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March 20, 2002 Board of Directors Meeting : Governor's Escrow of Municipal Funds: Discussion and Consensus The NC Metropolitan Coalition joins the NC League of Municipalities and the NC Association of County Commissioners in opposing the Governor Easley's escrow of local revenues in order to balance the state's current budget. The Metropolitan Coalition Board of Directors, which is made of the chief elected official from each member city, believes that the Governor should use state funds to balance the state budget and release his escrow local revenues. When the Coalition Board of Directors met with the Governor on February 13, the Governor invited the local government representatives to identify alternatives to escrow of local revenues. In response to the Governor's invitation, the Coalition formed a State Budget Task Force to study the issue and review other options for the full Coalition to consider at a special March 20 Board of Directors meeting. Task Force Members
After discussion and consideration of the material presented, the Task Force developed a consensus around a set of recommendations for the full Coalition to consider at the March 20 Board of Directors meeting. March 20 Coalition Board of Director's Meeting On March 20 the Board convened to consider the Mayor's State Budget Task Force recommendations. Mayor Bell and Mayor Joines presented the Task Force recommendations for discussion. After a full discussion of the issues and recommendations of the Task Force, the Board of Directors for the Metropolitan Coalition reached consensus on the following. 1) The Metropolitan Coalition's Board of Directors recognize, respect and empathize with the Governor 's responsibility to end the state's fiscal year with a balanced budget. As elected officials for cities and towns they too must manage complex budgets. City leaders have also made difficult adjustments to their budgets as a result of the recession and the escrow of local revenue. 2) The Board finds that the Governor had other options available as alternatives to the escrow of local government funds. The Coalition calls on the Governor to release the local revenues and use other sources that are legally and readily available to him. 3) The Board would like to meet with the Governor in early May to discuss the current situation and the release of local revenues. The Board hopes that the ongoing staff level discussions will continue between representatives of the Governor, the Coalition, the League of Municipalities and the Association of County Commissioners. These discussions offer an opportunity to fully explore the options available to the Governor. The Board believes these discussions provide an excellent forum for collaboration. Further, they hope that ongoing discussions will aid in developing information for a fruitful meeting between local elected officials and the Governor the first week of May. This is when local governments begin the final stages of their budget process for next year. 4) The Board has identified potential sources of funds (totaling over $500 million) that could be used individually, or combined, as alternatives to the Governor's escrow of $209 million of local revenues. The Board identified potential sources of funds with an eye towards ease of access, availability and ability to quickly generate funds so the Governor can meet his constitutional obligation to balance the current budget. The Coalition Board of Directors asks the Governor review these, and any other appropriate sources. They call on the Governor to identify alternative funds at a level sufficient to allow for the release local revenue presently being escrowed. 5) The list of potential sources of funds for the Governor (below) is in no particular order and certainly not exhaustive. The purpose of the list is to identify funds or sources that are readily available to the Governor that would allow him to release local funds. The total funds available in each category are simply estimates and are included for illustrative purposes only. Exact figures would require careful study with the Governor's staff. The Coalition believes these sources may be available now, and could be repaid later at the Governor's and General Assembly's option. Tobacco Settlement funds – both Health and Tobacco Funds The tobacco settlement was based primarily on reimbursing state taxpayers for medical costs (Medicaid) associated with tobacco use. Preliminary research indicates that the Governor has access to between - $150 million and $200 million combined from these two funds available this year. Each of these funds represents 25% of the state's share of the Tobacco Settlement. The remaining 50% is designated for the Golden Leaf Foundation – which the Governor would have difficulty tapping without legislation. The tobacco settlement also requires additional payments to the state next year. $150-200 million available Economic Development Fund The FY'01/'02 appropriation to the NC Dept of Commerce included a new appropriation $15 million as discretionary funds for the Governor to use for economic development. The FY'00/'01 budget for this category was $1 million. Some of this fund may be uncommitted this year directly available to the Governor. $15 million appropriation to the Governor – availability is undetermined Highway Trust Fund The Highway Trust Fund carries a balance of at least $544 million. In addition, there are commitments and programs from the Highway Trust Fund that could be delayed without impacting construction of roads, transit projects or jeopardize federal matching projects. The Coalition believes funds could be either borrowed or transferred without delaying projects currently in the TIP. For example supplementary funds have been set-aside from the Trust Fund for non-TIP project planning and traffic signal improvements. At least $90 million from the cash balance based project planning for non-TIP projects and signalization improvements alone Floyd Funds The Governor has identified $150 million in the Floyd fund that could be borrowed to balance this year's budget, but he did not include them on the balance sheet as of yet. Additionally, the mayors have suggested a careful analysis of the remaining funds and programs to ensure their continued need. It is suggested that local governments in the impacted areas be involved in the analysis. $150 million suggested by the Governor as available this year with repayment required Sale of Assets There are state real estate properties that could be offered for sale that could generate funds, which the Governor could designate to balance the budget. The transaction time for such sales could be overcome by using the funds to repay another source that could be borrowed in the short term (Floyd or Highway Trust Fund). Sale of state property requires Council of State approval. Total is hard to estimate without inventory, but the potential is great. Figures for Blount Street alone are in excess of $32 million. Shortened workweek Shortened workweek for some state employees, Grade 62 and above (those making over $30,000/yr). This could done in a staggered pattern so that offices remain open. $113 million for shortened workweek, equal to six days for the rest of the state fiscal year. For more information, please contact : Beau Mills, Director NC Metropolitan Coalition www.ncmetros.org |