(2) of the Constitution of North Carolina.
(f)	Any such referendum on the question of consolidation or the assumption of debt or the right to issue authorized but unissued debt may be held on the same day as any other referendum or election in the county involved, but may not otherwise be held during the period beginning 30 days before and ending 30 days after the day of any other referendum or election to be conducted by the board of elections conducting the referendum and already validly called or scheduled by law.
(g)	A notice of a referendum on consolidation or on assumption of obligations shall be published at least twice in a newspaper of general circulation in the county.  The first publication shall be not less than 14 days and the second publication not less than seven days before the last day on which voters may register for the referendum.  The notice  shall state the date of the referendum, a statement as to the last date for registration for the referendum under the election laws then in effect, and substantially the text of the proposition to be voted upon.  The notice shall be published by the governing bodies of the units proposed to be consolidated or, if applicable, the interim governing board of the consolidated city-county by their respective clerks or by such other person as shall be designated by each applicable governing body or board.
(h)	The board of elections shall canvass any referendum on consolidation and any referendum on assumption of obligations and shall certify the results to the governing bodies of the units proposed to be consolidated or, if applicable, the interim governing board of the consolidated city-county which shall then certify and declare the result of the referendum and shall publish a statement of the result once in a newspaper of general circulation in the county, with the following statement appended:
'Any action or proceeding challenging the regularity or validity of this referendum must be begun within 30 days after the date of publication of this statement of result.'
(i)	Any action or proceeding in any court to set aside a referendum on consolidation or a referendum on assumption of obligations in connection with consolidation, or to obtain any other relief, upon the grounds that the referendum is invalid or was irregularly conducted, must be begun within 30 days after the publication of the statement of the result of the referendum.  After the expiration of this period of limitation, no right of action or defense based upon the invalidity of or any irregularity in the referendum shall be asserted, nor shall the validity of the referendum be open to question in any court upon any ground whatever, except in an action or proceeding begun within the period of limitation prescribed in this section.
"§ 160B-18.  Local government commission review of assumption of obligations: assumption of obligations and right to issue authorized but unissued faith and credit debt upon consolidation.
(a)	Review by Local Government Commission. –  At the date specified in the following sentence if any consolidating city or county has outstanding any general obligation or any other debt secured by a pledge of faith and credit or, if applicable, any authorized but unissued general obligation or any other debt secured by a pledge of faith and credit which is proposed to be assumed by the consolidated city-county or has outstanding or pending approval any other obligations the issuance of which was or is subject to approval by the local government commission, then the assumption of any such obligations and, if applicable, the assumption of the right to issue such authorized but unissued general obligation or other faith and credit debt, if any, shall be subject to review by the local government commission.  The finance officers of the units proposed to be consolidated shall use their best efforts to notify the secretary of the local government commission of the proposed consolidation and assumption of obligations at least two months before the introduction in the General Assembly of legislation proposing to enact the consolidation into law, provided that time allows.  The local government commission, to such extent it deems appropriate, may conduct a review of the proposed consolidation and assumption of obligations and may report the results of its review to the presiding officer of each house of the General Assembly to be provided to the respective committees to which the legislation to enact the consolidation shall be referred.
(b)	Assumption of Obligations by Consolidated City-County. – Subject to the requirement of referendum approval of certain debt assumption for consolidation by the General Assembly and effective upon the effective date of the consolidation provided in G.S. 160B-16(a), upon enactment of the consolidation by the General Assembly and effective upon the effective date of the consolidation provided in G.S. 160B-16(b), the obligations of the consolidating city at the effective date of the consolidation, which obligations include general obligation and any other debt secure by a pledge of faith and credit (including formerly authorized but unissued debt as may have been issued at the time) the assumption of which faith and credit debt by the consolidated city-county has been approved by referendum, are assumed by, and become binding obligations of, the consolidated city-county, and the faith and credit of the consolidated city-county is pledged to secure any such assumed general obligation or other debt secured by pledge of faith and credit.  In addition, the obligations of the county at the effective date of the consolidation, which obligations include general obligation and any other debt secured by a pledge of faith and credit, shall be binding obligations of the consolidated city-county and the faith and credit of the consolidated city-county is pledged to secure any such general obligation or other debt secured by pledge of faith and credit.
(c)	Right to Issue Authorized But Unissued Obligations. – Subject to the passage of a referendum relating to the assumption by the consolidated city-county of the right to issue any authorized but unissued general obligation or other debt of the consolidating city to be secured by a pledge of faith and credit that is proposed to be assumed by the consolidated city-county, upon enactment of the consolidation by the General Assembly and effective upon the effective date of the consolidation as provided in G.S. 160B-16(b), the right to issue the authorized but unissued obligations of the consolidating city at the effective date of the consolidation, which obligations include such of the authorized but unissued general obligation or other debt to be secured by a pledge of faith and credit the assumption of the right to issue which faith and credit debt by the consolidated city-county, has been approved by referendum, is assumed by, and upon issuance such obligations become binding obligations of, the consolidated city-county, and, upon issuance, the faith and credit of the consolidated city-county is pledged to secure any such general obligation or other debt secured by pledge of faith and credit.  In addition, the right to issue the authorized but unissued obligations of the county at the effective date of the consolidation, which obligations include general obligation and any other debt to be secured by a pledge of faith and credit, shall be vested in the consolidated city-county and, upon issuance, such obligations become binding obligations of the consolidated city-county and, upon issuance, the faith and credit of the consolidated city-county is pledged to secure any such general obligation or other debt secured by pledge of faith and credit.
"§ 160B-19.  Notice of enactment of consolidation; limitation of actions.
(a)	Publication of Notice of Enactment. – Following ratification of an act of the General Assembly authorizing consolidation, there shall be published once in a newspaper of general circulation in the county a notice of said enactment and, if applicable, the fact that in connection with said enactment there is an assumption by the consolidated city-county of the obligations of the consolidating city, including general obligation and any other debt secured by a pledge of faith and credit and, if applicable, assumption of the right to issue authorized but unissued obligations of the consolidating city, including authorized but unissued general obligation and any other debt to be secured by a pledge of faith and credit, and that there is also binding on the consolidated city-county the obligations of the county, including general obligation and any other debt secured by a pledge of faith and credit and, if applicable, there is vested in the consolidated city-county the right to issue authorized but unissued obligations of the county, including authorized but unissued general obligation and any other debt to be secured by a pledge of faith and credit, with the following statement appended:
'Any action or proceeding challenging the regularity or validity of this referendum must be begun within 30 days after the date of publication of this statement of result.'
The notice shall be published by the governing bodies of the units proposed to be consolidated or, if applicable, the interim governing board of the consolidated city-county by their respective clerks or by such other persons as shall be designated by each applicable governing body or board.
(b)	Limitation on Action Contesting Validity of Enactment of Consolidation. – Any action or proceeding in any court to set aside enactment of a city-county consolidation by the General Assembly, or to obtain any other relief, upon the grounds that the enactment is invalid or was irregularly enacted, must be begun within 30 days after the publication of the notice of the enactment.  After the expiration of this period of limitation, no right of action or defense based upon the invalidity of the enactment or any irregularity in the enactment shall be asserted, nor shall the validity of the enactment be open to question in any court upon any grounds whatever, except in an action or proceeding begun within the period of limitation prescribed in this section."
Sec. 4.  G.S. 153A-405 reads as rewritten:
"§ 153A-405. Referendum; General Assembly action.
(a)	If authorized to do so by the concurrent resolutions that established it, a commission may call a referendum on its proposed plan of governmental consolidation.  If authorized or directed in the concurrent resolutions, the ballot question may include the assumption of obligations language and may also include the assumption of the right to issue authorized but unissued faith and credit debt language as provided in subsection (b) of this section. The referendum may be held on the same day as any other referendum or election in the county or counties involved, but may not otherwise be held during the period beginning 30 days before and ending 30 days after the day of any other referendum or election to be conducted by the board or boards of elections conducting the referendum and already validly called or scheduled by law.
(b)	The proposition submitted to the voters shall be substantially in one 
or more of the following forms and may include part or all of the bracketed language as appropriate and other such modifications as may be needed to reflect the issued debt of any of the consolidating units or the portion of the authorized but unissued debt of any of the consolidating units the right to issue which is proposed to be assumed by the consolidating city:
(1)	'Shall the County of   and the County of   , be consolidated [and the consolidated unit to assume their obligations, including general obligation and any other debt secured by a pledge of faith and credit, [the right to issue authorized but unissued general obligation debt and any other debt to be secured by a pledge of faith and credit [(including any such debt as may be authorized for said city or county on the date of this referendum)] and any of said authorized but unissued debt as may be hereafter issued,] and be authorized to levy taxes in an amount sufficient to pay the principal of and the interest on said general obligation or other debt secured by a pledge of faith and credit?
	[  ]  YES
	[  ]  NO'
(2)	'Shall the City of    and the City of   , be consolidated [and the consolidated unit assume their obligations, including general obligation and any other debt secured by a pledge of faith and credit, [the right to issue authorized but unissued general obligation and any other debt to be secured by a pledge of faith and credit [(including any such debt as may be authorized for said city or county on the date of this referendum)] and any of said authorized but unissued debt as may be hereafter issued,] and be authorized to levy taxes in an amount sufficient to pay the principal of and the interest on said general obligation or other debt secured by a pledge of faith and credit?
	[  ]  YES
	[  ]  NO'
(3)	'Shall the County of     and the County of     be consolidated [and the consolidated unit assume their obligations, including general obligation and any other debt secured by a pledge of faith and credit, [the right to issue authorized but unissued general obligation and any other debt to be secured by a pledge of faith and credit [(including any such debt as may be authorized for said city or county on the date of this referendum)] and any of said authorized but unissued debt as may be hereafter issued,] and be authorized to levy taxes in an amount sufficient to pay the principal of and the interest on said general obligation or other debt secured by a pledge of faith and credit?
	[  ]  YES
	[  ]  NO'
(c)	If the proposition is to consolidate two or more counties or to consolidate two or more cities, to be approved it must receive the votes of a majority of those voting in each of the counties or cities, as the case may be. If the proposition is to consolidate one or more cities with a county, to be approved it must receive the votes of a majority of those voting in the referendum. In addition, no governmental consolidation may become effective until enacted into law by the General Assembly."
Sec. 5.  G.S. 160A-20(h) reads as rewritten:
"(h)	As used in this section, the term 'unit of local government' means any of the following:
(1)	A county.
(2)	A city.
(3)	A water and sewer authority created under Article 1 of Chapter 162A of the General Statutes.
(4)	An airport authority whose situs is entirely within a county that has (i) a population of over 120,000 according to the most recent federal decennial census and (ii) an area of less than 200 square miles.
(5)	An airport authority in a county in which there are two incorporated municipalities with a population of more than 65,000 according to the most recent federal decennial census.
(6)	A local school administrative unit (i) that is located in a county that has a population of over 90,000 according to the most recent federal decennial census and (ii) whose board of education is authorized to levy a school tax.
(7)	An area mental health, developmental disabilities, and substance abuse authority, acting in accordance with G.S. 122C-147.
(8)	A consolidated city-county, as defined by G.S. 160B-2(1).
(9)	An urban facilities financing district created by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1)."
Sec. 6.  G.S. 159-7(b)(15) reads as rewritten:
"(15)	'Unit,' 'unit of local government,' or 'local government' is a municipal corporation that is not subject to the Executive Budget Act (Article 1 of Chapter 143 of the General Statutes) and that has the power to levy taxes, including a consolidated city-county, as defined by G.S. 160B-2(1). and all boards, agencies, commissions, authorities, and institutions thereof that are not municipal corporations."
Sec. 7.  G.S. 159G-3(10) reads as rewritten:
"(10)	'Local government unit' means a county, city, town, incorporated village, consolidated city-county, as defined by G.S. 160B-2(1), including such a consolidated city-county acting with respect to an urban service district defined by a consolidated city-county, or urban facilities financing district created by such a consolidated city-county, sanitary district, metropolitan sewerage district, metropolitan water district, county water and sewer district, water and sewer authority or joint agency created pursuant to Part 1 of Article 20 of Chapter 160A of the General Statutes."
Sec. 8.  G.S. 105-113.82(f) reads as rewritten:
"(f)	City Defined. – As used in this section, the term 'city' means a city as defined in G.S. 153A-1(1) or an urban service district defined by the governing body of a consolidated city-county, as defined by G.S. 160B-2(1).  The amount due an urban service district shall be distributed to the governing body of the consolidated city-county."
Sec. 9.  G.S. 105-116(d), as effective July 1, 1995, reads as rewritten:
"(d)	Distribution. – For the purpose of this subsection, the term 'distribution amount' means three and nine hundredths percent (3.09%) of the taxable gross receipts derived during a period by an electric power company and a natural gas company from sales within a municipality of the commodities and services described in subsection (a) of this section.  The Secretary shall distribute to each municipality the distribution amount for that municipality for the preceding calendar quarter less an amount equal to one-fourth of the excess of the distribution amount for that municipality for the period April 1, 1994, to March 31, 1995, over the distribution amount for that municipality for the period April 1, 1990, to March 31, 1991, as certified by the Secretary.  The Secretary shall distribute the revenue within 75 days after the end of each quarter.  If a company's report does not state the company's taxable gross receipts derived within a municipality, the Secretary shall determine a practical method of allocating part of the company's taxable gross receipts to the municipality.
As used in this subsection, the term 'municipality' includes an urban service district defined by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1).  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 10.  G.S. 105-164.44C reads as rewritten:
"§ 105-164.44C.  Reimbursement for sales taxes on food stamp foods and supplemental foods.
(a)	As soon as practicable after July 1 of each year, the Secretary shall make a preliminary allocation to each county of the amount of local sales taxes that would have been collected in the county during the 1989-90 fiscal year on foods purchased with food stamp coupons or supplemental food instruments in the county, had these foods not been exempt from tax under G.S. 105-164.13(38). The Secretary shall then distribute the amounts allocated to each county between the county and the cities located in the county in accordance with the method by which local sales and use taxes are distributed in that county. In order to pay for the reimbursement under this section and the cost to the Department of Revenue for administering the reimbursement, the Secretary shall draw from collections received under Division I of Article 4 of this Chapter an amount equal to the amount of the reimbursement and the cost of administration.
(b)	As used in this section, the term 'city' includes an urban service district defined by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1).  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 11.  G.S. 105-273(11) reads as rewritten:
"(11)	'Municipal corporation' and 'municipality' mean city, town, incorporated village, sanitary district, rural fire protection district, rural recreation district, mosquito control district, hospital district, metropolitan sewerage district, watershed improvement district, or other district or unit of local government by or for which ad valorem taxes are levied. The terms also include a consolidated city-county as defined by G.S. 160B-2(1)."
Sec. 12.  G.S. 105-275.1(d) reads as rewritten:
"(d)	'City' Defined. – As used in this section, the term 'city' has the same meaning as in G.S. 153A-1(1).  The term also includes an urban service district defined by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1).  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 13.  G.S. 105-275.2 is amended by adding a new subsection to read:
"( b1)	Any amount due, pursuant to this section, to a consolidated city-county, as defined by G.S. 160B-2(1), shall be distributed to the governing board of the consolidated city-county."
Sec. 14.  G.S. 105-277A(d)(1) reads as rewritten:
"(1)	'City' has the same meaning as in G.S. 153A-1(1).  The term also includes an urban service district defined by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1).  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 15.  G.S. 105-277.1A is amended by adding a new subsection to read:
"( g)	As used in this section, the term 'cities' includes an urban service district defined by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1).  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 16.  G.S. 105-464 reads as rewritten:
"§ 105-464. Purpose and intent.
It is the purpose of this Article to afford the counties and municipalities of this State with opportunity to obtain an added source of revenue with which to meet their growing financial needs by  providing all counties of the State with authority to levy a one percent (1%) sales and use tax as hereinafter provided.  Wherever in this Article the words 'county' or 'counties' are used, those terms include a consolidated city-county as defined by G.S. 160B-2(1)."
Sec. 17.  G.S. 105-466 is amended by adding a new subsection to read:
"( b1)	If the board of commissioners of a county has imposed the local sales and use tax authorized by this Article and any or all of the taxes authorized by Articles 40 and 42 of this Chapter, with or without a special election, and the county subsequently becomes part of a consolidated city-county, the taxes shall continue in effect unless and until repealed by the governing board of the consolidated city-county."
Sec. 18.  G.S. 105-472 reads as rewritten:
"§ 105-472.  Disposition and distribution of taxes collected.
(a)	County Allocation. – The Secretary shall, on a quarterly basis, allocate to each taxing county for which the Secretary collects the tax the net proceeds of the tax collected in that county under this Article.  For the purpose of this section, 'net proceeds' means the gross proceeds of the tax collected in each county under this Article less taxes refunded, the cost to the State of collecting and administering the tax in the county as determined by the Secretary, and other deductions that may be charged to the county.  If the Secretary collects local sales or use taxes in a month and the taxes cannot be identified as being attributable to a particular taxing county, the Secretary shall allocate the taxes among the taxing counties in proportion to the amount of taxes collected in each county under this Article during that month and shall include them in the quarterly distribution.
(b)	Distribution Between Counties and Cities. – The Secretary shall divide the amount allocated to each taxing county among the county and its municipalities in accordance with the method determined by the county.  The board of county commissioners shall, by resolution, choose one of the following methods of distribution:
(1)	Per Capita Method. – The net proceeds of the tax collected in a taxing county shall be distributed to that county and to the municipalities in the county on a per capita basis according to the total population of the taxing county, plus the total population of the municipalities in the county.  In the case of a municipality located in more than one county, only that part of its population living in the taxing county is considered its 'total population'.  In order to make the distribution, the Secretary shall determine a per capita figure by dividing the amount allocated to each taxing county by the total population of that county plus the total population of all municipalities in the county.  The Secretary shall then multiply this per capita figure by the population of the taxing county and by the population of each municipality in the county; each respective product shall be the amount to be distributed to the county and to each municipality in the county.  To determine the population of each county and each municipality, the Secretary shall use the most recent annual estimate of population certified by the State Planning Officer.
(2)	Ad Valorem Method. – The net proceeds of the tax collected in a taxing county shall be distributed to that county and the municipalities in the county in proportion to the total amount of ad valorem taxes levied by each on property having a tax situs in the taxing county during the fiscal year next preceding the distribution.  For purposes of this section, the amount of the ad valorem taxes levied by a county or municipality includes ad valorem taxes levied by the county or municipality in behalf of a taxing district and collected by the county or municipality.  In addition, the amount of taxes levied by a county includes ad valorem taxes levied by a merged school administrative unit described in G.S. 115C-513 in the part of the unit located in the county.  In computing the amount of tax proceeds to be distributed to each county and municipality, the amount of any ad valorem taxes levied but not substantially collected shall be ignored.  Each county and municipality receiving a distribution of the proceeds of the tax levied under this Article shall in turn immediately share the proceeds with each district in behalf of which the county or municipality levied ad valorem taxes in the proportion that the district levy bears to the total levy of the county or municipality.  Any county or municipality that fails to provide the Department of Revenue with information concerning ad valorem taxes levied by it adequate to permit a timely determination of its appropriate share of tax proceeds collected under this Article may be excluded by the Secretary from each quarterly distribution with respect to which the information was not provided in a timely manner, and those tax proceeds shall then be distributed only to the remaining counties or municipalities, as appropriate.  For the purpose of computing the distribution of the tax under this subsection to any county and the municipalities located in the county for any quarter with respect to which the property valuation of a public service company is the subject of an appeal and the Department of Revenue is restrained by law from certifying the valuation to the county and the municipalities in the county, the Department shall use the last property valuation of the public service company that has been certified.
The board of county commissioners in each taxing county shall, by resolution adopted during the month of April of each year, determine which of the two foregoing methods of distribution shall be in effect in the county during the next succeeding fiscal year.  In order for the resolution to be effective, a certified copy of it must be delivered to the Secretary in Raleigh within 15 calendar days after its adoption.  If the board fails to adopt a resolution choosing a method of distribution not then in effect in the county, or if a certified copy of the resolution is not timely delivered to the Secretary, the method of distribution then in effect in the county shall continue in effect for the following fiscal year.  The method of distribution in effect on the first of July of each fiscal year shall apply to every distribution made during that fiscal year.
(c)	Municipality Defined. – As used in this Article, the term 'municipality' means 'city' as defined in G.S. 153A-1, and also includes an urban service district defined by the governing board of a consolidated city-county.
(d)	The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 19.  G.S. 105-473(e) reads as rewritten:
"(e)	The board of county commissioners, upon adoption of said resolution, shall cause a certified copy of the resolution to be delivered immediately to the Secretary of Revenue, accompanied by a certified statement from the county board of elections, if applicable, setting forth the results of any special election approving the repeal of the tax in the county."
Sec. 20.  G.S. 105-482 reads as rewritten:
"§ 105-482.  Limitations.
"(a)	This Article applies only to counties that levy one percent (1%) sales and use taxes under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws.
(b)	For the purposes of this Article, the term 'county' includes a consolidated city-county, as defined by G.S. 160B-2(1)."
Sec. 21.  G.S. 105-486(c) reads as rewritten:
"(c)	Distribution Between Counties and Cities. – The amount allocated to each taxing county shall then be divided among the county and its municipalities in accordance with the method by which the one percent (1%) sales and use taxes levied in that county pursuant to Article 39 of this Chapter or Chapter 1096 of the 1967 Session Laws are distributed.  If any taxes levied under this Article by a county have not been collected in that county for a full quarter because of the levy or repeal of the taxes, the Secretary shall distribute a pro rata share to that county for that quarter based on the number of months the taxes were collected in that county during the quarter.  The amount due an urban service district defined by the governing board of a consolidated city-county shall be distributed to the governing board of the consolidated city-county."
Sec. 22.  G.S. 105-487 reads as rewritten:
"§ 105-487.  Use of additional tax revenue by counties and municipalities.
(a)	Except as provided in subsection (c), forty percent (40%) of the revenue received by a county from additional one-half percent (1/2%) sales and use taxes levied under this Article during the first five fiscal years in which the additional taxes are in effect in the county and thirty percent (30%) of the revenue received by a county from these taxes in the next 10 fiscal years in which the taxes are in effect in the county may be used by the county only for public school capital outlay purposes or to retire any indebtedness incurred by the county for these purposes.
(b)	Except as provided in subsection (c), forty percent (40%) of the revenue received by a municipality, and forty percent (40%) of the revenue received by a consolidated city-county because it is due a defined urban service district, from additional one-half percent (1/2%) sales and use taxes levied under this Article during the first five fiscal years in which the additional taxes are in effect in the municipality or urban service district and thirty percent (30%) of the revenue received by a municipality, and thirty (30%) of the revenue received by a consolidated city-county because it is due to a defined urban service district, from these taxes in the second five fiscal years in which the taxes are in effect in the municipality may be used by the municipality or consolidated city-county only for water and sewage capital outlay purposes or to retire any indebtedness incurred by the municipality or the consolidated city-county or its urban service districts or predecessor municipalities, for these purposes.
(c)	The Local Government Commission may, upon petition by a county or municipality, authorize a county or municipality to use part or all its tax revenue, otherwise required by subsection (a) or (b) to be used for public schools or water and sewage capital needs, for any lawful purpose.  The petition shall be in the form of a resolution adopted by the city council, governing board of a consolidated city-county, or board of county commissioners and transmitted to the Local Government Commission.  The petition shall demonstrate that the county or municipality can provide for its public school or water and sewage capital needs without restricting the use of part or all of the designated amount of the additional one-half percent (1/2%) sales and use tax revenue for these purposes.
In making its decision, the Local Government Commission shall consider information contained in the petition concerning not only the public school or water and sewage capital needs, but also the other capital needs of the petitioning county or municipality.  The Commission may also consider information from sources other than the petition.  The Commission shall issue a written decision on each petition stating the findings of the Commission concerning the public school or water and sewage capital needs of the petitioning county or municipality and the percentage of revenue otherwise restricted by subsection (a)	or (b) that may be used by the petitioning county or municipality for any lawful purpose.
Decisions of the Commission allowing counties or municipalities to use a percentage of their tax revenue that would otherwise be restricted under subsection (a)	or (b) for any lawful purpose are final and shall continue in effect until the restrictions imposed by those subsections expire.  A county or municipality whose petition is denied, in whole or in part, by the Commission may subsequently submit a new petition to the Commission.
(d)	For purposes of determining the number of fiscal years in which one-half percent (1/2%) sales and use taxes levied under this Article have been in effect in a county or municipality, these taxes are considered to be in effect only from the effective date of the levy of these taxes and are considered to be in effect for a full fiscal year during the first year in which these taxes were in effect, regardless of the number of months in that year in which the taxes were actually in effect.
(e)	A county or municipality may expend part or all of the revenue restricted for public school or water and sewage capital needs pursuant to subsections (a) and (b) in the fiscal year in which the revenue is received, or the county or municipality may place part or all of this revenue in a capital reserve fund and shall specifically identify this revenue in accordance with Chapter 159 of the General Statutes."
Sec. 23.  G.S. 105-497 reads as rewritten:
"§ 105-497. Limitations.
(a)	This Article applies only to counties and consolidated city-county units that levy one percent (1%) sales and use taxes under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws and also levy one-half percent (1/2%) local sales and use taxes under Article 40 of this Chapter.
(b)	For the purposes of this Article, the terms 'county' or 'counties' includes a consolidated city-county as defined by G.S. 160B-2(1)."
Sec. 24.  G.S. 105-501 reads as rewritten:
"§ 105-501.  Distribution of additional taxes.
The Secretary shall, on a quarterly basis, allocate the net proceeds of the additional one-half percent (1/2%) sales and use taxes levied under this Article to the taxing counties on a per capita basis according to the most recent annual population estimates certified to the Secretary by the State Budget Officer.  The Secretary shall then adjust the amount allocated to each county as provided in G.S. 105-486(b).  The amount allocated to each taxing county shall then be divided among the county and the municipalities located in the county in accordance with the method by which the one percent (1%) sales and use taxes levied in that county pursuant to Article 39 of this Chapter or Chapter 1096 of the 1967 Session Laws are distributed.
If any taxes levied under this Article by a county have not been collected in that county for a full quarter because of the levy or repeal of the taxes, the Secretary shall distribute a pro rata share to that county for that quarter based on the number of months the taxes were collected in that county during the quarter.  The amount due an urban service district shall be distributed to the governing board of the consolidated city-county."
Sec. 25.  G.S. 105-504 is amended by adding a new subsection to read:
"( f)	The provisions of this section shall also apply to revenues from these taxes received by a consolidated city-county, as defined by G.S. 160B-2(1), because the taxes were due a defined urban service district."
Sec. 26.  G.S. 136-41.1(b) reads as rewritten:
"(b)	For purposes of this section and of G.S. 136-41.2 and 136-41.3, urban service districts defined by the governing board of a consolidated city-county in which street services are provided by the consolidated city-county, as defined by G.S. 160B-2(1), shall be considered eligible municipalities, and the allocations to be made thereby shall be made to the government of the consolidated city-county."
Sec. 27.  This act becomes effective July 1, 1995.