REBECCA TROUTMAN

NCACC IGR DIRECTOR

Legislative and Statewide

County Issues Update

Final State Budget, Finally!

County Impacts:

• $100 million lottery funds for county school capital– Can’t pledge for future debt service

• $13.7 million for county child welfare enhancements & increased state oversight

• What was left out?– NO non-emergency Medicaid transport outsourcing

– NO workers’ comp & tort claims shifts

– NO forestry services increase

– NO tier-1 limitation on state-funded school nurses

Final State Budget, Finally!

County Impacts:

• Phase out of Medicaid $500,000 benefit

– Not Medicaid hold harmless

• All misdemeanants to county jails under voluntary Statewide Misdemeanant Confinement Fund

Final State Budget, Finally!

Statewide Impacts:

• 7% avg. teacher salary increase; $500 non-certified & central admin.– TAs largely intact

– Tenure going forward eliminated in last year’s budget

• $1,000 to state & community college employees– 1% state retiree COLA

• Medicaid provider cuts but little change in Medicaid services or eligibility– Medicaid reform postponed until next session

Final State Budget, Finally!

Statewide Impacts:

• $2.2 million for mental health community-based crisis services

• $10 million for film industry grant program

– Allows sunsets of film & historic rehab tax credits

• $20 million for Job Catalyst program

– Spending authority embedded in local sales tax bill

• SBI transfer to DPS

– Crime lab remains with Justice

End of Session Surprise FailsH1224—Senate PCS, Local Sales Tax For Educ./Econ. Dev.

• Original pcs eliminates ¼ cent general purpose & replaces with ½ cent educ. and/or transit in ¼ cent increments– Cap combined county sales taxes at 2.5%

• Grandfather in Durham & Orange at 2.75%

• Mecklenburg unable to move forward with Nov. ¼ cent

• Senate adopted version keeps general purpose & increases to ½ cent, offers new ed. option at ½ cent & increases transit to ½ cent—either or in ¼ cent increments– Cap combined sales taxes at 2.5%

– Companion H189 permits Mecklenburg & Wake until 2016 to keep 2.75%

• Senate ties econ. development, teachers’ asst. tech fix to measure

• House fails to concur

NCACC County Goals Checklist Support farmland preservation

– $1M for military buffers

Monitor & protect counties in natural resource extraction– Limit on property taxes turned back– Study of mineral valuation for property taxes

*Ensure mental health funding– $2.2M in community crisis services

Retain NEMT– House budget provision rejected

Preserve county HHS fed. funds– No service cuts– Add. funds for CPS

Increase childcare subsidies & Pre-K– Add. funding for slots & rate increases– Tightening of eligibility requirements

*Oppose transportation shifts– No legislation introduced

Allow county participation in state health plan– Montgomery County added

Support full funding of JRA– Creates facilities to house probation violators

Provide state crime lab funding– Initiates Western Crime Lab & forensic DNA

Remove pop. threshold for detention space limitations– S463 enacted

*Reinstate lottery funds– H1107 introduced with 70 house members– Maintained at current levels

Maintain state responsibility for school buses & tort claims– Gov. proposal to shift tort claims rejected

Support community college workforce pgm– $15.1M recurring for health & tech ed pgms

*Oppose unfunded mandates & cost shifts – No new mandates or cost shifts

*Preserve existing tax base– No loss in revenue base

Centralize appraisal of wireless & cable facilities– H1050 shifts wireless appraisals to DoR

Other Legislation Impacting CountiesH1195 - Pension Spiking, Collins & Ross• LRC House Committee on Retirement

– NCACC & NCLM crafted with Retirement Div. & NCCCMA retirement committee

– Goal to preserve pension fund fiscal integrity w/out impacting valid salary increases or promotions

• Sets contribution-based benefit cap triggered by excessive salary increase & imminent retirement– Only applies to state & local employees >$100,000 retiring Jan 2015 or later

• Salary does not trigger cap; excessive salary MAY trigger cap– Retirement Div. to report names who MAY trigger cap if retire w/in year

• Notice contains estimated liability owed if cap trigger• Consequences if cap triggered?

– Reduced pension; New employee pays liability; Gov’t entity to pay for existing employee (can be shared locally with employee)

• Bill also provides for non-vested contribution returns with interest & resets TSERS vesting to 5 years

Other Legislation Impacting CountiesH1043 - P&C Prequalification, Arp

• P&C study committee from NCACC-sponsored Design Build legislative goal– Wake County Commissioner Paul Coble county rep

• H1043 requires lgs to adopt prequal policy & prequal assessment tool & limits for construction at risk, design-build, PPP

• Establishes Blue Ribbon Comm. to Study Building & Infrastructure Needs of State– Includes water & sewer, community colleges and schools

– Study infrastructure needs thru 2025, priority process for needs, feasibility of fund with dedicated revenue & funding options until 2025

Other Legislation Impacting Counties

S403 Omnibus Elections Clarifications

• House floor amendment to limit special elections, e.g. for sales tax or bond referenda, to elections having all precincts open, e.g. non-municipal, odd-years

Other Legislation Impacting Counties

H292 – Moratorium on Lawsuits for School Funds PCS

• Prohibits schools for suing over sufficiency for 2 years

– Applies only to Union, Gaston & Nash

Update—Union County appeal heard in Court of Appeals 12/2

NCACC files amicus brief

Other Legislation Impacting Counties

H369 – Criminal Law Changes

• Clarifies that local government assurance of E-Verify contractor/subcontractor compliance only applies to formal bid threshold for purchases & construction

– Aligns county & city requirements with all state & public agencies

Other Legislation Impacting Counties

H1050 Tax Reform• Tweaks tax simplification act of last summer• Major impact is to cities—privilege licenses

– Reinstates inadvertent repeal– Limits application in 2014-15 to physical presence– Repeals in entirety in 2015-16 without replacement

revenue

• Sets LPA fees at $1.06 & makes increase retroactive to March

• Authorizes DoR to centrally appraise wireless facilities & towers (NCACC goal)

Other Legislation Impacting CountiesH1031 – Econ. Development Partnership

• Permits Commerce to outsource certain econ develop. functions– Recruitment, retention, business development,

international trade, marketing & travel & tourism

• Does not distribute incentives

• Establishes 8 regional prosperity zones to house reps of state agencies for better collaboration & coordination

Statewide Environmental IssuesS734—Reg. Reform• Rejects House’s plans to limit county or city zoning

authority for design controls or to amend misconduct, negligent definition of code officials to include enforcement of more stringent building code

• Includes enforcing county floodplain ordinance in ETJ

• Repeals moratorium on local environmental ordinances

• Enables permit applicant to choose version of rule or ordinance during permit application period if rule or ordinance changes

• Standardizes local well permitting & inspection forms

Statewide Environmental Issues

S786--Energy Modernization Act• Repeals prohibition on permit issuance for fracking & allows issuance 61

days after all rules adopted—July 1, 2015• Extends deadline for rule adoption to Jan. 1, 2015

• Establishes Oil & Gas Commission to oversee oil & gas exploration• Makes confidential trade secret info but requires immediately disclose to

first responders• Sets responsibility for well contamination at ½ mile (was 5000 feet)• Preempts local ordinances that would prohibit or cause to prohibit oil &

gas exploration• Establishes state severance tax on energy minerals & prohibits local taxes,

excluding property taxes• NCDoR charged with studying other states’ practices on valuing energy materials for property taxes• JLOC Energy Policy to study how industry development impacts property tax revenues

Statewide Environmental IssuesS729--Coal Ash Management• Sets clean-up/remediation/closure requirements by dates

certain for state’s 33 coal ash ponds, based on DENR evaulation of severity– High-priority to have materials removed by 8/1/19 include facilities in

Rockingham, Gaston, Buncombe, & New Hanover– Other high risk ponds may convert to industrial landfills but remediation

must occur by 12/31/19– Intermediate by 12/31/24– Low by 12/31/29

• Prohibits new or expanded ponds & requires groundwater monitoring

• Preempts local regulation of coal ash management

What Was Left? - Medicaid Reform• Structure of service delivery?

– Senate favors MCOs regionally competing with ACOs• All clients under full risk capitation by July 2018

– House, Gov., & medical community only support ACOs• Most clients under increasing risk capitation by July 2020

• Structure of oversight?– Senate favors new dept. with board of directors

• Senate wants study of eligibility determination options

– House & Gov. keep within NC-DHHS• House wants director approved by legislature

• HHS subcommittee (in split vote) endorses outsourcing risk within 3 years w/ preference to provider-led organization—full committee rejects

• PED subcommittee favors independent board administratively w/in NC-DHHS

Looking Forward2015-16 County Legislative Agenda

In Development

19

NCACC Legislative Goals Process

October

Goals Referred

to Steering

Committee

Steering Comms.

Consider & Recommend

Goals Referred to Legislative

Goals

Comm.

Legis. GoalsComm.

Considers & Recommends

Goals Referred to Board of Directors

Board Considers

& Approves Goals

Goals Referred

to Member

County Boards

New BoardsTake Office,Consider &

Select Delegates

Delegates ApproveGoals at

Legis Goals Conference

Nov 19-20

December January 15-16, 2015

July - Sept

December 10

Commissioners

& Boards

Submit

Proposed Goals

358 Total Goals Submitted44 to be voted on at Legislative Goals Conference

Committee Consideration

• Economic development front & center; 22 of 55 goals in Tax & Finance

– Uncertainty with new economic development structure

– Concern by rural counties

– Focus on expiring incentives, infrastructure

• Concern with tax base erosion

– Study of non-profit property tax exemptions

22

Top T&F Goals Thus Far

23

1. Oppose unfunded mandates and shifts of state responsibilities to counties.2. Grow North Carolina’s statewide economy through sound state investments,

including public infrastructure funding, competitive incentives, andcoordinated efforts with county economic development services.• Adopt new approaches to economic development incentives to include

rural counties.• Restore the film and historic preservation tax credits.• Provide increased grant funding for rural infrastructure projects.

3. Preserve the existing local revenue base.4. Authorize local option revenue sources already given to any other

jurisdiction.5. Expand local option sales tax by allowing for Board of Commissioners

resolution or public referendum.

Other County Priorities

• Oppose roads, Medicaid cost shift, encourage broadband

• Increase state funding for lottery, libraries, environment & ag programs

• Increase e911 fee flexibility

• Support Medicaid expansion & keep mental health public

24

Looking ForwardKey Statewide Issues

25

Pension FundLGERS Fund Stabilizing

• New financial reporting shows net assets

• Employer contribution to fall

• Investment gains support small COLA

• Retirement division/actuary recommend setting 5-year ARC (annual retirement contribution)

NCACC Board Adopts NCCCMA Recommendations

Managers’ assoc. retirement committee recommends:

• Set ARC at levels to support future 5-year rate

• Support COLA commensurate with investment gains

• Request staff to define 1,000 rule

State of the State(Barry Boardman)

• 2013-14 = $450 million shortfall– Personal Income tax collections the key reason

• 2014-15 ytd = General Fund revenue $145 million under target (down 2.2%)– Sales Tax collections were $59 million above target

• 5.7% baseline growth

– Personal Income collections were down $178 million

– Total Tax revenue down $131 million

Little Change In State Forecast

Sales Taxes Improving….but

Local distribution ytd = 8.9%

Legislative Session 1/28

• Governor’s 2-year budget due late Feb.

– Requires consensus revenue forecast with NCGA

– Focus on infrastructure?

– Offer up Medicaid expansion?

– New budget director

• Lee Roberts, former banker, Cokie Roberts’ son

• State tax revenues?

– Unknown until April 15

Legislative Session 1/28(Organization Session 1/14)

• New House leadership

– Committee chairs unknown

Rep. Tim Moore (Cleveland)

Speaker of the House

Rep. David Lewis (Harnett)

Rules Chair

Rep. Mike Hager (Rutherford)

Majority Leader

Key Legislative Issues?

• Tax Reform 2.0?

– Shift in local sales tax allocation?

– Expansion of sales tax to services?

– Replacement for municipal privilege license taxes?

• Medicaid Reform & Expansion?

– House/Senate differences remain

Questions?Comments?