Mecklenburg County Board of Commissioners

N.C. Government Relations Update

February 26, 2010Rebecca Troutman, NCACC IGR Director

Sharon Scudder, NCACC Executive Counsel

Items for Consideration

1. Budget Update: County Perspective2. Transportation Policy3. ABC System Reform4. Retirement System5. Collective Bargaining:

Member/Candidate Survey6. E911 Funding7. Judicial Actions?

State Budget - A Look Back

State Budget in Brief (S202)

• General Fund budget = $19 billion; adopted 8/5• Revenue available = $17.6 billion before tax/fee

increase• Continuation budget = $22.1 billion• 3 continuing resolutions to keep state govt

operating

– 20% deficit resolved by 40% in cuts, 30% in stimulus $, 8% fees, 22% new taxes

– 2200 fewer positions, $3.1 bil cuts

The Good, the Bad, the Ugly (S202)

Good !

• Medicaid relief swap continues– July 1: out of Medicaid funding business

• Mecklenburg:– 2009 = $10.6 mil benefit– 2008 = $2.6 mil benefit

– Oct. 1: remaining ¼ cent Art. 44 ceded to state; Art. 42 flips to pt delivery

• Jan. distribution reflects changes• Local sales = 2%; 1.5% pt delivery, .5% per capita

The Good, the Bad, the Ugly (S202)

Good !• School construction lottery funds intact

– Perdue returns Feb. payment of $37.6 m– Budget at $147.2 mil; $162.3 2008-09 actual– Tech. corrections directs 2009-10 excess to

counties w/ tax rates < statewide avg.– Special provision doesn’t replenish lottery

reserve– Mecklenburg = $16.8 mil

The Good, the Bad, the Ugly (S202)

Good !• Expansion items target county legislative goals

– School nurses, daycare admin, NCFAST, community colleges, mental health crisis beds

• Maintains DMV registration/property tax collection system development– System in development; July 2011– Estimated gain to counties = $53.4 m annually – Mecklenburg = $7.8 m

Property Tax Collection Rates, All Property v. Motor Vehicles97.78% 98.02% 97.63% 98.36% 98.38%

86.69% 87.66% 87.23% 88.30% 87.22%

80%

85%

90%

95%

100%

2004 2005 2006 2007 2008

Property Excluding Motor Vehicles Motor Vehicles Only

Importance of Collecting Property Taxes with Vehicle Registration

Mecklenburg = 85.96 v. 98.52

The Good, the Bad, the Ugly (S202)

Good !

• What’s not in budget!?!– County housing of state misdemeanants

sentenced 90-180 days ($21 mil)– Local funding of law enforcement certification– LEA liability for school bus accidents

• What’s in budget!?!– Full funding of CJPP & JCPC

The Good, the Bad, the Ugly (S202)

Bad !

• Redirects corporate tax set aside from ADM Fund (school construction) to state education = $60 mil+ loss– 2 yr redirection unless….

• Senate proposal to eliminate

– Mecklenburg = <$11.7 mil>

• Withholds 2/3s beer & wine reimbursement for 1st year = $7.7 mil loss– Senate proposal to shift in perpetuity

The Good, the Bad, the Ugly (S202)

Bad !• Shifts child support enforcement to 28 counties

currently serviced by state regional offices = $4 mil+ cost increase– NCACC monitoring transition….

• Cuts $40 mil per year from state-funded mental health services; add. cuts via Medicaid– Turned back forced spending of fund balances; more

reporting

The Good, the Bad, the Ugly (S202)

Bad !• Repeals state reimbursement for jailed

misdemeanants at $18/day and extraordinary medical expenses = $10 mil+ loss

• Takes 10% of court facility fees for “collection” costs = $3 mil+ loss

• Eliminates state lease payments for probation offices = $1.2 mil loss– NCACC special provision to limit coverage

The Good, the Bad, the Ugly (S202)

Ugly !• Original proposal to force mental health

agencies to spend down fund balances to replace state cuts—rescinded in tech. corrections

• Legislature to study consolidation & administrative efficiencies of county DSS

• DHHS to undertake public health improvement plan

Counties Hurting Too

• 88 counties cut overall budget– 65 cut school appropriations– 200+ layoffs– 1000 positions eliminated– 16 counties with mandatory furloughs– Travel freeze, hiring freeze, delay of capital,

use of fund balance

State Budget – A Look Today

First 6 Mos. 2010

• Governor orders 5% avg. reversions = $500 mil– Excludes schools

• DoR increases 1-time corporate tax collections– Offsets declining state revenues– Sales taxes off by 11%

• Medicaid expenses projected 10% above budget by year’s end– Enrollment up, using more services– Mitigated by fed. clawback decrease

Counties Hurting Too

• Sales taxes down 8%+ through March

• Food stamp/Medicaid caseloads soaring

• Sales assessment ratios above 100%

• Additional property tax exclusions & exemptions, and eligibles, decrease funding

State Budget Picture Today• Revenues through January are $35 million

short of forecast– Collections near target with $472 mil in 1-time

corporate collections, $272 mil above budget– December/January estimated payments 5% (or

$20 million) below expectations– January net withholdings are down 4.7% ytd, &

2.4% below a $5 billion target– January sales collections showed some

improvement

Next 6 Mos.

• Unofficial revenue deficit = $500 mil• Revenue slowing refunds to maintain cash

flow• OSMB to review & revise? year end

estimate– Sales taxes to remain 8% below FY2009– Further reversions (schools?), rainy day

funds, other funds?

• Lower base for next year’s budget?

Lottery

• Sales up, $50 mil more revenue

• Current provision directs all to counties with effective tax rates < statewide avg.

• Expect legislative fix– All counties receive same per ADM

• DPI revising chart with new (2009) data– Change in 2010 allocations– Mecklenburg = $1 mil+

School Funding

• GA granted indefinite extension of local sales tax set-aside for school construction

• NCACC exploring– Ability to opt out via statutory provision?– Clarifying that set aside doesn’t apply to food

tax in 40 and 42• Save counties $45 million

Mental Health

• New provider model – CABHA– Critical access behavioral health agency– Medically necessary services, 2 or more services,

LME endorsement– Phase out community support services

• New LME model – Medicaid Waivers 1915 (b)– Supports capitated, at risk Medicaid – Modified version of Piedmont BH

• 1 – 2 new LMEs in 2010-11• Risks v rewards

Tax Modernization

• Senate attempt to restructure state/local tax structure– Broaden income/sales base; lower rate

• House sought more tried and true

• Largely House position but…– Special budget provision to authorize

senate/house finance to meet out of session

Tax Modernization

• Senate/House finance meeting monthly

• Largely focused on sales taxes– Services: yes or no

• Forecast?– Not in election year unless….

State Budget – A Look Tomorrow

2nd Year Biennium• Balanced budget but…………

– Governor orders budget cuts at 3, 5, 7% options• County programs?

– New revenues in place through 2010-11• No tax modernization

– Lower base? Lower revenue growth projections?– Continuation of fed. enhanced Medicaid?

• County concerns– State-shared revenues: video programming, e911,

beer/wine (again)– Service shift?

Emerging Issues/Emerging Concerns

TRANSPORTION• Governor

Perdue’s Transportation Conversation: Secondary Roads– Ability to pay?

• Intergovernmental Advisory Group Update

Transportation Legislation

• S758 (Transfer Secondary Roads to Counties)– Budget did transfer maintenance to highway

construction

• H148, Intermodal Transportation legislation passed, counties can hold referendum to increase their sales tax for the specific use of mass transit. – ½ cent for Regional Transportation Authorities– ¼ cent for all other Counties– Up to $7 Vehicle Registration Fees

ABC System

• Governor’s BRAC• Privatization• Salary & Ethics

Concerns• NCACC

Recommendations• Legislative Study• Politics

Retirement System

• Retirement Board Voted to Increase the Employer Rate by 1.55% - 6.35%

• 2009 Pension Value Declined $4.79B

• Smoothing Period: Rate may increase over the next 5 years– Employee rate increase?

• Future of Retirement Commission

Collective Bargaining

• Are the Unions Organizing?– Federal Attempt in December – Public Employees

• Our Legislative Goal:– Collective Bargaining for Public Employees –

Oppose legislation authorizing local governments to enter into collective bargaining agreements with public employees, or mandating dues check-off programs.

• Coalition for NC Jobs – Member/Candidate Survey

911 Funding Flexibility• Legislative Goal:

– E-911 Funds – Support legislation to preserve county revenue from E-911 charges and allow counties greater flexibility in the use of the funds; and restructure the 911 Board created by G.S. 62A-41 to add additional local government representation.

• 911 Board Study – Subcommittee Commissioner Brain McMahan, Randy Keaton, Christy Shearin, Lee Worsley

• Legislative 911 Committee• NCACC Strategy: 911 Center Visits / Draft

Language

Judicial Issues of Concern

Sharon Scudder

NCACC Executive Counsel

• Dispute over Board of Elections hiring part-time employee when position not specifically approved

• Writ of Mandamus issued by Superior Court Judge requiring County to pay employee and attorney fees

• Considerations regarding Local Government Budget and Fiscal Control Act, NCGS 159-28

• Future control of expenditures at risk

Graham County Board of Elections v. Graham County Board of Commissioners

• Declaratory Judgment Action filed against 7 counties – Claim failure to provide capital funding to charter

schools violates NC Constitution• Charter Schools statutory creation provides 10

charter with 5 year renewal process• Charter Schools are relieved of many funding

duties, teacher requirements, curriculum constraints, transportation requirements

• Are operated by private nonprofit groups • Risk of much more competition for county funds

Charter Schools Funding Case

THANK YOU.Questions / Discussion?