AG 1993 03 03 - Laserfiche WebLink

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SECTION D. 1. PROPOSED LEGISLATION OF CONCERN Local Financial Security Manager Recommendation: Support NORTH CAROLINA ASSOCIATION OF" COUNTY COMMISSIONERS TO: County Managers FROM: Jim Blackburn, General Counsel C E I---V ED DATE: December 23, 1992 SUBI~CT: "Local Financial Security" Legislation The State-Local Relations Subcon'm-~ttee of the Fiscal Trends and Reform Com_mJsslon has reconunended to the ~11 Commission legislation to deal with an issue of major importance Io local governments in North Cuo;lina. The full Commission is scheduled to consider the recommendations next week. The ]egls]adon ~s tentatively entitled ".&n Act to gh'e Local Government Units M'ore Financial Security ~nd Restore Growth Io State-Col]ecled Local Revenues and Tax-Sharing Funds." It is designed to accomplish ra,o purposes. Fkst, it would complete the effort begun in 1992 to provide for automatic distribution of state payments to local governments in two general v--ea~' (1) reimbursements to local goverm'nents for revenuas lost because of General Assembly ~ that reduced local tax revenues (repeal of ~ventory and some intangibles taxes, exemption o~ food stamp purchases from s~es tax and the Homestead Exemption, and (2) t~es that are local revenue sources but are collected by the state ~'~d disthbuted to local governments (remaining int~.ngibles t~es, beer and wine taxes and ufiEty franc~se re.xes). The security of all of these local revenue sources has been in jeop~_~dy since the ratification of Chapter 813 of the 1989 Session Laws (House Bill 2377) ~n June of 1990. The t990 legislation made all of these funds subject to the appropriations process v_nd was part of the leg~shfive effort to de~ with the budget crisis facing the state at that time. Legislation enacted fa 1992, Chapter 993 of the 1991 Session Laws (House Bill 916) provided for automatic dlsu-ibufion (rather than appropriation) of the first of these two fund sources, the "reimbursements". The second purpose to be accomplished by the proposed ]egislatlon deals with another problem that resulted from the Legislature's budget-balanckng effort, the 1991 freeze on the amounts of all these revenues that were distributed by the state. This freeze c~used local governments to lose the growth in those fund sources that grew naturally or were indexed to provide for automatic growth. The proposed legislation would restore tkls growth to the state-collected, local revenue fund source with the result that local goverr~'nents would lose only the growth from the current blennJum that was withheld in order to balance the State's budget.