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League Bulletin

September 11, 2015

Legislative leaders indicated this week that they are close to finalizing budget negotiations and are optimistic that a final budget might be put to a vote before the House and Senate next week. Top chamber leaders planned to continue meeting today to try to settle remaining disagreements. Passage of a budget should clear the way for adjournment of the legislative session within two to three weeks. A continuing budget resolution that allows state government to operate in absence of a final budget is set to expire a week from today.

It remains unclear whether any substantial tax shifts, Medicaid reforms or business recruiting incentives -- issues removed from the budget talks -- will be considered after approval of a budget. Legislative leaders did indicate on Thursday that the House and Senate had agreed to a $2 billion bond referendum to be held next year, with much of the money going toward state building construction and some toward local school construction. The referendum is expected to be held during a March primary. Read more about the budget negotiations here. Contact: Rose Vaughn Williams

House Minority Leader Larry Hall this week addressed long-standing rumors that some legislators were planning significant changes to the state pension system, shifting from a defined benefit to a defined contribution plan. Representative Hall held a news conference on Thursday in which he criticized such plans and cited previous studies showing North Carolina's pension system in a strong financial position. Meanwhile, House Speaker Tim Moore and Senate Leader Phil Berger said there are no plans to pursue any legislation this year.

Representative Hall, during his news conference, said he had been told of plans to "drastically change the pension system" for state employees and that this "major policy change" might appear in the state budget or in a separate bill. "If this happens without the full involvement of the General Assembly, everyone loses," he said. He added that such a change might benefit stock traders but not the workers in the system.

A League legislative goal calls for support of legislation that "defends the fiscal integrity of Local Government Employees' Retirement System and its defined benefit structure, promotes reasonable pension reforms that are prospective in nature, and meets the needs of local employees, employers and retirees." One provision included in the Senate version of the budget would have begun phasing out health insurance coverage for state retirees. Another would have continually lowered the assumed rate of return of pension fund investments, potentially forcing higher contributions to the fund and leading to higher unfunded liability projections.

North Carolina's 7.25 percent assumed rate of return is already the fourth lowest in the country and considered sound by independent investment research firms like Morningstar. That firm has consistently ranked North Carolina's pension system one of the best in the country. The local government portion of the state pension fund is considered 100 percent funded, meaning there is no unfunded liability. Read more about the back-and-forth regarding the pension plan here and here. Contact: Sarah Collins

Various publications reported this week that legislative budget writers have agreed to put $30 million toward a grant program for film incentives. The figure represents a substantial increase over the $10 million allocated in the previous budget and was cheered by film industry advocates as an appropriation likely to pave the way for more film and TV production in the state.

One of the League's Municipal Advocacy Goals calls for support of legislation to establish a competitive film incentive program and to restore historic preservation tax credits. Tax credits for both historic building restoration and film production expired in January, and the League has advocated for adequate replacements to promote economic development in both 2014 and during this year's legislative session. The future of historic preservation tax credits also is the subject of budget negotiations, and Senate leaders appear to have softened in their opposition to the tax credits. Read more about the agreement on film grants here.

Aberdeen, Chimney Rock, Elon and Laurinburg have been chosen to participate in the North Carolina Main Street Center's new Downtown Associate Community program. The program will allow officials in the four municipalities to receive training and technical assistance for up to three years related to developing their downtowns and bringing new business investments there. At the end of the three years, each can apply for official designation as a Main Street community. Read the N.C. Department of Commerce news release about the selection and program here.

At a recent meeting of the N.C. Environmental Management Commission, N.C. Division of Air Quality Director Sheila Holman said she expects the U.S. Environmental Protection Agency (EPA) to set new ozone standards at a level that likely will keep the entire state in compliance. Director Holman said the EPA should release its new ozone standard by October 1. She explained that EPA originally proposed reducing the current standard from 75 parts per billion (ppb) to somewhere in the range of 65-70 ppb, and that EPA has recently indicated that the standard will likely be set at 70 ppb.

At that level, the whole state would remain in compliance, otherwise known as "attainment." Attainment is important to cities because transportation funding can be affected in areas that violate air quality standards. Director Holman also explained that even if the standard was set at 65 ppb, only five areas in the state would be in violation -- Mecklenburg County, Forsyth County and three mountain top monitoring stations. Contact: Sarah Collins.

We are continuing to seek applicants to serve on League policy committees, which is a great way to get involved in advocacy efforts. The deadline to fill out an interest form is November 2. You can return the form to Government Affairs Coordinator Karen Waddell. The Legislative Action Committees and Regulatory Action Committee serve a crucial role in developing League priorities and in making the needs of cities and towns known to state and federal policymakers. Get involved today! Contact: Karen Waddell