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JUSTICE AND PUBLIC SAFETY We were very disappointed that the budget report resurrected a budget reduction that eliminates in perpetuity the meager $18 per day jail misdemeanant payment to counties, costing counties $10 million annually. A similar House proposal was turned back earlier after counties voiced their opposition to this cost shift. Also disturbing is a judicial collection assistance fee in the amount of 10 percent on all court and judicial fines -this includes court facility fees, pretrial release fees, local crime laboratory fees and jail fees (Sec. 15.20(m)). While we await more official loss projections, our estimated loss for this exceeds $3.5 million annually. Speaking of facilities, the budget eliminates state lease payments for probation offices at a $1.2 million loss to counties. Register of Deeds fees are also being used to support state general fund expenses. The registration fee is increased from $22 to $28, with $5 of this increase going to the state and $1 to the RoD automation fund. Both the Juvenile Crime Prevention Council (JCPC) and the Criminal Justice Partnership Program received full funding. Section 15.17) does require a biennial study of the effectiveness of JCPC's programs by sampling participating juveniles and documenting subsequent criminal justice system interaction. HEALTH AND HUMAN SERVICES Another disappointing reversal, fortunately short-lived, was the special provision that references Local Management Entities' fund bal- ances in light of a $40 million cut in state-funded mental health services. Section 10.19A requires DHHS to reduce each LME state fund allotment by 10 percent ($40 million total) and prohibits each LME with a fund balance to reduce services supported previously by these state funds. Furthermore, LMEs with fund balances are expressly required to supplant the state reduction and must use their fund bal- ances exclusively for client services. While a similar provision was offered in the House's budget proposal, the NCACC understood that the joint subcommittee on appropriations removed mention of LME fund balances and their required uses. The Association worked to re- verse this mandated use of fund balances to make up for state funding shortfalls with a technical corrections provision-H836 rewrote the budget's special provision to allow DHHS to consider a LME's unrestricted fund balance when it reduces state mental health allocations. The budget does shift all funding responsibilities for child support services to counties. Currently, 16 state offices provide child sup- port services to 28 counties. As acost-saving measure ($4.1 million), and a purported attempt at equity, the budget requires all regional offices to be county-funded by July 1, 2010. The NCACC has started conversations with the Division of Social Services to make this as smooth a transition as possible. DHHS DSS is developing a checklist for transition issues and is compiling detailed information on each office to help counties plan for the transition in services and oversight. Now for some more good news that realizes four NCACC legislative goals. The budget provides additional funding for county daycare administrative expenses (5 percent of childcare subsidy amounts), appropriates county-earned federal funding to begin implementa- tion of the NCFAST social services case management system, provides additional funding ($1 million) for school nurses, and continues implementation of the combined motor vehicle registration and property tax collections system. SALARIES AND BENEFITS Not surprisingly, no employee pay enhancements are recommended, but millions are needed to offset state health plan costs (8.9 per- cent premium increase) and greater state retirement system contributions. Nearly $50 million is reserved for severance pay and benefits. Section 26.16A requires all counties to comply with the "send-in" payroll arrangement for local cooperative extension personnel, ef- fective Jan. 1, 2011, and prohibits county furloughs, or local salary reductions after that date. We believe this provision stems from the confusion of state furloughs and salary reductions in late spring last fiscal year. NCSU Cooperative Extension contacted the Association and expressed its surprise at this required change in cooperative extension salary processing. REVENUE CHANGES Effective Sept. 1, 2009, the state sales tax temporarily increases by 1 percentage point, netting the state an additional $803.5 million this fiscal year. The statewide sales tax rate will be 7.75 percent until July 1, 2011, whereby the 1 percent increase will expire. A 2 percent or 3 percent surcharge will be levied on any single taxpayer making over $60,000, effective for the 2009 and 2010 tax years. Cigarette taxes will go up 10 cents per pack, and the excise tax on beer, wine and liquor will increase as well. For the May 2010 local beer and wine distribution, the state is withholding two-thirds of the normal distribution, costing counties roughly $7.7 million. Despite much debate about restructuring state and local revenues, the budget only applies the general sales tax to digital products but clarifies remote sales nexus through click throughs. Local revenue increases from digital product sales were estimated earlier at less than $7 million for the first year of implementation. Section 27A.7 enables the President Pro Tem and the Speaker of the House to authorize the Senate and House finance committees and other designated members to meet during the interim to study and recommend legislation to reform the state's sales and income tax structure. G-4 Page 143