N.C. Government Finance Officers’ Association Summer 2012 Meeting Government Relations Update

1. N.C. Government Finance Officers’ AssociationSummer 2012 MeetingGovernment Relations Update Rebecca Troutman, NCACC IGR Director

2. Looking Back Contingency Fee Audits Fracking LME Governance Court Cases of Interest Budget & Beyond…Legislative Hot Topics for Counties State Budget Human Services Flexibility County Broadband Grants Looking Ahead • NCACC Legislative Goals • Statewide Tax Reform • 2013 Tax Rate Survey

3. State Budget Impacts to CountiesH950 & S187

4. State Budget H950 Overall • $20.2 B total • $230 M > 2012-13 certified • No new taxes, fees; increase per over-collections, reversions, special fund balances • Year-end general fund base revenue growth at 6.2 % declines to 4.3% in 2012-13 • Most excess dollars to Medicaid • 1.2% salary increase & 1% retiree COLA • UNC opt for defined contribution • S187 Tech Amend adds 5 days leave

5. H950 Education Impacts • Sets county lottery funds at $100M • Allocates per pupil • Statutory allocation if any overage • Increases K-12 funding by $143.2 M to reduce flexibility cut to $360 M total • 1.2% teacher salary increase—no flexibility in use • Includes some components of Senate’s “Excellent Public Schools”

6. H950 Education Reforms • Reading literacy concentration • No automatic promotion • Must read at grade level in 3td grade or retained • Schools must publish literacy success/failure & A-F grades • NC Teacher Corps • In lieu of Teaching Fellows • Recruit & place college grads & mid-career

7. H950 Health & Human Services • Adds $9 M for local psych bed additions & expands capacity in Broughton & Cherry • Cuts community mental health by $20 M nr • Adds $4.9 M nr for county health depts. for health & wellness activities • New $ contingent on Medicaid funding sufficiency • Budgets $4.4 M for guardianship transition

8. H950 Health & Human Services • Federal policy issues regarding adult care homes • Personal care services & State/County Special Asst institutional rates create institutional bias • Certain adult care home pops w/ 50%+ mentally ill lose Medicaid funding; need to transition to community housing

9. H950 Health & Human Services • Creates “Transitions to Community Living Fund” • $50 M to transition mentally ill to community & backfill (temporarily) loss of PCS Medicaid funds to adult care homes • Implement 1915 I waiver for special care units only

10. H950 Health & Human Services • Restructures State/County Special Asst. In-Home program, effective Feb. 15, 2013 • All counties must participate (9 do not) • All counties must maintain 2011-12 approps in 2012-13 • All counties must maintain filled slots or fill vacant slots • In-home rate = adult care home rate • No new county service $; case mgt $ may be needed

11. H950 Health & Human Services • Directs NC-DHHS to develop & issue RFP for non-emergency Medicaid transportation • Dept must study impacts on human services transportation system prior to RFP

12. H950 Natural & Economic Resources • Staffs Mining & Energy Commission • Restores DENR regional offices • Funds Clean Water & Drinking Water • Clean Water Trust Fund appropriations reduced to $10.8 M & made nr

13. H950 General Government & Transportation • No add. funds to draw down federal HAVA • Does require vendor maintenance certification of county tech. staff • DoT to prioritize paving unpaved roads • Provides personnel for combined vehicle registration/property tax system • S187 delays new/increased ferry tolls 1 yr • Caps gas tax for 1 yr

14. Legislation of County Interest

15. Local Human ServicesAdministration (H438) Key Elements: • Provides option to all boards of commissioners to restructure human services • Under BOC or create consolidated human services board • Current law only permits counties with pops. >425,000 to restructure • Advisory health board req’d if no consolidated HS board • BOC to consolidate health or DSS or both • No mental health, public health authority or hospital

16. Local Human ServicesAdministration (H438) • BOC may consolidate health or DSS agency or both • Under manager’s supervision • Employees under SPA or not • To receive fed. & state funds, as of 7/1/14, counties must: • Maintain county health AV funding at 2011 levels • Have health depts accredited (current req.) • Creates incentives for regionalism

17. County Broadband Grants (S572) Key Elements: • Authorizes any county to enter public/private partnerships for broadband investments • Grants to expand service to unserved areas • Only to qualified providers & via public notice • Counties can only use unrestricted general fund revenue for grants

18. Contingency Fee Audits (H462 & S847) Key Elements: • Prohibits contingency fee contracts for 2 years, beginning July 2013 • Prohibition sunsets July 2015 • Legislative leadership agrees to study audits • Scope, use, impacts, problems • Flat fee, hourly fee audits continue

19. LME Governance (S181) Key Elements: • Limits area board size 11-21 by 10/2013 • Prescribes 10 board categories • Consumer/family, expertise in managed care organizations across legal, financial, and services disciplines • Composition to represent participating counties • Boards of county commissioners make appts. • LMEs >= 1.25 M pop flexibility for board size/compensation

20. LME Governance (S181) Key Elements: • Area board members subject to attendance, training requirements • Single county authorities no longer under county financial control • Counties precluded from leaving LME for 2 yrs, pending DHHS rules • Assigns public guardianship solely to county DSS • Transition funding in budget • Study via tech corrections

21. Fracking (S820) Key Elements: • Creates Mining & Energy Commission • 1 voting county member apptd by President Pro Tem • Charged with developing regulatory program for oil & gas exploration • Authorizes fracking but no permits pending subsequent legislative action • NCACC, NCLM & NER develop recs re local regulations • Set backs, placement, light & noise restrictions • Can’t have effect of prohibiting fracking

22. Other Legislative Issues of Interest • H925 – Annexation Reform • Result of Litigation • Replaces petition process with referendum by registered voters in the “to-be-annexed area” • H5 – Local Deannexations • County Zoning Fix: H1169 • Allows a County, by ordinance, to reinstate zoning prior to the annexation

23. Other Legislative Issues of Interest • Sweepstakes – H1180 (not enacted) • Counties have no express authority to assess privilege licenses or other fees • Supreme Ct. to rule • Pretrial Release – S756 (not enacted) • Proposed waiting period before PR/arrestee contact • Justice Reinvestment Act • $21 M fund; $3.9 M spent

24. Court Cases of County Interest

25. Charter Schools Sugar Creek Charter School v. Nash County (Sugar Creek II) • Supreme Court denied Petition for Discretionary Review • COA decision stands • Current statutory provisions preclude charter schools from seeking capital funds

26. Penalties/Forfeitures • Richmond County Board of Education v. Janet Cowell, et. al. • Complaint for Declaratory Judgment • Challenges $50 improper equipment fee going to SMCF as cost of criminal action • Asks court to declare penalty and redirect to school board

27. Williams v. Pasquotank • May 3, 2011 COA unanimous opinion - when considering whether governmental immunity applies to a function of government, the task being performed “is proprietary and private when any corporation, individual, or group of individuals could do the same thing.” • Supreme Court arguments - awaiting decision from Supreme Court

28. Looking Forward

29. NCACC Legislative Goals • All counties asked to submit goals thru Sept. 17 • NCGFOA to “brainstorm” needs • Goals vetted by NCACC steering committee, legislative goals committee, NCACC board of directors, all counties via NCACC Legislative Goals Conference

30. NCACC Legislative Goals Process(Adopted Goals Remain in Place for 2-Yr. Biennial Session) Counties Submit Pro- posed Goals Goals Referred to Legislative Goals Comm. Legis. Goals Comm. Considers & Recommends Goals Referred to Steering Committee Steering Comms. Consider & Recommend July - Sept Sept - Oct Nov Goals Referred to Board of Directors Board Considers & Approves Goals New Boards Take Office, Consider & Select Delegates Delegates Approve Goals at Legis Goals Conference Goals Referred to Member County Boards Dec Dec Jan 2013 General Assembly Convenes Jan. 2013

31. 2013 Statewide Tax Reform • Legislative commitment to reform NC tax structure • Legislative leaders invite proposals for property tax reform, sales tax reform • Conversation may include shift of responsibilities, authority

32. A Challenge for Counties– Preparing for the 2013-14 Legislative Session 6 – number of open Senate seats created by redistricting 9 – number of Senators retiring, primary loss 12 – number of Legislators seeking higher office 14 – number of open House seats created by redistricting 24 – number of Representatives retiring, primary loss 42 – number of new faces in 2011-12 ~50 – total number of potential new faces for 2013-14 Retirees include Owens, Justice, Stevens, Hackney, Brubaker, McGee, Folwell, Garrou, Purcell

33. 2012-13 County Tax Rate Survey

34. Questions / Comments Thank You!