LEGISLATIVE UPDATE Hugh Johnson, NC Association of County Commissioners Hartwell Wright, NC League of Municipalities NC International Personnel Management Association March 17, 2016
2 Outline • Legislative Update (2015) • Bills of Interest • Sales Tax Redistribution • LGERS • Recent LGERS Board Actions • 2016 and Beyond • Election year changes • Possible short session issues
3 Demographic Change Driving State Issues
4 Demographic Change Driving State Issues
5 Legislative Update - 2015 Key Budget Items for Counties Education • Funds teacher assistant positions but eliminates LEA flexibility to use these funds for other purposes • Final budget includes $100M to fund projected enrollment growth of 35K additional students over the biennium • Continues $100M appropriation for school capital from lottery Health and Human Services • Increases autopsy fees from $1,250 to $1,750 and medical examiner fees from $100 to $200 (earlier version had increases to $2,800 and $250) Non ‐ parent relative income is no longer subject to formulas for child care subsidies • reducing barriers to receiving subsidies • Increases foster care age to 21 and provides $16 million to raise this age while funding initiatives for children transitioning from foster care • Some expansions to public health and behavioral health programs; also reduction to LME/MCOs targeted at entities with large cash balances Public Safety • Appropriates $22.5M recurring to fund the SMCP • Establishes $5M reserve for 2:1 matching grants to local and county law enforcement to purchase body cameras
6 Legislative Update - 2015 HB 154 - Local Governments in State Health Plan • Session Law 2015-112 effective June 24, 2015 • Allows local governments to seek health coverage for employees under the State Health Plan. • Limits the total number of local government employees who can be moved into the State Health Plan to 10,000. • Any local government electing to participate must have less than 1,000 employees and dependents enrolled in health coverage at the time the local government provides notice to the Plan of its desire to participate .
7 Legislative Update - 2015 HB 616 - Local Governmental Employees’ Retirement COLA • Called for 1% cost-of-living adjustment (COLA) increase for LGERS pensioners. • The legislation was filed despite a decision by the LGERS Board in January 2015 to provide a 0.625% COLA to retirees. o The .625% increase was the maximum COLA that could be provided by relying solely on existing LGERS funds. o Increasing the COLA to 1% would mean an increase for local governments’ contribution rate for general employees. • HB 616 was approved by the House, but not acted on by the Senate.
8 Legislative Update - 2015 HB 666 - WC/ Firefighters’ Presumptive Cancer • Would have created a presumption that certain types of cancer occurring in firefighters are occupations diseases and subject to coverage under worker’s compensation. • The list of nine separate types of cancer under the list of occupational diseases had the potential to significantly increase municipalities’ workers compensations costs. • The bill was reported “without prejudice” from House Pensions and Retirement, but did not pass the House
9 Legislative Update - 2015 SB 699 – Protect LEO Home Address/Other Info • Prohibits disclosure of LEO address, emergency contact info, and personal identifying numbers like SSN • Also provides that government provided mobile phone numbers are not public record when provided to LEO/emergency responders • Passed House 106-0 and Senate 42-0 • Effective October 1, 2015
10 Legislative Update - 2015 HB 44 - Local Government Regulatory Reform • Streamlines payment and pre-audit processes for local governments by exempting debit cards and payroll from pre-audit certification • Removes a public health funding requirement from 2012 that limited county budget flexibility
11 Legislative Update - 2015 SB 423 – Foster Care Family Act • Allows foster parents and county DSS to make certain parenting decisions for foster care children • Will allow foster care children to participate in activities like other children w/consent of foster parents or county • Also provides liability protection for foster parents and counties for these decisions • Simplifies the process for foster children to receive driver’s licenses and get auto insurance coverage
12 Legislative Update - 2015 HB 318 – E-Verify/Food Benefit Waiver • Clarifies local government contracts for goods don’t have to follow E-verify, only services • Follows changes from last short session streamlining certain e-verify requirements for small local government purchases • Sanctuary jurisdictions prohibited • Prohibits DHHS from seeking waiver for FNS applicant work requirements after January 1, 2016
13 Legislative Update - 2015 SB 119 – Technical Corrections • Expands FNS applicant work requirements for all counties beginning July 1 • DHHS already planned to expand this for 23 counties on January 1 — legislation originally pushed for all counties on January 1 • Final bill requires certain adults applying for FNS to meet work requirements in all counties beginning July 1 • Added time and cost for processing applications • State received a grant from USDA to help with work requirements
14 Legislative Update - 2015 SB 455 – Iran Divestment Act • Passed 113-4 in the House and 48-0 in the Senate • From a 2010 federal law allowing states and localities to prohibit governments from investing/contracting with an entity investing in Iran’s energy sector • Directs the State Treasurer to compile a list of entities with investment activities in Iran’s energy sector and prohibits State investment with entities on the list • Prohibits State and local governments from contracting with entities on the list • Does not apply to contracts valued at $1,000 or less • “Substantial positive action” exception • Good faith exception • Requires vendors and bidders to certify they are not on Divestment List • State Treasurer published Divestment List on 2/26/16 See more details in NCACC blog post: http://www.ncacc.org/Blog.aspx?IID=203#item & UNC School of Government FAQs: https://www.sog.unc.edu/sites/www.sog.unc.edu/files/articles/Iran%20Divestment%20Act%20FAQ.pdf
15 Sales Tax Redistribution Expands the sales tax base to repair, 1. maintenance and installation services on tangible personal property (including motor vehicles) Combines this additional revenue from 2. Articles 39, 40 and 42 ($67.2 million in FY 2017) with $17.6 million from state sales taxes Distributes the total ($84.8 million in FY 3. 2017) to 79 counties according to a statutory percentage that the legislature will periodically review Must be spent on public schools, community 4. colleges or economic development Effective Dates: Base expansion March 1, 2016 Distribution of revenue July 1, 2016
16 Sales Tax Redistribution Allocation
17 Sales Tax Redistribution Allocation
18 Interim Committees Environmental Review Commission • Oversight of environmental policy implementation • Per budget, convened a Solid Waste Authority Working Group to study local government solid waste issues JLOC on Health and Human Services • Oversight of HHS budget and policy implementation • Of note to counties, discuss behavioral health program funding and changes JLOC on Medicaid and Health Choice • Oversight of Medicaid reform implementation • HB372 – Medicaid Transformation and Reorganization Numerous Transportation Oversight Committees
19 Retirement Systems • LGERS Board met Jan. 21 • Approved League- recommended Employer Contribution Rate Stabilization Policy • Begins FY16-17 with base rates of 7.25% for general employees and 8.00% for LEO
3/4/2016 City and County Update 20 Retirement Systems Employer Contribution Rates General Fiscal Year Law Enforcement Officers Employees/Firefighters 2016-17 7.25% 8.00% 2017-18 7.50% 8.25% 2018-19 7.75% 8.50% 2019-20 8.00% 8.75% 2020-21 8.25% 9.00% * This table reflects the pension component of the contribution rates; death benefit contribution is in addition to these rates
21 Retirement Systems • Employer Contribution Rate Stabilization • Automatically increased or decreased if annual required contribution is 50% higher/lower than stabilized rate • “Cushion” built in for retiree COLAs from investment gains
22 2016 and Beyond • Election Year: • Primary March 15 (included state bond) • 41 House members (22 R, 19 D) have no opponents • 13 Senators (9 R, 4 D) have no opponents • Another 16 House races, 2 Senate races decided after primary – 43% of all races decided after primary in all • Primary Update: $2B Connect NC Bond passed; some races close and could go to recount • Session begins April 25 • Short session year
23 2016 and Beyond • Election Year: • US Congressional Primary moved June 7 • Following court ruling and new maps drawn during special session • Other primary runoff races eliminated as a result • Possible statewide cost of almost $10M for a second primary • Filing reopens for new Congressional races on March 16 • One day after all other primaries — March 15
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