GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

S	1 

SENATE BILL 1188

Short Title:  Revise City Distribution Formula.	(Public)

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Sponsors: Senator Cochrane.

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Referred to:  Finance.

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May 10, 2000

A BILL TO BE ENTITLED
AN ACT TO FURTHER ADJUST THE SHARE CERTAIN CITIES RECEIVE FROM THE STATE GROSS RECEIPTS TAXES ON ELECTRIC POWER COMPANIES AND TELEPHONE COMPANIES.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-116.1 reads as rewritten:
"§ 105-116.1.  Distribution of gross receipts taxes to cities.
(a)	Definitions. – The following definitions apply in this section:
(1)	Freeze deduction. – The amount by which the percentage distribution amount of a city was required to be reduced in fiscal year 1995-96 in determining the amount to distribute to the city.
(2)	Percentage distribution amount. – Three and nine hundredths percent (3.09%) of the gross receipts derived by an electric power company and a telephone company from sales within a city that are taxable under G.S. 105-116 or G.S. 105-120.
(b)	Distribution. – The Secretary must distribute to the cities part of the taxes collected under this Article on electric power companies and telephone companies. Each city's share for a calendar quarter is the percentage distribution amount for that city for that quarter minus one-fourth of the city's hold-back amount and one-fourth of the city's proportionate share of the annual cost to the Department of administering the distribution. The Secretary must make the distribution within 75 days after the end of each calendar quarter.
(c)	Limited Hold-Harmless Adjustment. – The hold-back amount for a city that, in the 1995-96 fiscal year, received from gross receipts taxes less than ninety-five percent (95%) of the amount it received in the 1990-91 fiscal year but at least sixty percent (60%) of the amount it received in the 1990-91 fiscal year is the amount determined by the following calculation:
(1)	Adjust the city's 1995-96 distribution by adding the city's freeze deduction to the amount distributed to the city for that year.
(2)	Compare the adjusted 1995-96 amount with the city's 1990-91 distribution.
(3)	If the adjusted 1995-96 amount is less than or equal to the city's 1990-91 distribution, the hold-back amount for the city is zero.
(4)	If the adjusted 1995-96 amount is more than the city's 1990-91 distribution, the hold-back amount for the city is the city's freeze deduction minus the difference between the city's 1990-91 distribution and the city's 1995-96 distribution.
(c1)	Additional Limited Hold-Harmless Adjustment. – The hold-back amount for a city that, in the 1995-96 fiscal year, received from gross receipts taxes less than sixty percent (60%) of the amount it received in the 1990-91 fiscal year is the amount determined by the following calculation:
(1)	Adjust the city's 1999-2000 distribution by adding the city's freeze deduction to the amount distributed to the city for that year.
(2)	Compare the adjusted 1999-2000 amount with the city's 1990-91 distribution.
(3)	If the adjusted 1999-2000 amount is less than or equal to the city's 1990-91 distribution, the hold-back amount for the city is zero.
(4)	If the adjusted 1999-2000 amount is more than the city's 1990-91 distribution, the hold-back amount for the city is the city's freeze deduction minus the difference between the city's 1990-91 distribution and the city's 1999-2000 distribution.
(d)	Allocation of Hold-Harmless Adjustment. – The hold-back amount for a city that, in the 1995-96 fiscal year, received from gross receipts taxes at least ninety-five percent (95%) of the amount it received in the 1990-91 fiscal year is the amount determined by the following calculation:
(1)	Determine the amount by which the freeze deduction is reduced for all cities whose hold-back amount is determined under subsections (c) and (c1) of this section. This amount is the total hold-harmless adjustment.
(2)	Determine the amount of gross receipts taxes that would be distributed for the quarter to cities whose hold-back amount is determined under this subsection if these cities received their percentage distribution amount minus one-fourth of their freeze deduction.
(3)	For each city included in the calculation in subdivision (2) of this subsection, determine that city's percentage share of the amount determined under that subdivision.
(4)	Add to the city's freeze deduction an amount equal to the city's percentage share under subdivision (3) of this subsection multiplied by the total hold-harmless adjustment.
(e)	Disqualification. –  No municipality may receive any funds under this section if it was incorporated with an effective date of on or after January 1, 2000, and is disqualified from receiving funds under G.S. 136-41.2. No municipality may receive any funds under this section, incorporated with an effective date on or after January 1, 2000, unless a majority of the mileage of its streets are open to the public. The previous sentence becomes effective with respect to distribution of funds on or after July 1, 1999."
Section 2.  If a city's hold-back amount calculated under G.S. 105-116.1(c1), as enacted by this act, is less than the amount deducted from the city's 1995-96 franchise tax distribution, the Secretary must distribute five times the amount of the difference, less any distributions made to the city under Section 5 of S.L. 1997-118, to the city by October 15, 2000.  This distribution is made to adjust retroactively the city's 1995-96, 1996-97, 1997-98, 1998-99, and 1999-2000 franchise tax distributions.  The amount needed to make the distribution required by this section must be drawn from the amount of gross receipts taxes distributed to the cities that do not receive a distribution under this section in proportion to the amount received.
Section 3.  This act is effective when it becomes law.