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Separation Allowance Proposal Creates Unfunded Mandate on Cities, Towns

​NCLM Urges Legislators to Avoid Putting a New Burden on Local Taxpayers​

June 18, 2018

​(RALEIGH)  -- Legislation currently making its way through the North Carolina General Assembly has the potential to place a substantial unfunded mandate on cities and towns and the payers of local taxes. The proposed expansion of a post-retirement benefit called a separation allowance to firefighters and rescue squad workers, which would be paid in addition to a local government pension benefit, would cost an estimated $300 million to provide to current local government employees expected to reach eligibility. In response to the legislation's consideration by the House, Michael Lazzara, President of the N.C. League of Municipalities and Mayor Pro-Tem of Jacksonville, made the following statement:

“The member cities and towns of the North Carolina League of Municipalities have always and will always oppose unfunded mandates from the state or federal level. While our firefighters and rescue squad workers perform heroic work in keeping our citizens safe, municipal officials must be good stewards of local taxes paid by residents and also must consider the contributions of other municipal employees who also work in dangerous jobs. Finally, it is important to recognize that this benefit – because it will be paid completely by the employees' final employer – will create a disincentive to hire late-career firefighters and rescue squad workers, harming the very people it is intended to help."

The separation allowance provision is contained in SB 153 Military Retiree State Income Tax Relief. The provision provides no funding source to pay for the change and comes at a time when state officials have questioned the state's ability to adequately fund existing state retirement benefits.    

About the League

The North Carolina League of Municipalities is a membership association of 540 great hometowns – representing nearly every municipality in the state. The League advocates for its members, from the largest city to the smallest village, on the full range of legislative issues that affect municipalities.

For more than 100 years, the League has promoted – and continues to promote – good government by offering non-partisan advocacy, insurance and other services – as directed by its membership.​​​