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LGERS Board Sets Pension Spiking Factor, Provides GASB Reporting Update

During its quarterly meeting on Thursday, the Local Government Employees Retirement System (LGERS) Board of Directors adopted a factor of 5.1 to be implemented in the new anti-pension spiking formula. The factor is part of a formula that determines whether a local government retiree's annual benefits exceed a new contribution-based benefit cap. Other parts of the formula used to determine when pension spiking has occurred are a new retiree's accumulated contributions into the system and an annuity factor based on age.

The pension spiking legislation outlining this formula was an initiative spearheaded by the League, the N.C. Association of County Commissioners, and the Office of State Treasurer during the 2014 legislative short session. It's goal is to protect the long-term fiscal health of the retirement system. The League supported the 5.1 factor, which will affect an estimated 0.27 percent of retirees per year, seeing it as a cautious and pragmatic approach to implementing the new law. The pension spiking legislation authorized the Board to set a factor that could have affected up to 0.75 percent of retirees per year. The formula is designed to catch end-of-career compensation spikes that result in significantly higher retirement benefits.

The factor will be reassessed by the Board next October, and then once every five years thereafter to coincide with the timing of the Retirement System's quinquennial Experience Study. For more information on the new pension spiking statute, click here or here. Also, stay tuned for information on a specialized webinar for local government employees regarding an overview of the pension spiking law.

The LGERS Board also heard a presentation regarding GASB 67 and 68 changes to financial reporting for pension plans. Of importance to local government finance officers, it was reported that LGERS will be recorded as a financial asset. LGERS is one of only three NC retirement system plans that can be reported as an asset this year. Finance officers should expect to receive communications from the Office of State Treasurer regarding the GASB changes within the next month. Contact: Whitney Christensen

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Letters From Local Government Commission Warned of Revenue Loss Dangers

The Local Government Commission notified 14 municipalities earlier this year that the pending loss of privilege license tax revenue would pose a significant budget challenge and called for quickly preparing for the change. The letters, delivered just before the start of the current fiscal year, cited analyses by the commission showing that the revenue loss "will have a significant impact on your budget going forward."

The 14 municipalities notified were not large cities, like Charlotte, which would see the biggest hit dollar-wise. The largest was Oxford, with a population of 8,700. To make up for the revenue loss without state help, each would face a significant property tax increase, ranging from 4.3 cents per $100 valuation to 10.3 cents. The other municipalities notified were the towns of Ahoskie, Brunswick, Calabash, Dublin, Fairmont, Haw River, Maxton, Pembroke, Pilot Mountain, Red Springs, Rowland, Saint Pauls and Tar Heel.

The letters did point out that the issue may be addressed during the 2015 legislative session. As legislators approved the bill calling for the eventual repeal of privilege license taxes, legislative leaders committed to League staff that they would work to address replacement revenue in the 2015 legislative session. Governor Pat McCrory mentioned legislators' commitments regarding replacement revenue when signing the legislation.

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Look for Advocacy Goals Conference Information!

City managers, city clerks and municipal elected officials will be receiving emailed packets beginning next week in preparation for the League's Advocacy Goals Conference to be held December 11 in Raleigh. The information will include a list of proposed Municipal Advocacy Goals that will be further whittled down during the conference, as well as instructions regarding voting procedures and designating voting delegates.

You can already go online to register and find out more information about the conference here. A pre-conference reception, to be held at The Oxford in downtown Raleigh on the evening of December 10, will also be a part of this year's events. The conference will mark the culmination of weeks of work by many of you and by League staff to set legislative and regulatory goals in advance of the new legislative session. Please come and take part in establishing advocacy goals!

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Cities of Raleigh, Wilson Join National Broadband Coalition

The City of Wilson and City of Raleigh have joined a new national coalition of municipalities formed to promote the deployment of and residents' access to next-generation broadband. The Next Century Cities initiative was announced earlier this week in Santa Monica, Calif. The coalition says that its aim is not specifically related to the support of community broadband systems, but is focused on the deployment of gigbit-level Internet, regardless of the supplier, to promote economic development, improve education, and better connect residents.

The coalition, though, is being created as the Federal Communication Commission considers a petition from Wilson and the City of Chattanooga, Tenn., to preempt state laws that restrict community broadband systems. The petition and the formation of the coalition were featured in this recent op-ed in the Washington-based political publication The Hill. League members will consider a proposed goal at the December Advocacy Goals Conference that calls for the "support of legislation to enhance the authority of municipalities to own and operate municipal broadband systems in order to create more competition in the broadband market and provide more affordable services to unserved and underserved areas of the state in the furtherance of economic development."

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Film Officials Talk Film Incentives Push

Two people with ties to the Wilmington film industry say they plan to push the Legislature for a more expansive version of film incentives in 2015, but also acknowledge that any plan will be a difficult sell. Johnny Griffin, director of the Wilmington Regional Film Commission, and Bill Vassar, executive vice president at EUE/Screen Gems Studios, were recently quoted in this Associated Press article about state film incentives. The article notes that the CBS TV series "Under the Dome" has decided to film for a third season in the Wilmington area, and has Griffin pointing to the decision as a factor that will keep the debate over expanded film incentives alive for another year.

The Legislature decided earlier this year to allow tax credits for TV and film productions to expire, but did approve a grant program for the productions. The program is capped at $10 million in total grants. Film industry officials have said that the grant program is not enough to prevent an exodus of TV and film projects from North Carolina. In the previous legislative biennium, the League adopted a Municipal Advocacy Goal to extend the tax credit and lobbied for its extension. A similar proposed goal, calling for the support of  legislation that would create a competitive film incentive program as well as preserve state historic preservation tax credits, will be considered at the League's Advocacy Goals Conference in Raleigh on December 11.

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Auditor to Pay City of Cherryville for Undetected Embezzlement

An accountant who had conducted audits for the City of Cherryville since 2006 has agreed to pay the city $75,000 after failing to detect embezzlement. CPA Darrell L. Keller of Kings Mountain said his firm had done nothing wrong, but agreed to the settlement earlier this week. The city had more than $500,000 embezzled from 2005 to 2011, and two employees were convicted of taking the money. Read more about the settlement here.