Legislative Report #05-01

Report 05-1
February 4, 2005

Welcome!

Thank you for signing up to receive our Legislative Report by e-mail. We intend to transmit the Report every week during the 2005 Session of the General Assembly. The report will be sent on Friday of each week.

We expect that there will be occasions during this Session when it will be necessary to ask our members to contact their legislators immediately about legislation of critical importance to retirees. In these cases, we will send a separate Alert calling for action by our members.

We would welcome any suggestions that you wish to offer regarding the Legislative Reports. As always, we appreciate your interest and support.

Overview

The General Assembly convened on January 26 to begin the 2005 Session. The projected budget deficit for Fiscal Year 2005-06 and hurricane damage assistance were the main topics of discussion during the opening week of the Session.

Legislators must address a projected shortfall of $1.3 billion to balance next year's state budget. The key issues in the development of the 2005-06 budget will include:

1)re-enactment of temporary taxes that are scheduled to expire this year (1/2% state sales tax, 8.25% state income tax bracket, and estate taxes),

2)increases in taxes on cigarettes and alcoholic beverages

3)authorization of a state lottery

4)reductions in state expenditures, excluding public education and essential human services programs.

We expect that the General Assembly also will consider changes to the State Health Plan. Estimates provided by the staff of the State Health Plan indicate that the General Assembly would need to appropriate an additional $370 million to maintain current benefits, deductibles, and dependent premium levels for the next two years. Changes in dependent premiums and deductibles likely will be considered to offset the projected appropriation.

Governor Easley is scheduled to present the proposed state budget for the 2005-07 biennium at the end of February. The proposed budget is expected to include cost-of-living adjustments for state employees and retirees.

Association Goals for 2005

The Executive Committee of the North Carolina Retired Governmental Employees' Association met in January and adopted goals for the 2005 Session regarding retiree COLAs. These goals are summarized below.

1)Retired Teachers, State Employees, and members of the Judicial System: seek a Cost-Of-Living Adjustment equal to the rate of inflation during 2004.

2)Retired Local Governmental Employees: seek a Cost-Of-Living Adjustment that will equalize COLAs granted in 2003, 2004, and 2005 with the cumulative rate of inflation for the period 2002 through 2004.

3)National Guard Pension Fund: ask the General Assembly to review the status of this fund and consider an increase in the maximum monthly benefit.

The bill to provide COLAs to retired state and local government employees is expected to be introduced by early March.

Legislation of General Interest

The General Assembly still is in the process of organizing committees and completing committee assignments. However, a number of bills already have been introduced that are of general interest to retirees. These bills are summarized below and the primary sponsor is listed after the short title.

House Bill 59: Retired School Professionals Return to Work (Rep. McLawhorn)
This bill authorizes public school teachers, guidance counselors, and media specialists who have been retired for at least 6 months to return to work in the public schools with no cap on earnings and no loss of pension benefits.

Senate Bill 31: Increase Fire and Rescue Squad Pension (Sen. Hoyle)
This bill would increase the monthly pension amount for eligible firemen and rescue squad members to $ 163.00 effective July 1, 2005.

House Bill 36: Expand Homestead Benefit Via Tax Credit (Rep. Allred)
This bill would allow homeowners age 65 and older with taxable annual income of $30,000 or less a 50% tax credit on state income taxes for local property taxes paid on their permanent residence.

House Bill 46: Falsify Info/Adult Care Home Licensure/Penalty (Reps. Nye and Clary)
The bill authorizes the state Department of Health and Human Services to impose civil penalties on any Adult Care Home licensure applicant who falsifies or omits material information on the application.

House Bill 3: Local Option Lottery (Rep. Owens)
The bill authorizes county governments to conduct local referenda to establish a lottery. 25% of net lottery proceeds would be distributed to participating local governments for school construction and education programs. The remaining proceeds would be retained by the state to establish or enhance educational programs.

House Bill 15: Cigarette Tax Increase For Public Health (Rep. Miller)
This bill would increase the state tax on a pack of cigarettes from the current rate ($.05) to $1.20 effective July 1, 2005.