The Balance Sheet

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The Balance Sheet

The Balance Sheet is the blog of the Local Government Commission staff. Click below to sign up to receive email alerts when new blog posts are released.

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For announcements and resources related to ARPA funds and the impacts of COVID-19, visit our Local Government ARPA Resources page.

ARPA Resources

Audit Deadline for June 30, 2020 Financial Statements

Friday, May 15, 2020

COVID-19 has impacted local governments in many ways, not the least of which is interfering with the timeline for completing a June 30, 2020 audit. After giving careful consideration to the limitations on local governments’ staff time and the availability of audit staff, we are extending the deadline for June 30, 2020 audits, both financial and compliance, to January 31, 2021.

What does that mean? If you have already submitted your audit contract with an October 31, 2020 deadline and submit your audit before January 31, 2021:

  • we will accept your audit as timely, and we will make no indication in our records that your audit was late
  • we will not require an amended contract form

If your audit report is submitted after 11:59 PM on January 31, 2021:

  • it will be considered late
  • you or your auditor will need to submit an amended contract form

If you have not yet submitted your audit contract for your June 30, 2021 audit, you may submit it with a January 31, 2021 due date instead of October 31, 2020 (or any date in between those two dates).

Again, units that have already submitted contracts do NOT need to send in contract amendment forms simply to change the due date to a date on or before January 31, 2021. We recommend that you consult with your auditor and your unit attorney to determine if you need to make changes to the contract you entered into with your auditor.

Note that these...

Registration Now Open – 19th Annual State Treasurer’s Conference

Thursday, May 7, 2020

As with most events recently, our annual State Treasurer’s Conference will be offered in a different format this year. Beginning on Tuesday, June 16, we will be offering four virtual sessions of two hours each on topics of interest to both local government finance officials and staff as well as local government auditors. We will not be holding a separate class for auditors this year. 

The schedule of sessions is as follows:

Date/Time Topic
Tuesday, June 16,  10:00 AM – 12:00 noon  Cybersecurity Issues with Shannon Tufts; Pre-Audit with Kara Millonzi
Thursday, June 18,  10:00 AM – 12:00 noon LGC and Single Audit update; Financial Issues Related to COVID-19
Tuesday, June 23,  10:00 AM – 12:00 noon State Auditor update with State Auditor Beth Wood; 2018 Revisions to Yellow Book Requirements
Thursday, June 25,  10:00 AM – 12:00 noon GAAP Update with David Bean, Director of Technical Resources at GASB

You must register for each session separately, and each will provide 120 minutes of CPE credit for CPAs. The fee for each two hour session is $75 after the discount currently being offered by the SOG for all courses.  

Registration for this event has closed....

Budgeting in Uncertain Times

Thursday, May 7, 2020

Image of someone using a calculator with charts spread out on deskShort of having a crystal ball, finance and budget officers don’t have a lot to go on to determine the financial impact of COVID-19 on North Carolina local governments. That doesn’t mean, however, that there aren’t steps local finance and budget officials can take to begin to prepare for the inevitable decline in revenue.

Steps for 2019-2020 Budgets

Even though the 2019-2020 fiscal year is almost over, there are steps units can take to preserve cash and reserves.

  • Current year budgets should be carefully reviewed to see if there are cuts or deferrals that can be made.
  • Typical appropriations considered for cuts are travel, training, and maintenance, and units may implement hiring freezes or furloughs. Each unit will need to make these decisions based on their individual circumstances. The more you can add to reserves this year, the better off you will likely be in the 2020-2021 fiscal year.
  • Units need to account for any increases in expenditures that have occurred and may continue to occur in direct response to the pandemic, and make sure those costs are included in the budget. Also, recognize any additional grant or contribution revenues you may have realized during this time.
  • Be proactive in...

NC General Assembly Extends Due Dates for Motor Vehicle Taxes

Tuesday, May 5, 2020

Senate Bill 704 (S.L 2020-3), signed into law on May 4, 2020 by Governor Cooper, extends the due date of any credentials, permits, and registrations issued by DMV, and waives any penalties or fees for not complying with the original due dates of such items. The bill also extends the due date of motor vehicle tax payments to match the revised expiration dates. Due dates for related vehicle inspections also are extended five months.  This extension applies for any of the above-listed items that are due on or after March 1 and before August 1, 2020.  Subsequent years’ deadlines for these items will return to the previous due dates. Local governments should consider the impact these extensions will have on motor vehicle tax revenue and the related cash flows when considering budgets (both 19-20 and 20-21) and cash flow needs. 

Please contact us at (919) 814-4300 or with questions. 

NC General Assembly Passes COVID-19 Relief Bill that Includes Help for Local Governments

Tuesday, May 5, 2020

Photo of NC legislative buildingOne of the General Assembly’s first two coronavirus pandemic response bills, SB 704 in Section 2.3, establishes the “Local Government Coronavirus Relief Reserve” (Local Reserve). The new law then transfers the sum of $300 million derived from the federal CARES Act, P.L. 116-136, to the new Local Reserve. The General Assembly implicitly allows $150 million to be spent for responses to the pandemic as allowed by the original federal act.   

Per the US Treasury website, the CARES Act requires that the payments from the Coronavirus Relief Fund only be used to cover expenses that—

  1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
  2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and
  3. were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.

The new state law also specifies that it is the intent of the General Assembly to appropriate the remaining $150 million to local governments that experience a revenue shortfalls provided that the federal CARES Act, P.L. 116-136,...

Statements of Debt Service Obligations

Friday, April 24, 2020

As required by G.S. 159-35, the Local Government Commission staff has emailed statements of debt service obligations to local governments. Finance Officers should have received an annual e-mail with a link to the LGC129 Report – Annual Bond and Note Principal and Interest Requirements. If for some reason you did not receive this e-mail, or had problems with the link, please send an e-mail explaining the problem and your contact information to Staff will follow-up with you and re-send the report as needed.

FEMA Public Assistance Program Available for COVID-19 Emergency Expenses

Thursday, April 23, 2020

All North Carolina local governments and certain nonprofits are eligible to apply to the FEMA Public Assistance Program for FEMA reimbursement to assist with emergency expenses related to responding to COVID-19. The NC Division of Emergency Management and the UNC School of Government have partnered to produce an on-demand applicant briefing webinar that gives instructions on how to register for FEMA reimbursement, information on general reimbursement eligibility of COVID-19 expenses, tips on documenting expenses, and COVID-19 federal procurement requirements. A link to the free on-demand applicant briefing webinar, a pdf of the briefing presentation slides, and a summary of the FEMA Public Assistance program is available at both websites below:

The first step toward applying for FEMA reimbursement of eligible COVID-19 expenses is to register your organization in the FEMA Grants Portal. All local governments and nonprofits (incorporated as a 501(c), (d), or (e)) in the state are encouraged to register in the FEMA Grants Portal. Even if your organization is not...

Updates to UNC SOG Blog Post "Highlights of the U.S. Department of Labor's FFCRA Regulations"

Thursday, April 23, 2020

From Diane Juffras at UNC's School of Government: 

I recently published a new blog post on our Coates’ Canons blog: Furloughing Employees During the COVID-19 Crisis. You can find it here.

I also updated my earlier blog post, Highlights of the U.S. Department of Labor’s FFCRA Regulations. The US Dep’t of Labor published some revisions to the FFCRA regulations after their initial publication. Most of them were technical (numbering; change in punctuation), but one is substantive and worth noting. DOL eliminated subsection (f) of new 29 CFR 826.70 in its entirety. Because it was inconsistent with 29 CFR 826.160. Both of these sections were about using employer-provided accrued paid leave at the same time as emergency FMLA leave. The deleted section said that neither employers nor employees could substitute accrued paid leave for emergency FMLA leave. That is true, but it was confusing in light of section 826.160(c), which allows accrued paid leave to run concurrently with emergency FMLA leave.

Eliminating section 826.70(f) now makes clear that the employee has the right to ask to run accrued paid leave concurrently with emergency FMLA leave (after the first 10 days) and employers may require them to run concurrently. But there’s the important thing: when they run...

Revised Yellow Book Standards – Are You Ready?

Wednesday, April 22, 2020

GAO logoAs you are likely aware, the GAO 2018 Revision of the Government Auditing Standards – also known as the Yellow Book – are in effect for the fiscal year ended June 30, 2020. We are not anticipating any delay in this standard as it is already in effect; therefore, the standard will be applicable for certain audits for units with a June 30, 2020 fiscal year end. What does that mean to you as a local government? Or to you as an auditor of local governments? 

When do the Yellow Book Standards apply to a local government audit?
Any unit of government that expends $100,000 or more in state or federal funds in a given fiscal year must have a Yellow Book audit. 

What has changed in the revised standards?
The GAO has implemented stronger standards regarding independence of the auditor from the governmental unit and given some very specific guidance on how those standards impact the auditors’ work, especially regarding non-attest services performed for the audit client, including writing the financial statements. While the revised standards do not prohibit the auditor from writing the financial statements of an audit client, they do require certain thresholds to be met and certain actions by the auditor if he or she will continue to write the...

County Medicaid Hold Harmless Payments Impacted by COVID-19

Friday, April 17, 2020

Although the impact of the COVID-19 pandemic on North Carolina counties is not yet known, we can be sure that there will be one. We can also be sure that the pandemic downturn will negatively impact sales tax revenues for both the final quarter of FY 2020 and part or all of FY 2021. Other revenues may also be impacted, such as recreation fees or building permits; but we can be sure that existing sales taxes assumptions, at least in the immediate short term, will need to be revised downward. For both fiscal years, counties should plan for a significant drop in sales tax collections with the bulk of the revenue shortfalls occurring in FY2021. All local governments should review budgeted expenditures for the remainder of 2020, and for the fiscal year 2021, to determine which expenditures can be reduced to allow for these anticipated shortfalls.    

A sales tax issue that counties should consider for both 2020 and 2021 is how to budget and expend the Medicaid Hold Harmless (MHH) funds received from the state per GS 105-523. Eligible counties receive 90% of the projected year end MHH payments they are entitled to from the NC Department of Revenue (DOR) in March of each year. These hold harmless payments are made from the state to counties as a result of counties exchanging a portion of local sales and use tax revenue for the state’s agreement to assume...