Analysis Brief – August 22, 2013

Job Announcements on NCLGBA Career Gateway

Finance Director – Town Of Selma (Closes 9/6/13)
Finance Director – City Of Oxford (Open Until Filled)

End of Session Legislative Updates Scheduled/Available

The 2013 session of the North Carolina General Assembly has concluded, and our supporting organizations have had the time to review passed and adopted legislation and provide comprehensive overviews of how the session impacted county and municipal governments.

Click Here for NC League of Municipalities’ End of 2013 Session Bulletin

Click Here for NC Association of County Commissioners 2013 Legislative Session Report

The UNC School of Government will present two webinars, scheduled for August 29th and September 5th, providing a comprehensive review of the session.

Both sessions start at 10:00 a.m. and are scheduled to last until 12:30 p.m. Each session is $125/site or individual wanting CPE credit. Both sessions can be purchased for the discounted price of $225. Click here for more information and to register online.

Session 1 Topics – Thursday, August 29th (Click Here to Register)

  • Public health
  • Mental health
  • Social Services
  • Elections
  • Community Planning and development
  • Environment

Session 2 Topics – Thursday, September 5th (Click Here to Register)

  • Local government authority and finance
  • Purchasing and contracting
  • Emergency management
  • Ethics
  • Economic development
  • Property tax
  • Criminal law

Wells Fargo Releases Outlook for North Carolina

Click Here to Download and Read

The report offers a good overview of current trends in the Tar Heel State, along with several key metro areas. Among its findings:

  • As noted many times before, unique characteristics to North Carolina’s economy not only delayed the arrival of the most recent recession, but have also contributed to a delayed recovery in many parts of the state.
  • Real GDP in North Carolina grew 2.7% for 2012, slightly above the national mark (2.5%)

  • Hiring is picking up, especially in the hospitality, information, professional and business services.
  • Unemployment remains high, especially in rural areas, and driven to a bottoming out in manufacturing and construction.
  • Tax reform, especially with respect to reduced individual and corporate income tax rates, should help North Carolina compete for jobs lost in recent years to states neighboring key metropolitan areas.
  • At its worst, housing prices statewide saw a 13.7% drop. Recent gains now put them approximately 5.7% below pre-recession levels, better than the 19% decline still present at the national level.
  • North Carolina is “defying” logic associated with the current global slowdown and achieving strong growth in exports, currently up 5.5% for the year. Growth is centered on China and Mexico, while trade to Canada, the State’s largest partner, has fallen close to 3%.
  • Raleigh’s economy is clearly outpacing most of the rest of the state and country, with respect to both economic activity and employment growth.

NC down nearly 56,000 Jobs since January

July unemployment was reported at 8.9% for the Tar Heel State, up slightly from 8.8% in June. The State lost more than 13,000 in July, and is down almost 56,000 since January. The January 2013 unemployment rate, however, was 9.5%.

Job losses so far are significant, but reductions in the labor force count are even more so, down nearly 80,000 from January. During the same time period last year (January-June 2012), the state labor force grew by nearly 28,000, and years before that saw increases or decreases between around the 20,000 range.

If the labor force in July was equal to its January total (4.776 million), the unemployment rate would be 10.4%.

Need Performance Measurement Training?

UNC School of Government has two workshops coming up of interest to those seeking to enhance their performance measurement skills. Registration for each worskhop is $130/person, and each workshop lasts one day.

Both workshops are taught by Dr. David Ammons,

Friday, September 6th – Performance Measurement 101: Designing Measures in Local Government for Accountability and Results This course fulfills the “Performance Measurement” requirement for North Carolina Budget & Evaluation Certification Program (click here for more information)

This workshop focuses on the fundamentals of performance measurement and the design of measures that strengthen local government performance. Participants will discuss the criteria for a good set of measures, tips for developing or refining performance measures, and the use of standards or benchmarks in performance comparisons.
Friday, October 4th – Practical Analytic Techniques for Local Government  This course fulfills the “Evaluation” requirement for North Carolina Budget & Evaluation Certification Program (click here for more information)
This course focuses on a variety of easy-to-apply analytic techniques and includes examples of successful analysis among local governments. Topics include the use of analysis to consider the need for additional employees, to diagnose work scheduling and routing problems, to make adjustments for the impact of inflation, and to analyze patterns of demand for a service.

“Local Food” interest you?

UNC School of Government, along with the Center for Environmental Farming Systems, will host a special webinar, “Local Food and Local Government,” on Wednesday, September 11th, 10am to 11:30am.

Site cost for the webinar is $125. Click here to register.

What’s the impact of local food? From the USDA:

According to the latest Census of Agriculture, direct sales of food products from farmers to individual consumers rose by nearly 50 percent between 2002 and 2007. Worth an estimated $1 billion in 2005, local food sales grew to $4.8 billion in 2007 and nearly $7 billion last year, according to industry estimates. For nearby businesses in major cities across the U.S., having a farmers market nearby means an average increase in sales of anywhere from $19,000 to $15 million (according to a Marketumbrella research paper published in 2012).

Small Business Sentiment improving, not Great

(Wells Fargo) Wells Fargo’s Small Business Confidence Index rose 9 points in the third quarter to 25, reaching its highest level in five years. Both the present situation and future expectations components of the survey increased during the quarter, but small businesses are clearly more upbeat about future prospects than they are about actual operating results over the past year. The present situation index rose 2 points during the quarter to 4, while expectations climbed 7 points to 21.

Indicators suggest upcoming Growth

(Wells Fargo) The Leading Economic Index (LEI) increased 0.6 percent in July, with broad-based contributions from its underlying components, suggesting sustained growth for the economy. Only two components (capital good orders and average workweek for production workers) were negative.

LEI Contributors 072013

Real Estate Recovery yielding Mixed Results

Overall, the national real estate market is seeing recovery with respect to increased sale prices, reduced listing inventory and foreclosure stock, and increased issuance of permits for both single-family and multi-family construction.

Here’s some highlights from recent reports:

(Wells Fargo) Despite rising mortgage rates, existing home sales posted a better-than-expected 6.5 percent gain in July.  However, inventories rose for the sixth month, but remain at a historically low level. Distressed sales were unchanged.

(Wells Fargo) Housing starts increased 5.9 percent on the month, but all of the gain was in the volatile multifamily component. Single-family starts and permits fell on the month. Although the pullback in single-family starts and permits may be disconcerting, we are not worried… The NAHB/Wells Fargo Homebuilder Index reached its highest level since late 2005. So what is the disconnect? We suspect damp weather in the South continues to be the largest factor in the recent disappointing readings. The recent slowdown, however, suggests we could see some catch-up in construction activity later this year.

Most Realtors will tell you that real estate is primarily dependent on local conditions, meaning recovery activity is likely not to be consistent from place to place.  RealtyTrac found that when evaluating metropolitan areas for their first “Housing Market Recovery Index” report:

“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and  foreclosures falling closer to pre-housing bubble levels,” said Daren Blomquist, vice president at RealtyTrac. “Still symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets.”

The report created some disagreement in Wilmington, as the coastal metro area was listed in the “Bottom 20” list with respect to its index score and reflection of a “lagging” market. Local Realtors, however, are not satisfied with the metric:

“While the Wilmington housing market overall is trending up, we acknowledge that challenges towards a full recovery still exist; however, we believe that characterizing our housing market in such a negative light is short sighted and inaccurate,” said WRAR President R. J. Alex in a news release yesterday…In July, homes sales in the Wilmington region were up 18 percent to 628 units sold compared to the same period the year prior. Average home sale prices were also up 4 percent to $244,130, according to data from Wilmington Multiple Listing Service.

Where’s Fuel Going

The last 30 days have seen some decline in gasoline prices, nationally and in North Carolina, with the average dropping about $0.10/gallon.

ncgasmth082313

Compared to a year ago, North Carolina prices are about 27 cents/gallon less (-7.3%), consistent with the national trend. North Carolina is also starting to see a broader discount gap between its average and the National Average, though the border states of South Carolina, Virginia and Tennessee continue to have lower prices (7 to 20 cents/gallon).

ncgasyr082313

 

The latest short-term outlook from the Energy Information Administration indicates that fuel prices should remain stable through 2014, with crude oil prices falling back some from recent gains.

chart

However, if current unrest in Egypt and elsewhere in the Middle East negatively impacts production activity, or results in the inability to transport product through the Suez Canal, substantial price shocks are highly likely.

 

Other Items

LGC publishes LGERS Retirement & Investment Disclosure Memo for FY 2013

Employment Security video series on Unemployment Insurance Law changes & implementation (YouTube)

Notes from ASPA’s “Presenting for the Information Age” Webinar (Scribd)

Overview of GASB’s new Pension Reporting Standards (GFOA)

Analysis on Impact of Tax Exemption for Municipal Bond Interest in North Carolina (NACO)

Wells Fargo’s August Economic Outlook (YouTube)

Resources from 2013 Community Development Research Conference (Atlanta Fed)

Interview with Economist John Haltiwanger on various national economic issues (GDP, jobs, growth, etc.) (Richmond Fed Magazine)

LA County changes policy, prevents school bond campaign donors from issuing bonds (LA Times)

NC Senate Finance Committee Starts Work on Tax Reform

This Wednesday, the Senate Finance Committee began deliberations on S394, a comprehensive tax reform bill that could dramatically impact revenues local governments share with the State.

The session featured further analysis on the proposed legislation, which streamlines state personal and corporate income tax rates, eliminates state and local privilege license fees and utility franchise taxes, reduces the local sales tax on food from 2% to 1%, and broadens the overall sales tax to include most services.

NC League of Municipalities Director for Government Affairs, Paul Meyer, sent out an email late Wednesday indicating that the Committee is working to address as they balance tax reform with maintaining shared revenue levels for local governments:

The original version of SB 394 proposed the elimination of several state-collected local revenues and changes to the local tax structure, with that revenue being replaced with an expanded sales tax base, including the application of the sales tax to electricity. A new version of the bill proposed in committee on Wednesday added additional revenue sources for municipalities. Under this version of the bill, cities would receive a distribution of a portion of the State business privilege license tax, and a different distribution formula would be used for the revenue from the local sales tax on electricity and piped natural gas. Sales tax revenue from electricity and natural gas would be returned to the county of collection, with 80 percent going to the cities in those counties to be distributed on an ad valorem basis.

Reductions in municipal revenues that were in the original version of the bill remain. Of most interest to cities are the elimination of the city distribution of the electric franchise and beer and wine taxes, the elimination of the local privilege license tax, and the reduction in the local sales tax on food from 2 percent to 1 percent. All told this amounts to an annual loss of at least $320 million for cities and towns.

Bill sponsors indicated in the Committee meeting that the intent of the legislation is to be revenue-neutral at the local level, but they said that ensuring that no municipalities face a serious revenue loss as a result of the bill has been a challenge. Fiscal analysis of the current version of the bill indicates that at full implementation it will be revenue-neutral for cities and counties in the aggregate, but no city-by-city estimates have yet been made public. Bill sponsors did indicate that if the changes to the tax code generate additional revenue for the State in the first year of implementation, the excess revenue could be used to help fill in gaps at the local level.

Several items presented and discussed during the Senate Finance Committee on this important issue and piece of legislation are available for viewing and download below, including an overview of S394.

 

Other Documents:

S394 Overview

S394 Fiscal Chart

Income Tax Proposal Analysis

S394 Committee Substitute Legislation

More information on S394 can be found at the NCLM website, as well as the bill’s page at the website for the NC General Assembly.

 

 

NCLM Summary for 2012 Short Session Available

The North Carolina League of Municipalities released their Summary Bulletin of the 2012  Session of the General Assembly this week, providing information on numerous actions taken by the Legislature that will impact North Carolina’s cities and towns.

The introduction to the League’s summary reflected an ominous tone the advocacy group encountered throughout the session.

The 2012 North Carolina General Assembly short session ended on Tuesday, July 3, with the Senate wrapping up its session at approximately 3 a.m. and the House completing its work around 3 p.m.  It was a very trying legislative session for North Carolina cities and towns, certainly the most damaging one in recent history.  It is clear that NC cities and towns, and our supportive citizens and business leaders, must make a renewed effort not only to more directly and routinely discuss issues and build understanding with our legislators, but also to show significant leadership in engaging municipal citizens in grassroots outreach about the issues affecting their communities and quality of life.

Check out the list of topics, each with a direct link to the information provided in the summary.

The League is already starting work on its goals and agenda for the next legislative session and is seeking input from its members this month:

Just as we finish one session, we can hear the low roar of the next session revving its engine. Now is the time to submit legislative and regulatory goal proposals for the 2013-2014 biennium (Deadline August 31, 2012). Legislative and Regulatory Action Committees will be meeting in the next twelve weeks reviewing suggested goals in preparation for approval by the Board of Directors and ultimate consideration and endorsement by the NCLM membership at the January 24, 2013 Municipal Advocacy Goals Conference in Raleigh.