Finance & Revenue

State: Florida

The Sales tax holiday created:  A sales tax holiday for hurricane supplies (and school supplies)

What does the hurricane preparedness sales tax holiday look like?

• Its a June 2-4, a three-day emergency preparedness sales tax holiday
• that excepts from sales tax:ice, batteries, first-aid kits, gas tanks, coolers and generators 

Sun Sentinal | Gov. Rick Scott signs tax holidays for hurricane and school supplies

State:  Missouri

The economic development goal: 

• return jobs
• help a region of the state that’s suffered economically since a major aluminum smelter closed last year

What lure do the companies need to move into the economically repressed area of Missouri?

• a cheaper electric rate with a longer contract than is allowed under current law

What’s the opposition say? Doing this would allow electric companies to raise rates on residential customers

AP | Missouri Lawmakers Power up for Electric Special Session

• 20% want lower property taxes
• 17% school finance reform
• 16% no new spending, no new taxes
• 15% don’t know
• 13% more funding for CPS
• 12% more funding for border security
• 4%lower business taxes
• 4% school vouchers

TPPF | WHAT DO TEXANS WANT MOST FROM THE LEGISLATURE?

The City: St. Louis

What problem is Lambert International facing? The airport handles 1/2 the traffic it did 10 years ago when St. Louis was no longer a hub for a major airline

Whose genius idea is it to privatize the airport? A limited government think tank, Grow Missouri

How does an aiport privatize? Requires FAA permission, 

What beenfits can a private airport operator bring?

• strategic approach to running the airport
• improve the facilities to attract new vendors
• negotiate better flight schedules with airlines
• lure more cargo business

Has this worked elsewhere? Yes, its common in Europe and airports in Memphis, Indianapolis and Louisville have improved their fortunes by expanding cargo operations.

Governing | Should Struggling Airports Be Turned Over to Companies?

State: New Jersey

The Bill: Assembly Bill 3532

What would it allow? Allows racetrqcks and casinos to apply for fantasy sports licenses

The licensing agency in New Jersey: the state Division of Consumer Affairs

The tax/fee on fantasy sports operators in NJ: quarterly fee of 10.5% of gross revenues on companies that receive permits 

NJ.com | N.J. could soon allow casinos to run daily fantasy sports

Courier Post | New Jersey Assembly votes to regulate daily fantasy sports

The State: California

The Court: U.S. District Court for the Central District of California

The Opinion

The big deal in the ruling: This form of fantasy sports is gambling. 

The California court’s ruling could be persuasive to pending suits in these states:  Illinois, Massachusetts, Texas and New York

The Recorder | Fantasy Sports Operators Eye Calif. Ruling on Horse Racing

Lowest 25 funding ratio states (below 80% funded):

• Includes Texas with stated unfunded liablity of $69,352Million & a market value of  unfunded liabilities at $243,718 Million
• Also includes:
  • Georgia at $22,150 Million in stated unfunded liability & $92,310 million in market value  of unfunded liabilities
  • Colorado with $29,583 million in stated unfunded liabilities and  $66,388 million in market value of unfunded liabilities
  • New Jersey with $135,701 million in stated unfunded liabilities & $161,856

Top 25 funding ratio states (above 80% funded):

•  California, Florida, New York

2 Highest Funding Ratios:

• South Dakota
• Wisconsin

Hoover Institution | Monday, May 15, 2017 | Hidden Debt, Hidden Deficits: 2017 Edition

A report by: Institute on Taxation and Economic Policy & School Superintendents Association

Lays out 2 arguments supporting federal private school vouchers:

• profitable tax shelters by high-income taxpayers
• Economic boon for corproations and investors

How does the federal tax credit work? Offers “supersized” incentives to donate to organizations that distribute private school vouchers

Do residents of every state enjoy the tax benefits? No, only 17 states with private school voucher tax credit

Tax Justice | Investors and Corporations Would Profit from a Federal Private School Voucher Tax Credit

State: Connecticut

The new bonding mechanism sought to reduce CT’s cost of borrowing: investors revenue bonds

How are investors revenue bonds financed? A tax-secured revenue bond that is paid back directly from the state’s income tax revenues

Governing | Fresh Off Another Downgrade, Connecticut Has a Plan to Lower Borrowing Costs 

States that have not passed fantasy sports regulations: Texas,  Florida & North Carolina

State that is increasing penalties on fantasy sports operations: Massachusetts is considering hefty fines on operators as a mechanism to replace the 2016 temporary fantasy sports regulations.

Salem News | Fantasy sports sites could face hefty fees

Legal Sports Report | Daily Fantasy Sports Industry Gains Victory After Setbacks In Texas, Florida

WRAL | Fantasy sports bill fails in committee

State: New Jersey

3 points from Gov. Chris Chritie’s proposal to use lottery proceeds to pay down pension debt:

• ease the burden on future budget writers, by reducing the amount of pension liabilities
• Automatic injection of inject a $13.5 billion
• Dedicated funding source for 30 years

How does this work? New Jersey’s lottery will become an asset of the pension system

NJ.com | What you need to know about Christie plan to slash N.J. pension debt with lottery cash

Relying on information from the Comptroller’s website, TPPF says

• Cities impose a property tax burden of $305 per capita or $1,220 for a family of four
• The tax burden has grown 137% since 2000 while population & inflation is 82%, based on TPPF analysis
• City propety taxes have grown by 5.82% every year between 1996 and 2015

TPPF | YES, CITIES ARE PART OF THE PROPERTY TAX PROBLEM

Smoke signals are being sent that Congress could act to cap or limit the tax benefits of tax-exemopt municipal bonds.

What would happen to cities if the benefits of tax exempt municipal bonds is removed?cities would find it far more expensive to finance capital improvements and other infrastructure

What has been financed by tax-exempt municipal bonds?

• 4million miles of roads
• 500,000 bridges
• 16,000 airports
• 900,000 miles of water pipes
• municipal bonds support more than 1.5 million civic projects

Governing | The Growing Threat to Municipal Bonds

Arizona approved last minute tax incentive extension for spurring business development.

Arizona Senate Bill 1416 (2017)

Arizona Republic | Arizona Legislature ends session with tax, welfare bills on final day

The County: Grant County, Ky.

Grant County’s solution to its financial woes was to offer tax incentives to:  the Ark Encounter, a religious theme park that includes a “life-sized reconstruction” of Noah’s ship, along with a creation museum

The additional county revenue with the Ark Encounter? $0, the tax incentives were too steep

What seems to be the economic development flaw in Grant County’s plan?

• few other attractions nearby to entice visitors
• not enough hotel rooms to accommodate tourists
• not enough restaurants to draw tourists into local business districts

Governing | No Help From Noah: The County That Banked on a Religious Theme Park to Solve Its Money Problems

The Florida Legislature passed a budget that funds the agency that directs economic devleopment but does not fund:

• business incentives that Governor Scott relies on to lure businesses to expand or relocate in Florida

Governor Scott’s commented that Florida is out of the economic development game when the Legislature rejected his funding request.

News Service of Florida | Rick Scott: Florida’s Out of the Economic Development Game

The interference with an state auditor investigation: The University of California President, Janet Napolitano, intercepted and reviewed surveys sent independently to 10 campuses before they were submitted to the state auditor

The Legislative reaction: making it a crime to “intentionally interfere” with a state auditor’s investigation

Georgia’s  SB 180 was signed by its governor to increase the rural hospital tax credit from 70% to 90%.

The goal of the tax credit: encourage more investment in rural hospitals as too few invested with the 70% tax credit

Atlanta Journal Constitution | Georgia governor signs into law 50-plus pieces of legislation

Report by: U.S. PIRG, a public interest research group

Did they review Texas Special Disgtricts? Yes, and  the 3 special districts from Texas have “received at least one Transparency Star from the Comptroller.”

The recommendation: “Districts should make available the most recently approved budget document on their website.”

Special Districts by the numbers in this report:

• As of 2012, more than 38,000 special districts nationwide
• 38% publish their most recent budget online
• 30% posted comprehensive annual financial reports
• 11 of the 79 sampled post NO budget information online

Governing | Most Special Districts Lag in the Transparency Department

State: Wisconsin

The dark store bill package will:

Wisconsin State Journal | GOP bills target ‘dark store’ big-box tax strategy based on Madison court ruling

The federal spedning bill passed with the following language to increase funding across the baord for cybersecurity:

“strengthen our technical collection and analysis capabilities in cyberspace.”

Politico | SPENDING BILL MOVES WITH CYBER RIDERS

The gas tax: 12 cent increase on the gas tax added into the state budget

State: California

How long after the bill signing by the Governor did the initiative begin? a week

Sacramento Bee | Initiative filed to repeal California gas tax increase

The state: California

The proposed rules to tax space income:  

The California legislative proposal:  a split role property tax to increase  business property tax

Supports say the split roll tax will fund:  schools,  libraries & police

Opponents say the split roll tax will fund: 

• Pension liabilities.
• Local pension and health benefits consume local revenues and at CalPers and CalStrs.
• When pensions consumer revenues, or when CalPers or CalStars ask for larger contributions from local governmental entities, local entieis cut services like schools, libraries and police.

Small Business Action Committee | Sacramento Bee | Split roll property tax proposal is really a pension tax

The Texas Attorney General  issued an opinion that the Senate Budegt manuever to delay a transportation funding payment is likely legal. 

In response, the Dallas Morning News offers an editorial, Texas Senate’s accounting trick may be technically legal, but it’s wrong, raising these points:

• the responsible thing for budget writers to do is to use the Rainy Day Fund
• There is a gaping funding hole in the state Child Protective Services and foster care system

The County: Parker County has a new EDC, the aptly named,   Economic Development Council of Parker County.

Parker County’s inspiration: Katy Texas

The goals of the suburban EDC: 

• “Not a good ol boys club”
• Will pursue, enhance, maintain and promote economic development and commerce in Parker County
• Utilizing a planned, non-political approach to seeking long-term economic growth
• Focusing on quality growth with sustainable employment

• County and City economic development groups will work together
• Create cohesive plan to take development to a new level
• Goal of bringing high paying jobs to the area & bringing the communities together

Pennsylvania

• Fantasy Sports & Online Gambling being tied to each other’s fate
• Proposal is to tax online slot revenue at 54%
• A proposal calls for a 25% revenue tax on daily fantasy sports revenue & a $2.5 million up-front licensing fee

Florida

• Seminole gaming compact, a gaming expansion and fantasy sports are being tied to each other’s fate

Legal Sports Report | The Fate Of Daily Fantasy Sports, Online Gambling Are Tied Together In Pennsylvania

• More Money. HB 21 provides “more than $1.8 billion in additional funding for public education”
• More money across the board. “more than 95% of school districts and almost every charter school would receive more dollars per-student”
• Modern Calculations. “modernize the formulas”
• Local dollars stay local. allows “more taxpayer dollars to stay in their local schools”
• Less reliance on property taxes. “begin to reduce our over-reliance on local property taxes.”
• Less Robinhood. Reduces Robinhood payments by almost $400 million over 2 years

Joe Straus | Newsletter: House Approves Key Education Bill

36%: 19 of 52 Texas pension fund systems reporting an assumed rate of return of 8% or lower in 2011

78%: 61 of 78 Texas pension fund systems, reporting assumed rate of rteturn of 8% or lower in 2016  

The impact: better pension health

Chief Investment Officer | TEXPERS: Texas Pension Systems in Better Health with Lower Target Rates

In KP-0143, Attorney General Paxton sets up 3 reasons why the Senate’s funding mechanism of timing transfers to the State Highway Fund is a-ok in his book:

• The Constitution requires a transfer of net revenues, and the Comptroller says you can’t calucate “net” until after the fiscal year closes
• “Net revenue” isn’t defined, and if we look to precdent, other statutes and the dictionary, we agree “net” has to occur after a fiscal year ends
• The issue is simply- is it more important that the constitutional requirements focus on the money that is deposited or when it is deposited? The AG says money is more important than time.

Statesman | In budget fight, Attorney General Ken Paxton sides with Texas Senate

Dallas Morning News | Texas AG Ken Paxton sides with Senate on budget maneuver poo-pooed by House leaders

Houston Chronicle | Paxton rules $2.5 billion Senate budget plan legal

• 10% drop in sales of sugary drinks
• 16%  increase in sales of bottled water

Kaiser Health News | As California Weighs Soda Warning Labels, Tax In Berkeley Shown To Dilute Sales

State: North Dakota

Supporters of tapping the ND Rainy Day Fund: 8 North Dakota State distinguished professors

The professors rational for tapping the Rainy Day Fund:

• cuts to higher education create long term economic impact to a state
• higher education quality will falter 

North Dakota State University | The Spectrum | Distinguished Profs Call on Legislature to Tap Rainy Day Funds

Pennsylvania wants to use which state funds to pay pension costs? The State’s Surplus Revenue Fund

What triggered this idea? PA’s Legislative Audit Advisory Committee voted to accept the audit report 

Why does this sound familiar? Texas Comptroller Hegar proposed a similar idea in recent weeks. 

PennLive | Let’s drain the Legislature’s slush fund and use it to pay for pensions: Dan Truitt

Statesman | Comptroller Glenn Hegar: Reform rainy day fund to tackle pension issue

informed:intel on March 23, 2017:

Comptroller Glenn Hegar proposes investing to meet Texas long term obligations.

The Comptroller’s proposed idea:

• set aside some state Treasury balances to address long-term obligation by either:
  •  reserving a portion of the existing Economic Stabilization Fund
  • -or- 
  • capping the ESF and dedicating a portion above the cap to the permanent fund for long term obligations
• 7 states use long term investing on their severence taxes; including:
  • Alaska, Montana, New Mexico, North Dakota, Utah, West Virginia and Wyoming

Comptroller | Investing to Address Long-Term Obligations

State: Nevada

When did NV pass ESAs? 2015

What happened after NV passed ESAs? The Nevada Supreme Court declared the funding mechanism unconstitutional in 2016

The 2017 fix: Nevada Senate Bill 506 (2017)

The ESA buy-in for opponents:  ESA amendments to gain favor for Majority Party proposals.

Is this opposite day?

• Each Chamber of the NV Legislature is controlled by Democrats
• The Democratic control is not strong enough to pass legislation without Republican support

Las Vegas Review Journal | The good, bad and ugly still alive in the Nevada Legislature

None of these states have permitted fantasy sports, nor enacted legislation to study daily fantasy sports:

• Iowa
• Washington
• Montana
• Louisiana
• Arizona

Legal Sports Report | No Joy In Iowa For Daily Fantasy Sports, As Bill Is Not Likely To Pass

The TIRZ: Memorial City TIRZ

The tax increment of this TIRZ: $2.5 Billion

The annual budget of Memorial City TIRZ? $72 million

The allegations: 

• TIRZ board members are “developer-friendly appointees whose vote in lockstep with the developers’ interests”
• The TIRZ serves to benefit developers

The bill to fix it: HB 4046 requiring TIRZ board memebrs to live within 2 miles of the TIRZ

Houston Chronicle | Cynthia H. Neely is a board member of Residents Against Flooding and a homeowner in Memorial City TIRZ 17 | Taxation without representation at Texas’ TIRZes

State: Maryland

The manufacturing tax incentive bill signed by the Governor will:

• Apply to  “distressed counties” + 3  counties  chosen by the state Commerce Department
• Help new manufacturers creating jobs over the next 10 years by offering:
  •  sales tax refunds
  • state property tax credits
  •  relief from filing fees
  •  5.75% credit against income tax for the wages they pay
  • allows for accelerated depreciation  to write off the cost of capital purchases in one year
  • capped at $10 million a year statewide

• In exchange for the incentives, companies must:

  •  offer programs that allow their employees to improve their job skills

Governing | Maryland Hopes to Lure Manufacturers With Tax Breaks

The states most hevily reliant on state and local property taxes are:

• #1  NewHampshire  66.1% of state and local tax collections
• #5 Texas  40.4%
• #2 New Jersey 47.5%
• #3 Rhode Island 44.6%
• #4 Vermont 42.2%
• #6 Maine 39.9%
• #7 Connecticut 38.3%
• #8 Montana 38.2%
• #9 Illinois 36.5%
• #10 Massachusetts 36.3%
• #38 California. 25.4%
• #13  Florida 35.7%
• #30 Ohio. 28.6%
• #27 Pennsylvania 29.8%

Tax Foundation |  To What Extent Does Your State Rely on Property Taxes? 

Company: Netflix

Netflix’s position on film incentives: Invest in infrastructure over incentives

Netflix’s rational for not chaing film tax incentives:

• chasing tax incentives in other states produces diminishing returns on screen
• tough on workers
• grinds on talent

The Wrap | Netflix Plans to Move Productions to California, ‘Invest in Infrastructure,’ Ted Sarandos Says (Exclusive)

State: Arkansas

What does Arkansas’ bill to  legalize fantasy sports look like?

• 8% tax on gross fantasy sports revenue
• no consumer protections
• no registration or license requirements
• a finding that fantasy sports is not gambling

Arkanasas HB 2250 (2017)

Legal Sports Report | Arkansas joins the party on DFS

• New York
• Massachusetts
• Tennessee
• Mississippi
• Colorado
• Missouri
• Indiana
• Virginia
• Kansas
• Maryland
• Arkansas

Legal Sports Report | Arkansas Governor Signs Fantasy Sports Bill; Becomes 11th State To Legalize FanDuel, DraftKings

The report: “Why Pensions Matter“

The group behind the report:  National Public Pension Coalition

 In the 1990s Viriginia & Michigan ceased defined benefit plans & this is what happened:

• MI & Va moved to 401K style plans
• State costs went up 
• Retirement security for state employees, teachers and lawenforcment “plummeted”
• In 2003, VA found that a defined benefit plan cost the state 1/2 the cost to administer
  • VA reopened the state pension & offered a voluntary 401K
  • 78% opted for the pension
• In Michigan costs have increased and funding levels have decreased leaving thr average social worker with $37,000 in a 401K and a monthly retirement annuity of $400

The Hill | Public pensions matter — just ask Michigan and West Virginia

The Palmetto State: South Carolina

The South Carolina Pension Reforms.

• More Contributions
  • State contributions will increase to 13.56%, that’s up 2 points
  • State conribution to law enforcement pensions will incrase to 16.24%, that’s up 2 points
  • Annual increases of 1% from 2018-2023
  • State employee contributions increase to 9% from 8.66%
  • State law enforcement contributions increase to 9.75% from 9.24%
• Shorter Amoritization. Over next 10 years, 20 year amoritization. 
• Lower assumed rate of return.   7.25% from 7.5%
  • After 2012, the assumed rate of return will be set every 4 years by the board of the South Carolina Public Employee Benefit Authority

Pensions & Investments | South Carolina Legislature passes pension reform bill

Poll conducted by:  Texans for Local Control  a 501(c)(4)

Who was polled: registered voters in Houston

The result TPPF champions:  

• 64% of Houstonians widely support transitioning new employees to a defined contribution plan; 20% oppose
• 70% support a vote on pension obligation bonds

TPPF | ICYMI: TEXANS EAGER FOR AUTHENTIC PENSION REFORM

The Comptroller lists the problems with dark store commercial appraisals in a supporter email as:

• the cost is carried by residential property owners
• homeowners cannot argue to ARBs that their proeprty is “too special” to value
• the appraisal playing field should be level

The cost of dark store appraisals:

• cost our local governments $2.6 billion annually within five years
• cost $1.2 billion in lost school property taxes
• cost of $703 million a year away from the Foundation School Program

Comptroller Glenn Hegar Op-Ed | Sinister-sounding dark store theory is corporate welfare

The Tax Foundation ranked states by how well funded each states’  pensions are funded.  

What you need to know:

• Texas has the 21st  | 79% funding ratio
• South Dakota is #1  | 107% funding ratio
• Oregon is #2  | 104% funding ratio
• California #24 | 76% funding ratio
• Florida #10 | 91% funding ratio
• Ohio #20 | 80% funding ratio
• New York #6 | 98% funding ratio

Tax Foundation | How Well Funded Are Pension Plans in Your State?

• It is fantastical to think of fantasy sports as anything other than gambling.
• changing the definition of what is gambling would avail online gambling sites 
• Fantasy sports should play by the rules. 

Ft. Worth Star Telegram | We bet against fantasy football’s skill defense

Maine is proposing fantasy sports regulation that would:

• require annual registrtation with the Maine Department of Public Safety
• annual fee of up to $5000

the legislators label fantasy sports: gambling

Maine SP 449 (2017)

Maine Sun Journal | Maine may tax, regulate fantasy sports leagues

State: California

The statewide preemption:  California AB 252 (2017) creates a 5 year prohibition on cities and counties taxing streaming video services

Supporters of the preemption say: Streaming services provide content & are not table utilities 

Which groups are in opposition?

• League of California Cities
• California State Association of Counties
• California Cable & Telecommunications Association

Which groups are in support?

•  Internet Association
• AT&T
• Computer Technology Industry Association

The Recorder | ‘Netflix Tax’ Proposals Pit California Cities Against Tech

Kansas has a revenue shortfall.

To overcome the revenue shortfall, Kansas cuts state contributions to public employee pensions.

Why cut the pension amount? To lower the amount of new revenue Kansas needs from higher taxes.

KNSS | Kansas Senate advances budgets with pension move

• Why won’t they listen?  “chairman Dan Flynn was not open to receiving suggestions”
• Why aren’t local Republican  precinct chair wishes being honored? the bills are ” in direct opposition to the resolution that Harris County Republican Party precinct chairs voted to support”

Empower Texas | WHERE IS THE LEGISLATURE ON PENSION REFORM?

• reduces Robin Hood by almost $400 million
• makes needed structural changes
• puts more resources into the classroom
• reduces the pressure on local property taxes

Speaker Joe Straus | Straus Applauds Committee Vote on School Finance Reform

Texas HB 21 (2017)

What points does Senator Uresti make about his SB 1713?

• SB 1713 requires ” large out-of-state online retailers to remit the same sales tax as everyone else”
• A 2015 US Supreme Court decision created an opening for state’s to challenge the pre-internet requirement for a physical nexus before a tax could be levied
• Texas needs this to fill budget cuts
• SB 1713 could bring revenue of $247.2 million to $1.8 billion
• SB 1713 is about closing a loophole

Sen. Uresti | Tribtalk |  Outdated sales tax system thwarts Texas businesses

State: Connecticut

The pension triggering legislation: Bridgeport, CT wants to restructure its pension liabilities for its police nad fire fighter pension by ossuing pensino obligation bonds to lower its costs by $2.8M per year

The legislative quagmire: 

• Connecticut’s Assembly prefers statewide legislation and not local legislation
• Supporters say other municipalities with similar unfunded liabilities might want to take advantage of the bond market and pay off their unfunded debt
• Several members of the substative committee are pushing for a Bridgeport POB specific bill in lieu of statewide legislation

CT Post | Bridgeport pension bill clears committee

State: Michigan

The dark store property appraisal issue: Some Big Box stores seek to lower their property tax appraisals by having the big box store’s property be appraised as though the property was vacant

How the Michigan Legislature is addressing dark zombie store appraisals? 

• limit comparable properties for big box stores
• consider supply, demand, and economic vitality of property

Which groups oppose this legislation in Michigan?

• Michigan Chamber of Commerce
• retailers
• grocers
• manufacturers

Crain’s Detroit Business | Fight over big-box store taxes back in Michigan Legislature

Michigan House Bill 4397 (2017)

City Controller Chris B. Brown lays out the following arguments why inaction on the Houston pension crisis will be costly:

• Until a fix passes the legislature, the liability grows at a rate of $1 million per day
• It is not financially viable to move the pensions from defined benefit plans
• For the first time in its history, Houstonended its fiscal year with a negative statement of net position, largely due to the pension liability. This impacts Houston’s credit ratings.

TRIBTALK | For Houston pension crisis, cost of inaction is high

Good: Austin scores high in economic development transparancy as the country’s most transparent city

Bad:

• fails “to disclose even the names of companies that have received economic development tax breaks ”
  • Harris County
• “do notprovide adequate online disclosure of any of their subsidy programs”
  • Dallas
  • Bexar County
  • San Antonio
  • Harris County
  • Tarrant County
• “Texas’ reporting of local property tax abatements (Chapter 312) does it poorly. ”
  • The Annual Comptroller report does not include business names

Governing | Show Us the Local Subsidies 

54% | Portion of the 50 largest counties and cities that disclose no basic information online about the tax incentives they offer businesses.

Comptroller Glenn Hegar proposes investing to meet Texas long term obligations.

The Comptroller’s proposed idea:

• set aside some state Treasury balances to address long-term obligation by either:
  •  reserving a portion of the existing Economic Stabilization Fund
  • -or- 
  • capping the ESF and dedicating a portion above the cap to the permanent fund for long term obligations
• 7 states use long term investing on their severence taxes; including:
  • Alaska, Montana, New Mexico, North Dakota, Utah, West Virginia and Wyoming

Comptroller | Investing to Address Long-Term Obligations

Comptroller highlights 4 long term fiscal obligations facing the state:

• state employee pension funding;
• health care coverage for public school teachers and employees (TRS-Care);
• the Texas Guaranteed Tuition Fund, a state-sponsored tuition savings plan; and
• deferred maintenance for state buildings.

What warning flares has the Comptroller sent?

• In December he mentioned the 4 long term fiscal obligations in a letter to lawmakers
• In March he detailed the long term fiscal obligations in his Fiscal Notes publication

What specific Issues are facing ERS?

• unrealistic assumptions about investment returns
• inadequate contributions 
• longer life expectacy
• fewer contributors to the system
• 30% of ERS is law enforcmeent, which tends to retire earlier

Policy options to fix ERS:

• raising member and/or state contributions
• one time lump sum payment to ERS- either GR or Economic Stabilization Fund
• Pension obligation bonds
• Reducing benefits to future or future and current members
• Switching to a Hybrid plan ro Defined Contribution

City: Detroit

Pension Saving Action by Detroit: Established a fund to pay a balloon payment, due in 7 years

How does the pension’s savings fund work?

• funded by surplus tax revenue funds
• the fund is labeled “”retiree protection” trust fund”

Repsonse from Moody’s: “credit positive”

Crain’s Detroit Business | Detroit city pension catch-up plan wins plaudits from rating agency

State: Ohio

The bill:  House Bill 132 (2017)

The regulatory framework:

• Defines fantasy sports as a game of skill
• Oversight agency: Ohio Casino Control Commission
• Licensing fee: $30,000
• consumer protections such as: age limits, prohibition of daily fantasy sports employees playing, and segregation of player funds

State: Pennsylvania

The bill: House Bill 865 (2017) 

The regulatory framework: 

• Oversight agency: PA Gaming Control Board
• Defines fantasy sports as a game of skill
• Registration fee is set by the Gaming Control Board with a cieling of 5% of the operators revenue

Legal Sports Report | Two Important States For Daily Fantasy Sports Industry Have New Bills

What label does TPPF put on certificates of obligation? Certificates of Obligation: Nonvoter Approved Debt 

What issues does TPPF raise about certificates of obligation?

• Use of certificates of obligation has risen 63% from 2007 to 2016
• TPPF calls for longer notification periods
• TPPF wants a standard of “5% of the total number of voters that voted in the most recent gubernatorial election can compel a public vote”
• TPPF wants to limit the types of items that can be funded by certificates of obligation

TPPF | Certificates of Obligation: Nonvoter Approved Debt 

On March 9th, Dallas Police and Fire Pension System stopped paying DROP payments.

Here’s why DROP stopped:

• The Fund was unable to renegotiate a debt agreement that could trigger a call on a $174 million loan
• City Council member trustees had threatened lawsuits if DROP payments were made while a deal was being negotiated

Dallas Morning News | Dallas Police and Fire Pension System won’t pay out DROP withdrawals after all

State: Arkansas

How Arkansas seeks to regulate fantasy sports:

• legal recognition as a game of skill
• tax fantasy sports companies at 8% of profits

The author ties fantasy sports to church: “This is a thing that folks do on Sunday afternoon, you know, when they get home from church, and watching a game.”

Arkansas HB 2250 (2017)

THV 11 | Proposed bill would legalize fantasy sports betting in Arkansas

• “Texans love sports and their freedom”
• that’s why ” I filed Senate Bill 1970″
•  “I am a longtime advocate for personal freedoms and limited government.”
• “We must protect our liberties and rights”
• We must protect our “ability to play a game of skill that millions of Texans already enjoy.”
• “Fantasy sports add to the experience of watching your favorite team, and I’m excited to work with my fellow lawmakers and the sports fans all across Texas to pass this legislation.”

Legal Sports Report | Texas Senator Takes Aim At Legalizing Daily Fantasy Sports

Press Release | Senator Kolkhorst Files Legislation to Protect Fantasy Sports in Texas

Opponents to Fantasy Sports make the following 3 arguments in Minnesota:

• season long fantasy sports is skill, daily fantasy sports is a game of luck
• daily fantasy sports is “”is much like running a bookmaking company.”
• daily fantasy sports targets young people who were ” “who were born with cell phones in their hands.”

The retort from the bill’s author: daily and season long fantasy sports are the same

What the Minnesota bill does:

• requires registration with the state
• background checks for operators
• regular audits of companies offering the sport
• consumer protections like:
  • banning companies that run fantasy sports from playing the games
  • bans games in which winners are determined by scores of actual games
  • requires players to be paid within 72 hours
  • mandates that skill levels of players must be available to others

Duluth News Tribune | Minnesota legislators consider regulating daily fantasy sports playing

State: North Carolina

Highlights from the bill:

• state registration
• 18 year old player requirements
• defines fantasy sports as:
  • An online fantasy or simulated game or contest in which an entry fee is charged and all of the following conditions apply:
    • the public knows the awards/prizes ahead of time
    • knowledge and skill of participants
    • no winning outcome is based on a single player or a single team
• 10% of fantasy revenues go to the state

North Carolina HB 279 (2017)

WSOCTV 9 | Fantasy sports operators could be regulated in North Carolina

State: North Carolina

How has refinancing debt helped pensions in North Carolina:

• Savings gets distributed in this formula:
  • 15% to the pension fund
  • 85% to pay down retiree health-care debt
• Since 2009, North Carolina has refinanced $4 billion to garner savings of $289 million
• Bond experts note that the savings isn’t immediate

Governing | How Refinancing Debt Can Help Pensions

State: North Carolina

The 2017 Bill: HB279

The regulatory structure for new fantasy sports regulations:

• Oversight: Secretary of State’s Office
• Excluded from the definition of gaming or gambling
• Defined as contests ““be determined by accumulated statistical results of the performance of individuals.””
• player age limit: 18+
• operators would be required to pay a registration fee equal to 10 percent of their contest revenues from the previous year
  • minimum: $2,500
  • registration fee cap: $10,000
     

Chairman Flynn on his HB 3158 reforming the Dallas Police and Fire Pensions:

• HB 3158 “calls for “a new strong board of trustees”
• “This board will be free of heavy representation of those from elected positions and those without significant business experience,
• HB 3158’s goal: actuarial soundness
• he thanks “Sam Friar and Kelly Gottschalk at the plan, Mayor Rawlings”

CBS DFW | Bill Introduced To Create New Dallas Police And Fire Pension Board

KMOO | Chairman Flynn files Dallas Pensions Bill

State: Alabama

The Supporters of Daily Fantasy Sports in Alabama Say:

• Not Gaming. its not “r normal casino-type slot machines and table gambling”
• Normalized Behavior. People are already doing it with their friends.
• State Should Not Restrict. Alabama should not be “in the business of restricting people from participating in daily fantasy sports competitions”

The Opponents of Daily Fantasy Sports in Alabama Say:

• Addiction. Daily Fantasy Sports is as addicting as gambling
• Bad Economic Choice.  Daily Fantasy Sports “hurts the economy by suppressing the amount of money spent on goods and services”
• Kids will be in the Casino. Students will be playing Daily Fantasy Sports

Opelika Auburn News | Online fantasy sports could soon be legal in Alabama

Alabama legislation for 2017: SB 28, SB 270, and HB 354

• Pension problems are caused by money managers
  • exorbitant fees
  • under performing results
• $100 Billion – the amount pensions, endowments and the wealthy have lost to money managers
  • Buffet thinks $100 Billion is a conservative calculation
• All of this was reocrded in Buffet’s annual letter released last weekend

D Magazine | Warren Buffett Says Greedy Money Managers Are to Blame for Public Pension Problems

NY Times | DealB%k | Buffett Asks Big Money: Why Pay High Fees?

Warren Buffet’s Annual Letter (February 25, 2017) 

$2.15 Billion tax incentives granted by school districts in Harris County.

In the non-petrochemical areas, the biggest incentive package is Waller ISD at $11.5 million. 

Houston Business Journal | School handout: How Houston corporations benefit from Texas’ largest tax incentive program

CAFR from the Comptroller & Report to the Citizens of Texas:

• Economic Growth will be slow
• Unemployment rates will remain low
• Service-producing industries grew by 2.6%
• Goods producing industries declined by 2.9%
• Largest employment growth rate was educational and health services 4.1%
• Mining and logging industry had the greatest rate of decline  of 11.4%
• Texas exports in 2015 was $251 billion 
• Since 2002, Texas is the leading state exporter

State Financial Annual Audit from the SAO:

• Economic Stabilization Fund balance was $10.2 billion
• $7.9 billion in cash in the State Treasury
• $1.8 billion in current and non-current investments
• $439.5 million due from the General Revenue Fund
• FY16 was $140.4 billion, an increase of $6.7 billion or 5.0% since the prior fiscal year
• State’s assets on August 31, 2016, totaled $290.0 billion, a 7.3%
• State’s bonded indebtedness was $47.1 billion

• Adds Texas residency requirement to open records 
• Makes an open records request from a non-Texas resident discretionary
• 7 states have this standard: Tennessee, Arkansas, Delaware, Georgia, New Jersey and Virginia
• In 2013, US Supreme Court gae the A-OK to this residencey requirement

Courthouse News Service | Lawmaker Wants Public Info Restricted to Texans

Texas House Bill 526 (2017) 

State: South Carolina

The Pension Fix that unanimously passed the South Carolina Senate: 

• Close down the state pensions to new employees once the pensions are fully funded
• The projected timeline: 2040s 
• Future employees would be on a  defined contribution plan

Post & Courier | SC Senate unanimously passed plan to repair state pensions — and then shut them down

Governor Chris Christie has a pension funding plan- use the lottery.

Here’s Christie’s plan:

• reduce the unfunded liability by $13 billion
• increase the funded ratio from 49% to 64%
• the plan seeks to realize the value of the lottery like a private business would realize value from assets

Pensions & Investments | New Jersey governor proposes using lottery money to bolster state pension system

Jacksonville, Florida and its law enforcement officers are reaching a deal to solve its pension $2.7 billion liability crisis. 

Here’s how the Jacksonville and police officer penion deal is shaking out:

• Voters approved a 1/2 cent sales tax increasre to go into effect in 2030
• The sales tax increase is triggered if andf only if officers agree to a fix
• 65% of law enforcement officers voted to approve 401Ks for new hires
  • 82% of captains and lieutenants approved the 401Ks for new hires
• The 401K deal comes with a 3%  bonus and a 20% across the board pay increase 
• The 401K deal also includes a return of all cut benefits during the 2000 financial downturn
• The 401K deal includes a 25% contribution by the city
• Contribution rates of current pensions will increase from 8% to 10%
• The final step will be approval by rank and file officers in March

News 4 JAX | FOP membership approves mayor’s pension deal

The bill:  SJR 41 by Seliger  Proposing a constitutional amendment to provide for foregoing the transfer of oil and gas production tax revenue to the economic stabilization fund if the ending fund balance for the preceding fiscal year is greater than $5 billion and for reducing the rates of oil and gas production taxes by amounts sufficient to equal the foregone transfer.

That caption has too many words. 

What you need to know:

• Severence taxes put into the Rainy Day Fund to be cut if there is more than $5 billion in the Rainy Day Fund
• Rainy Day Fund balances above $5 Billion will fund general revenue & the state highway fund
• Supporters say:
  • it would immediately move more money into general revenue & the state highway fund
  • once the Rainy Day Fund dipped just below $5 billion, it would unlikely exceed $5 billion again
  • The author says ““the most pro-business bill filed in the 85th Legislature,”

Amarillo Globe | Seliger proposes bill to cap oil and gas production taxes

According to Bill King, Josh McGee, Chair of the Texas Pension Review Board, Debunks Myth That Defined Contribution Plans Cost More.

The 2 step argument:

• A defined contribution plan has no effect on the real cost of benefits earned under the defined benefit plan
• A defined contribution plan has no effect on the cost of paying off any funding shortfalls

Bill King | Pension Expert Debunks Myth That Defined Contribution Plans Cost More

Josh B McGee | Transition Costs Myth

• TPPF says Texas per capita debt increased by 52.7% since 2006
• TPPF says you can’t jsut look at debt; you have to look at debt outstanding to factor in interest costs
• TPPF says add pension liabilities when you look at the state’s fiscal outlook

The TPPF recommendation #1: debt transparency.

What shape does debt transparency take?   Ballot propositions should read–

” total debt service required to pay the proposed debt on time and in full and an estimate of the proposed debt’s influence on the average taxpayer’s taxes, as recommended for local debt.”

TPPF Recommendation #2: State pensions should become defined-contribution plans

TPPF Recommendation #3: Surpluses of state revenue be used to cut taxes, not pay liabilities

TPPF | FRAGILITY OF TEXAS’ STATE DEBT AND PUBLIC PENSIONS

Tax Foundation ranks state Rainy Day Funds as percentage of their expenditures:

• WY #1 | 100.4%
• TX #2 | 26.3%
• WV #3 | 24.3%
• NE #4 | 17.9%
• MN #5 | 12.6%
• OH #21 | 7.7%
• FL #17 | 9.2%
• CA #21 | 7.7%
• PA #46 | .2%
• NY #20 | 8.4%

The State: Washington

The 3 tax options for Washington to increase funding by $7 billion over 4 years:

• raising existing property taxes
• adopting a new capital gains dedicated to school funding
• new carbon tax dedicated to school funding

KNKX | Education Plans Move Forward In Washington Legislature

The 21 economic development programs & regulatory structures that TPPF lables corporate welfare + TPPF recommended course of action:

• Enterprise Fund | Eliminate it
• Events Trust Funds | Repeal
• Film Subsidies | Eliminate it
• Agricultural Loan Guarantee Program | Eliminate it
• PUC Energy Efficiency Program | Eliminate it
• Texas Emissions Reduction Plan | Eliminate plan & all related fees
• Medicaid Expansion | Do not expand
• Renewable Energy Subsidies | Eliminate mandatory renewable portfolio
• Skills Development Fund | Eliminate it
• Texas Universal Service Fund | Do not Expand it
• Chapter 311: Tax Increment Financing | More transparancy. Blight must be a pre-requisite for a TIRZ
• Chapter 312: Property Tax Abatements | Allow the 2019 expiration
• Chapter 313: The Texas Economic Development Act | Eliminate it
• Chapter 380: Economic Development Agreements | More transparency & public comment
• 4A and 4B Economic Development Sales Taxes  | Eliminate it
• The Local Hotel Occupancy Tax  | Eliminate it
• Title Insurance  | Use a file-and-use system for both rates and forms 
• Historical Racing | No gambling expansion
• Medical Scope of Practice | Repeal the Prescriptive Authority Agreement
• Occupational Licensing | less licensing
• Alcoholic Beverage Control | ditch the 3 tier system

TPPF | Policymakers Guide to Corporate Welfare

Rodney Anderson’s Trib Talk piece lays out the following reasons to support fantasy sports in Texas:

• Fantasy Sports represents new technology and new business & Texas has a long hsitory of supporting new business models
• Fantasy Sports has its roots in Texas tracing back to a 1979
• Its just like a tournament at a golf course or a bowling alley
• It requires skill and knowledge
• It is a “research oriented” game of skill
• HB 1457 offers “Consumer protection, economic freedom, and individual liberties”

Ray Perryman lays out 3 reasons that the Texas Enterprise Fund, and other deal closing economic development tools, are good for Texas:

• Economic Development is highly competitive & Incentives are widley used & Texas needs to play on a level field
• The real world isn’t an academic theoretical free market world
• Structual changes make economic develpoment more important including:
  • labor & capital are increasingly mobile
  • site selection is very sophisticated
  • even minor variations in cost can impact decisions

Rio Grande Guardian | Perryman: Killing the Goose

Comptroller Hegar says the cost to Texas should dark store appraisals be upheld is $100s of millions in lost property tax revenue.

3 reasons why it would cost the state 100s of millions in lost property tax revenue:

• lower property tax values will reduce property revenue impacting spending on fire and police, schools, parks, libraries, utilities, community colleges and road maintenance
• to sustain revenue levels, the burden would be shifted to home owners
• Appraisal Districts maintain that the current highest and best use of comparables necessitates open stores, not dark stores

Fiscal Notes | February 2017 | “Dark Store Theory” and Property Taxation

The State: Florida

The bill to regulate fantasy sports: Senate Bill 592 (2017) 

What the bill does:

• Create the  Office of Amusements within Florida’s Department of Business and Professional Regulation & grants the Office regulatory oversight and enforcement powers
• Industry fines are set at up to $5000 per vioaltion, not to exceed $100,000 in aggregate
• Fantasy sports operators intitial license fee is $500,000
• Annual license renewals are $100,000 (or 10% of the entry fees that are collected, whichever is lesser)
• FBI background check for operators and officers of the operating entity
• Players must be over 18
• Prohibits insiders from benefiting from information gleaned

The Treasure Coast editorial opposes the bill for these reasons:

• Excepts fantasy sports from gambling regulation
• Defines fantasy sports as a game of skill & referencing a November 2015 report by Stop Predatory Gambling

TC Palm | Our view: Please, not another daily fantasy sports bill

•  8% tax
• Administrative penalties against fantasy sports operators can be from $1000 to a total of $50,000
• The agency with oversight: Mississippi Gaming Commission
• Permits fantasy sports contests online or in casinos
• Operators would have to undergo a background check
• Operators must be licensed
• Operators will be audited annually
• operators must verify that people placing bets are at least 21.

Of procedural notes:

• The bill failed and after procedural manuevering it passed the next day.
• The bill follows recommendations for fantasy sports set by a study group after Mississippiu legalized fantasy sports in 2016.

Mississippi House Bill 967 (2017)

Casino World News | Daily fantasy sports bill passed by House in Mississippi

Mississippi Daily Journal | House approves tax, regulation of fantasy sports contests

The state: Oregon

The coffee tax: 5 cents per pound of wholesale coffee

The education program to fund: 

• Alternative Education Sustainability Fund to fund capital construction and primary school reading programs
• 1/2 the revenue will go to the Oregon Military Department to be used in the Oregon National Guard Youth Challenge Program

Oregon’s revenue shortfall in 2017: $1.8 billion budget gap

CBS News | Oregon legislature considers coffee tax, officials say

The Pension Affected: Omaha, Nebraska

The police and fire pension change sought in Nebraska: Move the police and fire from a traditional defined benefit pension system to a cash-balance system

The reasons police & fire oppose the switch:

• makes recruiting harder
• fewer recruits, decreases public safety
• makes it harder to effectively combat violent crime
• San Jose, California adopted this approach and saw more than 650 officers leave in 6 years, taking their entire pension with them
• Training law enforcement officers is expensive, providing a mechanism that allows them tobe trained and leave with their entire pension within 6 years adds more training costs

Nebraska LB 30 (2017)

KMTV 3 | Omaha fire and police union against pension bill

Add another lawsuit to the growing litigation list concerning Dallas pension. The details on the new law suit:

• 4 Dallas Council Members, who are also trustees on the police and fire pension board, sued
• The goal of the lawsuit: put an indepdent controller in charge of the pension fund to prevent liquidation of the fund
• The catalyst for the lawsuit: the pension board is allegedly “preparing to sell off its assets to allow payments to flow to pensioners with DROP accounts”
• This new legal action is rolled into the suit Mayor Rawlings filed

D Magazine | Dallas Council Members Sue to Wrest Control of Pension Assets From Board

Southeast Texas Record | Mayor’s office clarifies lawsuit in police-fire pension matter

Texas is considering a sales tax holiday for guns. Let’s peak at what the cost is in smaller states:

• Louisianna and Mississippi are the only 2 states with a sales tax holiday for guns
  • Louisianna started its holiday from the 5% sales tax on Labor Day weekend 2009
  • Louisianna walked back its sales tax holiday for guns in 2016 & 2017, opting for a tax cut while still imposing 3% sales tax
  • Louisianna’s sales tax holiday for guns was a revenue loss of  $600,000/ year
  • Louisianna gun store owner professed sales tax holiday sales accounted for 80%
  • Mississippi sales tax holiday began in 2013 cutting the 7% sales tax
  • Louisianna is #1 in firearm deaths
• Texas fiscal note in 2015: $6.6 million

Fox 6 | The real cost of running a tax holiday on guns

In December CALPERs lowered its discount rate from 7.35 to 7%.

Last week, CALSTRs lowered its discount rate from 7.5 to 7%

Reason | California Teachers’ Pension System Lowers Projection, Potentially Tripling What Taxpayers Will Owe

New Jersey is considering fantasy sports legislation which would:

• impose a 10.5% tax on gross receipts
• Regulation by the Division of Consumer Affairs
• Requiring fantasy sports to have permits to operate
• Age minimum of 18 years
• consumer protections to protect fantasy sports participants from “being gamed” by fantasy sports operators
• Annual Revenue Projectsions: $1 million to $5 million

NJTV | Move to Regulate Fantasy Sports in New Jersey

Which Wisconsin organization opposes fantasy sports? Citizens Against Expanded Gambling

What do they say against fantasy sports regulation? 

• If it’s passed, it’s going to represent the largest expansion of gambling in state history
• “You’re literally opening up an internet gambling outlet in every house, and every dorm room and certainly every smart phone in Wisconsin.”

What are the opponents doing? organizing local events throughout Wisconsin to spread the word

Wisconsin Public Radio | Wisconsin Lawmaker Plans Fantasy Gaming Regulations

Wyoming is considering revamping its school funding system, here are the nuts and bolts:

• 2% sales tax increase to fund schools with a June 30, 2020 sunset provision
• $43 million in cuts
• moratorium on alternative schools.
• removes any mention of freezing or cutting special education funding
• freezes transportation spending at the levels spent in the 2017-18 school year

Wyoming HB 236 (2017)

Casper Star Tribune | Lawmakers consider replacement to sweeping education funding bill

The state treasurer: South Carolina State Treasurer Curtis Loftis

The attorney general opinion: The South Carolina State Treasurer asked the state attorney general to opine on whether the methods used to calculate the pension plan are likelu unconstitutional.

What did the State Treasurer do with this Attorney General Opinion? 

• Says the penion liability is actually $24 billion
• Says the Legislature & the SC Public Employee Benefit Authority have hidden the pension liability

What did the Legislature do?

• A joint pension committee recommended that the State Treasurer lose his seat on the joint committee

Post & Courier | S.C. treasurer, armed with attorney general opinion, blasts pension fund management

The right: Texas Public Policy Foundation

The 3 issues raised about Tax Increment Reinvestment Zones:

• unaccountable to private citizens
  • calls for greater transperancy
• TIRZ statutes are expansive, allowing for TIRZs in areas that could find solutions with private investment
  • calls for a finding of blight before a TIRZ is created
• Monitoring of TIRZ development is necessary to look for TIRZs increasing overall development

TPPF | Tackling Tax Increment Reinvestment Zones 

Where: Nevada

Who sought information about state pension beneficiaries? the conservative Nevada Policy Research Institute

What pension beneficiary information is being sought? 

• names of those retired
• years of service
• amount of benefits
• years of employment
• most recent employer

What 3 things did a court say when the pension systems argued against disclosure?

• the information is not confidential
• no evidence that “the requested information would actually cause harm or even increase the risk of harm to retired employees.”
• there was no evidence that a risk of cybercrime would increase with the release of the information

What about attorney fees and costs? The state has to pay the think tank’s atorney fees and costs

Governing | Judge: Nevada Must Release Pension Recipients’ Names