NCACC Legislative Update NC Local Government Budget Association Summer Meeting

NCACC Legislative Update

NC Local Government Budget Association

Summer Meeting

2007-08 State Budget

• 1st Year of Biennium

• Governor proposes - House starts leg. budget process & amends – Senate amends – House/Senate conference committee appointed

• H1473– State spending under continuing

resolution thru 7/31– Continues ¼ cent state sales tax


• House/Senate Comparison

– $20.3 bil budget v. $20 bil

• fueled by: $1.3 bil surplus

– $100M county Medicaid relief v. intent for permanent relief

– Recurring funds to non-recurring status

• Must undergo continuation review


• House/Senate Comparison

– “Temporary” taxes remain v. taxes sunset• ¼ sales in, upper income out?

– EITC for poor v.?• EITC lite?


House/Senate Comparison:

• State employees & university faculty = 4.25% v. 4% & 5%; Senate?– Teachers = 5% avg; School administrators =

4.44% same– Community college = 5% same


Public Education—enrollment increases (26k more kids), Learn & Earn, Education Access Rewards– Gov & Senate propose free tuition program for eligible

students; House concurs but uses less money– Gov wants More at Four, House wants drop out

prevention, Senate wants focused reform pilot– At issue is school resource officers, DSSF, literacy

coaches– Study of school funding formulas

Community Colleges—enrollment increases in continuing, increase tuition by 6.3%, provide planning funds for anticipated bonds


Human Services– Gov & House propose new NC Kids’ Care

• Senate scales back to study, 2nd year implementation & lower eligibility

– Senate seeks Medicaid cost containment– Agreement on increases in Heath Choice, day

care, pandemic flu treatment, school nurses


Human Services– Debating mental health funding & oversight

• Both focus on community services—crisis, housing, substance abuse

• Both requiring annual LME report on county funding ($121 million)

• Senate reigning in community support services—new service busting county Medicaid cap

– $478 mil v. $427 mil; $24 mil above $27 mil cap


Justice and Public Safety– Senate increases court fees for 550+ new positions &

recurring technology fund ($8 mil)• Counties responsible for telephone system?• House largely follows gov. plan for 100+• Senate?

– VIPER• House proposes only $508k for implementation, Gov

requested $9.1 mil, Senate looking at $12.25 mil– Special provision for cops funding predicated on funding stream

• $2.3 mil for recurring expenses in all

– Gang suppression & intervention in both


Natural & Economic Resources– Continues One NC Fund; $13 v. $14 mil– Expands Rural Center’s economic

infrastructure program; $19 mil– Promotes film industry, viticulture, home

furnishing market, NC Green Business– Increases DoR administrative set aside from

white goods & scrap tire fees; $200 k to $425 k

Defining Issues

• County Medicaid Relief

• State and local infrastructure– What it is, how to fund

• Limited state debt capacity v. pent up demand• $10 bil schools, $7 bil water & sewer, $65 bil

roads, millions more for universities & community colleges

– Focus on land transfer tax to target growth with statewide bond for poorer communities

County Medicaid ReliefH1016

• Permanent, complete Medicaid relief—phased in over 3 years– 25% 10/1/07, 50% 2008-09, 100% 2009-10

• Counties cede ½ penny sales tax– ¼ 10/1/08, ¼ 10/1/09 (Art. 44)– Counties held harmless for 10 years– Cities held harmless and receive growth– Art. 42 per capita converted to point of delivery

House & Senate County Medicaid Relief

• H1016 preferred Medicaid relief strategy but…….

• House wants additional local revenue authority– .4% land transfer tax (4 x county deed stamp

= $300 mil)– ¼ cent sales tax = $250 mil– At county option by referendum


• House and Senate conferees meeting ‘round the clock

• Close to finalizing—Monday should unveil conference report

• Medicaid sticking point

Lottery in the Budget

• House/Senate appropriates $140 Million for school capital– $170 mil budgeted in 2006-07

• $102 mil actual thru May; anticipate $30 mil last qtr

– Special provision directs overage to be spent at discretion of budget director-i.e. state operating expenses

• $330 mil actual v. $450 mil budgeted

– Rejects Easley’s call to change lottery allocations

Lottery in Legislation

• H9-School Capital Fund Formula/Lottery Proceeds (passed House)– 65% still by ADM– 35% divided because?

• Mtn. legislators pushing ADM• Change in tax rates—3 in, 5 out

– 17.5% low wealth (% of low wealth funds) – 17.5% growth in 5 years ($ per ADM growth)

Tax and Finance

• Attack on property tax base given escalating values

• Reflecting national trends—e.g. Florida, SC

• Looking for study but agreeing to small increase in income

• H1499 reasonable compromise– Moves income to $25 k (current at $20.5 k)

Homestead Exemptions

H1499 Increase Income eligibility to 25K


S1051 Increase Income eligibility to 25K. Adds exemption for retirement communities & removes AGI stipulation.

H1983 Excludes Social Security, retirement, disability or pension income



Appraisal & Valuation BillsH1917 Caps appraisals for residents 70yrs+ who have been

residents for 5yrs. No income restrictions

H1889 Use-value taxation of conservation lands of 10acres+. Defers taxation until sale or transfer

S1305 Taxation at 50% of rate for conservation easements

S1499 Increase income eligibility to 30K

S1203 Reduces qualifying Ag land to 5acres. Wildlife Conservations lands taxed at use value. Allows for compensation consideration for easement transfer

S1348 Restricts valuations on this type of housing removing cause increases for property improvements

H540 Caps appraisal increase at CPI growth

Property Class Exemptions

H685 Faith Based Organizations

Property tax exclusion for church day cares in counties with limited service capacity

H2002 Educ & Non-Profits

Exempts property used for conservation & educational, scientific, rec, or ecological purposes.

H1981 Retirement Home/Community Owners

Provides for exclusions for charitable efforts beginning at 1% of revenue

Circuit Breakers, Deferrals, & Misc.H596 &

S412 Circuit Breaker $5K or less: 3.5% >$5K - $10K: 4.0%>$10K - $25K: 4.5% >$25K - $50K: 5.0%

H1610 Deferred until death or sale. Income restriction 30K, interest accrues on debt; once deferral = 85% of value

S1442 Income based deferral Income < Income eligibility amt, then 4% is

index or if 100 to 150% of income eligibility then 5%

S1309 -SAR < .90 = revaluation -Eliminates exemptions based on bond financing.-Removes carve outs for public service companies. -Use value for nonconforming residential property.

-Mobile home taxation system

H486 Excludes 48K or 50% of value for disable vets

S445 Study Committee to examine all of the above

Other Legislation

• H24 – Smoking in Public Places; S.L. 2007-193– Smoking in State government buildings prohibited – Local governments may restrict smoking in public

places in:• Buildings owned, leased and occupied by local government;• Building and grounds wherein local health departments and

departments of social services are housed• Public schools, school facilities, on school campuses, at

school‑related or school‑sponsored events, in or on other school property, public school buses, or at day care centers.

• Any place on a public transportation vehicle owned or leased by local government and used by the public.

NCACC Website

• Financial comparisons

• Legislative updates

• Links to counties• Links to state

resources

Questions &

Comments

Documents

NCACC Legislative Update NC Local Government Budget Association Summer Meeting