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State
Government News
State tax
collections are running slightly ahead of last year.
Through eight months of the fiscal year, the individual income
taxes are 2 percent ahead of last year's pace and sales taxes
are 4 percent higher. Corporate income tax collections are 5
percent greater. The overall 1 percent gain in taxes flowing
into the General Fund looks promising but the budget was
premised on 4.5 percent growth; hence, the frantic effort by
state officials to cut spending.
State
officials examine ways to cut $1.2 billion in spending
General Assembly budget writers wrapped up two days of
intensive meetings April 3 after reviewing possible ways the
state could slash up to $1.2 billion in spending in the fiscal
year beginning July 1. That figure represents 8.3 percent of
next year’s $14.7 billion spending plan. The anticipated
deficit grows to around $2 billion if normal spending-creep is
included, such as ABC bonuses for teachers and enrollment
growth at community colleges.
The governor is working with Executive Branch agencies on
slashing their budgets by between 7 and 11 percent. Last month
the Easley administration mailed letters to thousands of state
workers saying that avoiding layoffs next year will be
impossible unless the economy improves quickly and
dramatically.
Budget writers are looking generally at cutting state
government costs in the following areas:
Education: $695 million
Health and Human Services: $330 million
Natural and Economic Resources: $30 million
Justice and Public Safety: $125 million
General government: $20 million
Among the many scenarios examined by the legislators, the
following seem to be the leading candidates for achieving
those savings:
Tobacco money: The state could appropriate some portion
of the $177 million it will receive next year as part of the
national tobacco settlement. Reportedly the state would not
have to repay the money.
Eliminating vacant state jobs: The state could save about $200 million in salaries by
eliminating 5,500 vacant state jobs, including 2,217 in
justice and public safety programs and 1,037 in health and
human services.
Salary reductions: Senate Appropriations Committee
Co-chair Fountain Odom (D-Mecklenburg) said state employees
might accept pay cuts of 3 to 5 percent over layoffs or
furloughs.
Early Retirements: Nearly 12,000 state employees will
be eligible to retire in July, including 3,400 school
teachers. If the state eliminated their positions, the state
would save millions through their early retirement.
Workers’
comp rates decline this month...
The N.C. Rate Bureau's request for a 1.4 percent
reduction for Voluntary Industrial classes went into effect
April 1, meaning workers’ comp rates will drop by that
percentage for most employers. Insurance Commissioner Jim Long
said the loss costs system of setting workers’ comp rates,
adopted by the state in 1994, is the major reason rates have
either held steady or declined in recent years.
Under the loss costs system, North Carolina bases its
rates and profits on historical losses and by projecting
future loss expenses in the market. The N.C. Rate Bureau is a
non-profit group representing insurance companies that do
business in the state.
...
While homeowners insurance may go higher
Meanwhile, the N.C. Rate Bureau has asked the
Department of Insurance for an average 20 percent increase in
homeowners insurance, effective Aug. 1. If approved, the
request would see coastal homeowners' rates go up by as much
as 50 percent. The state has until July 5 to respond with its
own recommendations. The Rate Bureau blamed the increases are
necessary on large weather-related losses over the past few
years and rising construction and home value costs.
Doubling
of unemployment insurance taxes still likely
The $237 million in additional unemployment benefits
the state received from the federal government last month
won’t prevent a doubling of employer taxes next year to
shore up North Carolina’s rapidly depleting unemployment
trust fund, officials said. North Carolina and other states
received the funds last month as part of an $8 billion
appropriation Congress approved March 8 to shore up states'
trust funds. The grant boosts North Carolina's trust fund to
about $609 million. By statute, employers’ unemployment
insurance taxes double if the trust fund contains less than
$800 million on Aug. 1 of each year. Currently, employers pay
an average of 1.2 percent tax on the first $15,500 in wages
per employee. So an employer with 10 employees all earning
more than that would see their tax bill rise from $1,860 a
year to $3,720. If the trust fund balance rises to $800
million by Aug. 1, 2003, the tax rate would automatically be
cut by half.
State’s
jobless rate falls for third straight month
Unemployment rates fell in 60 counties in February,
pushing the state’s jobless rate down for the third straight
month. It fell to 6.2 percent in February from 6.4 percent in
January and 6.5 percent in December, according to figures
released by the N.C. Employment Security Commission. New
claims for unemployment benefits also dropped in February to
72,042, down 62 percent from the 187,624 in January. More
than $106 million in unemployment benefits was paid statewide
in February, compared with more than $136 million in January. The
state’s jobless rate was 4.7 percent in February 2001. Total unemployment in North
Carolina decreased from about 257,000 people in January to
about 250,000 in February. Seasonally adjusted labor force
numbers show that North Carolina’s labor force has also
decreased, from 4,020,200 in January to 4,006,100 in February.
The U.S. unemployment rate fell to 5.5 percent in February,
from 5.6 percent in January. Some of the industries hardest hit in
February included textile mill products (11,088 job losses);
construction and special trade contractors (6,776); heavy
construction (4,232); business services (4,224); and furniture
and fixtures (4,067). The five counties receiving the highest
amount in unemployment insurance benefits in February were:
Wake, $8.8 million; Mecklenburg, $8.3 million; Guilford, $5.4
million; Forsyth, $3.3 million; and Catawba, $3.2 million.
Unemployment rates in the state’s metro areas
in February, compared with January, were:
- Asheville, 4.7 percent, unchanged
- Charlotte/Gastonia/RockHill,
NC/SC, 5.9 percent, down
from 6.6 percent
- Fayetteville, 6.4 percent, down from 6.7 percent
- Goldsboro, 6.1 percent, up from 6.0 percent
- Greensboro/Winston-Salem/High
Point, 6.1 percent, up from
6.0 percent
- Greenville, 6.2 percent, unchanged
- Hickory/Morganton/Lenoir, 8.3 percent, down from 8.6 percent
- Jacksonville, 5.5 percent, down from 5.7 percent
- Raleigh/Durham/Chapel
Hill, 4.7 percent, unchanged
- Rocky
Mount, 10.3 percent, up from 10.0 percent
- Wilmington, 6.6 percent, down from 7.1 percent
FAA to pay
major cost of third runway at PTIA
In a
big boost for the FedEx project, the Federal Aviation
Administration said it will pay an estimated $108 million to
build a third runway at Piedmont Triad International Airport.
The agency said it will issue a letter of intent outlining its
12-year plan for funding the third runway and related
expenses. FedEx, which plans to open a $300 million cargo hub
at the airport by 2006, has said it needs a third runway
parallel to PTI's existing main airstrip for its overnight
sorting center.
Blue Cross submits revised
conversion plan
Blue Cross and Blue Shield of North Carolina has
submitted a revised business plan with the state Department of
Insurance, replacing an earlier document that state regulators
in January had deemed incomplete. If the state Department of
Insurance accepts the new business plan, then three public
hearings would be scheduled around the state to unveil it.
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