Session Law 2026-32 (HB 376) makes a few changes affecting local government-owned water and wastewater utilities. This post focuses on Section 3, which adds a new statute, G.S. 162A-19.2, related to setting rates for outside services (water and wastewater services provided outside the utility’s territorial boundaries). It makes two changes to existing law. First, it codifies the authority of most local government water and wastewater service providers to charge different rates for services provided outside their corporate limits or service districts. Second, it creates new procedural and disclosure requirements when those outside rates exceed inside rates by more than 25 percent.
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Development-related fees have received increased attention from the North Carolina General Assembly in recent years. The legislature created a detailed statutory framework for water and sewer system development fees, including requirements for how those fees are calculated, adopted, and spent. It also has placed additional limits on building permit and inspection fees and required local governments to report information about the collection and use of those fees.
The board adopts the annual budget. It is balanced. Estimated revenues plus appropriated fund balance equal appropriations in each fund, and everything appears to be in order. The budget lays out a plan for the full fiscal year, showing what the government expects to receive and what it is authorized to spend over that period.
A few months later, payroll is coming due, a large invoice has arrived, and cash on hand is tighter than expected. There is still room in the budget. Departments have not exceeded their appropriations. But there is concern about whether there is enough money available right now to make the payments. How is that possible?
In trying to make sense of that, board members recall that the most recent financial report showed a substantial fund balance. If that money is there, why can it not be used?
The difficulty is that each of these numbers captures a different aspect of the government’s finances. The budget is a full-year plan based on estimates. Cash is what is available at a point in time. Fund balance represents accumulated resources, but it includes more than cash and is not fully available for spending.
This post walks through how those pieces fit together. It explains what the budget does and what it means for it to be balanced, why that does not translate into cash availability throughout the year, how to track cash in practical terms, and how fund balance fits into that picture.
In the aftermath of a disaster, local governments often struggle with the financial burden of paying for the recovery and continuing normal operations. For a FEMA-declared disaster, the Public Assistance Program provides reimbursement for certain recovery costs. But the reimbursements take time to process—sometimes months or even years. Cashflow loans can help local units bridge this gap.
North Carolina law authorizes an annual refund of state and local sales and use taxes paid by counties, municipalities, and certain other governmental entities on their direct purchases of tangible personal property and services. See G.S. 105-164.14; G.S. 105-467(b). Taxes paid by contractors on building materials and fixtures may also be treated as direct purchases by a governmental unit—provided the materials become part of a building or structure that is owned or leased by the unit and used for public purposes. However, the law excludes refunds for purchases of electricity, telecommunications services, piped natural gas, video programming, prepaid meal plans, alcoholic beverages, and items related to the provision of municipal communications services.
Effective July 1, 2025, Session Law 2025-8 (HB 50) amends G.S. 143-166.42, which governs the Law Enforcement Special Separation Allowance (LESSA) for local law enforcement officers. While the core structure of the LESSA remains unchanged, the new law introduces an alternative benefit calculation method that may impact retirement decisions and budget planning for local governments.
The State of North Carolina operates on a biennial budget cycle, meaning that every two years, in odd-numbered years, the General Assembly adopts a comprehensive budget that covers two full fiscal years. The General Assembly typically adjusts the budget for the second year to account for updated priorities, revenues, and spending needs. The state’s fiscal year runs from July 1 through June 30, and under G.S. 143C-5-4(a), the General Assembly is expected to enact the biennial budget by June 15 of odd-numbered years and any adjustments by June 30 of even-numbered years.
When a state transportation project requires the relocation of water or sewer lines, the cost of moving that infrastructure often falls on the local government that owns it. These expenses, known as nonbetterment costs, can be significant, especially for smaller systems with limited budgets. A recent change to G.S. 136-27.1 shifts more of that burden to the North Carolina Department of Transportation (NCDOT) by expanding which local government entities qualify for full reimbursement. See S.L. 2025-65.
Every local government and public authority begins the fiscal year with an annual budget ordinance. The ordinance shows the unit’s best estimate of the revenue it expects to receive and the expenditures it expects to make during the year. These estimates guide operations, but they will never match reality perfectly. Needs change, information improves, and conditions shift during the year. When that happens, the unit may need to revise the budget ordinance.
Counties and municipalities across North Carolina are currently finalizing their FY 2026-27 budgets. For some local governments, that process has been complicated by Senate Bill 889 (SB 889), which would temporarily delay implementation of certain property reappraisals that became effective on January 1, 2026. Because the bill remains under consideration at the General Assembly, affected local governments face an unusual challenge. They must continue planning for their new annual budget ordinance while uncertainty remains about the property tax base that may ultimately be available for FY 2026-27.