Agenda - 06-20-2002 - 2 - Laserfiche WebLink

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ye. ove 6/17/02 NCACC Status Report on Sales Tax& Local Revenue Securi , Bills RELIEF PROPOSED FOR COUNTIES' MEDICAID COSTS Legislation introduced last week in the House would enable counties to enact a one-half percent local option sales tax early in the upcoming fiscal year and earmark an additional one-half percent state sales tax to reduce county Medicaid costs. The bills contemplate the elimination of reimbursements to cities and counties. H1632 and H1633, both introduced by Rep. Russell Tucker (Duplin), are companion bills. H1632 removes the July 1, 2003 "sunset" on the sales tax scheduled to become a local sales tax on that date and transfers the proceeds from the half-cent tax to the Department of Health and Human Services to reduce the county share of Medicaid costs beginning in 2003-2004. H1633 would permit counties to levy a one-half percent sales tax effective August 1, 2002. It includes the hold harmless provision contained in the bill enacted in 2001 authorizing the local option tax and allows an abbreviated provision for notifying the Department of Revenue of county action to levy the tax. SENATE CONSIDERS ACCELERATED LOCAL SALES TAX OPTION The Senate last week approved a revenue package that includes authority for counties to enact a one-half percent sales tax effective in the upcoming fiscal year rather than July 1, 2003 as provided by the 2001 Budget Act. S1292 was approved by the Senate Finance Committee June 11 and debated on the Senate floor the next day. The bill would enable counties to levy a one-half percent sales tax to be effective August 1, 2002 and would provide funds to hold harmless local jurisdictions that receive less from the new %z cent sales tax than they currently receive as reimbursements for local taxes previously repealed by the General Assembly. The Senate also approved a floor amendment to the bill incorporating provisions of other bills that are designed to secure local revenues from action by the Governor when dealing with state budget shortfalls. See below for House action on local revenue security legislation. 51292 was approved by the Senate on second reading Wednesday, June 12 and on third reading on Thursday, June 13. It goes on to the House for consideration. HOUSE DEBATES LOCAL GOVERNMENT REVENUE SECURITY The House last week considered legislation to protect local revenues from action by the Governor when taking action to balance the State's budget. H1490, introduced by several members of the House, was favorably reported by the House Finance Committee on June 11 and sent to the House floor for debate on Thursday, June 13 where it was approved on second and third reading. It goes on to the Senate for consideration. The legislation would amend the Executive Budget Act and a number of other statutes to make it clear that revenues earmarked or appropriated to local governments, or taxes collected for local governments by the state, could not the "sequestered" or frozen by the Governor without legislative authorization unless all other funding sources have been exhausted.