Legislative Report #07-22

Report 07-22
June 22, 2007

BUDGET CONFERENCE CONTINUES

The Joint Conference Committee on the state budget worked through the week to find common ground on the 2007-09 budget. The main points of contention are the extension of temporary state taxes that are due to expire on June 30 and Medicaid relief for the counties. On Wednesday, Senator Rand presented a new Medicaid relief proposal to the Senate Finance Committee. Under this proposal, the state would assume the county share of Medicaid costs during the next 3 years and the counties would turn over several local tax sources to the state. The Rand proposal, which appears to present an opportunity to resolve one of the sticking points in the budget conference, will be debated again on Monday.

STATE RETIREE ISSUES: SHOULD YOU CONTACT LEGISLATORS?

Several of our members have asked whether they should continue to contact legislators about the importance of a higher COLA for state retirees and a careful approach to the conversion of the State Health Plan. We detailed our positions on these two issues in the June 15 edition of our Legislative Report. You can view this report on our Web site (www.ncrgea.com) by going to Legislative Updates.

The answer to this question is a resounding “Yes”. Please do continue to call, e-mail, and write your members of the House and Senate. Let them know how important these issues are to you. This is especially important in light of reports this week that state revenue collections are coming in higher than had been projected by more than $250 million.

OTHER COMMITTEE ACTIVITY

The House Committee on Pensions and Retirement met on Wednesday and discussed several bills. These bills are summarized below.

Senate Bill 659: Officials Forfeit Pensions for Felonies

This bill provides that elected officials who are participating in any of the state’s public retirement systems would forfeit their pension benefits if convicted of a state or federal felony involving public corruption or felony violation of election laws. The bill applies to all elected officials not vested in any of the public retirement systems on and after July 1, 2007.

The bill received a favorable report from the committee and was sent the House floor on Thursday. The bill was approved on second and third readings and has been sent to the Governor to be signed.

Senate Bill 720: Open Enrollment/Contributory Death Benefit

This bill would allow state and local government retirees who did not enroll in the Contributory Death Benefit Plan at the time of retirement another opportunity to participate. The bill establishes a one-time open enrollment period from February 1 through May 31, 2008. Premiums would be based on age at the time of enrollment.

The committee discussed the bill but did not take action. Questions were raised as to whether there are sufficient resources in the Death Benefit Fund to support both Senate Bill 720 and House Bill 779. This House bill, which currently is in the Appropriations Committee, would increase the death benefit from $9,000 to $10,000. Senate Bill 720 will be scheduled for further consideration when this issue is resolved.

House Bill 233: Equal Tax Treatment of Gov’t. Retirement Benefits

This bill would provide a state income tax exemption on the pensions of all retired North Carolina state and local government employees as well as federal government retirees regardless of their vesting status under the State Supreme Court decision in the Bailey vs. Patton lawsuit.

Last week, the committee had failed to give the bill a favorable report. On Wednesday, the committee reconsidered and voted to re-refer House Bill 233 to the House Finance Committee without prejudice.