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

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...

Upcoming Debt Payments - Cash Flow Concerns

Monday, April 13, 2020

Public utility systems have undoubtedly taken a hit from the COVID-19 pandemic, be it from businesses reducing hours or shutting down, or from the temporary ban on enforcing collections or both. In addition, some units may be dealing with a reduced workforce to manage their systems. All of these challenges may be a cause for concern with your May (SRF) and June (USDA) debt payments that are due soon. If you think you may have difficulty making your May SRF payment, please contact Jennifer House at DEQ as soon as you practically can. In addition, please contact us at the SLGFD. If you think you may have difficulty making your June USDA payment, please contact your local office or Dennis Delong or Julia Johnson at the state office at (919) 873-2046. Again, please contact us at the SLGFD as well. We can be reached at (919) 814-4300 or at slgfd@nctreasurer.com

We encourage you to think through your potential cash flow challenges beyond these two approaching payment dates, since most of these programs have another round of payments due again in November (SRF) when cash levels may be even more negatively impacted than they are at this time. Please contact DEQ or USDA as noted above and as applicable, and SLGFD as soon as you anticipate issues making any of your payments (including those other than SRF and USDA) so that we may best assist you.

As with the initial loan...

Should You Consider Adopting an Interim Budget for a portion of the 2020-2021 Fiscal Year?

Monday, April 6, 2020

Image of person using a calculator with charts spread out over deskWe have received many questions recently about interim budgets, and for good reason. Revenue estimates for the 2020-2021 fiscal year are very likely to be anyone’s guess for sources like sales tax and utility charges for services, at least in the short term. As time passes and we collect more information, we should get a clearer picture of what to expect. But what does that mean for your budget process?

Rather than trying to “guestimate” revenue amounts, some local government officials are considering adopting an interim budget to buy themselves time for more data to come in on how revenues are being impacted by the COVID-19 pandemic. An interim budget is one that covers a relatively short period of time – often 60 days or less – and appropriates only those funds necessary to keep the government operational. In fact, NCGS 159-16 (where you will find the authority to adopt an interim budget) says that the appropriations may be used only to pay salaries, debt service payments, and the usual ordinary expenses of the local government. Interim budgets do not include new spending, and they don’t include capital items. There are no revenue estimates in an interim budget – the appropriations are offset by an appropriated fund balance figure. Note that existing capital...

Zoom Call for Local Government Utilities About Executive Order No. 124

Wednesday, April 1, 2020

When:   Thursday, April 2, 1:00 - 2:30pm
Cost:      Free

Details:  The Governor issued an Executive Order on March 31 (EO 124) that, among other things, prohibits local government utilities from disconnecting water, wastewater, electric, and natural gas service to residential customers for at least 60 days, prohibits local government utilities from imposing certain fees and charges, mandates payment plan parameters, and imposes a new reporting requirement. We are still working on analyzing all the provisions of the EO, and seeking clarification on certain aspects from the Governor’s and AG’s staff. We will host a zoom call for all local government utilities tomorrow (Thursday, April 2, 2020) from 1:00-2:30 pm. The call-in information is below. We will be able to accommodate 500 participants on the call and will make the recording available online afterward.

Join Kara Millonzi and Shadi Eskaf from the School of Government and the Environmental Finance Center, and Sharon Edmundson from the Department of State Treasurer, among others, will be on this call. Please feel free to send any questions in advance to Kara at millonzi@sog.unc.edu or Shadi at eskaf@sog.unc.edu.

Call-in Info:

...

Are Local Governments Required to Suspend Water Disconnections?

Tuesday, March 31, 2020

The guidance that was provided in this post is no longer accurate due to Governor Roy Cooper’s Executive Order No. 124 issued on March 31, 2020 and has been removed. Please refer to the order for details or contact us at SGLFD@nctreasurer.com with questions.

ZOOM Call for Local Government Finance Officers About COVID-19 Response

Thursday, March 26, 2020

If you were unable to call in to the ZOOM call held on Wednesday, March 25, the UNC School of Government is sponsoring a repeat of the call on Friday, March 27, at 1:00 p.m. 

If you participated on the March 25 call, please DO NOT join the call on March 27. We will be repeating the same information and want to reach the maximum number of people. We will also make the recording of that call available. 

Please note that we will be hosting additional calls in the next few weeks.

Here is the information about the March 27 call:

Date/Time: Friday, March 27, 2020 1:00 p.m.
Link to join ZOOM meeting: https://unc.zoom.us/j/720349870
Meeting ID: 720 349 870
Phone Number: 877-853-5257 US Toll-free

 

GASB to Consider Delaying the Implementation of Statements 84 and 87

Thursday, March 26, 2020

In a press release dated March 26, 2020, the GASB announced it is considering postponement of implementation of all standards and implementation guides with effective dates that begin on or after reporting periods ended June 30, 2018, and beyond.  Of particular interest to NC local governments is that included in this consideration are both Statement 84 on Fiduciary Funds and Statement 87 on Leases.  This is excellent news for local governments faced with myriad challenges as a result of COVID-19.  The exposure draft for this project will be issued in April, and full board consideration will occur in May, 2020.  Read the full text of the press release here.