Some updates from today and this week…
Treasurer Cowell Offers Update During Visit to Rocky Mount
By Kenneth Hunter
North Carolina Treasurer Janet Cowell attended a luncheon this afternoon in Rocky Mount with a diverse group of attendees, including public employees. Here are some highlights of her comments to the group:
- State pension fund investments (for state and local employees) earned a little under 12% last year, and the fund overall has returned to the value it had prior to the 2008 recession.
- “We’ve been a State that has managed its finances well. Don’t let anyone tell you otherwise.”
- State Board of Education worked with the Treasurer’s Office to add financial literacy to the K-12 social studies curriculum. The subject will be discussed in the classroom in a formal matter starting this coming fall, for all grades and Kindergarten.
- Treasurer’s Office is really pushing its Unclaimed Property Program. They made an award this morning to a man in Nashville worth approximately $7,000. More information is available on their website, www.nccash.com.
- Since taking over the State’s employee health plans, the Treasurer’s Office has worked on implementing positive changes encouraged by employees. The Treasurer specifically mentioned that her work with employee health plans for state employees and retirees has been “one of the best personal experiences” in her work with government.
- When asked by a local government employee about whether or not the State is looking at ways to offer healthcare options for local governments and their employees, the Treasurer mentioned there is no active conversation, though some choice for individual employees may open up with the arrival on insurance exchanges.
- Soon, State Retirees will have access to Medicare Advantage plans.
- The State Retirement System, which currently manages and offers pension, 401(k) and 457 plans (their 457 is largest in the country), will soon be offering a 403(b) plan for employees (managed by TIAA-CREF).
- For the first time in 4 years, the State Government has excess debt capacity. In response to a question, the Treasurer did mention this may open the opportunity (depending on the interests of the legislature) for offering shared debt access for struggling local jurisdictions needed funds for capital projects (like schools).
- The Treasurer’s Office is “ok” with legislation proposed this year by the General Assembly that would limit non-voter approved debt to only 25% of total debt issued (at the State level). This legislation does not affect locally-issued debt.
- The Treasurer’s Office will “fight hard” to keep borrowing options open for local government. So far, the General Assembly has agreed with their guidance.
- Community Colleges, in general, are “popular” with the General Assembly.
- As a point of information, the Treasurer mentioned that approximately 20% of students in Durham and Pamlico Counties are now attending Charter Schools.
- With respect to investment plan fees for employees, the size of the Statewide investment pools in 401(k) and 457 plans (more than $7 billion) enables the State Retirement System to leverage its position to keep fees low for its participants (averaging 0.5%). Treasurer also announced that in the near future, members will be paid back extra fees, anywhere from $10 to $120 per employee depending on plan and personal balance.
- State employees now have access to health incentive programs, such as “Stork” programs for expecting mothers, which do provide benefits for abiding with expectation on pre-natal care and doctor visits.
- When asked about guidance on implementing and explaining GASB requirements regarding pension fund obligations and unfunded liabilities, the Treasurer said that information will be provided to local governments, especially those who are part of the retirement system in the near future.
Notable Legislation Would Regionalize Charlotte Airport, Limit Collections, Refund Deannexed Area Taxes
Click here to link to an NCLM post discussing 2 of these items. Excerpt below:
SB 81 was given a favorable report by the (Senate Finance) Committee, but not before some debate. The bill would transfer ownership of Charlotte Douglas International Airport from the City of Charlotte to a newly-established Charlotte Regional Airport Authority… A representative from the City of Charlotte also spoke to the Committee and indicated that the City was prepared to conduct a study on the airport’s ownership and present the results prior to the legislature’s adjournment this year, but the bill moved forward nonetheless.
SB 97 would prevent municipalities from collecting property taxes from areas that were part of the city for less than six months and have not yet been billed for their property tax. The idea for the bill was generated by the City of Wilmington and is intended to apply only to the Monkey Junction area, which was legislatively deannexed from Wilmington during last session. However, it is a statewide bill and thus could potentially apply in other areas of the state.
Another bill, HB5, would force cities with area forcibly deannexed last year to refund property tax revenue collected from property owners in the deannexed areas. Depending on the circumstances, this can have a significant impact on finances in a couple municipal areas.
The NCSU INDEX OF NORTH CAROLINA LEADING ECONOMIC INDICATORS (the “Index”), a forecast of the economy’s direction four to six months ahead, gave back a small amount of its recent gains by falling 0.4% in December. The components of the Index were mixed, with the national index, manufacturing hours, and manufacturing earnings improving, while an increase in initial jobless claims and a drop in building permits had negative impacts on the Index. Still the Index is higher than a year ago and much more “bullish” than in mid-2012. The Index is suggesting an acceleration of economic growth in the state – at least through the early part of 2013.
Personal Income Drops Significantly in January
Today’s report on January 2013 national personal income showed a 3.6% decline from the prior month, with a 4% decline in disposable income. Significant loss of total and disposable income was expected in part due to losses in total employment for the month (due to post-holiday transition) and the end of the payroll tax holiday. However, the actual numbers are significantly more than those predicted by forecasters.
January’s cut sliced more than half of the growth in personal income in the past year, pushing the annual growth rate downward to 4% for total income and 3% for real disposable income (Graphs Courtesy Wells Fargo).
End-of-Year GDP Didn’t Contract, But It Didn’t Grow, Either
The Bureau of Econoimic Analysis released their second (revised) estimate for Gross Domestic Product for the Fourth Quarter of 2012. Initially, they estimated a decline of 0.1% within the last three months of the year. This time, however, they determined that there was actually some growth, equivalent to 0.1%.
Federal government expenditures remained the primary driving factor for the stagnant results, showing a 14.8% decline (22% decline in Defense) for the quarter. The GDP price index increased 1.5% for the quarter.
Notably to those whose local economies involve businesses that export products, the revised GDP shows that the real (indexed for inflation) value of exported goods declined 3.9% in the final quarter of 2012, while the real value of imports declined by 4.6% (so we actually had a 0.7% net “gain” to GDP).
Fuel Prices Stop Climbing, for at least This Week
Retail prices for gasoline and diesel did go down a little for the past week, though not as much as crude oil, which is ending the week hovering in the $90-91/bbl range.
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