GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

H	1 

HOUSE BILL 129*

Short Title:  Taxpayer Bill of Rights.	(Public)

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Sponsors: Representatives Gamble; Hensley and Beall.

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Referred to:  Finance.

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February 8, 1995

A BILL TO BE ENTITLED
AN ACT TO PROTECT THE TAXPAYERS OF NORTH CAROLINA BY ESTABLISHING THE TAXPAYER BILL OF RIGHTS.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 105 of the General Statutes is amended by adding a new section immediately before Article 1 to read:
"§ 105-1.1.  Declaration of taxpayer rights.
By means of the United States Constitution and the North Carolina Constitution, the people have bestowed upon the General Assembly the power to obtain a regular and adequate supply of revenue to serve the public good.  The General Assembly exercises this power, which is an indispensable ingredient of government, by imposing taxes on the people of the State.  In exercising this power, the General Assembly pledges to be ever mindful that the Assembly is the embodiment of the people and guarantees to the people, who are the necessary subjects of taxation, the following rights:
(1)	To be protected from tax increases caused by 'bracket-creep' and other effects of inflation on tax liabilities, in accordance with G.S. 105-134.2 and G.S. 105-277.1.
(2)	To have a constitutional limit on the State income tax rate, in accordance with Article V, Sec. 2 of the North Carolina Constitution.
(3)	To have a balanced State budget, in accordance with Article III, Sec. 5 of the North Carolina Constitution.
(4)	To be protected from uncontrolled growth in State government by limiting increases in State spending and in the number of State employees, in accordance with G.S. 143-10.2A and G.S. 143-10.2.
(5)	To have the fiscal affairs of the State managed in the same prudent, responsible way in which the people of the State manage their fiscal affairs, in accordance with G.S. 120-36.7, 143-3.5, 143-15.1, 143-15.2, 143-15.3, and 143-15.4.
(6)	To be told the truth in taxation, in accordance with G.S. 120-36.7, 159-50, 160A-20, and 105-286.
(7)	To be treated fairly and promptly in any questions regarding tax liability, in accordance with G.S. 105-241.1, 105-241.2, and 105-258.1.
(8)	To know the costs of proposed legislation and proposed administrative rules, in accordance with G.S. 120-36.7, 143-3.5, 150B-21.4, 62-31, 96-4, 97-80, 105-262, and 143-138.
(9)	To have the people's investment in State buildings and other State facilities protected through adequate funding for maintenance and repairs, in accordance with G.S. 143-15.3A.
(10)	To be informed on how revenue is used, pursuant to G.S. 20-66(j), 105-248, 105-321.1, 143-15.1, 143-10.3, 143-10.4, and 143-10.5."
Sec. 2.  G.S. 105-134.2 reads as rewritten:
"§ 105-134.2.  Individual income tax imposed.
(a)	Tax Brackets and Rates. – A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105-152 and for surviving spouses, as defined in section 2(a) of the Code:
		On the North Carolina taxable income up to twenty-one thousand two hundred fifty dollars ($21,250), six percent (6%).
		On the amount over twenty-one thousand two hundred fifty dollars ($21,250) and up to one hundred thousand dollars ($100,000), seven percent (7%).
		On the amount over one hundred thousand dollars ($100,000), seven and seventy-five one-hundredths percent (7.75%).
(2)	For heads of households, as defined in section 2(b) of the Code:
		On the North Carolina taxable income up to seventeen thousand dollars ($17,000), six percent (6%).
		On the amount over seventeen thousand dollars ($17,000) and up to eighty thousand dollars ($80,000), seven percent (7%).
		On the amount over eighty thousand dollars ($80,000), seven and seventy-five one-hundredths percent (7.75%).
(3)	For unmarried individuals other than surviving spouses and heads of households:
		On the North Carolina taxable income up to twelve thousand seven hundred fifty dollars ($12,750), six percent (6%).
		On the amount over twelve thousand seven hundred fifty dollars ($12,750) and up to sixty thousand dollars ($60,000), seven percent (7%).
		On the amount over sixty thousand dollars ($60,000), seven and seventy-five one-hundredths percent (7.75%).
(4)	For married individuals who do not file a joint return under G.S. 105-152:
		On the North Carolina taxable income up to ten thousand six hundred twenty-five dollars ($10,625), six percent (6%).
		On the amount over ten thousand six hundred twenty-five dollars ($10,625) and up to fifty thousand dollars ($50,000), seven percent (7%).
		On the amount over fifty thousand dollars ($50,000), seven and seventy-five one-hundredths percent (7.75%).
(b)	Tax Tables. – In lieu of the tax imposed by subsection (a) of this section, there is imposed for each taxable year upon the North Carolina taxable income of every individual a tax determined under tables, applicable to the taxable year, which may be prescribed by the Secretary. The amounts of the tax determined under the tables shall be computed on the basis of the rates prescribed by subsection (a) of this section. This subsection does not apply to an individual making a return under section 443(a)(1) of the Code for a period of less than 12 months on account of a change in the individual's annual accounting period, or to an estate or trust. The tax imposed by this subsection shall be treated as the tax imposed by subsection (a) of this section.
(c)	Inflation Adjustment to Tax Brackets. – The minimum and maximum dollar amounts for each rate bracket set in subsection (a) of this section apply to the 1994 taxable year.  For taxable years beginning on or after January 1, 1995, the minimum and maximum dollar amount for each rate bracket is the amount for the previous taxable year multiplied by the inflation factor and rounded to the next lowest multiple of fifty dollars ($50.00).  The inflation factor is the cost-of-living adjustment determined under section 1(f)(3) of the Code for application to the federal taxable year that begins on the same January 1.
The Secretary must calculate the rate brackets for a taxable year by December 15 of the preceding calendar year.  The Secretary must also adjust the tax tables prescribed under subsection (b)	of this section to the extent necessary to reflect the inflation adjustments to the rate brackets." 
Sec. 3.  G.S. 105-134.6(c) reads as rewritten:
"(c)	Additions. – The following additions to taxable income shall be made in calculating North Carolina taxable income, to the extent each item is not included in taxable income:
(1)	Interest upon the obligations of states, other than this State, and their political subdivisions.
(2)	Any amount allowed as a deduction from gross income under the Code that is taxed under the Code by a separate tax other than the tax imposed in section 1 of the Code.
(3)	Any amount deducted from gross income under section 164 of the Code as state, local, or foreign income tax to the extent that the taxpayer's total itemized deductions deducted under the Code for the taxable year exceed the standard deduction allowable to the taxpayer under the Code reduced by the following amount, which is the amount by which the taxpayer's allowable standard deduction was increased under section 63(c)(4) of the Code for taxable years beginning before January 1, 1995:
	Filing Status:	Amount Added:
	Married, filing jointly	$1,350
	Head of Household	 1,200
	Single	   800
	Married, filing separate	   675.
(4)	The following amount, which is the amount by which the taxpayer's standard deduction was increased for inflation under section 63(c)(4)(A) of the Code for taxable years beginning before January 1, 1995:
	Filing Status:	Amount Added:
	Married, filing jointly	$1,350
	Head of Household	 1,200
	Single	   800
	Married, filing separate	   675.
(4a)	Five hundred dollars ($500.00), which is the amount by which the taxpayer's personal exemptions were increased for inflation under section 151(d)(4)(A) of the Code for taxable years beginning before January 1, 1995.  For the purpose of this subdivision, if the taxpayer's personal exemptions for the taxable year have been reduced by the applicable percentage under section 151(d)(3) of the Code, the amount by which the personal exemptions have been increased for inflation is also reduced by the applicable percentage. 
(5)	The fair market value, up to a maximum of one hundred thousand dollars ($100,000), of the donated property interest for which the taxpayer claims a credit for the taxable year under G.S. 105-151.12 and the market price of the gleaned crop for which the taxpayer claims a credit for the taxable year under G.S. 105-151.14.
(6)	The amount by which the basis of property under the Code exceeds the basis of the property under this Article, in the year the taxpayer disposes of the property."
Sec. 4.  G.S. 105-277.1 reads as rewritten:
"§ 105-277.1.  Property classified for taxation at reduced valuation.
(a)	Exclusion. – The following class of property is designated a special class of property under Article V, Sec. 2(2) of the North Carolina Constitution and shall be assessed for taxation in accordance with this section.  A portion of the appraised value of a permanent residence owned and occupied by a qualifying owner is excluded from taxation.  The portion excluded is the homestead amount for the county in which the residence is located.  A qualifying owner is an owner who meets all of the following requirements as of January 1 preceding the taxable year for which the benefit is claimed:
(1)	Is at least 65 years of age or totally and permanently disabled.
(2)	Has an income for the preceding calendar year that does not exceed the income eligibility limit set in subsection (a2) of this section.
(3)	Is a North Carolina resident.
An otherwise qualifying owner does not lose the benefit of this exclusion because of a temporary absence from his or her permanent residence for reasons of health, or because of an extended absence while confined to a rest home or nursing home, so long as the residence is unoccupied or occupied by the owner's spouse or other dependent.
(a1)	Amount Excluded. – The homestead amount is fifteen thousand dollars ($15,000) for each county until the county's first horizontal adjustment of real property or reappraisal that is effective on or after January 1, 1996.  Upon the effective date of a county's first horizontal adjustment of real property or reappraisal effective on or after January 1, 1996, the homestead amount for that county is the previous year's amount plus or minus a percentage of this amount that equals the average percentage increase or decrease in the appraised value of real property in the county resulting from the horizontal adjustment or reappraisal, rounded to the nearest one hundred dollars ($100.00).  The homestead amount effective upon a county's horizontal adjustment or reappraisal remains the county's homestead amount until the county's next horizontal adjustment of real property or reappraisal.
The Secretary must calculate a new homestead amount to be in effect in a county when a horizontal adjustment or reappraisal becomes effective in the county.  The Secretary must notify the assessor of the county by April 1 of the new amount to be in effect for the taxable year beginning the following July 1.  The Secretary must use the sales assessment ratio studies made under G.S. 105-289(h)	to determine the percentage increase or decrease in real property values resulting from a horizontal adjustment or reappraisal.
(a2)	Income Limit. – The income eligibility limit is the same for every county.  Until January 1, 1996, the limit is eleven thousand dollars ($11,000).  For taxable years beginning on or after January 1, 1996, the limit is the amount for the preceding year increased by the same percentage of this amount as the percentage by which the federal government increased the benefits under Titles II and XVI of the Social Security Act during the calendar year preceding the year in which the determination of a new income eligibility limit is made, rounded to the nearest one hundred dollars ($100.00).  On or before July 1 of each year, the Secretary must determine the income eligibility amount to be in effect for the taxable year beginning the following January 1 and must notify the assessor of each county of the amount to be in effect for that taxable year.
(b)	Definitions. – When used in this section, the following definitions shall apply:
(1)	Code. – The Internal Revenue Code, as defined in G.S. 105-228.90.
(1a)	Income. – Adjusted gross income, as defined in section 62 of the Code, plus all other moneys received from every source other than gifts or inheritances received from a spouse, lineal ancestor, or lineal descendant.  For married applicants residing with their spouses, the income of both spouses must be included, whether or not the property is in both names.
(1b)	Owner. – A person who holds legal or equitable title, whether individually, as a tenant by the entirety, a joint tenant, or a tenant in common, or as the holder of a life estate or an estate for the life of another.  A manufactured home jointly owned by husband and wife is considered property held by the entirety.
(2)	Repealed by Session Laws 1993, c. 360, s. 1, effective for taxes collected for taxable years beginning on or after July 1, 1994.
(2a)	Repealed by Session Laws 1985 (Reg. Sess., 1986), c. 982, s. 20.
(3)	Permanent residence. – A person's legal residence. It includes the dwelling, the dwelling site, not to exceed one acre, and related improvements. The dwelling may be a single family residence, a unit in a multi-family residential complex, or a manufactured home.
(4)	Totally and permanently disabled. – A person is totally and permanently disabled if the person has a physical or mental impairment that substantially precludes him or her from obtaining gainful employment and appears reasonably certain to continue without substantial improvement throughout his or her life. 
(c)	Application. – An application for the exclusion provided by this section should be filed during the regular listing period, but may be filed and must be accepted at any time up to and through April 15 preceding the tax year for which the exclusion is claimed. When property is owned by two or more persons other than husband and wife and one or more of them qualifies for this exclusion, each owner shall apply separately for his or her proportionate share of the exclusion.
(1)	Elderly Applicants. – Persons 65 years of age or older may apply for this exclusion by entering the appropriate information on a form made available by the assessor under G.S. 105-282.1.
(2)	Disabled Applicants. – Persons who are totally and permanently disabled may apply for this exclusion by (i) entering the appropriate information on a form made available by the assessor under G.S. 105-282.1 and (ii) furnishing acceptable proof of their disability. The proof shall be in the form of a certificate from a physician licensed to practice medicine in North Carolina or from a governmental agency authorized to determine qualification for disability benefits. After a disabled applicant has qualified for this classification, he or she shall not be required to furnish an additional certificate unless the applicant's disability is reduced to the extent that the applicant could no longer be certified for the taxation at reduced valuation.
(d)	Multiple Ownership. – A permanent residence owned and occupied by husband and wife as tenants by the entirety is entitled to the full benefit of this exclusion notwithstanding that only one of them meets the age or disability requirements of this section.  When a permanent residence is owned and occupied by two or more persons other than husband and wife and one or more of the owners qualifies for this exclusion, each qualifying owner is entitled to the full amount of the exclusion not to exceed his or her proportionate share of the valuation of the property.  No part of an exclusion available to one co-owner may be claimed by any other co-owner and in no event may the total exclusion allowed for a permanent residence exceed the homestead amount for the county where the residence is located."
Sec. 5.  G.S. 105-309(f) reads as rewritten: 
"(f)	The following information shall appear on each abstract or on an information sheet distributed with the abstract.  The abstract or sheet must include the address and telephone number of the assessor below the notice required by this subsection.  The notice shall read as follows:

'PROPERTY TAX RELIEF FOR ELDERLY AND
PERMANENTLY DISABLED PERSONS.

North Carolina excludes from property taxes (assessor insert amount, if amount known, or words "a portion", if amount not known) of the appraised value of a permanent residence owned and occupied by North Carolina residents aged 65 or older or totally and permanently disabled whose income does not exceed (assessor insert amount).  Income means the owner's adjusted gross income as determined for federal income tax purposes, plus all moneys received other than gifts or inheritances received from a spouse, lineal ancestor or lineal descendant.
If you received this exclusion in (assessor insert previous year), you do not need to apply again unless you have changed your permanent residence. If you received the exclusion in (assessor insert previous year) and your income in (assessor insert previous year) was above (assessor insert amount), you must notify the assessor. If you received the exclusion in (assessor insert previous year) because you were totally and permanently disabled and you are no longer totally and permanently disabled, you must notify the assessor. If the person receiving the exclusion in (assessor insert previous year) has died, the person required by law to list the property must notify the assessor. Failure to make any of the notices required by this paragraph before April 15 will result in penalties and interest.
If you did not receive the exclusion in (assessor insert previous year) but are now eligible, you may obtain a copy of an application from the assessor. It must be filed by April 15'."
Sec. 6.  G.S. 143-10.2 reads as rewritten:
"§ 143-10.2.  Limit on number of State employees.
The total number of permanent State-funded employees, including permanent employees in the Department of Transportation but excluding employees in the State's public school system funded by way of State aid to local public school units, shall not be increased by the end of any State fiscal year by a greater percentage than the percentage rate of the residential population growth for the State of North Carolina.  The percentage rates shall be computed by the Office of State Budget and Management.  The population growth shall be computed by averaging the rate of residential population growth in each of the preceding 10 fiscal years as stated in the annual estimates of residential population in North Carolina made by the United States Census Bureau.  The growth rate of the number of employees shall be computed by averaging the rate of growth of State employees in each of the preceding 10 fiscal years as of July 1 of each fiscal year as stated in the State Budget." 
Sec. 7.  Article 143 of the General Statutes is amended by adding a new section to read:
"§ 143-10.2A.  Limit on the size of the General Fund operating budget.
(a)	Size Limitation. – Except as otherwise provided in this section, the General Fund operating budget each fiscal year may not be greater than seven percent (7%) of the projected total State personal income for that fiscal year.  For the purpose of this section, the General Fund operating budget includes any appropriations for local tax-sharing, but does not include appropriations for (i) capital expenditures or (ii) one-time expenditures due to natural disasters, federal mandates, or other emergencies.
(b)	Increase in Size Limitation. – To the extent that any percentage increase in appropriations for a fiscal year for (i) Medicaid, (ii) operation of prisons, or (iii) the costs of providing health insurance for teachers and State employees, exceeds the percentage increase in State personal income growth for the same period, the limitation on the size of the General Fund operating budget provided in subsection (a) of this section for that fiscal year shall be increased by the dollar amount represented by the excess percentage.  For all subsequent fiscal years, the percentage limitation contained in subsection (a) of this section shall then be increased to reflect that dollar adjustment.
(c)	Second Year of Biennial Budget. – The General Fund operating budget appropriations for the second year in a Current Operations Appropriations Act that contains a biennial budget shall not be more than the General Fund operating budget appropriations for the first year of the biennial budget, adjusted to account for annualization of positions and programs funded for a portion of the year only in the first year of the biennium.
(d)	Fiscal Reports. – The Director and the Fiscal Research Division of the Legislative Services Commission shall each submit a tentative estimate of total State personal income for the upcoming fiscal year to the General Assembly no later than February 1 of each year.  The Director and the Fiscal Research Division shall each submit a final projection of total State personal income for the upcoming fiscal year to the General Assembly no later than May 1 of each year.  The General Assembly shall use the lower of the two final projections to calculate the limitation on the size of the General Fund operating budget provided in this section."
Sec. 8.  G.S. 143-15.1 reads as rewritten:
"§ 143-15.1.  Current Operations Appropriations Act; General Fund Financial Model.
(a)	Current Operations Appropriations Act. – The General Assembly shall enact the Current Operations Appropriations Act by June 15 of odd-numbered years and by June 30 of even-numbered years in which a Current Operations Appropriations Act is enacted. The Current Operations Appropriations Act shall state the amount of General Fund appropriations availability upon which the General Fund budget is based. The statement of availability shall list separately the beginning General Fund credit balance, General Fund revenues, and any other components of the availability amount.
(b)	General Fund Financial Model. – The General Assembly shall review the results of the General Fund Financial model, a computer-based financial model used to project long-term expenditure and revenue trends under various simulations, in its budget deliberations. The model shall be maintained and, from time to time, updated by the Fiscal Research Division of the General Assembly."
Sec. 9.  G.S. 143-15.4 is repealed.
Sec. 10.  G.S. 143-15.2 reads as rewritten:
"§ 143-15.2.  Use of General Fund credit balance.
The State Controller shall reserve up to one-fourth of any unreserved credit balance, as determined on a cash basis, remaining in the General Fund at the end of each fiscal year to the Savings Reserve Account as provided in G.S. 143-15.3, unless that would result in the Savings Reserve Account having funds in excess of eight percent (8%) of the amount appropriated the preceding year for the General Fund operating budget, including local government tax-sharing funds; in that case, only funds sufficient to reach the eight percent (8%) level shall be reserved. The State Controller shall also reserve the lesser of (i) one-fourth of any unreserved credit balance, as determined on a cash basis, remaining in the General Fund and (ii) one and one-half percent (1.5%) of the replacement value of all State buildings supported from the General Fund, at the end of each fiscal year to the Repairs and Renovations Reserve Account as provided in G.S. 143-15.3A. The General Assembly may appropriate that part of the anticipated General Fund credit balance not expected to be reserved to the Savings Reserve Account or the Repairs and Renovations Reserve Account only for capital improvements or other one-time expenditures. As used in this section, the term 'unreserved credit balance' means the credit balance amount, as determined on a cash basis, before funds are reserved by the Controller to the Savings Reserve Account or the Repairs and Renovations Reserve Account pursuant to G.S. 143-15.3 and G.S. 143-15.3A."
Sec. 11.  G.S. 143-15.3 reads as rewritten:
"§ 143-15.3.  Savings Reserve Account.
(a)	There is established a Savings Reserve Account as a restricted reserve in the General Fund. The State Controller shall reserve to the Savings Reserve Account one-fourth of any unreserved credit balance remaining in the General Fund at the end of each fiscal year until the account contains funds equal to eight percent (8%) of the amount appropriated the preceding year for the General Fund operating budget, including local government tax-sharing funds. If the balance in the Savings Reserve Account falls below this level during a fiscal year, the State Controller shall reserve to the Savings Reserve Account for the following fiscal years up to one-fourth of any unreserved credit balance remaining in the General Fund at the end of each fiscal year until the account again equals eight percent (8%) of the amount appropriated the preceding year for the General Fund operating budget, including local government tax-sharing funds. As used in this section, the term 'unreserved credit balance' means the credit balance amount, as determined on a cash basis, before funds are reserved by the Controller to the Savings Reserve Account or the Repairs and Renovations Reserve Account pursuant to this section and G.S. 143-15.3A.
(b)	The Director may not use funds in the Savings Reserve Account unless the use has been approved by an act of the General Assembly."
Sec. 12.  [State General Obligation Bonds] G.S. 120-36.7 is amended by adding a new subsection to read:
"( e)	Proposed Bond Authorizations. – Every bill introduced in the General Assembly proposing the issuance of State general obligation bonds shall have attached to it at the time of its consideration by the General Assembly a fiscal note prepared by the Fiscal Research Division.  The fiscal note shall estimate the debt service of the proposed bonds over the life of the bonds."
Sec. 13.  [Local Government General Obligation Bonds] G.S. 159-50 reads as rewritten:
"§ 159-50.  Notice of intent to make application for issuance of voted bonds; objection by citizens and taxpayers.
(a)	When a unit of local government proposes to issue bonds that must be approved by a vote of the people, it shall first publish a notice of its intent to make application to the Commission for approval of the issue.  The notice shall be published once not less than 10 days before the application is filed. The notice shall state all of the following:
(1)	That the board intends to file an application with the Commission for approval of a bond issue.
(2)	In brief and general terms the purpose of the proposed issue.
(3)	The maximum amount of bonds to be issued.
(4)	The property tax rate required to produce revenue equal to the projected annual debt service on the maximum amount of bonds that could be issued.
(5)	That any citizen or taxpayer of the issuing unit may, within seven days after the date of the publication, file with the governing board and the Commission a statement of any objections that person may have to the issue. 
The Commission may prescribe the form of the notice.
(b)	Any citizen or taxpayer of the issuing unit who objects to the proposed bond issue in whole or in part may, within seven days from the date of publication of the notice, file a written statement of objections with the board and the Commission. The statement shall set forth each objection to the proposed bond issue and shall contain the name and address of the person filing it. The Commission shall consider the statement of objections along with the application and shall notify the objector and the board of its disposition of each objection.
(c)	Failure to comply with this section shall not affect the validity of any bonds otherwise issued in accordance with the law. This section shall not apply to bonds that need not be submitted to a vote of the people."
[This appears to apply to bond anticipation notes as well.  Need to check further.]
Sec. 14.  [Certificates of participation]  G.S. 160A-20(g) reads as rewritten:
"(g)	Before entering into a contract under this section that includes the issuance of certificates of participation, a unit of local government shall publish notice of its intent to enter the contract and hold a public hearing on the contract.  The notice shall state the time and date of the public hearing and state the property tax rate required to produce revenue equal to the projected annual payments under the contract.  Before entering into a contract under this section that involves real property but does not include the issuance of certificates of participation, a unit of local government shall hold a public hearing on the contract.  A notice of a public hearing required by this subsection shall be published once at least 10 days before the date fixed for the hearing."
Sec. 15.  The catch line to G.S. 105-286 reads as rewritten:
"§ 105-286.  Time for general reappraisal of real property; notice of revenue-neutral property tax rate."
Sec. 16.  G.S. 105-286 is amended by adding a new subsection to read:
"( d)	Revenue-Neutral Rate. – When a county completes a reappraisal of real property or a horizontal adjustment of real property, it must publish in a newspaper having general circulation in the county a notice of the revenue-neutral property tax rate for the reappraisal or readjustment.  The 'revenue-neutral property tax rate' is the rate that will generate the same amount of revenue that was generated by the property tax in the year before the reappraisal or readjustment became effective."
Sec. 17.  The catch line to G.S. 105-241.1 reads as rewritten:
"§ 105-241.1.  Taxpayer rights and assessment procedure when additional taxes assessed."
Sec. 18.  G.S. 105-267 reads as rewritten:
"§ 105-267.  Taxes to be paid; suits for recovery of taxes.
No court of this State shall entertain a suit of any kind brought for the purpose of preventing the collection of any tax imposed in this Subchapter. Whenever a taxpayer shall have a valid defense to the enforcement of the collection of a tax assessed or charged against the taxpayer or the taxpayer's property, the taxpayer shall pay the tax to the proper officer, and the payment shall be without prejudice to any defense of rights the taxpayer may have in the premises. At any time within 180 days after payment, the taxpayer may demand a refund of the tax paid in writing from the Secretary of Revenue and if the tax is not  refunded within 90 days thereafter, the taxpayer may sue the Secretary of Revenue in the courts of the State for the amount demanded. The suit may be brought in the Superior Court of Wake County, or in the county in which the taxpayer resides at any time within three years after the expiration of the 90-day period allowed for making the refund. If upon the trial it shall be determined that the tax or any part of the tax was levied or assessed for an illegal or unauthorized purpose, or that the tax was for any reason invalid or excessive, judgment shall be rendered for the taxpayer and the tax shall be refunded, with interest, to the taxpayer. The amount of taxes for which judgment shall be rendered in the action shall be refunded by the State; provided, nothing in this section shall be construed to conflict with or supersede the provisions of G.S. 105-241.2."
Sec. 19.  G.S. 150B-21.4 is amended by adding a new subsection to read:
"( b1)	Substantial Economic Impact. – Before an agency publishes in the North Carolina Register the proposed text of a permanent rule change that would have a substantial economic impact and is not identical to a federal regulation the agency is required to adopt, the agency must obtain from the Office of State Budget and Management a fiscal note for the proposed rule change.  If an agency is not sure whether a proposed rule change would have a substantial economic impact, the agency may ask the Office of State Budget and Management to determine whether the proposed rule change has a substantial economic impact.  The Office of State Budget and Management must prepare a fiscal note for a proposed rule change within 90 days after receiving a written request for the note.
A fiscal note for a rule must contain the following:
(1)	A description of the persons who would be affected by the proposed rule change.
(2)	A description of the types of expenditures that persons affected by the proposed rule change would have to make to comply with the rule and an estimate of these expenditures.
(3)	A description of the purpose and benefits of the proposed rule change.
(4)	An explanation of how the estimate of expenditures was computed.
As used in this subsection, the term 'substantial economic impact' means an aggregate financial impact on all persons affected of at least five million dollars ($5,000,000) in a twelve-month period."
Sec. 20.  G.S. 150B-21.1(d) reads as rewritten:
"(d)	Effective Date and Expiration. – A temporary rule becomes effective on the date specified in G.S. 150B-21.3. A temporary rule expires on the date specified in the rule or 210 days from the date the rule becomes effective, whichever comes first."
Sec. 21.  G.S. 150B-21.2(e) reads as rewritten:
"(e)	Comments. – An agency must accept comments on the text of a proposed rule that is published in the North Carolina Register and requires a fiscal analysis under G.S. 150B-21.4(b1) for at least 60 days after the text is published or until the date of any public hearing held on the proposed rule, whichever is longer.  An agency must accept comments on the text of any other proposed rule published in the North Carolina Register for at least 30 days after the text is published or until the date of any public hearing held on the proposed rule, whichever is longer.  An agency must accept comments on a statement of the subject matter of proposed rule making until the public hearing on the subject matter.  An agency must consider fully all written and oral comments received."
Sec. 22.  G.S. 150B-21.9(a) reads as rewritten:
"(a)	Standards. – The Commission must determine whether a rule meets all of the following criteria:
(1)	It is within the authority delegated to the agency by the General Assembly.
(2)	It is clear and unambiguous.
(3)	It is reasonably necessary to fulfill a duty delegated to the agency by the General Assembly.
The Commission may determine if a rule submitted to it was adopted in accordance with Part 2 of this Article.  The Commission may ask the Office of State Budget and Management to determine if a rule has a substantial economic impact and is therefore required to have a fiscal note.  The Commission must ask that Office to make this determination if a fiscal note was not prepared for a rule and the Commission receives a written request for a determination of whether the rule has a substantial economic impact.
The Commission must notify the agency that adopted the rule if it determines that a rule was not adopted in accordance with Part 2 of this Article and must return the rule to the agency.  Entry of a rule in the North Carolina Administrative Code after review by the Commission is conclusive evidence that the rule was adopted in accordance with Part 2 of this Article."
Sec. 23.  [Utilities Commission] G.S. 62-31 reads as rewritten:
"§ *62-31  Power to make and enforce rules and regulations for public utilities.
The Commission shall have and exercise full power and authority to administer and enforce the provisions of this Chapter, and to make and enforce reasonable and necessary rules and regulations to that end.  The Commission shall request the Office of State Budget and Management to prepare a fiscal note for a proposed new or amended rule or regulation that has a substantial economic impact, as defined in G.S. 150B-21.4(b1).  The Commission shall not take final action on a proposed rule change that has a substantial economic impact until at least 60 days after the Office of State Budget and Management gives the Commission a copy of the fiscal note for the proposed change."
Sec. 24.  [Employment Security Commission] G.S. 96-4(b) reads as rewritten:
"(b)	Regulations and General and Special Rules. – General and special rules may be adopted, amended, or rescinded by the Commission only after public hearing or opportunity to be heard thereon, of which proper notice has been given by mail to the last known address in cases of special rules, or by publication as herein provided, and by one publication as herein provided as to general rules.  The Commission may not take final action on a general or special rule that has a substantial economic impact, as defined in G.S. 150B-21.4(b1), until 60 days after the Office of State Budget and Management prepares a fiscal note for the proposed rule and and gives the Commission a copy of the note.  General rules shall become effective 10 days after filing with the Secretary of State and publication in one or more newspapers of general circulation in this State.  Special rules shall become effective 10 days after notification to or mailing to the last known address of the individuals or concerns affected thereby.  Before the adoption, amendment, or repeal of any permanent regulation, the Commission shall publish notice of the public hearing and offer any person an opportunity to present data, opinions, and arguments.  The notice shall be published in one or more newspapers of general circulation in this State at least 10 days before the public hearing and at least 20 days prior to the proposed effective date of the proposed permanent regulation.  The published notice of public hearing shall include the time and place of the public hearing; a statement of the manner in which data, opinions, and arguments may be submitted to or before the Commission; a statement of the terms or substance of the proposed regulation; a statement of whether a fiscal note has been or will be prepared for the proposed regulation and the proposed effective date of the regulation.  Any permanent regulation adopted after following the above procedure shall become effective on its effective date and after it is published in the manner provided for in subsection (c) as well as such additional publication as the Commission deems appropriate.  Additionally, the Commission shall provide notice of adoption by mail to the last known addresses of all persons who submitted data, opinions, or arguments to the Commission with respect to the regulation.  Temporary regulations may be adopted, amended, or rescinded by the Commission and shall become effective in the manner and at the time prescribed by the Commission but shall remain in force for no longer than 120 days."
Sec. 25.  [Industrial Commission] G.S. 97-80(a) reads as rewritten:
"(a)	The Commission may make rules, not inconsistent with this Article, for carrying out the provisions of this Article.  The Commission shall request the Office of State Budget and Management to prepare a fiscal note for a proposed new or amended rule that has a substantial economic impact, as defined in G.S. 150B-21.4(b1).  The Commission shall not take final action on a proposed rule change that has a substantial economic impact until at least 60 days after the Office of State Budget and Management gives the Commission a copy of the fiscal note for the proposed change.
Processes, procedure, and discovery under this Article shall be as summary and simple as reasonably may be."
Sec. 26.  [Department of Revenue]  G.S. 105-262 reads as rewritten:
"§ 105-262.  Rules.
The Secretary of Revenue may adopt rules needed to administer a tax collected by the Secretary or to fulfill another duty delegated to the Secretary.  The Tax Review Board shall review a new rule or a change to a rule before it is filed in the North Carolina Administrative Code.
The Secretary must ask the Office of State Budget and Management to prepare a fiscal note for a proposed new rule or a proposed change to a rule that has a substantial economic impact, as defined in G.S. 150B-21.4(b1).  The Secretary may not take final action on a proposed rule change that has a substantial economic impact until at least 60 days after the Office of State Budget and Management gives the Commission a copy of the fiscal note for the proposed change."
Sec. 27.  [Building Code Council] G.S. 143-138(a) reads as rewritten:
"(a)	Preparation and Adoption. – The Building Code Council is hereby empowered to prepare and adopt, in accordance with the provisions of this Article, a North Carolina State Building Code.  Prior to the adoption of this Code, or any part thereof, the Council shall hold at least one public hearing.  A notice of such public hearing shall be given once a week for two successive calendar weeks in a newspaper published in Raleigh, said notice to be published the first time not less than 15 days prior to the date fixed for said hearing.  The Council may hold such other public hearings and give such other notice as it may deem necessary.
The Council shall request the Office of State Budget and Management to prepare a fiscal note for a proposed Code change that has a substantial economic impact, as defined in G.S. 150B-21.4(b1).  The Commission shall not take final action on a proposed Code change that has a substantial economic impact until at least 60 days after the Office of State Budget and Management gives the Commission a copy of the fiscal note for the proposed change."
Sec. 28.  There is appropriated from the General Fund to the Office of State Budget and Management the sum of four hundred fifty thousand dollars ($450,000) for fiscal year 1995-96 and the sum of nine hundred thousand dollars ($900,000) for fiscal year 1996-97 to implement Sections 19 through 27 of this act.
Sec. 29.  G.S. 20-66 is amended by adding a new subsection to read:
"( j)	Information on Use of Revenue. – The Division must include in each notice of registration renewal a brief explanation of the source and use of revenue in the Highway Fund and the Highway Trust Fund.  The explanation must be presented in the form of a chart or another means that is easily understandable."
Sec. 30.  G.S. 105-248 reads as rewritten:
"§ 105-248.  Purpose of and information on State taxes.
The taxes levied in this Subchapter are for the expenses of the State government, the appropriations to its educational, charitable, and penal institutions, the interest on the debt of the State, the public schools, and other specific appropriations made by law, and shall be collected and paid into the General Fund.  The Secretary must inform the public about the taxes imposed by this Subchapter by including in the instructions for filing an individual income tax return a brief explanation of the source and use of revenue in the General Fund.  The explanation must be presented in the form of a chart or another means that is easily understandable."
Sec. 31.  Article 20 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-321.1.  Information on use of property tax revenue.
The assessor must inform the public about the taxes imposed by this Subchapter by including in the annual notice of taxes due a brief explanation of the use of property tax revenue and percentage of total unit revenue that comes from property taxes.  The explanation must be presented in the form of a chart or another means that is easily understandable."
Sec. 32.  Sections 2 and 3 of this act are effective for taxable years beginning on or after January 1, 1995.   Notwithstanding G.S. 105-134.2(c), as enacted by this act, the Secretary must adjust the tax brackets pursuant to G.S. 105-134.2 by September 1, 1995.  Sections 4 and 5 of this act are effective for taxes imposed for taxable years beginning on or after July 1, 1996.
Sections 10 through 16, and Sections 19 through 28 of this act become effective July 1, 1995.  Sections 19 through 27 of this act apply to rules for which a notice of rule making is published in the North Carolina Register on or after the effective date and to rule and Building Code changes that are initiated on or after that date and are not subject to the procedures in Chapter 150B of the General Statutes, the Administrative Procedure Act.
The remainder of this act is effective upon ratification.