- Published on Wednesday, 23 January 2013 00:29
- Written by Super User
By WILLARD KILLOUGH III
This isn't meant to read like a financial doomsday scenario, but when considering the state of the economy as of late, it's a good idea to start anticipating the worse and hope for the best.
To keep this simple, here's a not-all-inclusive list of what's around the corner. It's evident the cumulative affect of spending at all levels of government and the taxes they demand could have an increasingly painful affect on our quality of life.
• Homeowners Insurance in North Carolina - The North Carolina Rate Bureau filed a request with the North Carolina Department of Insurance on October 1, for insurance rate adjustments calling for a 30% increase for coastal homeowners insurance rates. The request calls for an average statewide increase of 17.7%, with increases as high as 30% in New Hanover, Brunswick, Pender Counties and other coastal counties. The request sets June 1, 2013 as the effective date for the increases. On Tuesday October 23, State Insurance Commissioner Wayne Goodwin issued a statement saying, "Initial review raises concerns that the rate increases requested by the insurance companies may be excessive and unfairly discriminatory."
A public hearing is scheduled to begin on June 3, 2013, at 10 a.m. at 430 N. Salisbury St. in Raleigh. Goodwin will serve as the hearing officer and listen to experts from the Department of Insurance and the Rate Bureau to decide what rate changes, if any, are warranted.
• NC Dwelling Insurance - On November 27, 2012 Insurance Commissioner Wayne Goodwin signed a settlement agreement with insurance companies in the matter of a rate revision for dwelling insurance. The agreement allows for a statewide average increase of 13.2 percent for dwelling fire and extended coverage policies, spread over a three-year period. For New Hanover, Pender, Onslow, Brunswick and Carteret Counties, the increase is as high as 25.9% over three years. Dwelling insurance policies are not homeowners insurance policies; dwelling policies are offered to non-owner occupied residences including rental properties, investment properties and other properties that are not occupied full-time by the property owner. They offer fewer coverage options and are sold to cover properties that would not qualify for a standard homeowners policy.
Dwelling policies typically consist of two parts: the fire portion of the policy covers damage caused by fire; the extended coverage portion of the policy generally covers damage caused by wind, hail, fire, smoke, riot, civil commotion, and aircraft and vehicle damage.
In North Carolina, there are approximately 400,000 properties covered by dwelling insurance, compared with more than 2.2 million covered by homeowners insurance, which are not part of this settlement.
• Electric Bills - Progress Energy Carolinas, a subsidiary of Duke Energy, filed a request on October 12, 2012 "to increase North Carolina retail rates - the company's first general rate increase request since 1987." Progress Energy claims, "the total net residential increase, as proposed, would average 14.2 percent. The bill for an average residential customer using 1,000 kilowatt-hours (kWh) per month would increase to $119.94 from the current $105.15. That includes an increase in the standard customer charge to $13.50 per month from the current $6.75. The average net increase for commercial and industrial customers would be about 9 percent."
Progress says the majority of the request is to pay for investments to modernize the power system.
• Flood Insurance (See page 1-A this week) - Obama signed a reform act in July 2012 that made sweeping changes to the National Flood Insurance Program. Many of the increases will be relatively moderate or affect specific high-risk groups such as repetitive loss properties. However, the Act also removes two longstanding “grandfather” clauses that are likely to be very expensive for property owners in or even near the respective 100-year floodplain shown on flood maps. (Coastal areas).
• Groceries are not getting cheaper - In addition to the 2.5% increase in food prices in 2012, the US Department of Agriculture (USDA) is predicting a 3 to 4% increase in prices during 2013. Much of that is due to drought conditions of 2012 while also linked to inflation. The drought has affected prices for corn and soybeans as well as other field crops which should, in turn, drive up retail food prices. However, the transmission of commodity price changes into retail prices typically takes several months to occur, and most of the impact of the drought is expected to be realized in 2013.
• Obamacare - In 2014 the mandate kicks in. If you can afford to buy health insurance (per the criteria of the law) then you have to. And employers with at least 50 employees must provide health coverage or pay penalties. If your employer doesn't offer it, even if they have to pay the penalty rather than funding health insurance, you still have to buy it elsewhere or also pay a penalty.
According to FactCheck.org the minimum penalty - per person - will be $695 once the tax is fully phased in. But it will be less to start. The minimum penalty per person will start at $95 in 2014, the first year that the law will require individuals to obtain coverage. And it will rise to $325 the following year.
That penalty is higher for people with higher taxable incomes.
• Paychecks just got smaller - Obama and Congress let a 2% social security payroll tax cut expire. That means your paycheck was less starting this month. People earning the same salary each week will easily see the reduction. Those working hourly jobs are less likely to notice it unless they pay close attention to their paycheck stubs.
• Local property taxes - While the Town of Kure Beach raised their property tax rate last year a few cents to cover projects and expenditures, the Town of Carolina Beach actually tightened the budgetary belt. Padding of the budget was trimmed, positions not filled (some eliminated through attrition) and all with the understanding the reduction was likely not sustainable for the future.
Therefore, the Town of Carolina Beach has a good chance of being forced to raise taxes for the 2013-2014 fiscal year.
If they want to fund a capital improvement plan for water, sewer, an Aquatic Center (really large pool) and other improvements, they'll have to find the revenues to pay the annual debt service.
The Town Council is requesting information to author a capital improvement plan. That's a good idea. They can ask department heads to lay out all of their needs, prioritize, print, bind and sit the document in the lobby at Town Hall.
Both beach Towns and New Hanover County are faced with finding ways to fully fund future beach nourishment and inlet dredging projects since federal funding is becoming increasingly hard to obtain.
The Council will have to come up with a long-term revenue source to fund beach nourishment and maintenance dredging for the Carolina Beach Inlet.
Both are vitally important to our tourism-based economy which in turn helps offset the cost to taxpayers for their local government.
If federal funding completely disappears, and that's become more and more likely in recent years, the Town
will likely have to seek state permission to levy a sales tax or raise the property tax rate to build a fund to cover those vital projects.
All of these issues - and others - are worth considering in the short and long term.
Our local leaders need to be mindful of the financial burdens impacting citizens’ wallets. Especially those on fixed incomes such as seniors.
Citizens don't see their congressman at the local grocery store or gas station. But they do see their local Council member or County Commissioner from time to time.
It's time to continue looking for ways to cut the cost to taxpayers - or at least hold the line - in order to not make a bad situation worse.