Legislative Report

Report 09-18
May 29, 2009

HOUSE STRUGGLES WITH BUDGET

The subcommittees of the House Committee on Appropriations met through the week in an effort to identify budget reductions needed to close the roughly $4 billion gap between the state’s projected continuation budgetary requirements and projected revenue collections. The subcommittees are scheduled to complete work on budget recommendations by the end of next week.

Most of the public discussion of state budget reductions focused on potential reductions in the budgets of the state’s educational institutions. The advocacy groups for the public school systems have reported that the House subcommittee dealing with education agency budgets is considering a $1.0 billion reduction of funding for school grades K through 12. The University System is bracing for reductions as high as 15% in 2009-10.

COST-OF-LIVING ADJUSTMENT FOR LOCAL RETIREES REMAINS UNCERTAIN

Our lobbyists and members have discussed inclusion of a provision in the state budget to authorize a 1.0% COLA for retired local government employees with the leaders of the House Appropriations Committee. The majority of the Committee’s co-chairs appear to be sympathetic to our request. However, a few have expressed reservations about giving a raise to one group at a time when state teachers, employees, and retirees will not receive any increases.

Our message to the House is simple. The proposed COLA for local retirees does not require any state funding. This raise can be paid by undistributed gains that are available in the Local Governmental Employees Retirement System. The 1.0% COLA also is supported by the N.C. Association of County Commissioners, the N.C. League of Municipalities, and the Board of Trustees of the State Retirement Systems. Moreover, in 2004 local government retirees did not receive a Cost-Of-Living Adjustment while state retirees and employees did receive raises. There really is no down side for the members of the General Assembly if they include the local COLA in the Appropriations Act.

There are eight co-chairs of the House Appropriations Committee. They are:

Rep. Mickey Michaux          Rep. Jim Crawford
Rep. Martha Alexander        Rep. Alma Adams
Rep. Phil Haire                     Rep. Maggie Jeffus
Rep. Joe Tolson                    Rep. Doug Yongue

If you have not already done so, we ask that you contact these co-chairs as well as your members of the House of Representatives. Please convey our message in your own words and ask for their support. It would help our cause if the House heard from retired teachers and state employees as well as local retirees.

BILLS APPROVED THIS WEEK

On Thursday, the House approved a modified version of Senate Bill 703, State Treasurer’s Investments, on third reading. This bill expands the range of investment vehicles that the Treasurer may use for investment of monies in the retirement systems and other funds that are managed by the Department of State Treasurer. The new options include investment instruments that are better suited to periods of economic recovery and rising inflation.

Senate Bill 703 has been returned to the Senate. A vote on whether the Senate will concur with changes made by the House will be scheduled in the near future.