RALEIGH — Now settled into his role, North Carolina State Treasurer Brad Briner told North State Journal he has encountered “no big surprises” but has concerns about the finances of the state’s local municipalities.
“It’s the little things that sneak up on you,” said Briner. “I kind of knew this, but now I very much know this. We have a lot of local finance issues in this state. And there are 1,100 municipalities that the (Local Government Commission) oversees and that we’re trying to help through Hurricane Helene and other things like that. That has snuck up on me, just in the magnitude of what that is and how important it is.”
As chair of the Local Government Commission (LGC), Briner said he and State Auditor Dave Boliek, an LGC board member, are aware of the issues, particularly the cessation of American Rescue Plan Act funds.
“We’ve been working very closely together on some of these distressed local communities, and the hangover from ARPA funds running out is only just beginning,” said Briner. “You had towns getting seven-digit and larger payments one time that, somehow, they convinced themselves were going to be perpetual.
Briner also said the creation of viable utility reserve was recently discussed related to depleted ARPA funds.
“So there was half a billion dollars of ARPA money at the state level that was set aside just to help distressed utilities, wastewater and drinking water in rural communities. They’ve spent all that now,” said Briner. “There’s a $35 billion water infrastructure problem in this state that we haven’t begun to touch, but at least they got a small down payment on it.”
Last month, Briner discussed a proposal for the State Health Plan (SHP) that would change the cost of premiums through a “progressive” banded structure based on a percentage of plan enrollee salaries.
“So, honestly, we’re looking at what Medicare does and thinking about what we can learn from them, at least on the revenue side,” Briner said of the banded premium idea. “But then you collide with state information technology and infrastructure to implement something like that. It turns out that’s very challenging to do.”
Briner said the plan they are considering was the only way to achieve this in the short term by 2026.
“We would have to rewrite a whole section of the basic code of payroll for the state to do it any other way,” he said. “In the end, we have a number of state employees in the median state wages; $55,000 or thereabouts.
“And it goes well down from there in certain professions, who are paying $25.00 a month for individual coverage, and we’re going to ask more of them. And that’s a really hard ask, particularly at the very lowest end of the spectrum.”
While initial action has been taken to move discussions forward on the banned plan, Briner said the final actions won’t be taken until August.
The banned premium proposal comes as Briner has estimated the SHP will face a $1.4 billion deficit by 2027. Briner said the most expensive portion of the SHP’s enrolled population are those under the retirement age of 65, while retirees cost the least since Medicare Advantage largely covers them.
Briner said the legislature is being asked to address the deficit.
“They’ve been averaging increasing their funding level by about 3.5% each year, going back many, many years. We’re asking for more than that,” said Briner. “We’re asking for them to step up to 5% this year. That would be roughly $100 million more. As you know, the budget is very tight this year. We’re hopeful to get that, but that is not at all guaranteed.”
Briner said the state pension offered the fewest surprises as he came into office.
“The big, pleasant surprise has been the number of people who want to come work here at a salary structure which is not particularly competitive with other pension plans,” Briner said of the pension plan. He added there will be a few new hires in that division in the near future.
“This tends to be late career people who want to come work here,” said Briner. “And wages is absolutely not the reason. So that’s been a really pleasant surprise, and we’re kind of sorting through all that.”
In terms of the state pension, a bill has been filed by House Speaker Destin Hall (R-Granite Falls) that would allow the plan to invest in digital currencies and assets. Briner said he’s in favor of it, and it is “part of what we want to achieve here.”
“The way that we govern pension plans is overly prescriptive,” Briner said regarding changing what the pension can invest in. “We have a statute that says you can buy this, but not that, and this percent of that, and those percentages are, honestly, probably pulled out of thin air or the product of a compromise 15 or 20 years ago. They don’t really change the risk profile of a pension plan in the way that I think the legislature should have a voice to make sure that we are not taking inappropriate risks.”
And what we’d like to do is change this to a board governance structure where the legislature continues to have oversight of aggregate risk, aggregate cost and the big-picture items that they should absolutely be concerned about. But the little picture items, which is where we are at statute right now —and that would include digital assets — those are kind of evolved so fast that it’s not really a statutory concern, in my opinion.”
Briner said he hears the call not to take undue risks “loud and clear” but said what’s appropriate today will likely change. He added he’d like to put a governance structure in place that make it “perpetual rather than episodic.”
