Legislative Report #07-06

Report 07-06
March 2, 2007

MORE DETAILS: THE GOVERNOR'S BUDGET

This week, the Appropriations Committee began the review of the proposed state budget for the 2007-09 biennium. Details of the Governor’s proposals were presented by the staff of the Office of Budget and Management.

The budget includes a total of $ 269.9 million for the 2-year period to cover increased State Health Plan costs. Although the budget does not propose to increase member co-payments or annual deductibles, the amount contained in the budget is less than the preliminary estimates provided by the State Health Plan. The staff of the General Assembly will conduct further research to determine the precise amount needed to maintain the State Health Plan at current benefit levels during the biennium.

The Governor’s budget proposes appropriations of $28.6 million to provide a 2.0% COLA in 2007-08 for retired state employees. These appropriations would supplement available gains in the Teachers’ and State Employees’ Retirement System (TSERS) to cover the cost of this COLA. The gains in the TSERS would only support a 1.0% COLA, reflecting the continuing problem of an insufficient state employer contribution rate.

BOARD OF TRUSTEES' BILL INTRODUCTIONS EXPECTED NEXT WEEK

Bills to carry out the legislative goals of the Board of Trustees of the Retirement Systems are expected to be introduced next week. These legislative goals are supported by the N.C. Retired Governmental Employees’ Association and a broad coalition of groups representing active and retired government employees. The goals include COLAs for state and local retirees, an increase in the state employer contribution rate for TSERS, and an increase in the TSERS retirement accrual formula to 1.83%.

CORRECTION!

Last week’s Legislative Report (#07-5) included a summary of House Bill 233 to provide equal state income tax treatment of governmental retirement benefits. Unfortunately, we left one word out of the description. The first sentence of the description of HB 233 should have read as follows: “This bill would exempt North Carolina state and local pensions and Federal pensions from state income taxes, effective in 2008.” We apologize for the mistake.

BILLS INTRODUCED THIS WEEK

Senate Bill 352: Trust Fund For State Retiree Health Benefits
(Primary Sponsor – Sen. Blake)

This bill authorizes a public referendum to approve a State Constitutional amendment establishing a non-reverting, interest-bearing special trust fund for state retiree health benefits. The trust fund would receive 5% of the annual net revenues of the State Lottery.

Senate Bill 347: Flexible Payment/Law Enforcement Separation
(Primary Sponsor – Sen. Stevens)

This bill makes a technical change in the payroll frequency of the special separation allowance received by retired law enforcement officers. The bill provides that payments will be made in equal installments on the payroll frequency used by the employer. This replaces the current rigid frequency of payment on the last day of every month.