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League Bulletin

October 23, 2015

Gov. Pat McCrory this week made four stops around the state to sign into law a $2 billion bond proposal to boost state infrastructure. League President Lestine Hutchens joined Governor McCrory at the ceremony held at Stone Mountain State Park near Elkin, and League staff and municipal officials also attended other signing ceremonies. The governor's signing of HB 943 Connect NC Bond Act of 2015 should achieve a key League priority of additional infrastructure investments that will benefit municipalities. The bond package contains $300 million for local water and sewer projects. 

The bond package will be put before state voters in a March referendum. Nearly 150 people attended the initial signing ceremony held at N.C. State University. About half the dollars in the package are designated for university building and repair. At the Stone Mountain State Park ceremony, Mayor Hutchens called the bond package "good news" for cities and towns, and said she would be working for its passage. Read more about that ceremony here and about the bond package here.

Governor Pat McCrory still has several bills remaining before him, and a week or less to decide whether to sign, veto or allow them to become law without his signature. Among the bills is HB 765 Regulatory Reform Act of 2015, which includes some provisions affecting municipalities but the most onerous having been converted to studies at the urging of the League. (Read earlier League coverage about that bill here.)

Once the General Assembly adjourns, the governor has 30 days to act on pending legislation from the date of those bills'  ratification. With this year's session having ended on Sept. 30, that window of time will soon close. As of earlier this week, this list reflected the bills remaining on Governor McCrory's desk, although he has acted on several since then.

During its quarterly meeting on Thursday, the Local Government Employees Retirement System (LGERS) Board of Directors took action to reduce the "contribution-based benefit cap” (CBBC) factor from 5.1 to 4.7 (see presentation). The CBBC factor is the multiplier in the “pension spiking” formula that dictates the amount that retirement benefits will be capped at, and thus how many prospective retirees will be affected in a given calendar year.

The formula was established by legislation in 2014 and the factor determines whether a local government retiree's annual benefits exceed a new contribution-based benefit cap. The formula is designed to catch end-of-career compensation spikes that result in significantly higher retirement benefits that exceed the amount an individual has contributed to the system over time.

In October of 2014, the LGERS board adopted an initial factor of 5.1 with the knowledge that it would be reassessed after one year. The new 4.7 factor is estimated to affect 0.36 percent of retirees per year (12 people) and represents the mid-range of where the board could have set the factor, since the 2014 pension spiking legislation authorized the board to set a factor that could have affected up to 0.75 percent of retirees per year.

While a reduction in the factor makes the pension spiking legislation apply to more retirees, it helps to alleviate the concerns of critics who believe it is easy to take advantage of the retirement systems’ offerings. The change also will help maintain the fiscal solvency and health of the local government pension fund. The new factor will be in place for the next five years. Contact: Sarah Collins

An extensive look at the state's recent use of business recruiting incentives by WRAL-TV in Raleigh shows that many of the jobs announcements associated with the inducements did not come to fruition. The TV station also presented information showing that many of those jobs went to wealthy counties, an issue that has been the focus of earlier examinations of state incentive programs. State Commerce Secretary John Skvarla responded to the findings by noting that the state inducements do not go to companies that do not produce jobs and that the number of jobs that were created are still substantial. He called the state's Jobs Development Investment Grant program a "winning program" because it is putting jobs in places where they are needed. The JDIG program bases its grants on a portion of the income tax paid by workers, meaning that the state does not suffer loses when companies alter their plans regarding plant locations or expansions.
Among the bills signed this week by Gov. Pat McCrory is SB 472 Local Incentives for Historic Rehabilitation, which expands and clarifies existing law allowing local governments to offer their own incentives for historic preservation projects. The bill had been seen by some as an alternative to the restoration of a state historic tax credit, which was eventually included in the state budget bill, HB 97 2015 Appropriations Act. The League, while expressing support for SB 472, made clear that cities and towns did not see it as a substitute for a state tax credit, which has been crucial for scores of downtown development projects.
There is still time to apply to serve on one of the League's policy committees, which is a great way to get involved in the advocacy efforts that benefit all cities and towns. The deadline to fill out an interest form is Nov. 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