Robin Barham, Budget & Performance Manager, City of Concord

NCLGBA: The People Who Balance NC Communities

We invite you to hear from North Carolina’s local government budget professionals who believe in the value of public service and consider it an honor to bring value to their communities in their respective roles. We are highlighting NCLGBA members who are an important part to the balance in their communities.

Today we will hear from City of Concord’s Robin Barham.

Concord is a growing community, and one that honors its heritage and tradition while racing towards the future. Over the years, Concord has developed a diverse economic base that includes distribution, manufacturing, racing, hospitality, and professional services. The city is home to Charlotte Motor Speedway (despite its name, it is located in Concord), Concord Mills mall, Amazon, Fed Ex, Great Wolf Lodge, Alevo, Concord Regional Airport, and many NASCAR race teams.

Our City has grown tremendously from just over 30,000 people in 1990 to 85,600 in 2015. As NC’s 12th largest city, Concord is 7th largest in land size with just over 61 square miles of service area. Concord offers an excellent variety of entertainment options and leisure for visitors and residents alike, with the addition of mixed use/walkable development, extensive greenway options, the Clearwater Artists’ studio, and quality infrastructure that provide a high quality of life for our citizens. With all that Concord offers, the City lives up to its tag line “High Performance Living.”

PWB Barham 1

What was the biggest challenge facing your community this fiscal year and how do you see it impacting the budget development process for FY 2017?
Managing growth is our biggest challenge right now, and the ever-present possibility that the state will change our revenue streams. With the recession squarely behind us, residential, commercial and industrial development are all occurring at a fast pace. At this month’s City Council meeting alone, 4 tracts of land for over 819 homes were voluntarily annexed into the City, with a build out anywhere from 2 to 7 years. Our commitment to the newly developed areas must be the same as the quality of services provided to our current residents; and as we all know, that takes resources. Revenues are growing, but not always at the pace that sustains this growth from year to year. We are working towards a balanced budget for FY17 that adequately funds staff and infrastructure to handle this growth. The number of positions requested for FY17 is astonishing, so it will be interesting to see how that all plays out.

Planning has become vital, especially within zoning, as we update both our Downtown Master Plan and our Land Use Plan. Multiple City departments are undergoing Master Plan development/revisions – all of these future plans for our City will be exciting to see. Certainly the budget office is a great place to see all of these plans come to life!

Just as we have a firm handle on our current revenue streams, we are ever watchful of the NC General Assembly and members’ efforts to redistribute sales tax and other revenues streams across the state. The loss of state revenue always remains a possibility.

PWB Barham 2

What drew you to a career in public service?
As a child, I was always drawn to folks in my small town who made a difference, no matter what role they played in our community. I came from a family with limited financial resources, so I often found myself on the “receiving” end, taking advantage of the opportunities (whether programs or scholarships) that were available to participate in after-school activities, attend college and graduate school. So many people helped me over the years, I always viewed public service as my way of “giving” back. As a child, I often heard my grandmother say “Be a blessing, not a burden.” With that in mind, I have always sought a career with purpose, meaning and commitment to the community in which I live. One of the best compliments someone can give is to say how much they enjoy living in Concord. In my personal life, I am married to a firefighter (both paid and volunteer), so public service is a way of life for us. I hope that service to others is something that we are instilling in our children too.

What career advice do you wish someone would have shared with you when you started your first local government budgeting job?
The one who talks the most is not necessarily the smartest (or most respected). It’s common to see early career employees jump in and give assessments and/or opinions in hopes of impressing others with their knowledge and skill. I’m positive I did this on occasion (and likely still do). What I’ve realized over the years now is that listening to the group and putting idea connections together is a far better use of time than just blurting out whatever it is that I am thinking at that moment. Two of the best City Managers I have ever worked for were incredibly thoughtful contributors to the discussion, but in no way drove it. When they spoke it was sparingly, but what they spoke mattered.

PWB Barham 3

What excites you most about what you have been working on during FY 2016 in your community and your department?
We just moved into a new City Hall, consolidating 3 separate buildings downtown into one. It’s been a delight in the budget office to first see the project as a CIP in our 5 year forecast, then to move to the architectural phase, construction and now, to show it off to the public. We are very excited to have a City Hall that matches the quality of service the City provides – if you have ever visited our old building, you know exactly why we are so excited!!

If you didn’t work in budgeting, what would you do?
I often joke that I should quit my job, open my own floral or photography shop, and run for City Council. But in reality (and to more consistently pay the bills), I would have liked to become a cardiologist.

PWB Barham 4

Tell us something about yourself that others may not know.
I am a huge sports junkie. My television at home is almost always on sports and my weekend schedule revolves around my son’s sports games or my favorite teams (VT Hokies, Carolina Panthers, Green Bay Packers, and Boston Red Sox). My son Zach received a football from Cam Newton at a Panthers/NY Giants game back in December and was featured on a national sports segment on FOX. He still “thinks” he is the coolest kid at school, but he has a tough time keeping that ball away from his 6 year old little sister!!

Discussion Provides Overview on Atlantic Coast Pipeline

This morning, the Rocky Mount Area Chamber of Commerce hosted a forum with its members providing an overview of the proposed Atlantic Coast Pipeline for natural gas, to be built by Virginia-based Dominion. The pipe would delivery natural gas from active drilling sites in West Virginia and Pennsylvania to gas distribution networks, power plants and other customers along the east coast, primarily in Virginia and North Carolina.

The presentation (video embed below) featured remarks by Bruce McKay, Senior Policy Advisor for Federal Affairs with Dominion, and Rich Worsinger, Energy Resources Director for the City of Rocky Mount. The Eastern North Carolina cities of Rocky Mount, Wilson and Greenville are among 8 municipalities in the state that run natural gas distribution systems for residential, business and industrial customers.

One of the points made during the presentation pertained to the tax value of the pipeline within the jurisdictions it will be run. McKay estimated the pipeline will generate $6 million in property tax revenue for North Carolina counties on an annual basis, specifically mentioning Nash County receiving approximately $750,000 per year. The pipeline will also increase gas supply for customer utilization throughout Eastern North Carolina, creating greater opportunities for economic development requiring the resource.

Click here to learn more about the proposed Atlantic Coast Pipeline.

Economic Update – March 18, 2015

What’s Up with Local Sales Tax?

Keith Lane, Senior Budget Analyst in Durham County, shared an updated report on sales tax revenues for all 100 North Carolina counties, showing significant increases for most, along with lower refunds levels.

Click to Download County Tax History Data

Keith discussed his findings, along with other observations on intergovernmental revenues, during a recent phone interview (see below).

Click Here to Download Municipal Tax History Data

Senate Tax Reform

North Carolina Senate leaders are putting together a plan to redistribute local sales tax revenues. Article 39 revenues, currently distributed on the basis of point of sale (by County) would be distributed instead on the basis of distribution of Statewide population. Initial analysis, as reported by the media, indicate 80 rural counties would see increases in local sales tax revenues, while 20 urban counties would see decreases.

Under a per-capita plan, many higher-poverty, more rural counties such as Greene, Caswell and Jones, would see their sales tax revenues more than double.

Mecklenburg County and its towns and cities would lose about $35 million, a 16 percent drop.

Wake County and its cities and towns would collectively see a drop of about $18 million, or 13 percent, according to the projections by legislative staff.

Raleigh’s share of the loss would be about $8 million, according to documents.

Keith Lane prepared a County-by-County analysis of the impact of the proposed reforms, based on what is known at present about the likely reform plan. Anyone interested in checking the current estimation to ensure validity should contact Keith directly, klane@dconc.gov.
Click Here to Download Analysis

 

Legislature Looking at Incentive Changes

Significant discussion has taken place recently about efforts by the McCrory Administration to restore the State’s Historic Preservation Tax Credit and replenish available incentive funds under the revised JobGRO Program (formerly JDIG). NC Commerce officials presented their plan for JOBGro during Tuesday’s Senate Finance Committee meeting, and were met by criticism by some Senators concerned about past distribution of incentives and likely benefits of such a program. Information on these program, and their impact on jobs, are available for download below:

JobGROW Program Overview

Economic Development Overview (NC Commerce)

Economic Incentive Analysis (Kenan Institute)

JDIG Job Performance

Speaking of Economic Development

Last week, Golden Leaf Foundation President Dan Gerlach provided an overview of their economic development purposes to the Rocky Mount Area Jaycees. You can view the slide presentation here, or watch it below (Starts at 1:39).

Wells-Fargo March Economic Outlook

Check out their latest discussion broadcast below:

Metro Rents Going Up, Raleigh-Cary 15th Highest

A report this week from the National Association of Realtors showed residential rates in Metropolitan Areas increasing 15% nationwide over the past 5 years, surpassing average income growth of 11% for the same period.

Raleigh ranked 15th highest amongst 70 metro areas studied.

While the NAR report emphasized the importance of increasing housing starts in booming areas in order to ensure housing affordability, especially for younger families, it’s important to note potential changes in housing choices influenced by the desire of the Millenial generation for central city living and avoidance of liabilities and commitments created by home ownership, despite some recent research expressing continuation of traditional housing trends.

Crude Retreating Again, Outlook Relatively Stable, Gas Prices Slightly Declining

After several weeks of recovery in crude oil and approximately 20% increases in gasoline prices from winter lows, prices are following back down for both commodities. The biggest loser is crude, with April 2015 contract down below $45/bbl.

CrudeOil 18March2015

The EIA Energy Outlook does see crude prices returning to $75/bbl by the end of the year, with gasoline price stabilizing close to the current $2.40-$2.50/gallon nation average.

EIA Outlook Mar15

Statewide averages have fallen again to around $2.30/gallon. This does not appear to be lessening the gap with our neighbors in South Carolina, which are approximately 18 to 20 cents/gallon cheaper.

GasBuddy18Mar15

NC Leading Indicators Downward Since Fall

Dr. Michael Walden’s Index of North Carolina’s Leading Economic Indicators fell 1.7% in January, the fourth of the past six months to see a decline

Feb15Walden

First-time unemployment claims picked up 12% in January, though they remain nearly 18% below their level a year ago. Building permit activity also decreased 16%, though they remain 4% compared to last January.

“The correct interpretation from these results is that the state economy will continue to expand, but the rate of expansion may soon begin to lag. While certainly not worthy of an “R” (recession) warning, it will be important to note in coming months if improvements begin to taper as the economic recovery reaches its sixth anniversary.”

Economic Update – February 16, 2015

EDITOR’S NOTE: We were asked not to post the Federal Reserve presentation during the Winter NCLGBA Conference due to a media blackout in advance of presentations made after the first of the year. This update includes more recent outlook reports and analysis from multiple parties, including the Richmond Fed.

Richmond Fed President Discusses 2015 Outlook

Richmond Fed President Jeffrey Lacker presented his 2015 Economic Outlook during a speech in Richmond on January 9th. Dr. Lacker expressed optimism for continued growth in the national economy in the coming year. Here are the highlights of his remarks:

  • While GDP growth in 2015 may revert to its post-recession average of around 2 ¼ percent, there are reasons to believe that growth could rise to between 2 ½ and 3 percent this year.
  • We have seen pickups at other times during this expansion, only to see them subside, but the recent strength in consumer spending and the decline in the saving rate suggest the current higher growth rate can be sustained. Many labor market indicators also have strengthened.
  • The economy still faces some challenges, however, including sluggishness in the housing market, potentially weaker exports and declines in government spending.
  • Inflation is currently below the FOMC’s target of 2 percent but is likely to move closer to 2 percent after energy price movements subside.
  • The FOMC has no pre-set timetable for raising the federal funds rate target. Policymakers should strive to look through transitory phenomena to assess the appropriate path for interest rates.

For more, watch the video of his comments, watch the video below:

We cam also now make Dr. Kaglic’s presentation from the Winter Conference available again. Please click here to download.

How’s North Carolina Faring

Last week, Wells Fargo released their periodic outlook on the North Carolina economy. Overall, things are looking good. Here are some highlights from the report:

  • 2014 nonfarm payroll grew 2.8% statewide (+114,000), ahead of the national rate (+2.3%); trend consistent including and excluding 2 largest metros (Raleigh & Charlotte)
  • Job growth across all sectors, except for the public sector (third-largest)
  • Professional & business services increased 7.7% outside Raleigh & Charlotte metros, +9.7% is professional & technical subset
  • North Carolina now 9th most populated state, surpassing Michigan (1% in 2014)
  • Manufacturing growth broad-based, most significantly with skilled labor (shortages)
  • 12.4% growth in exports, continue multi-year trend
  • Some slowing in housing market, moderation in sales and price appreciation
  • Statewide home prices still down 4.8% from prerecession highs (national is 13.4%); 7.4% of homeowners underwater on mortgages (10.3% national)
  • Multi-family construction significantly outpacing single-family construction (remain flat), apartment vacancy rates starting to tick up
  • Wage growth at 3.7%, slightly below national (+3.9%) and at or below most border states (only Virginia is less +3.0%)
  • Anticipate another solid year of growth in 2015, continued growth focused in higher-skilled metros, more distribution to the rest of the state
  • State & local government employment could rebound; service sectors will grow in support
  • Year-to-year economic activity up 4.5% in November, consecutive growth since start on 2010, above pre-recession level

Click Here for Wells Fargo’s latest NC Outlook

For metro area analysis, please download one of the following chart sets:

Asheville

Burlington

Charlotte

Durham-Chapel Hill

Fayetteville

Greensboro-High Point

Greenville

Hickory

Jacksonville

Raleigh

Rocky Mount

Wilmington

Winston-Salem

State of North Carolina

The North Carolina Index of Leading Economic Indicators, published by NC State’s Michael Walden, finished the year with a 1% decline in December, primarily driven by sluggish wage activity. For the year, the state saw growth in construction permits issued and hours worked, along with a sharp decline with unemployment claims. While Dr. Walden does not believe the economic conditions indicate upcoming deceleration, lack of earnings growth may continue to pose a problem with limiting the rate of growth.

Click Here for Dr. Walden’s January 2015 Index

State Revenue Outlook

January’s revenue report from the General Assembly’s Fiscal Research Division shows current FY 2015 revenues approximately $200 million below budgeted target (-2%). Sales tax (+6.2%) growth and above-target corporate income tax revenue (+$57 million) are helping offset but have not completely made up for loss of personal income tax revenue (-11.3% compared to last year, 2.7% below target). These trends reflect the impact of personal and corporate income tax rate reductions and personal income tax restructuring.

For fiscal year 2015, Fiscal Research predicts continued economic growth, including:

  • 3.2% GDP Growth
  • 3.8% growth in total personal income, 2.6% growth in wages
  • 6.1% growth in retail sales

Last week’s memo from Fiscal Research on revenue projections forceasts total State tax revenues growing $586.4 million (+2.9%) for FY 2015. However, the forecast would still fall 1.3% below budget ($271 million), primarily due to lower-than-projected wage growth. FY 2016 revenue growth is projected at 3.2% ($680 million).

Southern States Outlook

Wells Fargo Economic also took a look at the Southern Region, which also shows widespread economic growth and a positive outlook for the coming year. Here are some highlights:

  • Most state close to or above 3.9% national wage growth level
  • 3.6% GDP growth in 2014; 4.0% projected in 2015
  • Oil price decline will have some impact, but stronger diversification will lessen impact and retain potential for growth
  • Technology continues to be a strong growth sector
  • Increasing urbanization led by inward migration of younger households (job opportunities, lifestyle, etc.)
  • New industries, led by aerospace and automobiles, rebuilding manufacturing sector
  • Traditional industries also seeing improvement (including furniture and textiles); business deals in sector back to pre-recession levels for region

Click Here to View the Southern States Outlook

Small Business Outlook

The latest Small Business Optimism Index did fall unexpectedly by 2.7%, a likely indication of early-year uncertainty and continued worry over healthcare and benefit costs. At the same time, 15% of firms indicated plans to hire in the first quarter of 2015, and 25% reported higher compensation to start the new year.

Oil & Gas Price Review

Crude oil prices have rebounded back to above $50/bbl, likely an indication of the impact of reduced supply by some producers, especially the United States. Gasoline prices have also rebounded back to over $2.15/gallon for unleaded in most North Carolina markets. These prices are at least $0.10/gallon more than neighboring states, with South Carolina prices still close to $2.00/gallon or less.

 

 

 

Economic Update (August 6th Edition)

With the plethora of information out there in recent weeks, including release of new GDP and State and Local Employment Data, it doesn’t hurt to take a look at what’s going on.

Don’t forget to check out the Economic Update presentation from our Summer Conference

State & Local Employment – June 2014

These stats were published early last week and reflect the impact of summer transition for education and other academic year-oriented workers. Prior to the recession, these employment reductions would be offset by increases due to summertime employment, often by high school and college students. While that is still the case in selection locations (often tied to resorts and vacation destinations), much of North Carolina does experience employment decline in June, though the unemployment rate remains relatively unchanged due to a corresponding decrease in the active labor force (they’ll be back in the fall, or have retired).

Take a look at the following charts to see how things are going right now for North Carolina Counties and MSAs:

Jun14NCempMSA

 

Jun14NCcounty12mth

 

Jun14NCcountyYr14As you can see, despite the June adjustment, most North Carolina counties have experienced employment growth since the start of 2014, and the majority are ahead of their counts from last June.

Other Sources

The following notes are pulled from a variety of sources, including multiple Wells Fargo Economics reports. You also might want to take a look at the following reports and updates published this summer by prominent NC economists:

Dr. Michael Walden’s Summer 2014 Economic Outlook

Dr. John Connaughton’s Babson Capital/UNC Charlotte Economic Forecast

GDP/GSP (BEA, Connaughton)

  • National: 2nd Quarter up 4% (year-to-year), real GDP 2.4% (up less than 1% compared to revised 1st Quarter); 1.8% growth in 2013; strong export growth, stable trade deficit
  • Statewide: +2.3% in 2013 (first year outpacing National growth since recession); Manufacturing -0.4%

Employment (BLS & NC Commerce, 8/1/14)

  • National (July): Up 209,000, 12-month average at 214,000 (still below break-even), participation still at 63%; increase in health benefit costs still outpacing total benefits, 50% more growth than wages
  • North Carolina (June): Down 26,700 for month, up 57,000 year-to-year; 2013 +1.8%,-0.2% in Manufacturing; Since 2010, strongest growth in Professional/Business Services, weakest in Manufacturing and Construction; private sector real hourly wages declined 4 of last 5 years

Short-Term Economic Outlook (Leading Economic Indicators, Walden)

  • National: Increased 0.3% in July, up 3% in 2014
  • North Carolina: No change for July, up 4.5% year-to-year; unemployment claims down 50%, permits down 13%, employee hours up 5.6%, earnings up 3.5%

Business & Consumer Confidence (Multiple Sources)

  • Small Business Optimism improving, but still below growth point; hiring plans improving; most concerned about impact of regulations
  • Consumer confidence improving, up for July but still below pre-recession levels
  • Spending growth still outpacing income

Retail Sales (Census & NC Department of Revenue)

  • National: +4.3% year-to-year, driven by vehicle sales; +3.6% for 2014
  • North Carolina: Up 3% for 2014

Loan Demand (Senior Loan Officer Opinion Survey)

  • Home loan demand back up to summer 2013 levels (cycle restored), more banks loosening standards
  • Strong demand for auto loans and revolving debt
  • Stronger cyclical demand for commercial & industrial loans (still not at pre-recession levels)

Construction (US Department of Commerce)

  • Total current activity value still below $1 Trillion (pre-recession high, $1.2 Trillion)
  • Residential construction fell slightly in June, still up 7% compared to last year
  • Non-residential construction down nearly 3% in June, still up nearly 5% compared to last year
  • State & local government activity still sluggish (no growth since end of recovery)
    • Analysts consider this a “significant drag” on economic activity

Industrial Output (ISM; Richmond Fed)

  • Nationally: Factory orders up 3%, shipments up 4%, composite index recovering from winter slump
  • Mid-Atlantic (IncludesNC): Strong outlook across all indicators

Non-Manufacturing Output (ISM; Richmond Fed)

  • National: Composite, new orders and employment indices up to pre-recession levels, outlook positive
  • Mid-Atlantic (IncludesNC): Positive movement across indicators, strong expectations for future demand
  • Carolinas: Positive outlook, though softening some; challenge finding qualified workers

Consumer Spending (BLS)

  • 4% growth in personal income and personal expenditures
  • Significant inflation impact on expenditures
    • Core: +2.5% pace
    • Total: +3.0% pace
  • Strong growth in durable growth sales, up 14% in last 3 months, 5.8% year-to-year

Vehicle Sales (Wells Fargo, ESRI)

  • Annualized rate up 1 million in 2014 (16.5 million)

Housing (Multiple Sources)

  • Starts improving, but NOWHERE near pre-recession levels
  • Multi-family > Single-family
  • National and State prices up 5%
  • Millenials aren’t buying house (and maybe won’t)

An Agricultural State (Wells Fargo, Connaughton)

  • 1.6% of GDP (significantly greater than neighboring states), $7.7 Billion in Output (9th largest in US)
  • 28,800 employees (6th highest in US)
  • 2013 saw 16.4% growth in National Output, continued growth expected in 2014
  • North Carolina: 21.6% growth in 2013; forecast 10.9% growth in 2014 (strongest of sectors)

The Fed’s Strategy (Wells Fargo)

  • Eliminate QE asset purchases in October (estimate $2.5T in Treasuries on books EOY, $1.8T in MBS)
  • Need to raise interest rates (inflation, GDP growth); current environment detrimental to security and liquidity-focused investors (savers, Seniors, local governments)
  • Growth in asset purchases mirrors stock market performance since 2009

Summary: Condition & Predictions

  • Wells Fargo: Growth impact with broaden beyond strong present sectors (energy, technology, motor vehicles)
  • Walden (NC State)
    • Total household wealth improving on financial side, housing wealth stagnant
    • Anticipate 2.5% inflation in 2014 (highest since 2011)
    • Localized growth disparities likely to persist
  • John Connaughton (UNCC)
    • 2014: +1.9% GSP Growth , +0.8% in Manufacturing; +1.5% Statewide employment growth (59,700 jobs), +2.6% in Manufacturing
    • 2015: +2.1% GSP Growth, +2.1% Agriculture, +1.4% Manufacturing; +2.4% Employment (101,500 jobs), +5.1% Manufacturing (strongest sector)

 

New Fiscal Year brings New Job Opportunities

This week, we’ve already made several additions to the Career Gateway. Take a look at the following positions currently advertised with jurisdictions in North Carolina (and beyond):

Operating Budget Manager – City of Raleigh (Closes 8/13)

Budget Manager – Davidson County (First Review 7/31)

Budget & Management Analyst (2 Openings) – City of Raleigh (Closes 8/8)

Budget & Management Services Director – Wake County (Closes 8/13)

Finance Director – Nash County (First Review 7/25)

Finance Director – Franklin County (First Review 8/6)

Finance Director/CFO – Beaufort County (Open Until Filled)

Budget Analyst (2 Openings) – Metropolitan Nashville/Davidson County (TN) (Closes 8/11)

Don’t forget, if your jurisdiction has an opening you want shared on the NCLGBA Career Gateway, email jobs@nclgba.org.

Summer 2014 Conference Presentations

Click Here to View Agenda Book

Click on the appropriate links to access conference presentations and supporting documentation.

Wednesday, July 16 Sessions

Ethics Matter!

Click Here for Presentation

Click Here for Handout/Case Studies

Streamline Your Budget Process

Click Here for Presentation

Click Here for Reference Items

Capital Financing Options for Local Government

Click Here for Presentation

Decision-Making Tools for Procurement of Goods & Services: Are You Sure We Really Need One?

Click Here for Presentation

 

Thursday, July 17 Sessions

Tax & Tag Program Update

Click Here for Presentation

Click Here for Video

Preventing a Brain Drain: Examining employee relations through surveys and cost-effective organizational improvements

Click Here for Presentation

Performance Management: Are We There Yet?

Click Here for Full Presentation (Click Here for Abridged)

Click Here for Video

25th Anniversary Panel

Click Here for Video

Summer 2014 Business Meeting

Click Here for Video

Priority Based Budgeting: Lessons Learned

Click Here for Presentation

Creating a Successful Local Government Internship: Tips to Engage the Next Generation

Click Here for Presentation

Click Here for Handout

Accessing State & Federal Funds for Infrastructure & Economic Development – —New Agencies & New Processes

Click Here for Presentation

Click Here for Video

Friday, July 18 Presentations

NC Municipal Legislative Update (NCLM)

Click Here for Presentation

Click Here for Video

NC County Legislative Update (NCACC)

Click Here for Presentation

Click Here for Video

Economic Update

Click Here for Presentation

Click Here for Video

LGERS Rescinds January Decision, Retirement Contribution Rate Increase Avoided

From the April 17th LINC’ed IN Weekly Update of the NC League of Municipalities:

FW__NC_Retirement_News__Annual_Benefits_StatementsIn their quarterly meeting this morning, the Local Government Employees’ Retirement System (LGERS) Board of Trustees voted to rescind its January recommendation to increase the employer contribution rate and grant a cost of living adjustment (COLA) for current system retirees. Following today’s action the employer contribution rate for general employees and fire fighters will remain at 7.07 percent for FY2014-15. The January vote, which you can read about here, called for an increase in the FY14-15 employer contribution rate from 7.07 to 7.17 percent, which would carry an estimated cost to local governments of $5.5 million. Offering the motion to rescind that recommendation, Board member Jerry Ayscue cited several other new financial burdens local governments currently face as well as his concerns with the LGERS Board taking a different position than the Teachers and State Employees’ Retirement System (TSERS) Board of Trustees, which voted in January not to grant a COLA. His motion was seconded by Mayor Grady Smith of Elm City and supported by remarks from Morganton City Manager Sally Sandy and general public Board appointee John Aneralla. After Ayscue’s motion to rescind prevailed in a 7-5 vote, the Board approved his subsequent motion to keep the employer contribution rates unchanged for FY14-15 in order to meet the Annual Required Contribution (ARC) for pension expenses in the system. The League thanks Ayscue and the other Board members who agreed to support the League’s position to protect the fiscal health of local governments by voting in favor of the motion.

In his legislative preview presentation to both boards, State Treasurer’s Office Policy Development Analyst Sam Watts provided an overview of the Pension Spiking Prevention Act of 2014 that the Treasurer’s Office, League of Municipalities, and Association of County Commissioners have been collaborating to create over the last several months. If enacted, the legislation would help curb the effects of pension spiking on the state and local retirement systems by employing a Contribution Based Benefit Cap (CBBC) formula to identify employees whose contributions do not sustain their forecasted pension benefits. In his overview, Watts explained his office’s intent to possibly raise the proposed average final compensation threshold for running the CBBC formula from $50,000 to $100,000. We will continue to update you on our collective efforts to safeguard the fiscal integrity of the pension system through pension spiking reform. If you have any questions on any of these issues, please contact League Government Affairs Associate Whitney Christensen.

“Short Session” to focus on Teacher Pay; NC Political Landscape Changing

Photo posted by Triangle Business Journal
Photo posted by Triangle Business Journal

Upcoming policy discussions in the General Assembly and ongoing upheaval in North Carolina politics resulting from the State’s ongoing economic and demographic transformation reflected the focus of comments from a diverse group of Raleigh policy experts during the Rocky Mount Area Chamber of Commerce’s Spring Legislative Forum, held April 17th.

The morning event featured presentations by Joe Stewart of the North Carolina FreeEnterprise Foundation, Alex Sirota of the North Carolina Justice Center’s Budget & Tax Center, Chris Fitzsimon of the North Carolina Justice Center’s NC Policy Watch, and Becki Gray of the John Locke Foundation. While their presentations and subsequent audience questions did include some discussion of economic challenges for Rocky Mount and Eastern North Carolina, most of their content focused on issues and trends applicable to the state as a whole.

Leading off, Joe Stewart highlighted the “fundamental shift” taking place with respect to North Carolina’s electoral map, influenced by continued, concentrated growth in urban areas along the Charlotte-to-Raleigh corridor (“Charleigh”), voter anger and disgruntlement with current incumbent office holders, mobilization in response to negative opinion regarding the Affordable Care Act, and traditional poor results for the party of the incumbent Present during the mid-term election of their second term. Stewart anticipates the general election results staying close to current political party distribution, though several incumbents may suffer defeat in their primaries against strong opposition and voter dissatisfaction.

Click Here for Audio of Joe Stewart’s Presentation (MP3)

Alex Sirota followed up with an overview of current state budget and economic conditions, emphasizing the challenges many parts of North Carolina are facing with “too few jobs, and too few consumers.”

Sirota’s presentation included mention how North Carolina’s state budget as a percentage of the overall state economy is at its lowest level in 40 years, reflecting decreased investments for infrastructure, schools and programs focused on economic accessibility. She does not anticipate policymakers doing much in the coming legislative session, as leadership blames the impact of Medicaid entitlement spending for limiting budget options.

Sirota disagreed, arguing Medicaid expenditures have shown lower rates of growth than other state programs. While recent legislative forecast of state revenues shows overall growth slightly above budgeted projections, Sirota express concern about the impact of tax reform plans adopted in prior sessions, including last year’s significant reforms which will reduce revenues from the state income tax by approximately $655 million per year.

Click Here for Audio of Alex Sirota’s Presentation (MP3)

Similarly, Chris Fitzsimon emphasized how limits in available state revenues impacted funding for education. The veteran journalist started off retelling a story provided by Mooresville School Superintendent Mark Edwards, who encountered one of his teachers working an evening shift at Food Lion as a janitor in order to earn extra pay and cover family living expenses.

Fitzsimon did note Governor Pat McCrory’s proposal for increasing starting teacher pay as a positive step, but expressed deep concern regarding the lack of pay increases for veteran teachers, as well as limited funding for student textbooks and additional essential programs, including the state’s Pre-K initiative.

Fitzsimon also mentioned approximately 20,000 families in North Carolina are on the waiting list for childcare subsidies, a program he argued is critical to helping parents move off other entitlements and successfully reenter the workforce.

In closing, Fitzsimon concluded that the current “list of priorities” comprising the state budget is backwards and requires significant consideration in the coming session.

Click Here for Audio of Chris Fitzsimon’s Presentation (MP3)

Becki Gray closed the presentations with some counterpoints to Fitzsimon’s claims, providing a summary of actions taken by Governor McCrory and the General Assembly to achieve economic growth and job growth through restructured and reduced taxation, as well as addressing business concerns with the costs and impact of regulation.

Gray noted the reduction of sales taxes in 2011, as well as personal and corporate income tax rate reductions taking effect earlier this year. In defense of regulatory reform, she mentioned how several entrepreneurs informed her how they did not believe they could start their current businesses in today’s environment of rules and bureaucracy.

Gray also discussed the importance of effective investments in infrastructure, emphasizing the strategy of moving away from past focus on patronage and toward greater consideration of actual need. On education, she discussed current reforms centered on standards and accountability, while noting how teacher pay has been identified by the General Assembly as their top issue for the upcoming short session.

Gray concluded that while economic response to reform takes time, early indications show improvement with respect to new job creation and growth across multiple sectors of the state economy. She does not believe we are “out of words,” though she feels we are “moving in the right direction.”

Click Here for Audio of Becki Gray’s Presentation (MP3)

Subsequent discussion following the presentations focused on current job growth, especially confusion over statistics and conflicts in reporting. Panelists agreed on the challenges dealing with confusion. Joe Stewart used the opportunity to discuss observations of how economic evolution and the impact of globalization are having significant impacts on workforce expectations.

Stewart noted the potential for growth of Charlotte’s Douglas International Airport, which will likely become the State’s third major port following construction of additional runways and a multimodal rail cargo distribution facility. Stewart also mentioned how North Carolina is home to the largest concentration of German-owned businesses in the United States, as well as how companies like Siemens, with funding assistance from the German Government, are working to train employees for their North Carolina plant, as well as trying to deal with the challenges of a multi-cultural workplace.

When asked about the importance of local infrastructure investment, all panelists agreed that local governments would help themselves to make strategic investments in local roads, bridges. They also acknowledge challenges facing the state with respect to transportation funding and growing demand for transit in densely-populated urban areas.

Click Here for Audio of Q&A Portion (MP3)