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2009 Legislative Alerts 

May 27, 2009
The General Appropriations Act for FY 2009-10

May 6, 2009
H. 3272 — ATI/Point of Sale

April 17, 2009
H. 3581 — Local Government Fund Suspension

March 25, 2009
H. 3272 — ATI/Point of Sale

March 12, 2009
H. 3581 — Local Government Fund Formula Suspension

March 6, 2009
LGF Funding Level

Feb. 29, 2009
Local Government Fund Slashed by $122 Million 


May 27, 2009
The General Appropriations Act for FY 2009-10

The state general appropriations act generally contains a number of temporary statutory provisions which are referred to as "provisos." Temporary provisos are effective only for the fiscal year addressed in the budget act and appear in Part IB of the act, hence the label "Part I provisos" or "temporary provisos." Many Part I provisos are adopted every year as part of the budget process with little or no changes. Others are truly temporary in nature and only appear for one or two years. The effective dates of all Part IB provisos are for the fiscal year in which the act has been passed, in this case, FY 2009-10. This year, the General Assembly placed a Part III in the budget to deal with the federal stimulus package. This part of the budget is currently the subject of several lawsuits. None of the money distributed in Part III directly affects county government.

The Local Government Fund (LGF) was funded in the main part of the budget bill with a $50 million cut from the formula amount. Proviso 90.21, detailed below, potentially will distribute an additional $10 million in funding for the LGF. It would be inadvisable to build this additional revenue into the county budget until it is collected, unless its distribution is made contingent upon receipt of the funds. The earliest the revenue may be available is the third or fourth quarter of next fiscal year.

The LGF will drop significantly in next year’s budget under the statutory formula, reflecting the drop in the state general fund occurring this year. The state general fund is expected to be about $1.2 billion less than the previous year. This equates to roughly a $50 million drop in the LGF under the statutory formula.

The following are some of the IB provisos of interest to governmental entities in this year’s appropriations act (Provisos marked with an * are new or amended provisos):

Proviso 1.43: This is the school district flexibility proviso. Section 59-21-1030, the EIA local effort requirement, is suspended for FY 2009-10. There is no corresponding suspension of the EFA local effort requirement.*

Proviso 21.17: This proviso, which transfers DSS employees who determine Medicaid eligibility to DHHS, also requires that the governing authority of each county shall continue to provide office space and facility service for this function as they do for DSS functions under Section 43-3-65. Section 43-3-65 requires the governing authorities of each county to provide office space and facility service—including janitorial, utility and telephone services and related supplies—for its county Department of Social Services.

Proviso 22.8: This proviso requires each county to provide all operating expenses of the local health department other than salaries, fringe benefits and travel in an amount at least equal to that appropriated for operations for each county in FY 1981. The proviso states that a reduction in the local health department funding level may be made in the event that any county makes uniform reductions in appropriations to all agencies or departments for maintenance and operations.

Proviso 26.23: This proviso directs the Department of Social Services to provide a detailed report to the General Assembly on the status of the Child Support Enforcement System.

Proviso 29.1: To receive the Aid to Counties Libraries Allotment, local library support may not be less than the amount actually expended for library operations from local sources in the second preceding year (FY 2007-08).

Proviso 37.5: This proviso directs that a proportionate share of funds—at $15,000 per district—be allocated to each of the state’s 46 Soil and Water Conservation Districts for general assistance to the district's programs. The districts’ funding may only be reduced in an amount not to exceed the percentage of each Department of Natural Resources budget reduction.*

Proviso 44.2: This proviso requires counties to provide for each circuit court and family court judge residing within that county an office to include all utilities and a private telephone, and requires counties to provide the same for Supreme Court justices and judges of the Court of Appeals upon their request.

Proviso 46.5: Proviso 46.5 states that amounts appropriated in the General Appropriations Act for solicitors' offices are in addition to any amounts presently being provided by the county for these services and may not be used to supplant funding already allocated for such services.

Proviso 47.1: This proviso states that no county may contribute less money to indigent defense than the amount the county contributed as of July 1, 2001. No county shall be permitted to contribute less money than the amount the county contributed in the prior fiscal year.

Proviso 47.14: This proviso requires a person applying for a court-appointed attorney in a termination of parental rights (TPR), abuse and neglect, or other civil court action to pay a $40 application fee. The clerk of court or other appropriate official is required to collect the application fee and remit the proceeds to the Commission on Indigent Defense on a monthly basis.*

Proviso 51.29: This proviso is intended to provide funding to expand the capabilities of the Department of Corrections (DOC) to more expeditiously accept and process newly-sentenced inmates who are awaiting transfer from local jails. $1.9 million was placed in the budget to expand the R&E centers at the Kirkland and MacDougall Housing Units. This proviso provides a permanent solution to DOC not accepting its prisoners from local jails in a timely manner, and it recognizes that DOC must comply with its statutory obligations.

Proviso 71.2: Proviso 71.2 requires counties to provide for each administrative law judge residing within that county, upon their request, an office within the existing physical facilities if space is available, to include all utilities and a private telephone.

Proviso 72.8: Amounts appropriated in the General Appropriations Act for victim assistance programs in solicitors' offices are in addition to amounts presently being provided by the county for these services, and they may not be used to supplant funding already allocated for such services.

Proviso 76.11: This proviso states that if the State Treasurer receives an audit report from a county that contains a significant finding related to court fine reports to the State Treasurers Office, the requirements of proviso 89.70 shall be followed if an amount due is specified. Proviso 89.70 is the Assessment Audit Proviso. The requirements of 89.70 are as follows:

If the error is determined to have been made by the county or municipal treasurer's office, the State Auditor shall notify the State Office of Victim Assistance for the crime victim portion and the chief administrator of the county or municipality of the findings and, if full payment has not been made by the county or municipality within ninety days of the audit notification, the State Treasurer is directed to adjust the authority's aid to subdivisions funding in an amount equal to the amount determined by the State Auditor to be the state's portion. . .

If an amount due is not specified, proviso 76.14 authorizes the State Treasurer to withhold 25 percent of all state payments to the county until the estimated deficiency has been satisfied. Additionally, the proviso states that if a county is more than 90 days delinquent in remitting monthly court fines, the State Treasurer shall withhold 25 percent of state funding for that county until all monthly reports are current. After 90 days, the funds being held by the Treasurer’s Office will be made available to the State Auditor to conduct an audit of the entity for determining an amount due, if any.

Proviso 79.1: This proviso states that the amount of compensation for county registration board members and county election commissioners is $1,500 per member and may not exceed $12,500 per county. If the number of appointments in a county exceeds eight members, compensation shall be reduced on a pro rata basis in order to adhere to the $12,500 per county limit. The funds are exempt from mandated budget reductions.

Proviso 79.7: This proviso requires members of the county board of voter registration and county election commission to receive a common curriculum about the duties and responsibilities of such boards and commissions. The State Election Commission must withhold the stipend of members, if they do not complete the training and certification program or fail to complete at least one training course in a year. Additionally, the proviso requires the commission to make the courses available in various locations—including the upstate, coastal and midlands areas of the state.

Proviso 80A.37: This proviso directs the Division of State Information Technology to administer and coordinate First Responder Interoperability operations for the statewide Palmetto 800 MHz radio system. The proviso directs the Division of State Information Technology to establish the level of required match each year, based upon the funding provided.*

Proviso 80A.39: This proviso states that there will be no state employee pay raises for FY 2009-10.*

Proviso 80A.52: This proviso states that the increase in the employer contribution rate for employers participating in the S.C. Police Officers Retirement System provided for in Section 9-11-310(F), as added by Act 311 of 2008, is suspended for FY 2009-10.*

Proviso 80A.65: This proviso states that the funds appropriated to the Division of Aeronautics for FAA grant matching may be used to match state and local aviation airport projects—whether or not they have received FAA funding.

Proviso 80C.6: This proviso states that a person who is eligible to participate in the state health and dental insurance plans as a council member of a participating county—and who is also eligible to participate as the spouse of a covered employee or retiree—may choose to participate in the insurance plans as either an employee or a spouse, but not both.*

Proviso 86.2: This proviso states that for FY 2009-10, counties may transfer funds among appropriated state revenues as needed to ensure the delivery of services.*

Proviso 86.3: This proviso amends the quarterly distribution amounts for the Local Government Fund. The amount of the first quarterly distribution for each entity shall equal the amount of the last quarterly distribution for FY 2008-09. The next three installments will be distributed in equal amounts, reflecting any reduction in the aid to subdivisions allocation. This proviso is intended to help reduce the necessity of tax anticipation notes by ensuring a predictable amount of revenue in the first quarter of the fiscal year.*

Proviso 86.4: This proviso—which provides for the salary supplements for clerks of court, probate judges, coroners, sheriffs, registers of deeds, auditors and treasurers—was amended to provide that a county can reduce the expenditures in the operation of these officials' offices, after consultation with the officer, without any required corresponding reduction in the county's state aid to subdivisions distribution.

Currently, §8-15-65 states: "To the extent that compensation for these officers is reduced by a county or there is any other reduction of expenditures in the operations of their offices, a corresponding reduction must be made in the distribution otherwise due the county pursuant to Chapter 27 of Title 6, the State Aid to Subdivisions Act." (Emphasis added.) This section has been interpreted as sheltering these offices from budget reductions, at the expense of all other county departments. The proviso is intended to allow county council the ability to reduce expenditures in these offices for a one-year period.

This proviso was also amended to exempt the salary supplements for clerks of court, probate judges, sheriffs, registers of deeds, coroners, auditors, and treasurers from across-the-board cuts mandated by the Budget and Control Board or General Assembly.*

Proviso 86.6: Requires that a county government must fund its legislative delegation budget as approved by the delegation for FY 2003-04.

Proviso 86.8: This proviso suspends §6-27-30 and §6-27-50. Section 6-27-30 requires 4½ percent of general fund revenues of the latest completed fiscal year be appropriated to the Local Government Fund. Section 6-27-50 states that the Aid to Subdivisions Act, which includes the LGF, may not be amended or repealed except in separate legislation solely for that purpose.*

Proviso 89.24: The mileage reimbursement for state employees is 50.5 cents per mile or the current rate established by the Internal Revenue Service—whichever is lower.

Proviso 89.72: This proviso authorizes the State Office of Victim Assistance (SOVA) to perform programmatic reviews for any entity which receives victim assistance money—primarily fine assessments—to ensure that victim fine money is spent in accordance with the statute.*

Proviso 89.118: This proviso authorizes a committee organized and co-chaired by the State Treasurer and the Comptroller General to monitor funds associated with the federal stimulus bill. This committee shall collect information associated with funds received by state agencies from the American Recovery and Reinvestment Act. Finally, the co-chairs may also require local government entities to provide any information deemed relevant to provide disclosure of the American Recovery and Reinvestment Act of 2009 funds to the public, including audit reports.*

Proviso 90.14: This proviso suspends §6-27-30 for this fiscal year. Section 6-27-30 requires 4½  percent of general fund revenues of the latest completed fiscal year be appropriated to the Local Government Fund.*

Proviso 90.21: This proviso requires the Department of Revenue to utilize $2,200,000 allocated to the department to hire and provide operations for specifically identified additional enforcement personnel (agents, auditors and support) to enhance audit and collection activity. The funds collected as a result of these enhanced audits are to be placed in a separate fund by the State Treasurer. The first $48,250,000 collected shall be disbursed on a pro rata basis to fund: reapportionment, OPEB funding, the school owner-occupied homestead exemption shortfall, and need-based grants. After this money is distributed, the next $8 million shall be transferred to the Department of Motor Vehicles to reimburse the department for the funds transferred to other agencies in the budget bill. The next $500,000 shall be transferred to the Forestry Commission, then the next $285,000 to Clemson University—PSA for the South Carolina Biotechnology Incubation Facility. The next $500,000 of excess revenue shall be transferred to the Commission on Higher Education—University Center of Greenville and the next $30,000 to the Department of Agriculture for Agri-Business Development. After all of the above money is distributed pursuant to this proviso, the next $10 million of revenue shall be transferred to Aid to Subdivisions—State Treasurer for the Local Government Fund.*

May 6, 2009
H. 3272 — ATI/Point of Sale

H. 3272 was taken up in Senate Finance subcommittee on Tuesday, rewritten by amendment, and given a favorable report; the full Senate Finance Committee gave H. 3272 a favorable report as amended. H. 3272 could be taken up on the floor of the Senate as early as Thursday, May 7.

Contacts with senators are urgently needed as soon as possible on H. 3272. Ask your senator to place his name on H. 3272.

H. 3272, as it came out of Senate Finance Committee, would exempt property over a 15 percent increase in the previous taxable value when a property undergoes an assessable transfer of interest. That taxable valuation would be in place until the next regular reassessment, instead of going to the full fair market value as happens under the current law. The taxable value could increase up 15 percent at the next regular reassessment. The taxable values on the books for properties which had an ATI prior to Jan. 1, 2009, would remain on the books. However, an ATI which occurred after Jan. 1, 2009, would be subject to the 15 percent cap in H. 3272. A sunset provision was placed in the bill and would expire after property tax year 2014.

H. 3272 would still have a fiscal impact of $44 million in an average tax year, beginning with the tax bills sent out in 2010.

1. The $44 million revenue loss next year will come after a $50 million cut to the FY 2009-10 LGF, and the FY 2010-11 fund will be lower than this year’s LGF under the statutory formula. Most of the tax revenue growth in local governments has come from the ATI, and taking away that revenue growth will put pressure on millage rates which everyone pays. It is, in effect, a reverse impact fee which existing residents pay when someone moves into an existing house or buys a commercial property.
2. When the constitutional 15 percent cap on valuations was debated, it was said repeatedly that the loss in revenue would not be that great because the ATI would bring values up to fair market value upon transfer; and the average property changes hands every seven years in South Carolina. H. 3272 reverses that decision.
3. Fast-appreciating property which undergoes an ATI in the future will never be taxed on its fair market value—while the great majority of homeowners got little or no benefit from the original 15 percent cap and will continue to pay on the full fair market value of their home.
4. The cost of reprogramming the assessors’ computers yet again will be significant, and there is no fiscal impact estimate of this cost attached to this bill.
5. There has been no discussion of the impact of this change upon the Index of Taxpaying Ability and the school funding which is affected by the Index. Taking value out of the school tax base will have to create winners and losers in the school funding system, and the losers will have to turn to higher millage rates.
6. Moody’s bond rating service placed all school bonds in South Carolina on a negative outlook immediately after Act 388 passed. In discussing the negative impact of the constitutional 15 percent cap on bond ratings, they cited the ATI mechanism as a positive counterbalance in high turnover districts. There is a risk that county and municipal bonds could be in the same position as school bonds, if H. 3272 were to pass and wipe out most of the revenue growth from the ATI. At the very least, H. 3272 would reduce future bond issuing capacity, if it did not result in bond rating downgrades.
7. New construction—either residential or commercial—will be placed at a disadvantage, if H. 3272 is adopted. A purchaser could buy an existing home or commercial property and receive a capped tax value. If that purchaser buys a new home or commercial property, they would be taxed on 100 percent of the value of the structure. H. 3272 may encourage the sale of existing structures, but genuine new investment would be discouraged. The Home Builders Association does not support H. 3272, because of this disadvantage, but will not fight H. 3272. The home builders have also said they will be asking for relief from that disadvantage in the future, should H. 3272 pass.

Please contact Robert Croom or Tim Winslow with any questions or to let them know the result of any conversations you have about H. 3272. Robert Croom can be reached by phone at (803) 609-5963 or via e-mail  and Tim Winslow may be reached at (803) 609-5964 or via e-mail.

April 17, 2009
H. 3581 — Local Government Fund Suspension

Ask your Senators to personally object to H. 3581 when it appears on the calendar for consideration. This is our LAST, BEST HOPE to stop this bill.

The Senate Finance Committee reported H. 3581—which allows the General Assembly to reduce the Local Government Fund in the budget—last night. They also passed a budget which reflects a $50 million cut to the Local Government Fund.

Neither the House nor the Senate allowed public testimony for H. 3581, so local governments have had no opportunity to express the devastating consequences of the committee’s action.

It is imperative that you contact your Senators this weekend. Ask that they object to consideration of H. 3581 and that they vote to defeat the bill when it is brought forward! 

TALK WITH THE SENATORS. The points to be made include:

• The LGF will drop significantly in next year’s budget under the statutory formula, reflecting the drop in the state general fund occurring this year. The state general fund is expected to be about $1.2 billion less than the previous year. This equates to a roughly $50 million drop in the LGF under the statutory formula.
• Show the Senators what amount of cut the county receives as a result of the House budget from the attached sheet.
• Explain the impact of the $50 million LGF cut in terms of the total property tax millage increase necessary to offset the cut and in terms of what impact solely using budget cuts would be. The attached sheet shows the distribution of the cut and millage increase necessary to offset the cut. Not all counties have the option to completely offset the cut through the millage rate, because the rate caps have no exception for the LGF cut.
• Explain the impact of the House LGF cut in terms of basic service reduction to the citizens. Only you can tell the Senators what the potential service impacts would be in your county after the county budget is impacted by the LGF cut. Many areas of spending are subject to minimum funding levels in state statute and budget provisos and cannot be cut.
• There is no reduction in the obligations the state places on counties to fund state agencies—including DHEC, DSS, DHHS, indigent defense, circuit court support, magistrate court support, the Department of Probation Pardon and Parole, etc. Some state agencies have already asked for increases in local funding.
• Counties still have other mandates—such as maintaining an animal shelter, long-term storage of DNA evidence, the Medically Indigent Assistance Program, long-term public records storage in climate controlled space, victim services, etc.
• Counties will have to pay increases in ordinary expenses such as jail costs, State Health Insurance premiums, workers’ comp premiums, etc.
• Let the Senators know how your reserve funds are obligated (tied to outstanding bonds or to avoid tax anticipation notes, etc.) and how little of that reserve is really available to use. Remind them that using reserve funds to pay for recurring expenses led to the reduction of the state’s bond rating, and the same is expected if the county were to use reserve funds to fill a revenue gap.

Ask your Senators to personally object to H. 3581 when it appears on the calendar for consideration. This our LAST, BEST HOPE to stop this bill.

March 25, 2009
H. 3272 — ATI/Point of Sale

The House Ways and Means Committee will consider H. 3272 TOMORROW, March 26, at 11 a.m. Calls to the members of the House Ways and Means Committee before 11 a.m. Thursday are critical.

Please contact the members of the House Ways and Means Committee on the attached roster, and ask that H. 3272 be sent back to subcommittee for further study.

H. 3272 exempts the increase in value caused by an assessable transfer of interest (ATI) when property is transferred to a new owner. This means that any value which was exempted from taxation by the 15 percent valuation cap would remain exempt. The bill is retroactive to tax year 2007.

• The property tax exemption in H. 3272 will cause a retroactive drop in the value of a mill of property tax for the budget year council is now considering.
• H. 3272 will cause an automatic millage increase to pay bond debt. Bond payments cannot be reduced, and the amount of revenue raised by last year’s millage levy will be less, so the millage rate must be increased to avoid default.
• H. 3272 will force cuts to existing services or millage rate increases to make up the amount of revenue which will be lost, because of the drop in revenue raised by last year’s millage levy.
• Several assessors said they cannot guarantee that the changes in the databases can be processed in time to prepare tax bills this fall. Each property will have to be examined by hand to sort out which properties had an ATI that must be adjusted back to old values, because there is no indicator as to the reason a property underwent ATI. New construction and improvements would still be taxed at their revised value after the ATI.

• THE REVENUE LOSS FROM H. 3272 IS BIGGER THAN THE $50 MILLION CUT TO THE LOCAL GOVERNMENT FUND. The first year fiscal impact is $52 million in lost revenue statewide, according to the Board of Economic Advisors. That lost revenue increases by $52 million each year—$104 million in year two, 156 million in year three, etc....

• The net effect of H. 3272 is that future increases in millage rates will shift the burden to existing taxpayers—in the same way the business community is treated under the school operating tax exemption.

• Another effect of H. 3272 is that people moving into the state will get the same benefit as long-time residents and will never pay property tax on the full value of their property.

• There has been no data or testimony on the effect of this change in taxable property values on school district EFA distributions.

• Moody’s put all school district bonds on a negative outlook in July, 2006 when Act 388 passed; and the existence of the ATI mechanism was looked upon by bond rating agencies as a positive portion of Act 388. Repealing ATI will hurt all bond ratings.

A thorough listing of these and other points is attached.

March 12, 2009
H. 3581 — Local Government Fund Formula Suspension

SCAC urges all county officials to make a special trip to Columbia on Tuesday, March 17.

SCAC asks that you come to the second floor of the State House at noon on Tuesday, to meet with your senators, as they come into the Senate chamber. At that time, also invite them to join a press conference at 1 p.m. to support the Local Government Fund. When staff contacted them, several senators said they know little about the cut in the Local Government Fund or H. 3581.

A bipartisan group of senators will hold a press conference to oppose the Local Government Fund cut and H. 3581 in the first floor lobby of the State House at 1 p.m.

This is our best opportunity to meet the senators in the State House, communicate the impact of suspending the Local Government Fund formula and get their support early, before other budget decisions preclude preservation of the Local Government Fund.

Talking points and other materials you might want will be in the Friday Report and available from SCAC staff in the State House.

Parking is available at meters on Assembly Street and in the cash parking garage of the AT&T building (the entrance is on Lady Street, between Main and Assembly Streets).

March 6, 2009
LGF Funding Level

The House convenes at 10 a.m. Monday to begin work on the budget bill. There is work to be done, before the House convenes Monday.

Although the House voted to allow suspension of the LGF formula, SCAC does not support the suspension of the LGF formula. If there are not sufficient votes to preserve the LGF formula in the House, we must work to minimize any cut in LGF funding in the House version of the budget. Each member of the House needs to be contacted to encourage them to maintain the LGF formula—or at least minimize the amount of any cut in the LGF—and to encourage them to vote for a series of "flexibility" amendments to remove minimum funding levels required of the county for state agency support.

ACTION REQUEST #1:

Contact House members to ask that they support all measures to eliminate or minimize the size of any LGF cut.

Tell the House members that—while suspension of the LGF formula is not acceptable—if the votes are not there to preserve the LGF, the amount of the LGF cut should be as small as possible to preserve basic local services. The great majority of those who supported H. 3581 to suspend the LGF formula say the LGF will be cut by $50 million, instead of $122 million. There are also representatives who supported the LGF formula suspension but said they do not support the $50 million cut being discussed now. Reports are that Speaker Bobby Harrell agreed to look for an additional $18 million to make the LGF cut $32 million. County officials need to let their House members know that they want all measures to minimize any LGF cut supported.

A spreadsheet showing the effect of various cuts in the LGF is attached. This sheet also shows these cuts in terms of the millage necessary to offset them.

ACTION REQUEST #2:

Ask House Members to support amendments to give flexibility in dealing with any LGF cut by deleting minimum funding levels of state agencies by counties.

Several amendments will be offered to delete the requirements for counties to fund state agencies at the same level as the previous year. It is not reasonable to adopt a state budget which will clearly require cuts in basic local services, while protecting a state agency supported by county taxpayers from any of those cuts. Why can’t agencies be asked to reduce expenditures, when basic local services will have to be cut to deal with the LGF funding cut?

Feb. 29, 2009
Local Government Fund Slashed by $122 Million 

LOCAL GOVERNMENT FUND SLASHED $122 MILLION

Late last night, the Local Government Fund (LGF) was slashed by $122 million. That is a 42 percent cut and is the same funding level for FY 1994-95. A distribution sheet showing the amount of the cut and proposed funding level is attached. This data was distributed at the Ways and Means Committee meeting.

The House Ways and Means Committee voted 16-7 to adopt H. 3581, which is a separate bill solely for the purpose of suspending the statutory LGF formula. Both H. 3581 and the budget bill now go to the full House next week.

Those voting to slash the LGF were: Reps. Barfield, Bingham, Cooper, Edge, Kirsh, Littlejohn, Loftis, Lucas, Merrill, Rice, Simrill, Murrell Smith, Roland Smith, White and Young.

Those voting to honor the statutory formula were: Reps. Battle, Clyburn, Cobb-Hunter, Kennedy, Joe Neal, Neilson, and Ott.

Absent were: Reps. Herbkersman and Mike Pitts.

When the budget bill was voted upon, the line items reflected a $122 million cut in the LGF. An amendment was offered to put a temporary cigarette tax in place to replace the $122 million cut from the LGF, but it failed on a 17-6 tabling motion (Those voting to fund the LGF with the cigarette tax were Reps. Bingham, Limehouse, Lucas, Merrill, Simrill, and Murrell Smith).

As you can see from the two roll calls, the LGF is being alternatively used for leverage or a battering ram, and the result jeopardizes local services and employees. When you talk with the members who voted and they explain their votes, you should politely but firmly point out that the bottom line result is a cut in money going to local services.

The LGF formula is 4.5 percent of the state general fund for the most recently completed fiscal year. When the state general fund goes up, so does the LGF. When the state general fund goes down, so does the LGF. The state general fund would have seen even larger increases, if hundreds of millions of dollars had not been put into trust funds which do not factor into the LGF formula. Aid to Subdivisions, now the LGF, started purely as property tax relief and continues as property tax relief.

Comments made during the debate included rationales to the effect:

• "My council voted to spend money on ___" to justify a vote to slash the LGF.
• "State agencies are being funded at FY 2005-06 levels." After the cut, the LGF is at FY 1994-95 levels.
• "I don’t think local governments should get 4.5 percent of the general fund in these trying times."
• "The LGF goes up every year." This is false, the LGF will drop next year when it reflects the drop in the state general fund. The only reason the LGF has increased is because the state general fund has increased and there are a lot of state spending increases which are not included in the state general fund.

A vote on H. 3581 is purely a vote on whether to honor the statutory formula for the LGF without getting into the back and forth of how to fund the state budget and the LGF. Ask your House member(s) to object to H. 3581 when it gets to the House floor and vote against H. 3581.

• Call your House member this weekend to explain what happened at the Ways and Means Committee meeting and how it affects their constituents’ service and the county employees in their district.
• Present the House members with the facts of how failing to honor the statutory LGF formula affects local services, employees and local tax rates. Tell members how much of the county budget cannot be cut because of other laws on the books.
• Plan to be at the Mid-Year Conference next week for a more detailed briefing and trips for personal meetings at the State House.
• Plan to come to the State House when H. 3581 and the budget are debated.
• Contact your local newspaper editor to let them know what has happened and what the effects of the cuts are in their circulation area.