Finance & Revenue

Texas Public Policy argues to stop economic development and lure businesses with the ‘Texas model.’

The jist of their argument:

• Economic development tax abatements for coporations have cause residential property taxes to raise 80% since 2007
• Unfair economic competition
• Government shouldn’t pick winners & losers

What should replace tax incentives and abatements?

• limiting yearly property tax increases;
• easing land-use restrictions to increase housing stock;
• eliminating unfriendly regulations;
• relaxing building-code requirements; and
• generally reducing the cost of city government.

TPPF | STOP DEVELOPMENT DEALS. GET AMAZON WITH THE ‘TEXAS MODEL’ 

Norway is considering imposing a tax on electric vehicles based on the vehicle’s weight. 

This tax structure impacts the 2500kg Tesla Model X, which weighs considerably more than other EVs. A Tesla X could cost an additional $8,8500.

Policy behind the tax: Electric vehicles cause more road damage than other, lighter vehicles.

Business Insider Nordic | Is the ‘Tesla Tax’ coming to Sweden?

AutoBlog | Tesla tax’ could hit Norway, the world’s top EV market

The Mike Collier (D) campaign for Lt. Governor of Texas is focusing on property taxes, and here’s what they’re saying:

• The Constitution is against home owners and small business owners who suffered in Harvey. The Constitution doesn’t allow for lost value assessments, like the lost value after a major storm.
• Its wrong for elected officials to say its too much of a hassle to reappraise storm ravaged property.
• Big oil and big corporations are under paying property taxes and would pay the legal costs to fight an assessment on stgorm ravaged property, shifting more of the burden on residential and small businesss owners.

Corpus Christi Caller Times | Texas homeowners and small businesses continue to get rotten property tax deal

The Oregon PERS UAL Task Force crafted a laundry list of proposals to reduce unfunded pension liability, including:

• Forfeiture and Debt Collection revenues going to pensions and not the jurisdiction the unpaid amount is owed
• Use Urban Rrenewal Funds
• Collection of past deferred billing credits to commercial entities
• Sunset property tax exemptions in enterprise zones
• Severence  Tax on Exctrative Industries like timber

Oregon Live | PERS: Task force seeks $5 billion in pension savings

Michigan’s HB 4999, which is expected to be signed by Governor Snyder, would preempt all local sales and exicse taxes that target specific foods and beverages.

What type of legislator files a bill to preempt local taxing authority? Republican who files zero based budgeting bills

Sacramento Bee | Michigan Legislature votes to ban local food, beverage taxes

The Republican Senate Leader in this state: Kentucky

The pension problem Kentucky wants to fix: the $30-$70 billion in unfunded pension liability

What type of legalization: The legalization of marijuana would apply to the legalize the production, sale and consumption of marijuana for adults

The proposed revenue generation: $100 M per year

The top 2 Kentucky pension systems are asking the legislators for: $5.4 billion to the pension funds over the next two years

WFPL | Senate Leader Floats Marijuana Proposal As Pension Fix

What you need to know about Speaker Straus’ newly appointed Select Committee on Economic Competitiveness:

• The committee has 60 days to wrap up its work (report due 12/12/17)
• The committee will look at workforce readiness, infrastructure and state and local economic development tools
• The Committee has a specific charge to “study the reasons that employers give for choosing, or not choosing, to do business in a particular state.”

Committee Members:

• Chairs: Cook & Senfronia Thompson
• Sarah Davis
• Charlie Geren
• Angie Chen Button
• Joe Moody
• Rene Oliveira

Committee Goals:

• “reassert that Texas is fully committed to private-sector growth”
•  “highlight the principles that the Texas House believes are critical to economic growth”
  • Speaker Straus said. “But there’s more to the formula. Businesses want to grow in places that have outstanding schools, colleges and universities, as well as a high quality of life for their employees. This committee will articulate principles of economic growth in Texas and show that the House is committed to competing in a global and changing economy.”
• It is not only CEOs that are watching Texas, but also “the best and brightest workers” who “need to see that Texas welcomes them and is determined to stay at the front of the pack when it comes to economic development.”

Texas House Speaker Joe Straus | SPEAKER STRAUS FORMS COMMITTEE TO LOOK AT ECONOMIC COMPETITIVENESS

Cook County, Illinois, home to Chicago and second city comedy, repealed its soda tax.

How long did the sugar tax last? It was adopted 4 months ago, and repealed before its December 2017 effective date

Who was for the soda tax? Commissioners who sought the $11 million in revenue to avoid an 115 across the board cut &  former New York Mayor Michael Bloomberg, a billionaire public health advocate, ran an expensive TV and radio ad campaign

Who was against the soda tax? American Beverage Association and local store owners teamed to spend millions of dollars to push for repeal (they spent less than Bloomberg and prevailed)

Chicago Tribune | Cook County Board repeals pop tax

Texas State Representative Ron Simmons is calling for a state infrastructure bank for water to ” issue bonds that could be used to either back up loans that are made by other banks”

Simmons linked the state infrastucture bank for water as a means to not dip into Texas’ Rainy Day Fund.

WFAA | Establishing state infrastructure bank could help Houston

California State Treasurer is calling on state funds, including state pensions, to divest from ” retailers that sell guns and ammunition around the country that are illegal in California”

What law does your state have that your elected officials would stoke a call for a political divestment? Certain women’s health care? Guns? Agriculture? Private Property Rights? Religious freedom? Public Education Standards?

Boston Globe | California treasurer urges state pension funds to drop gun sellers 

Michigan passed economic development legislation named ” the Good Jobs for Michigan bill”

The talking point:  “incentivize businesses to create large-scale employment that pays above-average wages”

The carrot for businesses:  A tax refund on qualified new employees

• If a business creates a minimum of 500 new jobs, pays wages at or above the regional average wage, it can get tax benefits up to 50% for the new employees for up to 5 years
• If a business creates a minimum of 250 new jobs, pays wages at 125% or more of the regional average wage, it can get tax benefits up to  100% for  the new employees for a period up to 10 years

The limits on the program:

• 15 projects per year
• rolling cap of $200 million for all projects
• unused funds may carry forward into future calendar years

Michigan SB242 (2017)

Arizona state attorneys involved in school finance litigation argue that the Judge has no authority to rule on funding adequacy.

Say what? it’s a basic separation of powers argument- funding is a question for the legislature not the judiciary

Arizona Daily Star | Can a judge tell the Legislature it’s not adequately funding schools?

Differing from other Sourthern States, the Florida Attorney General has not opined on the lgality of fantasy sports in Florida.

What does Florida HB 223 (2018) do for fantasy sports?

• outcomes reflect knowledge & skill AKA fantasy sports are a game of skill
• no specific statutory oversight, specific exceptions from regulation by the FL Department of Business and Professional Regulation

What does Florida SB 374 (2018) do for fantasy sports?

• outcomes reflect knowledge & skill AKA fantasy sports are a game of skill
• no college, high school or youth fantasy sports contests
• no specific statutory oversight, specific exceptions from regulation by the FL Department of Business and Professional Regulation

News Service of Florida | News 4 Jax | Lawmakers seek to end questions about fantasy sports

Legal Sports Report | Third Time’s The Charm? Florida Will Attempt To Pass Fantasy Sports Bill Again

Ohio has a .26% tax on business gross receipts above $1 million.

The Tax Foundation study lays out 5 reasons why the Ohio gross receipts tax is no bueno:

• Creates tax pyramiding
• Creates grossly inequitable effective tax rates across industries and businesses
• Even though the OH gross receipts tax was a tax cut, it is “difficult to attribute any positive economic outcomes”
• Results in extensive litigation
• A gross receipts tax is “inefficient and inequitable form of taxation long since superseded by more modern revenue tools”

Tax Foundation  | Ohio’s Commercial Activity Tax: A Reappraisal

• Pension problems will take a back seat. it’s not going to get worse.
• Balanced budgets are a government fallacy
• Deteriorating infrastructure will cost a lot to get it back up to par
• Cyberattacks will utliamtely cost lives when they hit infrastructure & health care

Governing | 5 Government Trends to Watch (the 5th trend is that in 30 years the these columnists will not be writing this column)

California legislators purport that pension costs exceed funding for schools, social services and parks.

Stanford Report | Pension Math: Public Pension Spending and Service Crowd Out in California, 2003-2030

Sacramento Bee | Pension costs ‘crowding out’ spending on parks, schools and social services, report says

The Ohio Supreme Court will no longer hear direct appeals of appeal disputed tax decisions.

Why the change in property tax appeals? “lighten its docket of a flood of market-driven property tax disputes and to preserve its role as arbiter of the state’s most significant legal questions.”

How did the Lege enact the change? Added the jurisdiction limitation to the state budget.

Does the jurisdictional limitation apply to individuals and businesses? yes, neither individuals nor businesses have the right to a direct appeal on tax rulings.

Governing | Taxpayers Lose Some Legal Rights in Ohio

• Texas:  $5 on each admission
• Illinois: $3 per customer admitted or use a sliding scale based on the amount of gross receipts subject to sales tax during the previous calendar year
• Georgia: greater of 1 percent of the previous calendar year’s gross revenues and $5,000
• Utah: 10% of admission fees, user fees, retail sales of in-state tangible personal property, and sales of food, food ingredients, beverages, and services
  • Utah’s tax also applies to escort services

Bloomberg | Salt Talk | Extras on Excise: Fashion Matters for Paying the Texas ‘Pole Tax’ 

3 Issues Ashby is requesting to be included as interim charges:

• Funding formulas for TDCJ, including adult probation and community supervision
• Abuse of common law marriage, including lawsuit abuse of common law marriage
• Improvements to TRS including – “should move away from a funding structure that considers active teacher payroll, in favor of one that considers the true cost of healthcare nationwide.”

Lufkin News | ASHBY: 3 issues Texas Legislature needs to consider

Kentucky is toying with the idea of closing its $33 Billion pension gap by suspending tax breaks for 3 years.

Tax breaks in kentucky account for roughly $13 billion, a 3 year suspension would be a revenue gain of $39 million.

Lexiington Herald Leader | On pension woes, first freeze the tax breaks

California Realtors want to change Proposition 13 from 1978- its the reason property is reassessed at sale only, and property taxes are capped at 1% of assessed value.

What are the proposals would change how property taxes are assessed and would apply in 3 different ways?

• Apply changes to all homeowners in California
• Apply changes to homeowners moving within their county of residence or to a county that allows intercounty assessed value transfers
• Apply to homeowners 55 or older moving anywhere in California

What are the economic incentives of reform?

• opens up th ehousing market
• frees up starter homes for first time home buyers

The potential impact to revenue:

• reduce revenues for cities, counties, special districts and schools anywhere from reduce revenue from a few hundred million dollars a year to several billion dollars a year
  Sacramento Bee | Own a home and looking to move? California Realtors want to get you a major tax break

   

The PROs for a Texas city to land Amazon’s second headquarters:

• large workforce
• universities
• essential infrastructure
• regulatory environment
• tax climate
• economic development incentives
• workforce training and education
• quality of life ( lakes, parks, recreational activities, museums, sports and entertainment venues, attractive and affordable housing, and the quality of the public school)

Texas cities have this factor against them:

• “…the recent tendency to enact or consider social legislation which is undesirable to many technology companies and workers.”

Rio Grande Guardian | Perryman: Attracting Amazon

In November 2016, Maine voters approved legalized recreational marijuana use.

The Maine Legislature is considering these changes to the voter approved 10% marijuana tax:

• doubling the marijuana tax rate to 20%
• giving a town with a recreational retail or cultivation business 5% of all state taxes collected from those facilities
• 6% of the remainder of the taxes would go to law enforcement
• 6% of the remainer would also fund public health, youth prevention and public awareness measures
• The remainder goes to Maine’s General Revenue Fund

AP via WCSH | 20% marijuana tax bill expected to be voted on

Portland Press Herald | Lawmakers decide how to divvy up 20% tax on Maine pot sales

Background: Jefferson County, Tennessee and other local governmental entities, including government officials, formed the Jefferson County Economic Development Oversight Committee

The Jefferson County Economic Development Oversight Committee​ recommended spending tens of millions of dollars in taxpayer money to begin development on an industrial megasite,

Open Records requests followed. A Tennessee appeals court ruled this week that open records laws applied because:

• It “performs a governmental function”
• “receives a substantial taxpayer funding”
• “is significantly involved and regulated by the Jefferson County Commission and Jefferson City and Dandridge city legislative bodies”

Why did people want the records in the first place? because word spread that the Jefferson County Economic Development Oversight Committee was tlaking about using eminent domain to acquire land for the industrial megasite

Citizen Tribune | Appeals Court: Jefferson group subject to open record laws

Texas Governor Abbott spelled out a 2019 bill draft during a Hurricane Harvey press conference. 

Background: Harvey Clean Up is costly. Texas Governor Abbott proposed accessing the millions in revenue held by TIRZ districts.

The Abbott legislative proposal, step by step: 

• modify the TIRZ statutes
• ensure tax increment revenue reserves held by TIRZ districts
• require reserve revenues in TIRZ districts to be accessible to cities to respond to disasters

The full Abbott quote: “Those hundreds of millions of dollars are siloed in TIRZ programs. Either the mayor could use those hundreds of millions of dollars to pay those expenses that cost a fraction of that, or the state legislature, during the next session, can and will modify the TIRZ statutes to ensure that the reserves, by TIRZ, can be used, by cities, to respond to disasters. So he has all the money that he needs, including the money that I provided to him, including the money that taxpayers have provided to him. He just needs to tap into it.”

The full City of Houston response:

“We cannot raid funds that the state has indicated cannot be raided – and which are largely for drainage projects to prevent future flooding anyway. Mayor Turner is asking the governor to do what other governors, such as Florida’s, are doing. It’s the Texas governor’s right to say no.”

KPRC | Gov. Abbott says Mayor Turner is using cleanup situation to hold state ‘hostage’

Ohio Legislature is trucking along with a fantasy sports regulation bill that will:

• regulate fantasy sports via the  Ohio Casino Control Commission
• supported by top executives of the Cincinnati Reds and Columbus Crew
• registration fee that maxes out at $30,000 for three years
• renewal fee of up to $30,000 for three years
• consumer protections

Crain’s Cleveland Business | Fantasy sports soon could have a new reality in Ohio

Ohio House Bill 153 (2017)

In 2016, Misouri legalized fantasy sports on the revenue estimate/ unicorn promise it would generate millions in revenue.

How much revenue will the state generate this year? $686,700 

Any hope on the horizon? yes, 4 new applicants to play in the fantasy sports area have emerged including Yahoo! Sports.

St. Louis Dispatch | Missouri on track to collect less than $1 million from fantasy sports tax

Opponents to Wisconsin’s Daily Fantasy Sports legislation make 2 arguments:

• Its an unconstitutional expansion of gambling
• Daily Fantasy Sports makes money by relying on lots of unskilled players participating while very few highly skilled players win all the prizes

WXPR | Group Raises Alarm Over Daily Fantasy Sports Bill

4 years ago Iowa reduced property taxes. Promises of sweeping changes. Reductions in commerical property taxes & the cities would be repaid by the state for any revenue loses.

The reality? The cities are losing property tax revenue, aren’t being fully reimbursed and businesses aren’t seeing the 1/2 tax cut promised. Surprise. Surprise. Surprise.

Des Moines Register | Iowa’s largest property tax cut in history fails to deliver, Register investigation finds

Texas Public Policy Foundation is calling for swift implementation of these economic policies which failed in 2017:

• Eliminate the business franchise tax, not included in the call [of the special session].
• Reform property taxes, included in the call [of the special session] but not passed.
  • ​All hail: SB 1 or HB 4
• Restrain budget growth to cut taxes, not included in the call.
•  Enact a stringent spending limit, included in the call but not passed.
  • ​All hail :  SB 9 or HB 208 
• Increase state budget transparency, not included in the call.
  • ​”Many government programs continue to get funding years after they are no longer needed.”  There’s no synopsis that does this sentence justice.
• Reduce government regulations, not included in the call.
  • ​vigilence…must remain low regulation.

TPPF | SIX MISSED OPPORTUNITIES IN SPECIAL SESSION THAT COULD HAVE AIDED ECONOMIC PROSPERITY

A drafting error in the revised marijuana tax in Colorado created the need for a special session to begin October 2nd.

What did the drafting error do? It prevented all taxing jurisdictions, to which the marijuana tax applies, from collecting the tax

AP via U.S. News & World Report | Colorado Governor Calls Legislature Back to Repair Pot Tax 

Danish pension fund has agreed to buy a 27.7% stake in Copenhagen Airports, moving ownership from an Australian company to a Danish pension.

Reuters | Danish pension fund to buy stake in Copenhagen Airports in $1.6 billion deal

France, Spain and Germany are tackling- how do can we tax tech?

What’s at issue: How can you tax where tech companies gerneate revenue. Not just where tech companies book their profit

What’s the angle? An “equalization tax” on tech revenue earned from digital business activity 

Proposed rates: 2 to 5% of revenue generated

Tech Crunch | France, Germany, Spain, Italy call for turnover tax for tech giants

CALPERs is in talks that could outsource its private equity division & serve as a bellweather for other state pensions.

How could this affect the pension fund?   Private equity has been CalPERS’ best-performing and main asset class in the past two decades

Reuters via CNBC | Largest US pension fund CalPERS in talks with BlackRock to outsource buyout business, source says

• Bring Your Infant to Work Day, All Day, Every Day. (AZ Dept. of Health Services, not technically a local government, but a government)
• discounts at local fitness centers (Memphis)
• free public transportation (Memphis)
• small cash performance awards (Memphis)
• departmental appreciation nights at local venues (Memphis)
• Student Loan Reduction Program beginning at $50/month (Memphis)
•  a gym, a sleep pod for 15-minute naps, and a juice bar–free anytime  (Atlanta)
• Educational events and same-day medical appointments (Atlanta)

Governing | Can New Perks Make Up for Smaller Pensions?

No. Nyett. Nej. Not gonna happen. 

To what question was the TX Attorney General repsonding?Chambers County asked to use sales & use tax revenue to fund the position of county fire marshal and safety coordinator because the Tax Code says it can be used for health and safety.

Why can’t sales and use tax revenue be used like this? Fire Marshall and Safety Coordinator sounds like health and safety? Chapter 324 of the Tax Code ties health and safety to disease prevention.

What would Chambers County need to do legislatively? Change Section 324.081 of the Tax Code to include fire marshalls and safety coordinators.

Texas Attorney General Opinion KP-0162

The opposition to ESAs in New Hampshire point to these issues with the legislation:

• New Hampshire’s proposed Educational Savings Account program would not be housed in the state educaiton agency and would be operated by a private scholarship organization
• Are there adequate oversight mechanisms?
• The fiduciary responsibility for the tax revenues & whether the Legislature is meeting its fiduciary duty

SB 193 New Hampshire (2017)

Concord Monitor | Accountability concerns arise over education savings account bill

Jerry Albright, the new chief investment officer 

Jase Auby, deputy chief investment officer with oversight responsibility for the fund’s public and private market investments

James Nield, managing director and chief risk officer

Dale West, head of global public markets

Sylvia Bell,  newchief operating officer, a new that consolidates operational functions within the TRS investment unit

Pensions & Investments | New executive team named for Texas Teacher Retirement System

Arizona voters will decide in November whether to expand their voucher program.

If approved, the Arizona voucher program would expand to every student under the terms of SB 1431.

Arizona Central | Arizona voters will have a say in school-voucher expansion, but court fight looms

Arizona SB 1431  (2017)

Hawaii has been working on a new rail line to keep commerce flowing. Its a deal that died during a regular session, but passed in a 5 day special session in August.

To fund the project, the top lawmakers agreed to these tax terms and kept all legislators fully apprised to move the deal fast:

• use specific numbers on the project and in the revenue generating plan:
  • use only the numbers of Hawaii Department of Budget and Finance and not lobbyist provided numbers
  • total revenue generated for the project: $2.4 billion over 13 years
  • $1.046 billion from a 0.5% general excise tax charged on Oahu taxpayers
  • $1.3 billion from hotel guests statewide via a 1% increase in the hotel room tax
  • Extends by 3 years the 0.5% general excise tax & increases the hotel room tax to 10.25 percent from 9.25 percent for 13 years.
• require certain levels of transparency
• require a timeline & sunset provisions on the taxes, which if not adhered to kills the project

Honolulu News  | How the Legislature’s ‘Big Five’ Crafted A Deal To Rescue Honolulu Rail

Los Angeles will be hosting the 2028 Olympics and the Clippers need a new stadium. What is a state to do? Pretend we’re working in a cartel cocaine processing room and sampling our own product? Yes, in a way, by expediting the permiting process to build stadiums more quickly.

How is the bill expediting the process?

• By exempting from full environmental review any “rail, bus, or transit project connected to the 2028 Olympics, along with expediting environmental challenges to construction of the Clippers arena in Inglewood.”
• Allowing for easier eminent domain for the Clippers stadium- except when it comes to residential property. Commerical property owners beware.

California Eminent Domain Report | New Bill Aims to Streamline LA Olympics Transit Projects & Clippers Arena

California SB 789 (2017)

The Real Deal Real Estate News | State bill would exempt projects tied to 2028 Olympics from CEQA

Denmark largest commerical pension has not backed off alternatives, it has stepped up investments in alternatives–infrastructure and unlisted, not publicly traded, companies.

In the past year it increased latnerative investments by 43%. In 3-4 years, Denmark intends to triple its investment in alternatives. The standards by which they measure investment choices:

• “Each investment must compete with what can be done in the listed market”
• Alternative investments are international- solar parks in Great Britain, the largest parking lot operator in the U.S. 

Reuters via Nasdaq | Leading Danish pension fund to keep faith in alternative investments

A fantasy sports themed restaurant in Virginia ill feature Virginia Online Fantasy Sports and offer special contests and events for restaurant patrons.

Richmond Times Dispatch | Fantasy-sports themed restaurant and website aiming to be a ‘destination’ opening in South Richmond

California is considering Assembly Bill 249  which would require political ads to include a disclosure of the top 3 contributors over $50,000 behind any and all political advertising.

Sacrmento Bee | Who paid for that political ad? Bill aims to spotlight mysterious funders

Philadelphia’s soda tax, including diet soda, has had its revenue estimates revised down by $6.7 million.

3 Reasons revenues are below estimates:

• tax avoidance due to consumer mobility
• the soda tax made beer cheaper than soda
• news reports of  “harm to local manufacturing and convenience store workers and reductions in consumer choices”

Tax Foundation | Soda Tax Experiment Failing in Philadelphia Amid Consumer Angst and Revenue Shortfalls

New York Times Connects  the Texas Economic Development Act to corporate disaster contributions  with these numbers:

• $2 Billion in Property Tax Credits have been given to corporations in the Houston area
• Recipients of the $2 Billion in property tax credits and/por Texas Enterprise Funds inlcude Dow Chemical, Exxon Mobil, Chevron, Fairway Energy Partners & Amazon
• Hurricane Harvey Diaster Recovery Efforts have been bolstered by $1 Million contributions by Chevron, Exxon, Amazon
• Hurricane Harvey Diaster Recovery Efforts have been bolstered by $10 Million contributions by Verizon

NY Times | Houston Loves Big Business. How Much Should Big Business Now Love It Back?

Disclosures and transparency occur fast and furious even in emergencies.

Lynette Lucas bases her Republican primary challenge in HD72 on these tenants:

• “I have four boys in their 20’s and they are struggling with careers and jobs.”
• “I am not happy about property taxes going up and the way our representative is voting in Austin.”
• ” I will secure our border and ensure enforcement of existing laws”
• ” expand gun rights with Constitutional carry”
• “keep men out of women’s private facilities in government buildings.”

San Angelo | Lucas to Challenge Rep. Drew Darby for District 72 Texas House Seat

Bill Gates suggested to Quartz that if US workers are being displaced by robots, tax the robots.

Who jumped on this idea? Jane Kim, a member of the San Francisco Board of Supervisors.

Kim did 3 things:

• Launched a campaign called the Jobs of the Future Fund
• Asked the California’s legislature to study a statewide tax on companies that displace workers with automation
• Decided that a portion of the tax would “be used for education, retraining and targeted investments in new industries” and “help smooth the transition for our workers, providing them with better opportunities

Quartz | California’s legislature is being asked to consider taxing robots

Illinois Governor signed AB 418 prohibiting police officers from participating in multiple pension systems.

What happens to police officers who vest and retire in one pension system and then take a leadership roile in a new police pension system? The second police pension system will require the officer to enroll in a 401K style plan.

A D.C. based, Libertarian Think Tank, Competitive Enterprise Institute, proposed asset recycling to Utah legislators.

Here’s how asset recycling works:

• states can sell or lease revenue-generating, publicly owned assets to the private sector

• the private sector takes over the maintenance costs and makes payments to the states.

• This frees up state assets, allowing states to fund other projects that may be less capable of generating their own supporting revenue

• states create an infrastructure inventory that tracks revenue-generating assets 

Desert News Utah | Task force considering new revenue models for transportation infrastructure

After the hoopla that the Cook County Illinois sweetened beverage tax violated federal food stamp rules was corrected, retailers are sued for misapplying the tax.

Citizens are suing grocer Jewel-Osco, Subway, Walgreens, 7-Eleven & Circle K over the tax. 

Governing | Retailers Sued for Allegedly Overusing Cook County’s Soda Tax 

Previously on informed:intel

The Federal Government is witholding food stamp money to Cook, County Illinois because of the soda tax. Let’s be honest, it isn’t a soda tax, it is a tax on any beverage that is sweetened in any manner.

How much food stamp funding is being withheld? $87 Million

Why do the Feds say a soda tax violates the food stamp rules?

• Purchases made with food stamps are tax exempt but Cook Co. retiailers is e not exempting the transactions
• An immediate refund does not cure the problem

Governing | Feds: Cook County’s Soda Tax Collection Violates Food Stamp Rules

Urban Farms in California could get a property tax cut in San Diego under its ordinance to reduce property taxes for urban farming lands.

Its based on a state incentive program, with a sunset date of 2018.

The policy goals:

•  spruce up blighted neighborhood
• boost access to healthy food in low-income areas

Urban Garden property tax incentive programs are up and running in: Santa Clara County and the cities of San Francisco and Sacramento

San Diego Union Tribune | New incentive aims to spur more community gardens

San Diego Union Tribune | Dream of urban gardens stymied by red tape

AMC Movie Theater Case, the case the Comtroller estiamtes could cost Texas $6 Billion in revenue is still alive. It lives!

The 3rd Court of Appeals has sided with AMC 3 separate times. The week of August 14th, Texas filed another petition with the Texas Supreme Court for review. 

AMC keeps winning on this rational- that the cost of goods sold deduction in the franchsie tax also include operating costs for maintaining the theater auditoriums.

Law 360 | Texas Tells State Court AMC’s Tax Win Could Cost $6B

Texas has a structural budget gap of roughly $9 Bilion, while it has $11 Billion in its Rainy Day Fund. 

11 is still a greater number than 9, right? Math is complicated. 4 Easy Steps to Explain the structural deficit:

• Chalk the Rainy Day Fund balance up to strong oil and gas revenues, and the spending thereof up to politics. Then tuck that away because of politics.
• As for the $9 Billion structural deficit:
  • Texas has a $2 Billion Medicaid shortfall. Healthcare costs are a driver of the state budget.
• Texas dedicated $5 Billion in revenue to transportation. $5 Billion that use to be in the coffers were taken away from spending discussions. Its like the road funds went out of the state checking account, and went into a money market with limitations. 
• Texas other spending driver is education, and that money has to be paid upfront. Almost 1.2 of the education funding is paid every September, October and November. The timing sucks for Texas because the money goes out before Texas tax revenues flow into the state coffers.

Dallas Morning News | Texas Goes to Wall Street for a short term loan of $5.4Billion

Texas Comptroller Glenn Hegar announced that Texas will be selling short term tax and revenue anticipation notes because:

• Texas needs to manage its short term cash flow
• Texas has a structural budget gap of $9 Bilion:
  • $2 Billion Medicaid Gap
  • The shifting of GR to Transportation
  • Texas makes nearly half of annual payments for its share of public school funding every September, October and November. The money goes out before tax revenues flow

3 Fun Facts about tax and revenue anticipation notes:

• Texas does this with some frequency
• The last time Texas issued tax and revenue anticipation notes was 3 years ago
• Texas maintains a high credit rating even with the sale of these notes

Dallas Morning News | Texas Goes to Wall Street for a short term loan of $5.4Billion

Navarro County has a new PACE Authority. What’s a PACE Authority? its a “a non-profit entity operating in Texas that seeks to assist business owners in obtaining loans to make energy-efficient and environmentally-friendly improvements to their commercial buildings”

3 Ways a PACE program is eonomic development:

• More Jobs.PACE programs put people to work on the construction projects
• Good for Existing Businesses. PACE programs offers financing to keep existing companies financially viable
• Expands Property Tax Base & Helps Comapnies Moving to Texas. As more comapnies move to Texas, PACE allows these comapnies to improve existing commercial buildings & that increases the tax bases of local governmental entities

Corsicana Daily Sun | County keeps pace — Texas Pace Authority a go in Navarro County

The Federal Government is witholding food stamp money to Cook, County Illinois because of the soda tax. Let’s be honest, it isn’t a soda tax, it is a tax on any beverage that is sweetened in any manner.

How much food stamp funding is being withheld? $87 Million

Why do the Feds say a soda tax violates the food stamp rules?

• Purchases made with food stamps are tax exempt but Cook Co. retiailers is e not exempting the transactions
• An immediate refund does not cure the problem

Governing | Feds: Cook County’s Soda Tax Collection Violates Food Stamp Rules

Virigina created the Autonomous Systems Center of Excellence to “capitalize on the flourishing unmanned systems industry.”

The state actions that will support the drone industry by:

• limiting red tape
• supporting the industry
• building a qualified workforce

It will also create a partnership with the naval base for expanding business opportunities in underwater droines.

What Texas entity has access to underwater business opportunities? Univeristy of Houston with its oil and gas exploration programs focused on Gulf of Mexico exploration

Government Technology | Virginia Launches New Autonomous Systems Center

Montana has created an outdoor recreation economic development office.

Why outdoor economic development? outdoor activities are a big deal in big sky country

The economic fund amount:  invest $200,000

The value of outdoor enterprises in Montana: The  industry pumps $7.1 billion into Montana per year

There’a also an association backing the proposal: Outdoor Industry Association located in Boulder, CO

Billings Gazette | Gazette opinion: Growing Montana’s outdoor economy

Today the Oklahoma Supreme Court ruled  a tobacco fee unconstitutional.

The cessation fee of $1.50 was placed on a pack of cigarettes and earmarked for health and human services funding by the recent legislature that was facing a budget shortfall.

A revenue measure in Oklahoma must meet the following criteria:

• it cannot be passed in the last five days of a session
• it must receive a required supermajority vote in favor or a vote by the people to pass

Reuters | Oklahoma Supreme Court rules fee on cigarettes unconstitutional

KOCO | State budget in limbo after Supreme Court strikes down cigarette fee

The Pennsylvania State Auditor found that the State Employees’ Retirement System & the Public School Employees’ Retirement System could do better to reduce fees to investment managers.

In 2007 the State Employees’ Retirement System paid $345 M in fees.

In 2016, the State Employees’ Retirement System paid $167 M in fees.

The auditor’s rational:

• lower fees to invesgtment managers = better pension performance

The Public School Employees’ Retirement System response to the state auditor: “baseless and inconsistent,”

Pittsburgh Post Gazette | Pa. Auditor General: State pension fund can do better on fees

This fall Pennsylvania will consider legislation that will limit Educational Savings Accounts to students in the state’s lowest performing schools. 

The trigger for determing lowest school performance, the bottom 15% of schools.

Elements of the ESA plan:

• Parents will receive the $5,000-6,000 of per pupil spending for their student’s education resources
• Unused ESA funds can be used to pay for college

Pennsylvania State Senator John Di Santo’s Senate Bill 2 (2017)

Senator DiSanto Announces Education Savings Account Legislation to Provide Opportunity for at-risk Students

The Sentinel | Senators push school choice plan to get students out of poor performing schools

5 Points from Texas Pubic Policy Foundation position paper in opposition to right of way fees:

• right of way fees should be called a tax
• right of way fees are anti-private property because land woners are being charged for the use of their own property
• Since 2008, local governments have collected $5.1 Billion in right of way fees
• Right of way fee funds are deposited into the general fund and not dedicated for the maintenance of the right of way
• 283.001, Local Government Code says right of way fees should be  consisten with the burden on the municipality for the right of way and fair and reasonable compensation for the use of the right of way

Bonjour interim charge and 2019. 

TPPF | RIGHTLY MANAGING THE MUNICIPAL RIGHT OF WAY?

Georgia GOP state party passed a resolution opposing gambling and horse racing, but removed a provision that called for the state repubicans to oppose fantasy sports.

A signal that Sourthern, evangelical Republicans don’t see fantasy sports as gambling?

Atlanta Journal Constitution | Georgia GOP strikes a blow against casino gambling

Philadelphia’s soda tax is lagging behind and it’s hurting Philadelphia says the Tax Foundation. 

The informed:intel:

• revenue is 14% short and is only providing 49% of its revenues to pre-K programs
• regressive tax causing greater economic strain to lower incomes
  • remember Philadelphia soda tax is 24 times the tax on beer
• job losses directly related to the tax

Tax Foundation | Soda Tax Experiment Failing in Philadelphia Amid Consumer Angst and Revenue Shortfalls

• The police force lost accreditation leaving no police officers to respond to incidents
• Necessitated re-defining the form of municipal government
• No municipal decisions on how to pay for sewer, police, firefighters and animal control
• Volunteer fire department dismantled

Texas Observer | The Rise and Fall of the “Freest Little City in Texas”

A Massachusetts task force studying fantasy sports is set to recommend that it whether fantasy sports is a game of skill or a game of chance is irrelevant.

The key factor to determine if it is gambling- whether there is money involved.

Boston Globe | Skill or luck? Panel is reviewing whether fantasy sports are really gambling

Boston Globe | State panel says daily fantasy sports should be classified as gambling

Texas Retailer Association offers 3 counterpoints on the benefits of sales tax holidays:

• sales tax holidays lead to greater overall sales
• “trickle down” economics leads to other sales during sales tax holidays
• the back to school holiday should be expanded to include technology like laptops and tablets

San Antonio Express News | Tax Foundation criticizes sales tax holidays, but Texas retailers disagree

Previously on informed:intel:

According to a new study released this week from the Tax Foundation, state sales tax holidays preent 6 fiscal problems for states.

16 states have sales tax holidays. Only Texas & Lousianna have 3 separate weekends of different sales tax holidays.

99 problems might be an issue for some, for sales tax holidays, its’ these 6 fiscal problems:

• Do not promote economic growth
• Discriminate arbitrarily among certain products and industries
• Mislead consumers about real savings
• Cause complexity and instability in the tax code
• Are not an effective means of relief for low-income consumers
• Are gimmicks that distract policymakers and taxpayers from genuine, permanent tax relief

Tax Foundation | Sales Tax Holidays: Politically Expedient but Poor Tax Policy, 2017

Delaware became the 14th state to legalize daily fantasy sports. 

The Delaware bill highlights are:

• defines daily fantasy sports as a game of skill
• $50,000 annual licensing fee
• 15% gross revene tax for revenues from Delaware players

Delaware HB 249 (2017)

Calvin Ayre | Delaware guv signs tax- and fee-heavy fantasy sports legislation

Philadelphia Business Journal | Delaware reinstates fantasy sports, with a tax on operators

Where: Oregon

The pension system: Oregon Public Employees Retirement Systems

The current assumed rate of return: 7.5%

The estimate from the actuaries: 6.7%

The board voted to approve a new rate of return of 7.2%.

US News and World Report | Board to Vote on Change to Oregon’s Public Pension System

US News and World Report | Oregon Board Cuts Pension-Investment Expectations

Florida cut its statewide film incentive program.

Miami-Dade County defiantly retorted with- Fine, we will do it ourselves, we don’t need you. 

What do the Miami-Dade County film incentive,a nd impending Miami Beach ordinances for film incentives look like?

• Filming companies receive reimbursements
• Film crews also receive breaks on certain fees, parking and other costs like:
  • free space to hold equipment
  •  waive fees for hiring off-duty police officers
  • waivers for reservation fees at city parks, community centers and other public spaces
• Miami Beach is offereing 30% reimbursement of costs for filming, if it’s done in the city’s redevelopment area
  • Miami Beach incentives are up to $50,000
  • Paid by the redevelopment agency or the city

Governing | As Filmmakers Leave Florida, Cities Hope to Entice Them Back

According to a new study released this week from the Tax Foundation, state sales tax holidays preent 6 fiscal problems for states.

16 states have sales tax holidays. Only Texas & Lousianna have 3 separate weekends of different sales tax holidays.

99 problems might be an issue for some, for sales tax holidays, its’ these 6 fiscal problems:

• Do not promote economic growth
• Discriminate arbitrarily among certain products and industries
• Mislead consumers about real savings
• Cause complexity and instability in the tax code
• Are not an effective means of relief for low-income consumers
• Are gimmicks that distract policymakers and taxpayers from genuine, permanent tax relief

Tax Foundation | Sales Tax Holidays: Politically Expedient but Poor Tax Policy, 2017

Indiana joined 24 other states that permit ABLE accounts.

An ABLE Account stands for Achieving a Better Life Experience and provides tax benefit savings account for disabled individuals.

An ABLE Account allows for:

• no taxes on the interest
• withdrawals limited to specific purposes like:
  • education
  • medical needs
  • housing or transporation related to accommodating a disability
• Can save up to $14,000 without running afoul of Medicaid eligibility or social security benefits

WIBC Indy’s News Center | Indiana to Launch Tax-Protected Savings Account for the Disabled

New Hampshire officially legalized fantasy sports, but set apart expereinced players by:

• defining experienced players as:
  • participated in over 1,000 fantasy competitions
  • having won three or more contests with prizes totaling $3,000 or more from the same game operator
• designating experienced players with a star

NH1.com | NH legalizes fantasy sports with special rules for experienced players

Victoria County Judge Ben Zeller lays out 3 opposing arguments to Bettencourt’s SB 1 :

• SB 1 does not cut taxes
• SB 1 is a distraction from unfunded mandates the Legislature places on local governments
• SB 1 does not address school property taxes while Victoria County has cut property taxes 
• The House has a better school finance plan
  • A good plan also address school finance formulas
  • Property tax plan should be more transparant
  • Property tax plan should be easier for tax payers to understand

Trib Talk | Victoria County Judge Zeller | Shutting down unfunded mandates — the state’s no-limit credit card

16 prisons world wide have been transformed from vacant prisons to luxury hotels & from revenue consumer to revenue generator.

A smattering of the options:

• Four Seasons Sultanahmet: Istanbul, Turkey

• Het Arresthuis Hotel: Roermond, Netherlands

• Hostel Celica: Ljubljana, Slovenia

• Malmaison Oxford: Oxford, United Kingdom

• The Liberty Hotel: Boston, Massachusetts

• Långholmen: Stockholm, Sweden

Nordic Business Insider | 16 prisons that have been transformed into luxury hotels

New Jersey is using its lottery to bolster assets of the state pension system, making the pension more actuarially sound.

Who else is dabbling in lottery and pension issues? Texas Lt. Gov. Dan Patrick

California is borrowing $6 billion from the state’s Surplus Money Investment Fund to pay down a portion of its $59 billion unfunded pension liability. 

Governing | States Get Creative on Pension Funding

New York, Colorado and Vermont have all implemented some form of state data security regulations for the finance industries operating within their state.

The trend is moving fast. Cyber security  to protect state economic revenues and vitality. 

Greensfelder Hemker & Gale PC | Rise of state cybersecurity rules in financial services

Ft. Worth. 

Moody’s for the second year in a row, lowered Ft. Worth’s credit rating by:

• lowering the rating tied to $657 million in outstanding debt to Aa3
• revising its outlook to “negative” from “stable.”
• warning investors that the city’s pension hole will continue to:
  • put pressure on the city’s operations
  •  its ability to provide services
  • its ability to make capital investments

Action by Ft. Worth in repsonse:

• a task force has been studying the pension issue
• the task force is developing ways to make it sustainable over the long haul
• Ft. Worth will present the Texas Pension Review Board with a restoration plan by December

The New Study: By Rice University Baker Institute fellow Joyce Beebe “ E-Commerce: Recent Developments in State Taxation of Online Sales”

2 Reasons Internet Sales arent; triggering state and local revenue:

• 1992 U.S. Supreme Court ruling requiring the vendor to have a physical presence in the state
• Inaction by Congress

3 Impacts to Texas Sales Tax Revenue:

• Sales tax is more than 50% of texas tax revenue
• 1% of online sales to Texans are captured by the sales tax
• Texas is leaving tens of millions untaxed

2017 Legislation, SB 1713, did not receive a hearing in the Texas House. It passed the Texas Senate on May 11th.

Houston Chronicle | The internet is still cutting into Texas sales taxes

Nevada Legislature legalized recreational marijuana. Licensing proceeded, supply dwindled and the use of the alcoholic beverage distribution system got called into question.

Cue the emergency rules… The Nevada Tax Commission adopted rules to make clear that distribution could be done by pot store owners that are duly licensed.

AP via CBS News | Nevada’s pot bottleneck prompts emergency rules

Georgia repealed its EV tax credit of $5000 in 2015. Georgia’s repeal and replace included a new $200 registration fee for EVs.

2 years later, the economic results are:

• Georgia EV sales slumped more than 80%
• Georgia lost its standing as #2 in EV vehciles behind California

How is the EV industry prepping to regain a tax credit? With everyone’s favorite toolkit- an economic study.

This EV economic study shows that lowering the $200 registration fee and implementing a $2500 tax credit for EVs would:

• generate $100 million in gains to Georgia’s GDP,
• create $54 million in increased income for Georgians
• 950 additional full-time jobs in the state

What groups/entities are in the EV coalition supporting a reduced EV tax credit?

• Plug In America
• EV Club of the South
• Southern Alliance for Clean Energy
• City of Atlanta
• Clean Cities-Georgia
• Sierra Club

Utility Dive | Can electric vehicle advocates resurrect Georgia’s tax credit?

Activist groups in Houston want the city to include enforceable job creation in its economic development agreements. 

Texas Organizing Project purports that 56% of Houston’s economic development agreements had no enforceable job creation requirements. 

Houston Public Media | Coalition Wants Tax Abatements To Require Help For Houston Economy

The Center for Retirement Research at Boston College has a new report that says for every 10% increase in alternative investments by a pension system, the pension’s rate of returns decrease.

2 Conclusions from the Center for Retirement Research:

• Hedge funds were the major drag on pension overall returns
• Alternative investments do not protect against stock market volatility

Governing | The Week in Public Finance: Late Budgets, Illinois’ First in Years and Risky Pension Investments

Oregon became the first state to tax adult bikes of $200 or more. Each bike will be taxed $15.

Oregon does not levy a regular sales tax. The $15 tax is dedicted to Connect Oregon program, that funds projects serving multiple modes of transportation.

The rational for the tax: because bikes who use roads should contribute too.

City Lab | Oregon (Yes, Oregon) Just Put a Tax on Bicycles

Nevada estimates that double dipping pensioners cost taxpayers $23 million per year. 

Where does the $23 million annual price tag hit?

• strains the pension systems. in 2016, the largest retirement system paid out $300 million more than contributions
• Nevada’s law is more generous than average. Nevada allows elected officials to double dip and any person who holds a job that is “critical and hard to fill”
  • Only 10 states are confirmed to have the “critical and hard to fill” exception for double dipping

Las Vegas Review Journal | Pension system perks cost taxpayers $23 million a year

Combined state and local sales tax rates for the U.S. look like this:

• #1 Louisiana (10.02 %)
• #2 Tennessee (9.45 %)
• #3 Arkansas (9.34 %)
• #4 Washington (9.20 %)
• #5 Alabama (9.03%)
• #10 California (8.48%)
• #12 Texas (8.17%)
• #28 Florida (6.80%)
• # 33 Pennsylvania  (6.34%)
• The lowest combined rate: Alaska 1.76%

Tax Foundation | State and Local Sales Tax Rates, Midyear 2017

Michigan Legislature is considering reigning in dark store tax challenges.  In the mean time, more towns are preparing for a rash of “dark store” tax challenges. 

In Somers, MI city council engaged outside counsel to fight a new dark store tax challenge from WalMart and Sams Club. The property appraisals had been flat since 2012 with no challenges. This marks the first challenge to the appraisal.

Kenosha News | Somers anticipating “dark store” tax challenge from Wal-Mart

Economic Arguments for ending the tax benefit of stadium bonds:

• stop financing big business of professional sports on the backs of taxpayers
• stadium bonds are costing taxpayers $3.2 billion since 2000
• there is $20 trillion in federal debt, stadium bond subsidies are waste that needs to be eliminated

Cory Booker | Booker, Lankford Introduce Bipartisan Bill to End Federal Subsidies for Sports Stadiums

ESPN | Senators aim to stop use of municipal funds to finance stadiums

Governing | Stadium Bonds on the Chopping Block

Houston Chronicle Editorial, Dark stores: Big box retailers’ strategy to cut property appraisals will harm local communities, supports adding commercial property appraisal refrom to the special session:

• Texas should learn from Michigan where dark store property tax reductions harmed revenues
• the current Comptroller estimate of local government revenue loss is  $2.9 billion
• Its not only Big Box retailers using dark store arguments to reduce property taxes, it is other businesses too

Mississippi’s fantasy sports bill includes 2 ways for sports betting to be legal in Mississippi if the US Supreme Court overturns the nationwide prohibition:

• Mississippi removed this provision from its fantasy sports bill:
  • (a) No wagering shall be allowed on the outcome of any athletic event, nor on any matter to be determined during an athletic event, nor on the outcome of any event which does not take place on the premises.
• Mississippi provided for legal sports betting should it become legal

Mississippi’s H 967 (2017)

Biloxi Sun Herald | Supreme Court decision could make it ‘another 1990s’ for Coast economy

Legal Sports Report | Mississippi Is Already Poised To Offer Legal Sports Betting, Thanks To Language In A Fantasy Sports Law

The U.S. Supreme Court will hear Christie v. NCAA.

What is New Jersey arguing in Christie v. NCAA? New Jersey is arguing that the 10th amendment prohibits the federal government from banning sports betting. (There’s a carve out for Nevada).

What would a US Supreme Court ruling for New Jersey mean to states? The ability to tax spots gambling revenue.

Sports Illustrated | All bets are off: Supreme Court to review sports betting ban

The North Carolina Capitol Broadcasting Company says the implemented educational savings accounts were created with noi accoutnability that allowed for:

• recipients to be private schools that have no standards nor accrediation
• recipients can be entities that are not lawfully created businesses
• recipients do not have to be schools
• the state’s top recipient of ESA funds is being investigated for the embezzlement of nearly $400,000 in employee tax withholdings

North Carolina Capitol Broadcasting Company | Editorial: New NC budget – poor management, failed responsibilities, missed opportunities

Initiative & Referendum  in small cities in California wants to stop sanctuary city policies by repealing the city’s utility user tax.

The initiative and referendum is being pushed until the targeted cities repeal their sanctuary city policies.

Sacramento Bee | He’s out to make sanctuary cities pay – and he only needs 62 signatures to get started

In January 2017, the Texas Comptroller re-defined what constitutes a strip club, a sexually oriented business, that should be assessed the strip club tax.

The new definition of strip club  includes individuals that are fully covered in “paint, latex, wax, gel, foam, film, coatings, and other substances applied to the body in a liquid or semi-liquid state.”

In 2015, the Comptroller began applying the stip club tax to latex clothed performances. The $5 surcharge was retoractive to 2008. Resulting tax bills were in the millions for these otherwise non-strip club businesses.

The legislative issue is that the statutory definition of strip club for the $5 tax would not be triggered by latex or scantily clad performers. The Comptroller rules & the statute don’t align, welcome to litigation and legislative fix territory.

Roped into the new tax are establishments that ” sponsor sporting events with scantily clad cheerleaders, restaurants having scantily clad waitresses and businesses hosting musical guests.”

Courthouse News Service | Strip Clubs Fight Texas’ Definition of Taxable Nudity

Illinois Legislature is in a special session on its budget. During the regular session, the budget included revenue from a gaming bill that included legalization of fantasy sports.  

Online Poker Report | Illinois Online Gambling, Fantasy Sports Bills Stir To Life During Special Session

North Carolina Legislature adopted educational savings accounts by:

• Including $450,000 of funding in the state budget
• $9,000 a year deposited into a taxpayer’s education savings account
• Requirements placed on the taxpayer using an educational savings account: 
  • Use limited to public or private school tuition, transportation to school, educational materials and therapies with required quarterly expense reports
  • Procurement Opportunity for financial institutions: A  debit card linked to the ESA account

North Carolina Public Radio | Three Big Changes In Education Policy That Made The Budget Deal