Legislative Report #06-02

Report 06-02
May 12, 2006

GOVERNOR PRESENTS BUDGET, BILLS INTRODUCED

The General Assembly got off to a fast start this week. Governor Easley presented recommended adjustments to the 2006-07 State Budget on the first day of the Session.

As of May 11, legislators had 230 new bills for consideration, including several addressing Cost-Of-Living Adjustments for retired employees. The highlights of the Governor’s budget recommendations and a summary of important new bills are presented below.

GOVERNOR'S BUDGET ADJUSTMENTS

The Governor proposed a net increase in the 2006-07 budget of nearly $1.5 billion. The increase includes over $700 million for salary adjustments for active teachers and state employees, COLAs for retired state employees, and repayment of a portion of the funds owed to the state retirement system. The main proposals include:

• 3.7% Cost-Of-Living Adjustment for retired state employees and teachers. This increase would require an additional $48 million appropriation from the General Fund to supplement available gains in the Teachers’ and State Employees’ Retirement System.

• $30 million to repay a portion of the monies diverted from the retirement system in 2001. This represents the fourth installment of a 5-year repayment plan. The remaining principal balance to be paid next year is approximately $45 million.

• 4.0% salary increase for full time state departmental, agency, and University system employees.

• A one-step increase plus a flat $2,250 for each public school teacher. This combined increase is equal to a average annual raise of 8%.

• 4.0% salary increase for all Community College personnel plus an additional 4.0% for Community College faculty and professional staff.

Important Note: The Governor’s budget proposals do not address COLAs for retired local governmental employees since the Local Governmental Employees’ Retirement System receives no money from the state. We expect a separate bill addressing local retiree COLAs to be introduced next week. The Retirement System Board of Trustees recommended that all available gains in the local system be used to fund the COLA. Gains are sufficient to fund a 2.8% increase.

BILLS INTRODUCED THIS WEEK

House Bill 1907: Teachers and State Employees Retirement System COLAs
(primary sponsors- Reps. Lucas, Bell and Coleman)

This bill would provide a 5.0% Cost-Of-Living adjustment to retired teachers and state employees affective July 1, 2006. The bill has been referred to the House Committee on Pensions and Retirement. This bill is supported by the N.C. Retired Governmental Employees’ Association.

House Bill 1889: Increase Fire and Rescue Squad Pensions
(primary sponsor- Rep. Julia Howard)

This bill proposes to increase the monthly pension benefit for eligible firemen and rescue squad workers from the current $163 to $165 effective July 1, 2006. The bill was referred to the House Committee on Pensions and Retirement.

Senate Bill 1286: Senior ADAs in the Judicial Retirement System
(primary sponsor-Sen. East)

This bill would place senior assistant district attorneys who are in office after July 1, 2006 in the Consolidated Judicial Retirement System. A senior assistant district attorney is defined as one who has at least 15 years of service as an assistant D.A. or as a district attorney. The bill was referred to the Senate Committee on Pensions & Retirement and Aging.

DEADLINES

The House and Senate have set deadlines for the filing of new bills. All new bills pertaining to pension benefits must be filed with the House or Senate Principal Clerks by Wednesday, May 24. Bills relating to the budget must be filed by May 25.