HB 1126 — 2026 Department of State Treasurer Administrative/Technical/Clarifying Changes.

"Compensation" shall mean all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee or teacher in the unit of the Retirement System for which he the employee is performing full-time work.

Notwithstanding any other provision of this Chapter, Chapter to the House Bill 1126-Second1126-First Edition Page 23 General Assembly Of North Carolina Session 2025 contrary, the term "compensation" shall not include:include any of the following:

Page 24 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 5.

(1) The Board of Trustees shall adopt straight life annuity factors on the basis of mortality tables, such other tables as may be necessary necessary, and the House Bill 1126-Second1126-First Edition Page 25 General Assembly Of North Carolina Session 2025 interest assumption rate recommended by the actuary based upon actual experience including an assumed annual post-retirement allowance increase of four percent (4%).

If the Retirement System is unable to return the amount to the account from which it originated, the member maydesignate another eligible account under the transferor plan or receive a lump sum distribution paid directly to the Page 26 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 member if the member would otherwise be eligible for a distribution under the transferor plan at such time.

House Bill 1126-Second1126-First Edition Page 27 General Assembly Of North Carolina Session 2025 a.

Page 28 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 (2)b.

House Bill 1126-Second1126-First Edition Page 29 General Assembly Of North Carolina Session 2025 "a.

Such The early Page 30 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 retirement allowance so elected shall be equal to the deferred retirement allowance otherwise payable at the attainment of the age of 60 years reduced by the percentage thereof indicated below.

House Bill 1126-Second1126-First Edition Page 31 General Assembly Of North Carolina Session 2025 (4) Notwithstanding the requirement of five or more years of creditable service to the contrary, a member who is a law enforcement officer, an eligible firefighter as defined in G.S.

Creditable service for unused sick leave shall be allowed only for sick leave accrued monthly during employment under a duly adopted sick Page 32 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 leave policyand for which the member maybe able to take credits and bepaid forsickleavewithoutrestriction.However,innoinstanceshall unused sick leave be credited to a member's account at retirement if the member's last day of actual service is more than five years prior to the effective date of the member's retirement.

The Medical Board shall arrange for and pass upon all medical examinations required under this Chapter, shall investigate all essential statements and certificates by or on behalf of a member in connection with an application for disability retirement,benefitsprovidedundertheDisabilityIncomePlanofNorth Carolina, andshall report House Bill 1126-Second1126-First Edition Page 33 General Assembly Of North Carolina Session 2025 in writing to the Board of Trustees its conclusion and recommendations upon all the matters referred to it, except as otherwise provided in this Chapter.

Page 34 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 The Department of State Treasurer and Board of Trustees may require each beneficiary to annually provide a statement of the beneficiary's monthly income received as compensation for services, including fees, commissions, or similar items, income received from business, and benefits received from the Social Security Administration, the federal Veterans Administration, any other federal agency, under the North Carolina Workers' Compensation Act, or under the provisions of G.S.

135-108, plus sixty-five percent (65%) of 1/12th of the annual longevity payment to which the participant or beneficiary would be eligible, to a maximum of three thousand nine hundred dollars ($3,900) per month reduced by anyprimarySocial Securitydisabilitybenefits to which the beneficiarymaybeneficiarymaybe be entitled, effective as of the first of the month following the month of initial entitlement, and by monthly payments for Workers' Compensation to which the participant or beneficiary may be entitled.

(2) The monthly benefit shall be further reduced by the amount of any monthly payments from thefederal Department ofVeterans Affairs, forpayments from any other federal agency agency, or for any payments made under the House Bill 1126-Second1126-First Edition Page 35 General Assembly Of North Carolina Session 2025 provisions of G.S.

(b2) Notwithstanding the foregoing, anything in subsection (b) or (b1) of this section, the long-term disability benefit is payable so long as the beneficiary is disabled and is in receipt of a primarySocial Securitydisabilitybenefit until theearliest dateat which thebeneficiaryis eligible for an unreduced service retirement allowance from the Retirement System, at which time the beneficiary would receive a retirement allowance calculated on the basis of the beneficiary's average final compensation at the time of disability as adjusted to reflect compensation increases subsequent to the time of disability and the creditable service accumulated by the beneficiary, Page 36 House Bill 1126-Second1126-First Edition General Assembly Of North Carolina Session 2025 including creditable service while in receipt of benefits under the Plan.

128-27(g) shall be null and void." REMOVEMISCELLANEOUS OBSOLETETECHNICAL FEECORRECTIONS CAP LANGUAGE SECTION 4.6.4.6.(a) G.S.

G.S.

116B-78 reads as rewritten:

"§ 116B-78.

Agreement to locate property between property finders and owners or apparent owners.

… (b) Criteria for Agreements.

– An agreement covered by this section is void and unenforceable if it does not meet all of the following criteria:

House Bill 1126-Second Edition Page 37 General Assembly Of North Carolina Session 2025 (1) Is in writing and clearly sets forth the nature of the property and the services to be rendered.

(2) Is signed by the owner, with signature notarized.

(2a) Is signed by a licensed private investigator authorized to bind the property finder, with signature notarized.

(3) Describes the property, which includes the type of property, the property ID held by the State Treasurer, and the name of the holder.

(4) States that there maybe other claims to the property that mayreduce the share of the owner.

(5) States the value of the property, to the extent known, before and after the fee or other compensation has been deducted.

(6) States clearly the fees and costs for services.

Total fees and costs shall be limited as follows:shall not exceed one thousand dollars ($1,000) or twenty percent (20%) of the value of the property recovered, whichever is less.

a.

For an agreement covered by this section other than one covered by G.S.

28A-22-11, total fees and costs shall not exceed one thousand dollars ($1,000) or twenty percent (20%) of the value of the property recovered, whichever is less.

b.

For an agreement subject to G.S.

28A-22-11 by an heir, unknown or known but unlocated, the primary purpose of which is to locate or recover, or assist in the recovery, of a share in a decedent's estate, or surplus funds in a special proceeding, total fees and costs shall not exceed twenty percent (20%) of the value of the property recovered.

…." CORRECT STATUTORY CITATION IN THE SCHOOL BUDGET AND FISCAL CONTROL ACT SECTION 4.7.

G.S.

159-7 reads as rewritten:

"SUBCHAPTER III.

BUDGETS AND FISCAL CONTROL.

"Article 3.

"The Local Government Budget and Fiscal Control Act.

"Part 1.

Budgets.

"§ 159-7.

Short title;

definitions;

local acts superseded.

… (d) Except as expressly provided herein, this Article does not apply to school administrative units.

The adoption and administration of budgets for the public school system and the management of the fiscal affairs of school administrative units are governed by the School Budget and Fiscal Control Act, Chapter 115, Article 9.

Chapter 115C, Article 31.

However, this Article and the School Budget and Fiscal Control Act shall be construed together to the end that the administration of the fiscal affairs of counties and school administrative units may be most effectively and efficiently administered.

…." MUNICIPAL INCORPORATIONS SUBCOMMITTEE REFERENCES SECTION 4.8.(a) G.S.

120-167 reads as rewritten:

"§ 120-167.

Additional criteria;

population.

The Commission Municipal Incorporations Subcommittee may not make a positive recommendation unless the proposed municipality has a permanent population of at least 100 and a population density (either permanent or seasonal) of at least 250 persons per square mile." SECTION 4.8.(b) G.S.

120-170 reads as rewritten:

"§ 120-170.

Findings as to services.

Page 38 House Bill 1126-Second Edition General Assembly Of North Carolina Session 2025 The Commission Municipal Incorporations Subcommittee may not make a positive recommendation unless it finds that the proposed municipality can provide at a reasonable tax rate the services requested by the petition, and finds that the proposed municipality can provide atareasonabletaxratethetypesofservicesusuallyprovidedbysimilarmunicipalities.

Inmaking findings under this section, the Commission Municipal Incorporations Subcommittee shall take into account municipal services already being provided." SECTION 4.8.(c) G.S.

120-171 reads as rewritten:

"§ 120-171.

Procedures if findings made.

(a) If the Commission Municipal Incorporations Subcommittee finds that it may not make a positive recommendation because of the provisions of G.S.

120-166 through G.S.

120-170, it shall make a negative recommendation to the General Assembly.

The report to the General Assemblyshall list the grounds on which a negative recommendation is made, along with specific findings.

If a negative recommendation is made, the Commission Municipal Incorporations Subcommittee shall notify the petitioners of the need for a legally sufficient description of the proposed municipality if the proposal is to be considered by the General Assembly.

At the request ofamajorityofthemembersof theinterim board namedin the petition, the Commission Municipal Incorporations Subcommittee may conduct a public hearing and forward any comments or findings made as a result of that hearing along with the negative recommendation.

(b) IftheCommission Municipal Incorporations Subcommittee determines thatit will not be barred from making a positive recommendation by G.S.

120-166 through G.S.

120-170, it shall require that petitioners have a legally sufficient description of the proposed municipality prepared at their expense as a condition of a positive recommendation.

(c) If the Commission Municipal Incorporations Subcommittee determines that it is not barred from making a positive recommendation, it shall make a positive recommendation to the General Assembly for incorporation.

(d) The report of the Commission Municipal Incorporations Subcommittee on a petition shall be in a form determined by the Commission to be useful to the General Assembly." SECTION 4.8.(d) G.S.

120-172 reads as rewritten:

"§ 120-172.

Referendum.

Based on information received at the public hearing, the Commission Municipal Incorporations Subcommittee may recommend that any incorporation act passed by the General Assembly shall be submitted to a referendum, except if the petition contained the signatures of fiftypercent (50%)of registered voters the Commission Municipal Incorporations Subcommittee shall not recommend a referendum." SECTION 4.8.(e) G.S.

120-173 reads as rewritten:

"§ 120-173.

Modification of petition.

With the agreement of the majority of the persons designated by the petition as an interim governing board, the Commission Municipal Incorporations Subcommittee may submit to the General Assemblyrecommendations basedondeletion ofareas from thepetition,as long as there are no noncontiguous areas." SECTION 4.8.(f) G.S.

120-174 reads as rewritten:

"§ 120-174.

Deadline for recommendations.

If the petition is timely received under G.S.

120-163(e), the Commission Municipal Incorporations Subcommittee shall make its recommendation to the General Assembly no later than 60 days after convening of the next regular session after submission of the petition." MISCELLANEOUS TECHNICAL CORRECTIONS SECTION 4.9.(a) G.S.

"(4) An accidental A line-of-duty insurance death benefit not to exceed two thousand one hundred dollars ($2,100) in total on account of the death of a House Bill 1126-Second Edition Page 39 General Assembly Of North Carolina Session 2025 participant caused by an accident while in the actual performance of duty as an officer." SECTION4.9.(b)SECTION4.6.(b) TheRevisorofStatutesshallreplacethereferenceto "G.S.

House Bill 1126-First Edition Page 37 General Assembly Of North Carolina Session 2025 SECTION 4.9.(c)4.6.(c) The Revisor of Statutes shall replace the reference to "G.S.

SECTION 4.9.(d)4.6.(d) G.S.

120-4.28." SECTION 4.9.(e)4.6.(e) G.S.

135-5(b21)(2)c.1." SECTION 4.9.(f)4.6.(f) G.S.

– The Investment Authority shall develop and adopt an investment policy statement for the Venture Capital Multiplier Fund." SECTION 4.9.(g)4.6.(g) G.S.

Premium payments shall be made through retirement allowance deductions or other methods adopted by the Board of Trustees." SECTION 4.9.(h)4.6.(h) G.S.

UNCLAIMEDEFFECTIVE PROPERTYDATE ALLOW CONTINGENCY FEES FOR VENDOR AUDITORS SECTION 5.1.

G.S.

116B-8 reads as rewritten:

Page 40 House Bill 1126-Second Edition General Assembly Of North Carolina Session 2025 "§ 116B-8.

Employment of persons with specialized skills or knowledge.

TheTreasurermayemploytheservices ofsuch independent consultants, real estatemanagers and other persons possessing specialized skills or knowledge as the Treasurer deems necessary or appropriate for the administration of this Chapter, including including enforcement, valuation, maintenance, upkeep, management, sale and conveyance of property and determination of sources of unreported abandoned property.

The Treasurer may also employ the services of an attorneytoperformatitlesearchortoprovideanaccuratelegaldescriptionofrealpropertywhich the Treasurer has reason to believe may have escheated.

Persons whose services are employed bytheTreasurerpursuanttothissectiontodeterminesourcesand amountsofunreportedproperty are subject to the same policies, including confidentiality and ethics, as employees of the Department of State Treasurer assigned to determine sources and amounts of unreported property.

If the Treasurer contracts with any other person to conduct an audit under this Chapter, the audit shall not be performed on a contingent fee basis or any other similar method that may impair an auditor's independence or the perception of the auditor's independence by the public.

Notwithstanding the preceding sentence, the Treasurer may contract with any other person on a contingent fee basis to conduct audits of life insurance companies where the audit is being conducted for the purpose of identifying unclaimed death benefits or to conduct audits of holders of unredeemed bond funds.

Compensation of persons whose services may be employed pursuant to this section on a contingent fee basis shall be limited to twelve percent (12%) of the final assessment." CLARIFY PROPERTY FINDER DEFINITION SECTION 5.2.

G.S.

116B-52 reads as rewritten:

"§ 116B-52.

Definitions.

In this Chapter:

… (11a) "Property finder" means an individual or business entity, incorporated or otherwise, who, for fee or any other consideration, seeks primarily seeks to locate, deliver, recover, or assist in the recovery of property that is distributable to the owner or presumed abandoned.

…." MODIFY NOTICE REQUIREMENTS SECTION 5.3.

G.S.

116B-59 reads as rewritten:

"§ 116B-59.

Notice by holders to apparent owners.

… (a1) A holder of property that is presumed abandoned and that is either (i) a security or other equity interest in a business association, including a security entitlement under Article 8 of Chapter 25 of the General Statutes, that is valued at twenty-five dollars ($25.00) or more or (ii) property, other than a security or other equity interest in a business association, including a security entitlement under Article 8 of Chapter 25 of the General Statutes, that is valued at fifty dollars ($50.00) or more shall send written notice by first-class mail to the apparent owner not more than 120 days or less than 60 days before filing the report required by this Article.

The holder shall exercise reasonable care to ascertain that it is sending the written notice to the apparent owner's correct address.

A holder may authorize a third party to perform the duties required by this subsection.

Notwithstanding any third-party authorization, the holder bears responsibility for a failure to comply with this section.

…." CLARIFY DUTIES OF A PROPERTY HOLDER SUBJECT TO NORTH CAROLINA UNCLAIMED PROPERTY ACT House Bill 1126-Second Edition Page 41 General Assembly Of North Carolina Session 2025 SECTION 5.4.(a) G.S.

116B-60 reads as rewritten:

"§ 116B-60.

Report of abandoned property;

certification by holders with tax return.

(a) A holder of property presumed abandoned shall file a report in an electronic format prescribed by the Treasurer concerning the property.

Holders shall file an electronic certification and verification in order to comply with subsection (f) of this section.

A holder may authorize a third party to perform the duties required by this subsection.

Notwithstanding any third-party authorization, the holder bears responsibility for a failure to comply with this section.

(b) For amounts due to the apparent owner of property of the value of fifty dollars ($50.00) twenty-five dollars ($25.00) or more, the and for property subject to G.S.

116B-53(c)(4), 116B-53(c)(5), and 116B-53(c)(5a), regardless of the amount, the report must be verified and must contain the following, if known by the holder:

… (b1) With the exception of property subject to G.S.

116B-53(c)(4), 116B-53(c)(5), and 116B-53(c)(5a), amounts due an apparent owner less than fifty dollars ($50.00) twenty-five dollars ($25.00) may be reported in an aggregate amount without furnishing any of the information required by subsection (b) of this section.

(b2) After submission of the report required bysubsection (b) of this section, the Treasurer may request additional information from the holder to clarify or obtain additional information that was previously required to be reported.

The holder of the property shall respond to the request with the requested information, if known, within 30 days of receiving the request.

(c) If a holder of property presumed abandoned is a successor to another person who previously held the property for the apparent owner or the holder has changed its name while holding the property, the holder shall file with the report its former names, if any, and the known names and addresses of all previous holders of the property.

(d) The report must be filed before November 1 of each year and cover the 12 months next preceding July 1 of that year, but a report with respect to a life insurance company must be filed before May 1 of each year for the calendar year next preceding.

(e) Before the date for filing the report, the holder of property presumed abandoned may request the Treasurer to extend the time for filing the report.

The Treasurer may grant the extension for good cause.

The holder, upon receipt of the extension, may make an interim payment on the amount the holder estimates will ultimately be due, which terminates the accrual of additional interest on the amount paid.

(f) The holder of property presumed abandoned shall file with the report a certification and verification that the holder has complied with G.S.

116B-59.

(f1) Any holder who has intangible property due to be reported with a cumulative value of two hundred fifty dollars ($250.00) or less in a single reporting year shall not be required to report the property in that year but shall report the property in any year when the value or aggregate value exceeds two hundred fifty dollars ($250.00).

(g) Every business association holding property presumed abandoned under this Chapter shall certifythe holding in the income tax return required byChapter 105 of the General Statutes.

The certification shall be a part of the tax return with which it is filed.

If the business association is not required to file an income tax return under Chapter 105, the certification shall be made in the form and manner required by the Secretary of Revenue.

The information appearing on the certification is not privileged or confidential, and this information shall be furnished by the Secretary of Revenue to the Escheat Fund on October 1 of each year, or if this date shall fall on a weekend or holiday, on the next regular business day." SECTION 5.4.(b) G.S.

116B-67(b) reads as rewritten:

"§ 116B-67.

Claim for property paid or delivered to the Treasurer.

… (b) At the discretion of the Treasurer, the claim shall be made to the holder or to the holder's successor.

If the holder is satisfied that the claim is valid and that the claimant is the Page 42 House Bill 1126-Second Edition General Assembly Of North Carolina Session 2025 owner of the property, the successor, or the Treasurer may request the holder to verify whether or not the claimant is the owner.

The holder shall so certify to the holder's decision under oath to the Treasurer by written statement attested by the holder under oath, or in the case of a corporation, within 30 days of the Treasurer's request.

The certification by the holder must be made by two principal officers, or one principal officer and an authorized employee of the corporation.

holder, and shall be binding on the holder.

The determination of the holder that the claimant is the owner shall, in the absence of fraud, be binding upon the Treasurer and upon receipt of the certificate of the holder to this effect, the Treasurer shall forthwith authorize and make payment of the claim or return of the property, or if the property has been sold, the amount received from the sale, to the owner, or to the holder in the event the owner has assigned the claim to the holder and the certificate of the holder is accompanied byan assignment.

In the event the holder rejects the claim, the claimant may appeal to the Treasurer.

If the holder, or the holder's successor, is not available, the owner may file a claim with the Treasurer on a form prescribed by the Treasurer.

In addition to any other information, the claim shall state the facts surrounding the unavailability of the holder and the lack of a successor." SECTION 5.4.(c) G.S.

116B-77(b) reads as rewritten:

"§ 116B-77.

Interest and penalties;

waiver.

… (b) A holder who willfully fails to report, pay, or deliver property within the time prescribed by this Chapter, or willfully fails to perform other duties imposed by this Chapter, including the duties imposed by G.S.

116B-59, shall 116B-60, and 116B-67, shall pay to the Treasurer, in addition to interest as provided in subsection (a) of this section, a civil penalty of one thousand dollars ($1,000) for each day the report, payment, or delivery is withheld, or the duty is not performed, up to a maximum of twenty-five thousand dollars ($25,000), plus twenty-five percent (25%) of the value of any property that should have been but was not reported." PART VI.

STATE AND LOCAL GOVERNMENT FINANCE TOWN OF SPEED/SALES TAX SECTION 6.1.

Notwithstanding G.S.

159-34(h), funds currently being withheld by the Department of Revenue from the Town of Speed's sales tax distributions under G.S.

159-34(g) shall be released by the Department to the Town within 45 days after the Local Government Commission's approval under G.S.

160A-866 of a plan of action to distribute the Town's assets and liabilities.

However, if the conditions of G.S.

159-34(h) are met before the Local Government Commission approves a plan of action under G.S.

160A-866, the Department of Revenue may act under G.S.

159-34(h) to release the funds as required by that section.

TOWN OF SPENCER MOUNTAIN/EXTEND THE SUNSET ON SUSPENSION OF CHARTER SECTION 6.2.

Section 3 of S.L.

2016-45, as amended bySection 2 of S.L.

2023-49, reads as rewritten:

"SECTION 3.

This act becomes effective July 1, 2016, and expires June 30, 2026.June 30, 2029." LGC MEETING REQUIREMENT FLEXIBILITY/SALES TAX WITHHOLDING APPEALS SECTION 6.3.

G.S.

159-34 reads as rewritten:

"§ 159-34.

Annual independent audit;

rules and regulations.

… House Bill 1126-Second Edition Page 43 General Assembly Of North Carolina Session 2025 (f) Upon receiving a notice of noncompliance under subsection (e) of this section, a county or municipality may notify the secretary in writing that it plans to appeal the action and the county or municipality will be scheduled to appear before the Commission at its next regularlyscheduled meeting.

as soon as practicable after July1.

The written notice shall state the basis for the appeal and include any evidence to support the appeal.

The Commission shall establish guidelines outlining specific criteria that would warrant a successful appeal.

If a county or municipality appeals prior to the secretary taking action to withhold under subsection (g) of this section, the secretary must delay withholding if the Commission determines that the county or municipalityhas provided sufficient evidence that the failure to provide a copy of their annual audit report is due to circumstances within the guidelines established by the Commission.

If the county or municipality appeals after the secretary takes action to withhold under subsection (g) of this section, the secretary must notify the Secretary of Revenue to release any funds withheld under subsection (g) of this section if the Commission determines that the countyor municipality has provided sufficient evidence that the failure to provide a copy of their annual audit report is due to circumstances within the guidelines established by the Commission.

…." REMOVE STATE TREASURER AS EX OFFICIO NONVOTING MEMBER OF BOARD OF DIRECTORS OF NC GLOBAL TRANSPARK AUTHORITY SECTION 6.4.

G.S.

63A-3 reads as rewritten:

"§ 63A-3.

Creation of Authority and Board.

… (b) Board of Directors.

– The Authority shall be governed by a Board of Directors.

The Board shall consist of at least the following 20 19 members:

(1) Six members appointed by the Governor.

One member shall be representative of the economic development industry, two members shall be representative of the commercial real estate development industry, two members shall be representative of the banking and finance industry, and one member shall be representative of environmental interests.

(2) Three members appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S.

120-121.

One member shall be representative of the aerospace and aviation industry, one member shall be representative of advanced manufacturing industries, and one member shall be representative of the logistics and supply chain management industry.

(3) Three members appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S.

120-121.

One member shall be representative of the aerospace and aviation industry, one member shall be representative of the emergency response and disaster reliefindustries, andonemembershall be representative of the defense and security industry.

(4) The State Treasurer, who shall serve as an ex officio nonvoting member.

(5) The President of the North Carolina System of Community Colleges or the President's designee, provided that the President of the North Carolina Community Colleges may instead appoint to the Board of Directors one member of the board of trustees of a community college or one president of a community college.

If such an appointment is made, the appointee shall serve at the pleasure of the President.

(6) The President of The Universityof North Carolina or the President's designee, provided that the President of the University of North Carolina may instead appoint to the Board of Directors one member of the board of trustees of a Page 44 House Bill 1126-Second Edition General Assembly Of North Carolina Session 2025 constituent institution of The University of North Carolina, or one chancellor of a constituent institution of The University of North Carolina.

If such an appointment is made,the appointeeshall serveat thepleasureofthePresident.

(7) The Chairman of the State Ports Authority.

(8) One member appointed by the board of county commissioners of any county in which the cargo airport complex site is located.

(9) One member appointed by the city council of the city which is a county seat of any county in which the cargo airport complex site is located.

(10) The Commissioner of Agriculture or the Commissioner's designee.

(11) The Secretary of the Department of Commerce or the Secretary's designee.

…." STUDY LOCAL GOVERNMENT BUDGET AND FISCAL CONTROL ACT SECTION 6.5.(a) Study.

– The State and Local Government Finance Division of the Department of State Treasurer shall study and report on the need to update Article 3 of Chapter 159 of the General Statutes, The Local Government Budget and Fiscal Control Act.

In making recommendations, the study shall consider all of the following:

(1) Existing statutory complexity and inconsistencies.

(2) The ability for local government to comply with statutory requirements in light of the shortage of qualified local government finance professionals.

(3) The need for training of local staff and local elected officials.

(4) Enforcement gaps in current statutory language.

(5) How to address the varying financial management challenges faced by governments of varying sizes.

SECTION 6.5.(b) Consultation.

– In conducting this study, the Division shall consult with the North Carolina League of Municipalities, the North Carolina Association of County Commissioners, the UNC School of Government, the North Carolina Government Finance Officers Association, and at least two executive branch agencies that interact directly with local governments on financial matters, of which one must be the Department of Environmental Quality.

SECTION6.5.(c) Report.–NolaterthanJanuary31,2027,theDivisionshallsubmit an initial report of its findings to the chairs of the House Finance Committee, the Senate Finance Committee, the House Committee on State and Local Government, and the Senate Committee on State and Local Government.

No later than October 1, 2027, the Division shall submit a final report of its findings, including any recommendations for statutory changes, to the chairs of the House Finance Committee, the Senate Finance Committee, the House Committee on State and Local Government, and the Senate Committee on State and Local Government.

MODIFY GENERAL ASSEMBLY ACTUARIAL NOTE PROCEDURE SECTION 6.6.

G.S.

120-114 reads as rewritten:

"§ 120-114.

Actuarial notes;

Retirement System cost estimates.

… (b) The author of each bill or resolution shall present a copy of the bill or resolution, with his request for an actuarial note, to the Fiscal Research Division which shall have the duty to prepare said actuarial note as promptly as possible.

Actuarial notes shall be prepared and transmitted to the author or authors no later than two weeks after the request for the actuarial note is made, unless an extension of time is agreed to by the author or authors as being necessary in preparation of the note.

Any person who signs an actuarial note knowing it to contain false information shall be fined not more than five hundred dollars ($500.00) or imprisoned not more than six months, or both.

… House Bill 1126-Second Edition Page 45 General Assembly Of North Carolina Session 2025 (e) Atanytimeanycommitteeofeitherhousereportsanylegislativeinstrument, towhich an actuarial note or notes are attached at the time of committee consideration, with any amendment of such nature as would substantially affect the cost to or the revenues of any retirement system, or program of hospital, medical, disability, or related benefits for teachers and State employees, as stated in the actuarial note or notes attached to the measure at the time of such consideration, it shall be the responsibility of the chairman of the committee reporting such instrument to obtain from the Fiscal Research Division actuary employed by the system or program an actuarial note of the fiscal and actuarial effect of the change proposed by the amendment reported.

Such actuarial note shall be attached to the report of the committee on the measure as a supplement thereto.

A floor amendment to a bill or resolution to which an actuarial note was attached at the time of committee consideration of the bill or resolution shall not be in order, if the amendment affects the costs to or the revenues of a retirement system, or program of hospital, medical, disability, or related benefits provided for teachers and State employees, unless the amendment is accompanied by an actuarial note, prepared by the Fiscal Research Division, actuaryemployed bythe system or program as to the actuarial effect of the amendment.

… (g) In addition to the other requirements of this section, if a bill or resolution adds or modifies service purchase provisions, the Fiscal Research Division actuary employed by the system or program shall obtain provide an estimate of the cost impact of those provisions using the 30-year United States Treasury constant maturity and cost-of-living adjustment and salary increase assumptions consistent with that rate as of December of the year of the most recent actuarial valuation in addition to the cost of the provision using the valuation assumptions." PART VII.

NORTH CAROLINA CAPITAL FACILITIES FINANCE AGENCY ADD CHARTER SCHOOLS AND RELIGIOUS SCHOOLS AS PARTICIPATING INSTITUTIONS SECTION 7.1.

G.S.

159D-37 reads as rewritten:

"§ 159D-37.

Definitions.

As used or referred to in this Article, the following words and terms have the following meanings, unless the context clearly indicates otherwise:

… (4a) "Institution for elementary and secondary education" means a nonprofit institution within the State of North Carolina authorized by law and engaged or to be engaged in the providing of kindergarten, elementary, or secondary education, or any combination of these.these including, without limitation, charter schools.

… (6a) "Project" means any one or more buildings, structures, equipment, improvements, additions, extensions, enlargements, or other facilities comprising any of the following:

a.

Educational facilities used by an institution for higher education or an institution for elementary and secondary education, including dormitories and other housing facilities, housing facilities for student nurses, dining halls and other food preparation and food service facilities, student unions, administration buildings, academic buildings, libraries, laboratories, research facilities, classrooms, athletic facilities, health care facilities, laundry facilities, and other structures or facilities related to these facilities or required or useful for the instruction of students, the conducting of research, or the operation of the institution.

Page 46 House Bill 1126-Second Edition General Assembly Of North Carolina Session 2025 b.

Student housing facilities to be owned or operated by an owner or operator other than an institution for higher education or an institution for elementary and secondary education.

c.

A special purpose project as defined in G.S.

159C-3.

The term "project" includes landscaping, site preparation, furniture, equipment and machinery, andothersimilar items necessaryorconvenient for operation of a particular facility in the manner for which its use is intended.

The term also includes all appurtenances and incidental facilities, such as headquarters or office facilities, maintenance, storage, or utility facilities, parking facilities, and other facilities related to, required, or useful for the operation of the project or essential or convenient for the orderly conduct of the facility.

The term "project" does not include the cost of items that customarily result in a current operating charge, such as books, fuel, or supplies.Thetermdoesnotincludeanyfacilityusedortobeusedforsectarian instruction or as a place of religious worship nor any facility that is used or to be used primarily in connection with any part of the program of a school or department of divinity for any religious denomination.

(6b) "Special purpose institution" means a for-profit or not-for-profit corporation or corporation, limited liabilitycompany, or similar entitythat undertakes any of the activities set forth in sub-subdivisions (6a)b.

and (6a)c.

subdivision (6a) of this section.

…." SECTION 7.2.

G.S.

159D-38(a) reads as rewritten:

"§ 159D-38.

Capital facilities finance agency.

(a) There is created a body politic and corporate to be known as "North Carolina Capital Facilities Finance Agency" which shall be constituted a public agency and an instrumentality of the State for the performance of essential public functions.

The agency shall be governed by a board of directors composed of seven members.

Two of the members of the board shall be the State Treasurer and the State Auditor, both of whom shall serve ex officio.

The remaining directors of the agency shall be residents of the State and shall not hold other public office.

The General Assembly upon the recommendation of the President Pro Tempore of the Senate shall appoint one director in accordance with G.S.

120-121, the General Assembly upon the recommendation of the Speaker of the House of Representatives shall appoint one director in accordance with G.S.

120-121, and the Governor shall appoint three directors of the agency.

The five appointive directors of the agency shall be appointed for staggered four-year terms, two beingappointed initiallyforone yearbythePresident oftheSenateandtheSpeakeroftheHouse, respectively, and one for two years, one for three years and one for four years, respectively, as designated by the Governor.

Each director shall continue in office until a successor is duly appointed and qualified, except that any person appointed to fill a vacancy shall serve only for the unexpired term.

Any vacancy in a position held by an appointive member shall be filled by a new appointment made by the officer who originally made the appointment.

Any member of the boardofdirectors is eligibleforreappointment.Eachappointivememberof theboardofdirectors may be removed by the Governor for misfeasance, malfeasance or neglect of duty after reasonable notice and a public hearing, unless the notice and hearing are in writing expressly waived.

Each appointive member of the board of directors shall take an oath of office to administer the duties of office faithfully and impartially and a record of the oath shall be filed in the office of the Secretary of State.

The Governor shall designate from among the members of the board of directors a chair and a vice-chair, whose terms extend to the earlier of either two years or the date of expiration of their then current terms as members The State Treasurer shall serve as chair of the board of directors of the agency.

The board of directors shall elect and House Bill 1126-Second Edition Page 47 General Assembly Of North Carolina Session 2025 appoint and prescribe the duties of a secretary-treasurer and any other officers it considers necessary or advisable, which officers need not be members of the board of directors." 4 MODERNIZE PUBLIC HEARING AND NOTICE REQUIREMENTS SECTION 7.3.

G.S.

159D-45 reads as rewritten:

"§ 159D-45.

Bonds and notes.

… (f) Before the issuance of bonds pursuant to this Article to finance a project, the Agency shall hold a public hearing with respect to the proposed project and the issuance of the bonds to finance the proposed project.

The public hearing may be held at any location designated by the Agency, including at the offices of the Agency in Raleigh, North Carolina.

No public hearing shall be required in connection with the refinancing of any project previously approved by the Agency.

The public hearing may be conducted by the Agency or by a hearing officer designated by the Agency to conduct public hearings.

Notice of the public hearing must be published at least once in at least one newspaper of general circulation in the county where the proposed project is to be located not less than 14 days before the public hearing.

The notice must describe generally the bonds proposed to be issued and the proposed project, including its general location, and any other information the Agency considers appropriate.

A copy of the notice of public hearing must be mailed to the clerk of the Board of Commissioners of the countyin which the proposed project is to be located and to the governing body of any city or town in which the proposed project is to be operated.shall be consistent with the requirements for reasonable public notice set forth in 26 U.S.C.

§ 147(f) and theregulations promulgatedpursuant to thatsection, or anysuccessorfederal provisions or regulations.

…." PART VIII.

EFFECTIVE DATE SECTION 8.1.

Page 4838 House Bill 1126-Second1126-First Edition