Polk County commissioners reviewed current state bills that could harm county tax dollars during a meeting Monday, April 18.
Following is text from the NCACC regarding proposed changes that could affect mental health funding, the local revenue base and responsibility for funding construction and maintenance projects for transportation.
See the Wednesday, May 4 and Friday, May 6 Bulletins for information from the NCACC about other issues.
Residents who want to express an opinion about these issues to state legislators can contact Rep. David Guice by email at David.Guice@ncleg.net or by phone at 919-715-4466; Sen. Tom Apodaca can be reached by email at Tom.Apodaca@ncleg.net or by phone at 919-733-5745.
Ensure adequate mental health funding
Issue: Seek legislation to ensure adequate capacity of state-funded acute psychiatric beds. Seek legislation to maintain the existing levels of state funding for community mental health services. Oppose legislation to close state-funded beds until there is adequate capacity statewide.
NCACC policy: Comprehensive and efficient human services, including social services, health and mental health, are essential to human well-being in our present society. These services must be clearly defined and adequately funded. State-mandated services delivered at the county level should be financed from state revenue sources in order for every citizen of North Carolina to receive a substantially similar degree of service.
Background: As state and federal policy changes have forced the downsizing of state psychiatric hospital capacity, commensurate increases in local service capacity has not kept pace with bed closures. The state has purchased local hospital beds that are set aside for the mentally ill, but additional funding is needed for increased bed capacity. Counties and local hospital emergency rooms have had to manage an increasingly larger population with mental health needs with inadequate community services, and the mentally ill are on the rise in county jails and among the homeless.
Action needed: Additional funding is needed to support the community mental health system. H84 and its companion bill, S334, would provide/appropriate more than $39 million to expand inpatient psychiatric bed capacity. These two bills are sponsored by Rep. Verla Insko (Orange) and Sen. Martin Nesbitt (Buncombe), who co-chaired the Legislative Oversight Committee on Mental Health, Developmental Disabilities and Substance Abuse Services. The House bill is in the Committee on Health and Human Services; the Senate bill is in Mental Health and Youth Services.
Bills related to goal:
H84, “Expand Inpatient Psychiatric Beds/Funds,” sponsored by Insko (D56) Orange; Farmer-Butterfield (D24) Edgecombe, Wilson; Brisson (D22) Bladen, Cumberland, an act to appropriate additional funds for the expansion of local inpatient psychiatric beds or bed days, as recommended by the Legislative Oversight Committee on Mental Health, Developmental Disabilities and Substance Abuse Services.
Preserve the existing
local revenue base
Issue: Preserve the existing local revenue base.
NCACC policy: County officials recognize their responsibilities for carrying out policies and programs formulated by the general assembly. We ask that state policy makers should recognize county revenue base limitations and variations in revenue-producing capabilities among counties and that the state not mandate programs requiring county financial participation.
Background: The property tax is the mainstay of the county revenue base, equating to more than 50 percent of a county’s total revenues and more than 75 percent of tax revenues. Over time, the general assembly has enacted various and expensive property tax exclusions and exemptions. Few, if any, of these property tax base reductions are reexamined to determine if they have achieved their intended tax policy objectives. Lawmakers rarely reassess local revenue losses to determine if the fiscal analysis appropriately identified actual revenue impacts once the exclusion or exemption has been enacted. Seldom is the revenue loss totality of property tax exclusions and exemptions addressed when individual exclusions are brought forward in the legislature.
As an example, North Carolina counties and cities pay for the Elderly Homestead Exemption Program, a program originally designed to provide a property tax break for the low income, elderly homeowner. Elderly homeowners with incomes below $25,600 are allowed to exempt from taxes the greater of $25,000 or 50 percent of the assessed value of their permanent residences, including up to one acre of land. A quick review of elderly homestead exemptions offered in other states indicated that North Carolina’s program is both generous and expansive.
The homestead’s income exemption was recently increased in 2008, jumping from $20,000 to $25,000. Numerous bills have been introduced this session that would increase the homestead property tax income eligibility level yet again. H246, introduced by Reps. Alma Adams (Guilford), William Wainwright (Craven) and Julia Howard (Davie), would increase the income limit to $35,000 and add a new deduction from the income computation by allowing an applicant to deduct “short-term and long-term capital losses, as defined in section 1222” of the Internal Revenue Code. The change would become effective July 1, 2011.
S216, introduced by Sen. Austin Allran (Catawba) also increases the homeowner’s income threshold to $35,000. A fiscal note has yet to be prepared for either of these bills; however, when the homestead exemption was increased from $20,500 to $25,000 on July 1, 2008, a fiscal note indicated local governments would lose as much as $20 million per year by 2011-12.
Action needed: H246 (Modify Homestead Property Tax Exclusion) is currently in the House Finance Committee. S216 is in the Senate Finance Committee. County commissioners should discuss the implications of these bills for their counties with their legislators, especially those who serve on the House and Senate Finance committees.
Bills related to goal:
• Bill H92, “Repeal Land Transfer Tax,” sponsored by Howard (R79) Iredell; Starnes (R87) Caldwell; Brawley (R103) Mecklenburg; Jordan (R93) Ashe, an act to repeal the land transfer tax.
• Bill H206, “Modify Property Tax Base Exclusions,” sponsored by Ross (D38) Wake; Jackson (D39) Wake; Gill (D33) Wake, an act to modify the property tax base exclusions.
• Bill H246, “Modify Homestead Property Tax Exclusion,” sponsored by Adams (D58) Guilford; Wainwright (D12) Craven, Lenoir; Howard (R79) Davie, Iredell, an act to increase the income eligibility limit of the homestead exemption.
• Bill H350, “Clarify Property Tax for Conservation Land,” sponsored by McGrady (R117) Henderson; Starnes (R87) Caldwell; Brubaker (R78) Randolph; Harrison (D57) Guilford, an act to reduce the corporate income tax rate in North Carolina.
• Bill S107, “Tax of Improved Property in Roadway Corridors,” sponsored by Brunstetter (R31) Forsyth; Garrou (D32) Forsyth, an act to reduce the property tax owed for improved property inside certain roadway corridors.
• Bill S164, “Modify Property Tax Base Exclusions,” sponsored by Stevens (R17) Wake, Hunt (R15) Wake; Blue (D14) Wake, an act to modify the property tax base exclusions.
• Bill S207, “Increase Statutory Homestead Exemption,” sponsored by Hartsell (R36) Cabarrus, Iredell, an act to increase the statutory homestead exemption.
• Bill S216, “Increase Income Limit for Homestead Exclusion,” sponsored by Allran (R42) Catawba, Iredell, an act to increase the income eligibility limit for the homestead exclusion to $35,000 dollars.
Oppose shift of state transportation responsibilities to counties
Issue: Oppose legislation shifting the state’s existing responsibility for funding transportation construction and maintenance projects to county governments.
NCACC policy: To provide equity among counties and to relieve counties of fiscal burdens that cannot adequately be funded by county revenue sources. Services mandated by the state should be fully funded by the state.
Background: The secondary road system is currently funded through two sources: the Highway Fund and the Highway Trust Fund. These two funds are used to construct and pave roads and to improve existing paved secondary roads. In 2009, legislation was introduced that would have shifted secondary road responsibilities to the counties. That bill would have created two road systems in the state: a primary road system over which the state would maintain responsibility, and a secondary road system for which counties would become responsible. Counties would have become responsible for more than $500 million in costs for secondary road resurfacing and expansion projects. Some of the more rural counties would have to increase property taxes by as much as 25 cents to generate the amount of revenue needed to maintain the same level of service. The general assembly is often told that counties in other states are currently responsible for roads, but counties in those states do not share costs in other areas, such as public education and health and human services.
The staff of the N.C. Department of Transportation has told the Joint Appropriations Subcommittee on Transportation that the NCDOT does not support transferring responsibility for secondary road maintenance to counties. The NCACC opposes any attempt to force road responsibilities on counties.
Action needed: At this point, legislation has not been filed in this session of the general assembly that would shift this responsibility to the counties. As the state budget is deliberated, it is important that you continue to talk with your legislators about the negative impact such a shift would have on your county and the amount of property tax increase it would take to fund secondary road maintenance in your county.