This document summarizes a meeting of the NCACC District held in Randolph County on April 3, 2013. It discusses the current political landscape in North Carolina with Republicans controlling the Governorship and both legislative chambers for the first time since 1896. It also summarizes Governor McCrory's proposed budget, including initiatives focused on the economy, education, and efficiency. The budget impacts counties both positively, with no shifts of state responsibilities, and negatively by not restoring some lottery and mental health funding. The document outlines next steps on finalizing the state budget.

1. ‘STAYING CONNECTED’
NCACC District Meeting
Randolph County
April 3, 2013

2. 2013 General Assembly
Where are we now?
David F. Thompson,
Executive Director

3. Disclaimer
Any resemblance to real persons, living or dead, is purely
coincidental. Some assembly required. Batteries not included.
No warranty is made as to the accuracy of any prediction,
opinion or conclusion. Contents may settle during shipping.
Use only as directed. No other warranty expressed or implied.
Do not use while driving a motor vehicle. No trans-fats. This is
not an offer to sell or buy securities. Apply only to affected
area. May be too violent for some viewers. For recreational
use only. If condition persists, see your physician. Freshest if
consumed before date on the carton. No postage necessary if
mailed in Canada. For off-road use only. Colors may fade.
One size fits all. Many suitcases look alike.
- Approved by Amy Bason, General Counsel

4. Where are we now - leadership
Sen. Phil Berger Governor Rep. Thom Tillis
Senate President Pro Tem Pat McCrory Speaker of the House
Republican Republican Republican
First time since 1896 election
Republicans have held Governorship and
both chambers
4

5. Where are we now – General Assembly
Number House Senate
Republicans 77 33
Democrats 43 17
No. needed to override veto 72 30
1st term members 44 12
2nd term members 28 16
Last time Republicans in majority 2010 1898
5

6. Where are we now – General Assembly
605 – number of years of Legislative experience lost
8 – number of current/former County Commissioners who
won seats
1 in Senate
7 in House
26 – Former county commissioners in the General Assembly

7. Where are we now – counties
580 – County Commissioners
303 – Republican County Commissioners
271 – Democrat County Commissioners
6 – Unaffiliated County Commissioners
121 – New Commissioners
53 – Republican majority boards
45 – Democrat majority boards
2 – no majority

8. Where are we now – Counties
• 60 legislative goals adopted by membership
– 12 defense (stopping something bad from happening)
– 48 offense (advocating for something good)
• Bills have been filed to further 17 of 48 NCACC
offensive goals
• Other goals being addressed via administrative fixes
• Defensive goals not advancing at this time – save
lottery

9. Where are we now – Competition/Complexity
• 818 advocates
• 868 Lobbyist Principals
• 170 legislators
• 1,075 bills introduced through April 2
• 213 bills being tracked by NCACC (20%)
• 580 commissioners
• 100 counties

10. Where We Are Now – Key dates
• Local bill filing deadlines have passed
• Senate bill filing deadlines have passed
• House public bill filing deadline is April 4
• Crossover deadline is May 16
• Senate expected to pass budget by mid-April
• House expected to pass budget by mid-May
• Budget to be finished by early June
• Session to adjourn by late June

11. We need you …
11

12. We need you …
• To stay focused on goals and key issues
• To educate new legislators on the role of county
government
• To continue to be the best advocates for county
government in North Carolina
• To come to Raleigh
– Walk the Hall Wednesdays
– County Assembly Day

13. Governor McCrory’s Proposed
Budget

14. Governor’s Initiatives
Economy, education, and efficiency
• $20.6 billion, $400 million higher than 2012-13
– Most state agencies at 1-3% cut
– 1% pay raise & 1% retiree COLA
• Focus on economy
– Nearly doubling of state rainy day fund
– Additional funding for state repairs and renovations
– Reserves for Medicaid, IT, disaster relief
• Focus on shoring up Medicaid and cost overruns

15. Governor’s Initiatives
Economy, education, and efficiency
• Focus on efficiency
– Closes poorly visited historic sites & dilapidated prisons
– Sweeps up off-budget revenues including Golden Leaf,
Parks & Recreation Trust Fund, scrap tire, white goods
– Creates NCGEAR—government efficiency & reform
• Focus on education
– Digital learning
– Pre-K
– Partially restores textbook cuts & instructional supplies
– Eliminates teachers assistants in grades 2-3
• No new initiatives outside digital learning

16. Revenue/Spending Picture
• Medicaid cost overruns….again
• State revenues slightly above target
– Except sales taxes
• Modest revenue growth of 3.6%
– Historical above 5%
– Sales at 3%
• State agencies asked to tighten belts
– $225 million overcollections/reversions

17. Budget Impacts to Counties
Good….
• County legislative goals included
• No shift of state responsibilities to counties
• Minimum cuts to county programs
Bad….
• No restored lottery funding
• Permanent take of corporate tax set aside for
school construction
• No restored community mental health funding

18. Budget Impacts to Counties
NCACC Goals
• Restores drug courts
• Increases state crime lab funds
• Increases funding for Justice Reinvestment,
including additional probation & parole officers
• Provides state funding to draw down $4 million in
federal HAVA
• Increases commitments to community college
workforce investments
• Increases Pre-K funding slots by 5000 but…
– Uses county lottery dollars for funding

19. County School Construction Funding
• Permanently redirects corporate income
tax set aside for county ADM school
construction to state general fund
– Estimated loss of $75 million per year

20. County School Construction Funding
• Restricts county school construction lottery
funds at $100 million recessionary levels
– Counties due $180 million (40% of net
proceeds)
– Proposal keeps 2012-13 excess for digital
learning
– Proposal dedicates county lottery dollars to
digital learning & pre-K

21. Lottery Dollars—Where Funding Should Go
• Prizes >= 50% of total annual revenues
• Education funding >= 35%
– 50% = Early grades class size reduction & academic pre-k
programs for at-risk four-year-olds
– 40% = school construction & school debt service
– 10% = college and university scholarships
• Lottery retailers <= 7% of ticket face value
• Lottery admin <= 8%
– If <8%, increase prize payments or public purposes
– Advertising <=1%
• Unclaimed prize money = 50% to enhance prizes & 50%
education funding
21

22. Lottery Dollars—Where Funding Is Going
Statutory Actual % & $
Purpose
%&$ 2013 Budget
Early grades class size reduction & academic 50%; 64.3%;
pre-k programs for at-risk four-year-olds $221M $284M
40%: 22.7%;
School construction & school debt service
$176M $100M
9.3%;
10%; $41 M +
College and university scholarships
$44M all excess 2012
revenues = $26M
3.7%;
LEA funding to offset budget reductions 0%
$16 M
22

23. County School Capital Funding Losses
Lottery/Corporate Income Tax Appropriations since
2009-10 (in millions)
Lottery $ Lottery
Year rec. 40% due Loss ADM loss Total loss
2009-10 $147.2 $147.2 $0.0 $60.5 $60.5
2010-11 $113.7 $176.5 $62.8 $64.5 $127.3
2011-12 $100.0 $170.0 $70.0 $72.1 $142.1
2012-13 $100.0 $176.5 $76.5 $74.8 $151.3
2013-14 $100.0 $180.0 $80.0 $75.0 $155.0
Totals $560.9 $850.2 $289.3 $346.9 $636.2
23

24. Next Steps on Budget
• Joint approps meeting to understand
proposal
– Talk of keeping House and Senate together
for consensus proposal
• Senate leads first in 2013-15 biennium
– Anticipated budget mid to late April
• House receives Senate proposal
– Anticipated budget mid-May
• Consensus to finalize by early June

25. Our Next Steps on Budget
• Alerted counties to inadequate lottery funding
• Alerted counties to overall impacts
• Meeting with county caucus to discuss county
priorities
• Meeting with Senate approps chairs to discuss
county priorities
• Need you to discuss county priorities—focus
on lottery funding

26. County Legislative Hot Topics

27. County Inmate Medical Cost Containment
• S321 sponsored by Sens. Jim Davis (County
Caucus co-chair), Buck Newton & Thom
Goolsby (JPS Approps co-chairs)
– House companion H448 per Cumberland Co.
legislative meeting
• Provide parity with state prison medical cost
containment initiatives
– Payments to providers limited to 70% of prevailing
charges or twice Medicaid rate
– Enables counties to pay Medicaid rates for in-patient
medical care
• Counties to fund non-federal share of cost

28. Tax Reform
• Awaiting Senate/House plans for tax reform
– Governor to propose changes to personal &
corporate tax in concert with legislative proposals
• S363 to revamp franchise & privilege license
taxes
– Replaces with revamped franchise tax
– Repeals municipal authority to levy franchise &
privilege license taxes
• S394 to revamp franchise, privilege, expand
sales tax base, reduce corporate & income
– Assessing county impacts

29. Public Records Issues
• S125 (Public Meetings/Records Law
Violations)
– Makes it a misdemeanor to withhold a public record
• S331 (Sunshine Amendment)
– Put open government in state constitution
• S332 (Government Transparency Act)
– Requires counties to disclose personnel performance
files on each employee & general description of actions

30. Goal Updates
• Electronic public notice
– Bills in House and Senate
• Motor vehicle property tax collection
– Implementation of new system in May
• Expand use of 911 funds
– Bills to study system, re-work board

31. Goal Updates
• County to have option to own and
construct school sites and facilities
– Senate bill accomplishes this goal
• Local control of school calendar
– Numerous local bills and 1 statewide bill
• Extend sales tax hold harmless
– Bills in House and Senate

32. Walk the Hall Wednesdays
• Sign up on NCACC Website
• Contact Alissa Willett
• First Come First Serve – Limited to 2
Counties per Wednesday
• Chance to Visit your Delegation, Attend
Legislative Committees
• Prepare to be Flexible
• Wear Comfortable shoes!

33. County Assembly Day
Wednesday, May 22, Raleigh