Legislative Update – 5/5/11

As the Legislature winds down the session, there has been much progress on the bills we have been tracking that relate to county budget issues. The following is a status:

Pension Reform

SB2100/HB1405 having emerged from conference on Friday May 6, has been sent to the governor. From the House bill, the plan adopts the 3% employee contribution and retirement eligibility of age 65 / 33 years for general class and age 60 / 30 years for special risk. From the Senate bill it eliminates cost-of-living adjustments for accruals accumulated after July of this year. The DROP program, eliminated in both underlyihg bills, was retained in the compromise, but the interest rate was reduced from 6% to 1.3%. One feature that appears to be new is the redefinition of “average final compensation” from 5 years to 8 years, which will reduce the base upon which a pension amount is calculated. The provision in the House bill to restrict new hires to a defined contribution plan only did not survive.

We estimate the savings for the county to be about $48M in the first year, based on the “employer contribution” section of the bill. See Pension Reform – the Final Bill for the details of the analysis.

Smart Cap

CS/JSR958 State Revenue Limitation, also known as “Smart Cap”, was sent to the Governor on May 4. Placed on the 2012 ballot will be a constitutional amendment that replaces the state’s current cap based on personal income growth, to one based on population and inflation, similar to Colorado’s TABOR. It differs from TABOR in one important respect however – the cap is based on the previous year’s cap, not on revenue. This has the effect of preventing the “ratcheting down” effect that can happen when revenue declines in a recession, and prevents unanticipated or undesired reductions. The cap can decline though, if inflation is negative or population shrinks.

Smart Cap applies only to state revenue, but we think it is time to examine a potential Smart Cap for the county budget – implemented as a charter change and also on the 2012 ballot.

Local Government Accountability

One bill that has been under the radar for most people is CS/SB224Local Government Accountability. The bill does several different things, but most notably for Palm Beach County, it will require the Sheriff to disclose more of the PBSO budget to public scrutiny, and give the County Commissioners more authority to obtain line item detail for this and previous budget years. Currently, only a Chapter 119 (open records) request has been able to obtain this level of detail on the Sheriff’s budget. Among other things, the bill says:

“The sheriff shall furnish to the board of county commissioners or the budget commission, if there is a budget commission in the county, all relevant and pertinent information concerning expenditures made in previous fiscal years and to the proposed expenditures which the such board or commission deems necessary, including expenditures at the subobject code level in accordance with the uniform accounting system prescribed by the Department of Financial Services.”

This bill was sent to the Governor on May 4.

Additional Homestead Exemption

HJR381, “Additional Homestead Exemption; Property Value Decline; Reduction for Nonhomestead Assessment Increases; Abrogation of Scheduled Repeal”, was sent to the Governor on May 4. This bill places a constitutional amendment on the 2012 ballot that will have several effects if approved by the voters, including eliminating the unfortunate circumstance that can cause your assessed valuation to increase while your actual market value is decreasing on a homesteaded property. It also caps the increase for non-homestead property to 5%.

Labor and Employment

SB830, “Labor and Employment”, also know as the “Thrasher Bill”, would prohibit state or local governments from deducting from wages, funds for political activity, primarly union dues. It also prohibits labor organizations from collecting dues, assessments, fines or penalties for the purposes of political activity without written authorization from the collectee. This is similar to measures being pursued in other states this year.

This bill was never brought up on the floor before the session ended and therefore died from inaction.

As things change with these bills, we will update this post to reflect the current status.

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