• The father of 401Ks says that they were ““never intended to cover everyone’s retirement.”
• The weakness of 401Ks grew in the Great Recession
• 401Ks eat away at retirement security with high fees and poor investment options
• Replacing a Pension with a 401K is risky

After naming Dallas the highest debt incurring city in Texas, Empower Texas also says the reason for high debt is pension systems. 

Empower Texas calls on future pension liabilities to be included on Dallas’ balance sheet.

It also calls pensions:

• costly for taxpayers
• risky for government workers
• links pension systems to local government bankruptcy

Empower Texas | Dallas Leads Texas Cities in “Hidden” Debt

The winner is Dallas.

Empower Texas says:

• Dallas hides billions in debt.
• Billions in debt is not disclosed on financial statements due to out dated accoutnign methods
• 3rd highest taxpayer burden for cities in the U.S.
• Each Dallas citizen burden of this debt is $17,900
• The reason the problem isn’t fixed: tax payer funded lobbyists hired by cities

Empower Texas | Dallas Leads Texas Cities in “Hidden” Debt

Michigan had allowed for temporary return to work provisions for teachers. This allowed teachers to retire, collect a pension, and return to work without jeopardizing their pension.

This return to work provision sunsetted, and the Michigan legislature continued the return to work program to meet 2 goals:

• a shortage of substitute teachers
• a shortage of full time teachers in certain subjects

What requirements exist to allow for return to work while collecting teacher retirement benefits?

• The subject area of the teacher has to meet defined shortage subject areas
• Return to work teachers may only do so for 3 year terms.
• Substitute teachers, who return to work,  receive full benefits as long as they make no more than 1/3 of their final average compensation in a year.

WILX | MI Legislature OKs Letting Retired Teachers Return with Pension

Congress is set to pass a permanent ban on internet sales tax. That’s the tax paid on access to the internet and collected by states and local governments.

What you need to know:

• Texas is 1 of 7 states that collect an inernet sales tax (Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas & Wisconsin)
• Advocates supporting the ban on internet sales tax say now is not the time to risk new taxes on the growing digital economy

The Hill | Seven states to lose millions from Internet tax ban

This week the state told the Texas Supreme Court that the lower courts got it wrong. That the 2013 tax levied on small tobacco is not unconstitutional.

Bonjour 2017 legislation to fix this mess.

Law 360 | Texas Asks State Justices To Revive ‘Small Tobacco’ Tax

• 27 of 46 states, with Rainy Day Funds,  have no clear directive for saving
• Texas Rainy Day Fund is the Second Largest in terms of dollars
• Minnesota sets the level of budget risk it wishes to offset with Rainy Day Funds
• 5 States (Connecticut, Minnesota, Nebraska, Oregon, Utah) review their Funds to determine a sufficient maximum or targeted balance for Funds

3 Recommendations from PEW Charitable Trust Review 

• States need to set an explicit purpose for the Fund savings and narrowly define it in law
• States need to study economic volatility to align savings and spending
• States need to determine the degree of risk sought to be offset

California had no idea how much CALPERS had paid out in management fees.

This triggered other states to make pension management fees more transparent. 

5 Things to Know:

• Over 25 years, California paid pension equity managers $3.4 Billion
• Performance fees, a fee attributed to alternative investments, are poorly reported by pension plans.
• CALPERS is leading the charge to adopt proposed industry-wide disclosure standards
  • Standards will require managers “to make clear the performance fees they are taking off the top of investment returns”
  • Written by Institutional Limited Partners Association (ILPA)
  • Final disclosure standards will be out in January 2016
• South Caronlina is calling for transparency
• Washington state is calling for transparency

Governing | Public Pensions Challenge Private Equity Fees

$627,000 per year, or $22 Million over the 30 year term with inflation, is the estimated loss to the City of Laredo if it approves a TIRZ to facilitate the building of a new subdivision. 

LMT Online | Firm: TIRZ would be costly

Houston City Council this week approved a new TIRZ for Montrose. 

The goal of creating the new Tax Increment Reinvestment Zone is to:

• repair and enhance infrastructure
  • new sidewalks
  • drainage system repairs
• enhance transportation & parking options

Houston Public Media | Houston City Council Unanimously Approves Establishing A TIRZ For Montrose

Houston Business Journal | New inner-Loop TIRZ approved

• Total Texas Enterprise Fund Allocations $577,357,696  
• State Auditor Pointed out 11 projecs that received $222.3 million with no TEF application
• TEF has created 77,269 jobs
• 92% of TEF cost benefit analysis were erroneous according to the State Auditor
• Article 1, Strategy C.1.4
• 3 largest TEF awards account for 39,810 new jobs
• 3 largest TEF awards account for a direct investment return of $3.2357 billion
• 49% of TEF awards did not have documentation that the award included consistent review of all required components of application according to the State Auditor.

​

TPPF also highlights these specific awards; see if your client is on the list:

• Texas A&M University System and Lexicon Pharmaceuticals 
• Sematech
• Texas Instruments
• Tyson Foods
• Hilmar Cheese Corp.
• Samsung Austin Semiconductor

TPPF| Spotlight Texas Enterprise Fund

Which local government wants to use a TIRZ to build a rodeo facility? Stephenville is considering it.

Would it be limited to rodeo use? No, the annual tractor pull or a farmer’s market are also events considered for the venue as Stephenville has no large facilities that can accommodate large gatherings.

What’s the local government goal? 20 year goal to enhance the airport & surrounding area to attract investment & development.

Stephenville Empire-Tribune | City council hears report on multi-purpose facility study

What state is returning excess revenue?  Wisconsin is returning excess revenue it thought it  needed to do work on Lambeau Field. 

How was the revenue collected?  A local sales tax surcharge with revenue required to go to Brown County stadium district to build a reserve fund for maintenance and operating costs of the iconic Green Bay stadium

The lucky recipients of the excess sales tax revenue are… Local government agencies in Brown County.

How was the funding returned to local governments? A bill signed by Gov. Scott Walker

How much excess sales tax revenue was collected?  $17.6 million.

How is the excess funding being divvied up?

• 25% to Brown County ( $4.4 million)
• 24 municipalities in Brown County will get the rest based on population.

What can the local governments do with the excess revenue? 

•  property tax relief
•  tax levy-supported debt relief 
• economic development.

Governing | Wisconsin Will Return Excess Stadium Money to Local Governments

Attorney General Opinion Request 0081- KP seeks clarification on education vendors.

Who is requesting the Attorney General Opinion? Senator Nelson

Why the Attorney General Opinion? 2015 contracting reforms and the Education Code conflict as to conflicts of interest with education vendors.

What question does Chairman Nelson want the Attorney General to answer? Whether 2015’s SB 20 Government Code provisions conflict with existing Education Code Section 51.923.

What’s the difference in these 2 code sections? SB 20 sets up a Government Code prohibits an agency’s govenrment board from entering into a contract with a vendor if a member of that government board has a financial interest. Whereas, the Education Code does the opposite. The Education Code permits institutions of higher education to enter into contracts with vendors in which members of the higher education institution;’s governing board have a financial interest. 

Moody’s is warning that its ratings analysis will include cybersecurity.

Moody’s looking to big picutre cybsersecurity:

• cyber defense
• cyber detection
• cyber prevention and response

Moody’s specific analysis will include:

• Nature of the affected assets or businesses 
• Duration of service disruption and expected time to restore
• Scope of the affected assets or businesses 

Why does this matter to Texas? Every state entity and local governmental entity that issues bonds will be impacted.

Think Advisor | Threat of Cyberattacks Could Now Affect Moody’s Ratings

Legl Tech News | Threat of Cyberattacks Could Now Affect Moody’s Ratings

Who is behind the push for local referendums on a soda tax? “Health Advocates” part of an international strategy backed by billionaires in New York and Texas, including former New York City Mayor Michael Bloomberg
 

What’s the 2016 push? Targeting up to 12 cities nationwide including Austin, TX

Politico writier calls the soda tax push  “a gift for Republicans” that could turn a “a super-sized Slurpee could be turned into a symbol of freedom”

Ted Cruz is on the case. In 2013 he offered a budget amendment that would have “prohibited federal regulations on the size or quantity of food and drinks.”

 Laura and John Arnold​ Foundation also on the case. The Arnolds’ Action Now Initiative is allegedly working with Anthony Holm
Politico | War over soda taxes coming to a polling place near you

Grist | Soft drink tax war to bubble up in cities across the U.S.

From 1982-2014, cigarette taxes in Texas increased 812%.

Sin Taxes in Texas account for:

• $3.8 billion in 2015
•  7.3% of all tax collections
• 3.5% of total state revenue

The Top 3 Sin Taxes are:

• Cigarette & tobacco taxes account for $1.5 billion (2.9% of total Texas revenue)
• Gambling accounted for $1.2 billion ( 2.19% of total Texas revenue)
• $1.1 billion from alcoholic beverages (2.16% of total Texas revenue)

Where does Texas fall compared to other states?  In 2014, Texas sin taxes accounted for 4.6% of its total revenue, that is slightly above the national average of 3.8%. Rhode Island leads the nation 15.9% of its revenues rely on sin taxes. 

Texas Comptroller | How Texas Taxes “Sin”

How did TIRZ money get to a redevelopment project?  Midland City Council approved funds from a dissolved TIRZ & the dissolved Downtown Midland Management District.

Did all the funds in the disolved TIRZ and MMD go to redevelopment? No, the economic development recipient had sought $2.9 M and recevied $900,000.

What’s the redevelopment project? Asbestos abtement and redevelopment of Midland’s Vaughn Building by Houston-based Innova Development company

Keep it in your pocket for the interim charges forcused on either economic development or MMDs.

Midland Reporter Telegram | Vaughn Building asbestos removal back in motion

Awaiting re-hearing from the 3rd Court of Appeals is a franchise tax lawsuit involving American Multi-Cinema Inc. The Comptroller maintains that if the Cineman’s Appellate win stands, Texas would lose a total of $7.1 Billion:

• $1.1 billion  in franchise tax revenue loss per year
• 4 years’ worth of refunds totaling another $6 billion

Bonjour Ways & Means Interim Charge #3

San Antonio Express News | Comptroller sees potential ‘enormous’ revenue hit from tax case

Previously on Information Intelligence:

Which city cut its pensions for police and fire? Chattanooga

What cuts did Chattanooga make?

• Reduced cost of living adjustments by amending the guaranteed annual 3% cost of living rate to an average of 1.5%, depending on the level of benefits
• Increased the employee conributions while reducing the city contributions.

How was Chattanooga able to do this? 

• The mayor first formed a 18-member task force
• The task force recommended the cuts
• The cuts reduce the city’s $150 million unfunded pension liability
• The cuts also reducde the ” increasingly unsustainable city contribution to the pension fund”
• Increased employees’ pension contributions by nearly 40%
• Saving Chattanooga  more than $227 million over the next 24 years

Did pension recipients sue? Yes, but a federal district judge this week ruled in favor of Chattanooga by finding:

• the cost of living adjustment was not a vested right nor was it a contractual obligation
• the cost of living adjustments were separate and apart from vested rights listed in city ordinance.

Chattanooga Tiems Free Press | Chattanooga wins pension lawsuit filed by retired police officers, firefighters

Governing | Pension Cuts Win Federal Court Support in Chattanooga

Leave it to the number crunchers to up the transperancy quotient.

What’s triggering the new disclosure rules for economic development deals? A change in GASB ( Governmental Accounting Standards Board) rules.

What’s the new GASB rule require?  As of 2017, governments will have to begin “tracking, tallying up and reporting the tax incentives awarded on their annual financial statements as lost tax revenue”

But, there’s a catch, one thing that need not be disclosed: The identity of the company receiving an incentive. The GASB rules only require voluntary disclosure of the identity of the economic development incentives.

3 Reasons critics think the name of companies receiving incentives should be disclosed:

•  economic development deals don’t help small business 
• don’t require details on how tax rebates are spent (think about the debate around how film tax credits are spent)
• reporting the incentive as lost revenue will negatively impact government’s finances

Governing | 3 Things the New Tax Incentive Disclosures Rule Won’t Reveal

• Pension systems have failed to disclose, or ask, how much private equity firms keep in performance fees
• When performance fees paid by pensions is revealed, the rulemaking/agency protocol/legislative solutions are 3 fold:
  • tougher scrutiny of private-equity investments
  • cut back a pension’s private equity holdings
  • negotiate lower fees
• Examples of performance fees paid around the country by state pension systems:
  • CALPERS Billions over 17 years above what was disclosed
  • New Mexico $6.3 million in performance fees
  • South Carolina $35.3million in performance fees
  • Kentucky $34.1 million
  • New Jersey $91.3 Million in performance fees
• Pension funds avoid disclosing performance fees because:
  • accounting rules didn’t require public reporting
  • returns were high enough to mitigate any cost concerns
• The issue of performance fees paid came to light nationwide after an activist blog publicly asked a CALPERS official for the amount the pension system paid to private equity firms
  • When CALPERS investigated, it was determined that the private equity firms did not know th e answer.

Bonjour, House Pension Committee Interim Charge #5

Wall Street Journal | Pensions’ Private-Equity Mystery: The Full Cost

New York Times | Calpers Paid $3.4 Billion to Private Equity Firms

• Texas wireless phone tax rate is 11.53% making it the 16th highest
• Texas combined wireless phone taxes, fees & charges total 17.99% making Texas #21
• The Top 10 states have wireless bills with fees & taxes that account for 20% of a wireless bill

Tax Foundation | Record High Taxes and Fees on Wireless Consumers in 2015

What’s the new high speed rail project? High Speed Rail from Los Angeles to Las Vegas

Which economic development office is involved and why: Nevada Governor’s Office of Economic Development because the Rail Authority signed an exclusive arrangement with a Las Vegas Company. (And Nevada relies on gaming tax revenues)

8 Facts to Know about the Project:

• It has an exclusive relationship with XpressWest ( a Las Vegas based company)
• no state dollars
• zero-emissions train
• half the time of the travel to 80 minutes
• cost less than $100 round-trip
• will ultimately connect with the California High Speed Rail Project
• Estimated to cut road traffic by 25%
• Partnership with a Chinese firm that has pledged $100 million for the $8 billion project

Sacramento Bee | Project to link Vegas and California with train gets boost

 Who is backing a cigarette tax increase? Tom Steyer

How much is he putting into it? $1 million

What’s the tobacco tax increase proposal look like?

• $2 per pack increase
• Applies to e-cigs too
• reduce smoking rates and to better fund Medi-Cal (California low income health care program)
• offer higher reimbursement rates for doctors who see Medi-Cal patients

​Who else is backing the tobacco tax increase?

• California State Council of Service Employees put in $2 million
• alliance of public health, labor and healthcare group 

An Urban Land Institute luncheon in Houston revealed the following differences with the city’s TIRZ districts:

• Budgets.  Vary from $500,000 to $10,000,000
• Redevelopment Partners Necessary. For a TIRZ to work, there needs to be a redevelopment plan that works with a corresponding Muncipal Management District
• Economic Disparity. In poorer areas the TIRZ will fix sidewalks, improving street lighting, projects the city cannot tackle. While in property wealthy areas, critics say TIRZs are a “cash cow for wealthy districts to undertake projects without oversight or voter input“

Refreshing Our Recollection: Interim Charge #1 House Committee on Special Purpose Districts. 

Houston Business Journal | Not all TIRZs created equal

Both the Beaumont Enterprise and the Midland Reporter-Telegram ran editorials supporting raising the gas tax. 

• 2015 Prop 7 is not enough for transportation funding
• The state still needs $5 billion per year for transportation funding
• “The only realistic answer is increasing the gasoline tax, which hasn’t changed since 1991”

Midland Reporter-Telegram | Texas highways need more funding, higher gasoline tax

 Base pension contributions on more realistic investment assumptions.

Charles Chieppo, research fellow at the Harvard Kennedy School’s Ash Center,  3 point rational is:

• A libertarian paper published by Reason
• Recommends Phasing in the more stringent financial standards
• Suggests a rate of 5-6%, not the current 8%

Governing | A Simple (But Hard) Way for Governments to Stay Out of Pension Trouble

Reason Policy Brief | Best Practices for Setting Public Sector Pension Fund Discount Rates 

Mandatory Sales Price Disclosure is no longer part of the goal of the City of Austin property appraisal litigation.

Austin Business Journal | Sale price disclosure off table in Austin property appraisal lawsuit

** REVISION **
SENATE

NOTICE OF PUBLIC HEARING

COMMITTEE:    Intergovernmental Relations  

TIME & DATE:  9:30 AM, Wednesday, December 02, 2015  

PLACE:        E1.012 (Hearing Room)  
CHAIR:        Senator Eddie Lucio, Jr.  

The Senate Committee on Intergovernmental Relations will hold an organizational hearing and will have a preliminary overview of the following charges:

Charge 2: Examine the processes used by home rule municipalities to adopt ordinances, rules, and regulations, including those initiated by petition and voter referendum. Determine if additional statutory safeguards are necessary to ensure that ballot language accurately describes proposed initiatives. Identify ways to improve transparency and make recommendations, if needed, to ensure that local propositions and the means by which they are put forth to voters, conform with existing state law.

Charge 3:  Review natural disaster preparedness planning and coordination in the wake of a growing range of threats. Evaluate whether existing processes maximize regional cooperation to rebuild housing and infrastructure, and allow for the timely dissemination of funds to units of local governments for reconstruction following a federal declaration. Develop recommendations, if necessary, to improve the efficiency of disaster recovery efforts, incorporating best practices identified from other states, as well as lessons-learned from past reconstruction efforts in Texas.

Charge 6: Examine ways to improve government accountability in elections regarding the issuance of public debt. Include a review of the information that is currently provided to individuals in the voting booth and provide statutory recommendations, if necessary, to improve transparency.

The hearing will include invited testimony only.

** See Committee Coordinator for previous versions of the schedule **
 

Revenue

TAXES | THE INTERIM CHARGES

• Agriculture & Livestock: property tax and rollback rates
• Appropriations: revenue sources, reliance on oil & gas; Strategic Fiscal Reviews; Rainy Day Fund Projections & Accountability
• Economic & Small Business Development + Energy Resources: reliance on oil & gas revenue
• Higher Education: community college taxing districts
• Special Purpose Districts: tax assessments by municipal management districts
• State Affairs: preparing for state revenue disaster
• Ways & Means: rising property tax levies & taxpayer dissatisfaction; repeal of franchise tax; ongoing tax litigation impact on revenue stability; monitor homestead exemption increase

TAXES | YOUR INFORMED INTEL

• Rollback Rate for City Property Tax Tops Ship Channel Agenda
• Big City Mayors: Support Local Control Over Property Tax Revenue
• TPPF: Slow Economy = Property Tax Reform. 5 Points
• A TIRZ? A MMD? No,It is an Innovation District coming to a TX City near you
• TIRZ Reform & Houston Mayoral Race. 3 Things to Know Now
• Lege Trend: State Reigning in Local Governments
• Eco Devo Trend: Eco Devo 101. TIRZ Begets a University Facility
• 4 Reasons not Taxing Municipal Bonds is Good. Good for Stadiums and Hospitals
• Comparison Charts on State and Local Spending. Stadiums or Roads get more tax revenue?
• Trend: Tax the Cloud. 5 Examples from across the country
• 3 More Commercial Property Appraisals Lawsuits Come to Light
• Key Point from Lt. Gov. on Property Appraisals in Corpus Christi
• Pro/Con: 3 Points from Mayor Adler / 3 Points from Sen. Bettencourt. Austin Commercial Property Tax Valuation Lawsuit
• Commercial Appraisal Lawsuit Status Check: 1 new lawsuit. 6 Homeowners. 1 State Senator Bettencourt weighs in with Interim Charge
• Denton County on Full Alert to City of Austin Commercial Property Tax Suit
• Lege Trend: Business Tax Credits for GEDs
• AL Special Session to fill Budget Shortfall. 7 Republican Supported Revenue Sources
• Rep. Wray on the Franchise Tax/Margins Tax 2015 Reforms
• Kolkhorst Goal for Business Taxes
• Margin Tax: TXSupreme Court & the $1.5 Billion Question
• Franchise Tax Loss for Out of State Companies
• Lege on the Horizon: Pass Through Payments & the Franchise Tax
• Legal Trend Forecasting: Margins Tax Woes
• #1. 11th Year in a Row. TX is #1 for Business
• Economic Benefit of Margin Tax Reform Courtesy of TPPF
• City Council Moves Forward with Spaceport to Benefit Airport

ECONOMIC DEVELOPMENT | THE INTERIM CHARGES

• Business & Industry: business tax credits for employing those receiving government benefits or consistently having faced significant barriers to employment
• Culture, Recreation & Tourism: economic development via heritage, cultural, recreational, historical, nature, and preservation practices
• Defense & Veteran Affairs: economic development around military bases
• Economic & Small Business Development: attract more businesses; Texas’ competitiveness; incentives for growth & expansion of small business; best practices for economic development incentives
• Environmental Regulation: incentives for consumers & retailers to promote hazardous waste disposal
• Investments & Financial Services: investment climate and resources bringing new businesses & jobs?
• Natural Resources: coastal economies
• Public Education + Economic & Small Business Development: incentives for business to invest in training and equipment for schools
• Urban Affairs: low income tax credit in light of U.S. Supreme Court ruling in TDHCA v. Inclusive Communities
• Ways & Means: SAO Review of Chapter 313; Marine Goods taxation competitiveness

ECONOMIC DEVELOPMENT | YOUR INFORMED INTEL

• West Texas TIRZ incentives for Hotel. Who. What. How much.
• Eco Devo In Bandera: Where Economy Meets Ecology
• A TIRZ? A MMD? No,It is an Innovation District coming to a TX City near you.
• Eco Devo Trend: Eco Devo 101. TIRZ Begets a University Facility.
• ECO DEVO: $9 Million in economic incentives for Panhandle Solar Project
• New Economic Development Office at the Port
• Poll Results: 4 Things that Matter to Small Business. Economic Development Programs to Choosing Texas.
• Lege Trend: State Audit Powers on Corporations that Get Eco Devo Dollars
• Eco Devo Deal. Geographically Limited Jobs. $750Million.
• Eco Devo: US Senator Opposition to Ex-Im Kicks TX out of Running for New Corporate Offices
• Tax Incentives on the Chopping Block in the South via a Constitutional Amendment
• 5 Reasons Tracye McDaniel of TEDC Says Texas Dominates Economic Development
• Data Center Tax Incentives State by State
• SAO: Auditing the 313 Agreements. 6 Fixes for 313s

PENSIONS | THE INTERIM CHARGES

• Appropriations: pension funding & actuarial soundness
• Insurance: 2013’s HB 2929 impact on ERS and TRS
• Pensions: impact of global market; GASb compliance; unfunded liabilities in LECOS & ERS; structural reforms for actuarial soundness; investment performance benchmarks
• Select Committee on State & Federal Power & Responsibility: pension divestment in foreign nations

PENSIONS | YOUR INFORMED INTEL

• Pension Liabilities Downgrade Dallas Debt Rating. 4 Reasons Why. 2 Things That Would Up the Rating
• Trend from the East Coast: Pension. Police. Fire. No City Control. No Legislative Action to Help City
• Trend: Pension Liabilities Threaten Municipal Bonds. Bondholders v. Retirees
• Lege Trend: Pension Divested from Coal to the tune of $340 Million
• AK Pension Reforms. Agency Rebuffs Legislature
• 30 State Pensions Ban Investment in Iran
• Campaign Trend: Pension Divestment
• Lege Trend: Pension Forfeiture Reform
• TexPERS Counters TPPF on Pension Reform
• TPPF: 4 Reasons Texas has a $57 BILLION Pension Problem
• Initiative & Referendum: Pension Reform in 3 steps
• Moodys Downgrades Houston Debt Rating
• Local Pension Funding. One City Mayor Calling for Funding Shift to the State
• Legal Trend: Sue For Pension Data. Lawsuits Bandied About in Houston

STATE CONTRACTING | THE INTERIM CHARGES

• Appropriations: study state contracting trends, monitor transparency & judiciousness
• General Investigating & Ethics: contracting practices at major agencies. more reforms? is there public confidence and trust?
• State Affairs: Contract monitoring, management, performance evaluation and notifications; best value recommendations; prevention of conflict of interest

STATE CONTRACTING | YOUR INFORMED INTEL

• AG Opinion: Local Contracting Opportunities. Calling All Parking Enforcement Aficionados.
• Contract Reform Update. LBB State Contract Database. New Info at your Fingertips for State Contracting.
• State Contracting. TXSCT says certain parts of state contracts are private.
• Procurement Contracts: Data Security Clauses
• SAO Report. Top 4 Reasons the GLO Contracting Process is Not Great.
• Contract Reform: Link Time. SAO, Strike Force Report. All in One Place.
• State Auditor: More Procurement Contracting Issues that Can Kill Your Contract

SHARING ECONOMY | THE INTERIM CHARGES

• Business & Industry: how to make Texas a sharing economy hotspot
• Economic & Small Business Development: how to support & grow the sharing economy in Texas

SHARING ECONOMY | YOUR INFORMED INTEL

• Legal Trend: Sharing Economy Leads to More Lawsuits. Leads to More Legislation.
• Private Property Rights. Sharing Economy. Local Ordinance Hoopla.
• Campaign Trend: Private Property Rights. Short Term rentals. The $3.6 Million + Local Election Issue
• Are ride share regulations a taking of cab property?
• Sharing Economy: Ride Share Fee to Offset Cab Costs.
• Legal & Lege Trend: Air Share Regulation
• NY Governor Says State Should Regulate Ride Share. Not Local Governments. 3 Reasons Why.
• Local Gov. Trend: Deregulate Ride Share to Level the Field
• Regulatory Trend: Update to Ride Share Rules from the Silver Mine State
• Ride Share. Sharing Economy. Regulatory trend: Employees or Independent Contractors

DEBT | THE INTERIM CHARGES

• Elections: improve transparency in bond elections
• Public Education: facility bond debt
• Special Purpose Districts: Municipal Management District debt

DEBT | YOUR INFORMED INTEL

• TX #11 on State & Local Debt Per Capita
• Pension Liabilities Downgrade Dallas Debt Rating. 4 Reasons Why. 2 Things That Would Up the Rating
• Moodys Downgrades Houston Debt Rating.
• 107 local bond elections. November. 2015. 13 Category Breakdown of Bond Projects.
• 3 Points from Empower Texans on Tarrant County JPS Debt
• May 9th Bond Election Results. Odds of losing 1 in 5ish.
• 4,700 Signatures Opposing Montgomery County Bond Proposition
• The Next Appropriation Challenge: State Debt from the mouths of elected officials

• The Top 10 States:
  • 1. Wyoming
  • 2. South Dakota
  • 3. Alaska
  • 4. Florida
  • 5. Nevada
  • 6. Montana
  • 7. New Hampshire
  • 8. Indiana
  • 9. Utah
  • 10. Texas 
• The break down for all of Texas businesses tax rankings for 2016
  • #41 corporate tax rank
  • #6 individual income tax rank
  • #37 sales tax rank
  • #15 unemployment insurance tax rank
  • #34 property tax rank
• Why is Texas #6 on individual income tax rank? Because Texas applies the gross receipts taxes to limited liability corporations (LLCs) and S corporations 

Tax Foundation | 2016 State Business Tax Climate Index 

Which Court Ruled What? Colorado’s highest court ruled that lawsuit lending entities must comply with pay day lending rules. 

What’s the background of applying pay day lending laws to lawsuit lending?  The State Consumer Credit Commission ruled that lawsuit lenders should be held to the same disclosure and licensing requirements.

Once the issue ended up in court, the state attorney general countersued the companies alleging unlicensed lending and charging “exorbitant” interest rates to plaintiffs.​

“Forbes notes how the case was an example of the Chamber of Commerce pushing for more, not less, regulation.”

WallStreet Journal | Payday Lending Rules Apply to Litigation Funding, Colorado Court Rules

Members:

Sen. Brian Birdwell (Chair)

Sen. Kevin Eltife

Sen. Jose Menendez

Sen. Larry Taylor

Sen. Kirk Watson

The committee is tasked with:

• Study potential ways to ensure the state is able to identify, track, and maintain real proeprty information
• Specifically look to the location, condition, and replacement value of all real property owned by the state
• Report to the legislature by January 13, 2017.

Lt. Governor Patrick Press Release 

Chair /Presiding Officer: Sanjiv Yajnik

• Dallas
• President of Financial Services at Capital One Financial Corporation
• Chairman & founding member of the Collin County Business Alliance
• Treasurer & board member of the National Academy Foundation
• Executive board member of the Dallas Symphony Association
• Founding member of the Indian American Professionals Network.
• MBA from the University of Western Ontario & is a graduate of the Stanford Executive Management Program.

Nancy Windham

• Nacogdoches
• President & CEO of the Nacogdoches Economic Development Corporation
• Former vice president of the Frisco Economic Development Corporation.
• Board member & an honorary life member of the Texas Economic Development Council
• Member of the Industrial Assets Management Council, TexasOne, Texas Forest Country Partnership Board of Directors, International Economic Development Council, and the International Council of Shopping Centers.
• Stephen F. Austin State University & is a graduate of the Economic Development Institute at the University of Oklahoma.

Mike Rollins 

• Austin
•  President & CEOGreater Austin Chamber of Commerce
• Certified Chamber Executive
• Former president & CEO of the Nashville Area Chamber of Commerce and the Asheville Chamber of Commerce, and general manager of the Columbia Chamber of Commerce.
• Board member of the TX Association of Chamber of Commerce
• Chairman of the Metro 8 Chamber of Commerce.
• B.A. from the University of South Carolina.

Alejandro “Alex” Meade

• Mission
• CEO of the Mission Economic Development Corporation
• Board member of the Texas Economic Development Council, Border Trade Alliance, I-69 Alliance, Rio Grande Valley Partnership, and RGV Lead
• Chairman of LeadTexas
• Member of the Texas State Affordable Housing Corporation
• Certified as an Economic Development Finance Professional (EDFP) by the National Development Council
• Certified Public Manager (CPM) by the National Certified Public Manager Consortium
• Bachelor of Business Administration in Economics from St. Edward’s University, MBA from The University of Texas at Brownsville, and MPA from The University of Texas Pan American

Mark Griffin 

• Lubbock
• President & eneral counsel for Rip Griffin Truck Service Center, L.P.
• President of Pro Petroleum, Inc.
• Member of the State Bar of Texas and the Lubbock County Bar Association
• Director of the Lubbock Economic Development Alliance and Plains Capital Bank. 
• Former board member of Covenant Health System, the Texas Guaranteed Student Loan Corporation, and the Lubbock Independent School District Foundation.
•  Bachelor of Business Administration from The University of Texas at Austin and a Juris Doctor from Texas Tech University School of Law.

Steve Head 

• The Woodlands
• Chancellor of the Lone Star College System
• Board member of the American Association of Community Colleges, Cypress Fairbanks Medical Center Governing Board, and the Greenspoint Management District 
• Member of the Greater Houston Partnership, The Woodlands Economic Development Partnership, Community Colleges for International Development Executive Committee, and the Sam Houston State University Educational Leadership Program Advisory Council
•  Bachelor of Arts and Master of Arts from Lamar University and a Doctor of Philosophy from Texas Tech University

Governor Abbott Press Release 

Select Committee on Property Tax Reform and Relief

Sen. Paul Bettencourt – Chair
Sen. Brandon Creighton
Sen. Kelly Hancock
Sen. Eduardo A. “Eddie” Lucio, Jr.
Sen. Charles Perry
Sen. Van Taylor
Sen. Carlos Uresti

The Committee will travel the state holding public hearings to:

• Look  for ways to improve the property tax process
• Look for ways to reduce the burden on property owners

Lt. Governor Patrick Press Release

Oklahoma collected $92 million in unpaid state taxes within 2 months by waiving all surcharges, interest and fees. The idea was the brain child of the Oklahoma House Appropriations Chairman 7 has exceeded projections. 

Note to self: Oklahoma has a population less than Harris County. Extrapolate to Texas and it could be $500 Million revenue within 2 months. 

NewsOK | Oklahoma Tax Commission collects more than $92.8 million in past-due taxes

Which state is reigning in business tax decuductions? LOL- Land of Lincoln

Which deduction is on the chopping block? A business tax cut that allowed a deduction for the cost of creating new jobs even when the same company cut the same number of jobs somewhere else in the state. 

The deduction allowed a business that overall cut jobs to get a tax deduction? yes. The Illinois Tax Code allowed every location, division or subsidiary to be treated for tax purposes as an independent operation.

Governing | Illinois Governor Ends Controversial Business Tax Loophole

Which state wants to split its pension system? Connecticut

Why split the pension?  A generous accounting system has left the pension 50% of the assets to meet liabilitiies.

Who thought of the split the pension idea? Center for Retirement Research

How would they split the pension? One pension for workers who started before 1984 & one pension for workers who started after 1984.

           The post-84 workers are the cheaper lot for a pension.

What are the pros/cons?

• The pre-1984 hires would be paid for directly out of the state’s annual budget. 
• The unfunded liabilities would be removed from the pension plan’s overall liabilities.
• CT State Treasurer thinks the idea is unconstitutional

Governing | The Week in Public Finance: Splitting Pensions, Going Hyperlocal and Charter Schools’ Impact on Credit Ratings

Oregon is the only state to be testing, pay as you drive, taxing structure for its citizens.

How does it work? A green box is attached to a car’s steering column, and reports speed, braking, and distance to a 3rd party contractor. 

The fee for pay as you drive in Oregon? 1.5 cents per mile.

Unlike the gas tax a Prius and F-150 would pay equal amounts.

It changes driving habits. One Prius driver reported breaking less.

A non-GPS device option will be available for statewide use, to quell concerns of privacy advocates of a state tracking its residents.

California will begina  similar pilot program in 2017.

Governing | A Real Way to Replace the Gas Tax

• Economically responsible compromises to bring back the film tax credit
• Delay enactment of the film tax credits until the 2016 budget is enacted. 
  • Use the film tax credit as leverage since Chicago is the heart of 3 primetime tv shows
• Offer an up to 30% tax credit

Deadline Hollywood | The Land Of Lincoln And ‘Empire’ Brings Back Film Tax Credits – Kind Of

• The $300 million Circuit of the Americas will built on a “deal” for $250 million over 10 years from the State of Texas
• The Major Events Trust Fund moved in 2015 from the Office of the Comptroller to the Office of the Governor
• A new calculation method at the Office of the Governor reduces the funds going to the Circuit of the Americas from $25 million to $19.5 million
• The Track says the deal was built around the calculations that arrived at $25 million, and the Texas is changing the terms
• The State says the Major Events Trust Fund is a tax reimbursmeent based on out of state generated tax revenues due to the event, and the numbers provided don’t add up
• This week a competing F1 Circuit opened in the Americas in Mexico City.

Road and Track | Budget Problems Could Kill F1 at Circuit of the Americas [Update]

Statesman | Why the future of Austin’s F1 race is in doubt

Motor Sport | US GP future under threat as Texas cuts state subsidy

States want to peek into corporate books? Yes. 

Why? An audit and investigative journalism revealed that tax credits for films in Massachusettes were sold more often than they were utilized by the recipient.

What’s the legislative fix? To allow the state to audit the books of entities that receive economic development funds for the sole purpose of determining the use of economic development funds by the recipient.

Governing : A Reel Bad Deal on Tax Giveaways

The Greater Green Bay Chamber supports raising the gas tax with these 3 pitches:

• Transportation funding is a Return on Investment:
  • it is an enhanced tax base
  • promotes new development
  • provides a safe, efficient and reliable mode of transporting raw materials, finished products and people
• Delays in transportation cost people and businesses money
• Fuel efficeint cars are good for the environment and our pocketbooks but bad for transportation funding, and we can fix that

Green Bay Press Gazette | Invest in transportation infrastructure

“Dallas is drowning in debt”

TPPF | TPPF Statement on Dallas’ Downgraded Debt Rating

Related: Moody’s Statement on Moody’s downgrades Dallas, TX’s GOLT bonds to Aa2 from Aa1; outlook stable

Moody’s downgraded Dallas debt rating to Aa2.

Why the downgrade?

• Dallas has $1.4 billion in outstanding debt
• + very large and growing unfunded pension liabilities
• + a high fixed cost burden
• +  basic infrastructure needs which we expect to keep the direct debt burden elevated

Dallas’ rating could increase with:

• Material improvement to annual pension funding thereby reducing Moody’s calculatino of adjusted net pension liability

• Significant increase to Dallas’ operation reserves and liquidity (More Local Revenue)

Moody’s downgrades Dallas, TX’s GOLT bonds to Aa2 from Aa1; outlook stable

• Oil producing counties are a state revenue source. Eagle Ford Shale counties alone contribute $323 million of severance tax receipts a year.
• Unfair revenue exchange with oil counties. In the same year that DeWitt county contributed $57.5 Million in severence taxes, it received $112,000 from the comptroller for money generated from gasoline tax remittances and overweight axle fees
  • Now the oil producing counties are left with dangerous roads. This was the catalyst for a county transportation infrastructure fund grant program 
• Time for the state to stop getting a “free ride.” Oil counties want the legislature to:
  • Establish requirements and timelines on how repairs should be made
  • Establish requirements for how the money is distributed — including the loose wording that only requires a county have increased energy production
  • Must be an ongoing program for transportation funding
  • Must have greater trickle down to the oil producing counties

Victoria Advocate | Texas counties call for oil, gas tax distribution reform

• 45 school projects
• 9 jails & public safety
• 1 golf course
• 16 roads
• 2 aquatic centers
• 11 parks and recreation
• 7 water drainage
• 7 municipal and county buildings
• 3 libraries
• 3 animal control
• 1 fairgrounds
• 1 health center
• 1 airport improvement

Texas Transparency | Upcoming Bond Election Roundup

Jess Fields, running for Texas House District 14, signed Americans for Prosperity’s Taxpayer  Protection Pledge. 

Americans for Prosperity | Jess Fields Signs Taxpayer Protection Pledge

Why does this matter to Texas? It echoes sentiments bandied about around local pensions for police and fire in Texas.

Where is this happening too? Florida

What’s the deal in Florida? Local governments say they need legislative help to gain control over rising cost sin police and fire pension systems.

What’s the legislative history in Florida? 25 years ago, local police and fire pension systems were permitted to operate like “independent agencies”

What sparked the legislator outcry to act? a forensic investigationlambasted the police and fire pension system. In 2014, Governor Rick Scott was asked by legislators to investigate the pensions, and his office declined. 

Jacksonville| Jacksonville councilman: State Legislature can put Pension Fund ‘monster’ back in cage

Which state is offering this economic development deal? New York

How much?  Up to $750 Million has been pledged by Governor Cuomo

What project is getting the $750 Million? A 1.2 million-square-foot SolarCity factory. Scheduled to open in early 2016, will create 5,000 jobs, with 3,000 of them in western New York.

Why the geographic limitation on added jobs? Because Western New York job market was hurt when steel declined.

Governing | New York Governor Takes a Big Bet on Solar Power

NYTimes | Despite Risks, Cuomo Bets on Solar Power to Lift Buffalo

Which state is also getting sued over its school finance system? Arizona

What’s the deal with the settlement offer from the state? The state wants to offer school funding from state trust land proceeds.

What did the State Comptroller, AKA Treasurer, say about it? Irresponsible. Illegal.

Why? What economic impact would the settlement have on school funding?

• Taking state trust land proceeds would reduce future school finance funding
• The Rainy Day Fund is flush and would be more fiscally prudent

What’s the Arizona Legislature Say? The Lege may vote this week to approve a fiscal settlement.

Arizona Capital Times | State treasurer says school finance deal is irresponsible, likely illegal

Fire District property tax increases in California have failed at the rate of nearly 2/3 since 2012.

Why are these fire protection tax increases failing?

• The tax increases for special districts, like a fire district, requires 2/3 to pass
• more than 1/2 of the failed measures received more than majority support

Sacramento Bee | Fire districts losing tax votes point finger at state fee

Why is the Tax Foundation on the topic of a soda tax? The Tax Foundation is responding to an October 13th New York Times piece touting the success of Mexico’s soda tax.

2 Retorts from the Tax Foundation:

• Taxing Soda Probably Doesn’t Translate to the Health Results You Want. Citing a 2010 health study they say kids will switch to a higher calorie beverage, milk, and a 2012 study says adults will switch to another higher calorie beverage, beer. 
• Tax Code Changes are not Predictable. It is far too early to find results in Mexico’s soda tax.

Tax Foundation | A Letter to the New York Times on Soda Taxes

The Texas Supreme Court will hear oral arguments on 12/8/15 concerning the Texas Small Tobacco Coalition suit against House Bill 3536 (2013) is constitutional. 

Who is getting involved?

• Comptroller
• Small Tobacco Coalition
• McLane Compny (a distributor)
• TMA
• TTARA
• The State of Indiana

What are they arguing about?

Whether HB3536 is a tax or a fee + some procedural issues raised by the state.

Why does this matter? 2 reasons

• tax policy consquences
• the courts have different review standards for fees & for taxes
  • a fee must meet the standards of due process and equal protection
  • a tax must meet the standard of equal and uniform

What happened to get us to this point?

• District Court ruled for the Small Tobacco Coalition fudning HB3536 unconstitutional tax
• The 3rd Court of Appeals agreed with the district court.
• This keeps the state from collecting the revenue that would be generated by HB 3536

Case 14-0747

• Texas needs the right policy in place for economic success
• Texas has an onerous property tax system that is tough on property owners and businesses
• Tax Foundation says Texas has the 14th worst property tax system that costs each Texan $1600 per year
• A 2012 Texas Comptroller Report says Texas property Tax outpaced population growth at a rate of 5:1
• Texas needs to do 3 things:
  • immediate relief
  • provide long lasting reform
  • property tax system should be replaced with an expanded sales tax

TribTalk | TPPF | Slowing Texas Economy Underscores Need for Property Tax Reform

• “significant weaknesses in its processes for the expenditure of state asset forfeiture funds”
• 10% of expenditures did not comply with state requirements for use of asset forfeiture property
• 18% of asset forefeiture expenditures did not have adequate documents
• Dallas County District Attorney Office should clarify its budgeting process to reflect permitted uses of asset forefeiture property
• During the SAO investigation the State Auditor received a “complaint regarding potential fraud relating to revenue deposits at the District Attorney’s Office.”
  • The SAO is investigation.

State Auditor | An Audit Report on the Expenditure of State Asset Forfeiture Funds at the Dallas County District Attorney’s Office

California Public Utilities Commission is considering rules about incentives for roof top solar ability to sell electricty back to the grid under net metering rules.

Why the new regulatory framework for rooftop solar? The grid operators say the cost of operating the grid is high and want to pay less for the electricity generated from rooftop solar.

What’s the policy goal in California? Generate 50% of its electricity from renewable sources by 2030.

Why would it matter if grid operators paid less for rooftop solar? It would increase cost to the customer and disincentivize the addition of more rooftop solar.

The Atlanta Business Journal says that opposition to the renewal of the Export-Import Bank by Texas’ U.S. Senators directly harms Texas ability to lure new corporate offices for GE.

An independent corporate selection consultation service labels Texas as out of the process for the General Electric headquarters because “politics do matter.”

The other items that matter:

• tax policy
• airports
• tech presence

Atlanta Business Chronicle | Atlanta, Triangle or N.Y.? Consultant weighs in on GE’s HQ relocation

Louisiana voters are considering a constitutional amendment that would allow legislators to rein in corporate tax incentives.

Why change the constitution on tax incentives? Louisiana takes up budget issues in a separate session from the general session which would consider tax incentives. The constitutional amendment would allow tax incentives to be considered in the budget legislative session.

Why does Louisiana want to cut back on tax incentives? Two words- budget shortfall.

Governing | Why Tax Incentives Could Change Louisiana’s Constitution

Georgia raised its gas tax before gas prices fell. Which turned into a win-win:

• gas prices went down
• revenue went up
• Transportation got an extra $74.3 million in September.

Georgia Governor Deal | September tax revenues up 4.6 percent

Texas takes in $1,970 in taxes per capita. That’s 42nd.

The highs and lows:

• #1 in state tax collection per capita: North Dakota at $7,438
• NY is #8 at $3,746
• California #11 at $3,490
• Florida is # 48 at $1,820
• Ohio #33 at $2,380

Tax Foundation | How Much Does Your State Collect in Taxes Per Capita? 

Comptroller’s revised revenue forecast for the 85th Legislature is $110.4 Billion.

Why the decrease? 2.3% decline in general revenue, reflecting a decline in oil and gas and the energy sector. 

What’s the impact to Rainy Day Fund (Economic Stabilization Fund)? The fund balance should be $10.7 Billion by the end of fiscal year 2017 on August 31, 2016. 

Coverage:

• AP via Click2Houston | Texas lowers projected tax revenue by $4.7B amid oil prices
• Ft. Worth Star Telegram | Comptroller revises revenue estimate due to lower oil prices
• Dallas Morning News | Texas comptroller Hegar concedes budget forecast was too rosy
• High Plains Public Radio | As Energy Sector Struggles, Texas Sales Tax Revenues Slump

• Veteran Affairs and Military Installations Subcommittee on Border Security
  • Will examine sanctuary cities
• Senate State Affairs
  • Ethics laws: transparent and ethically principled government; public officials’ reporting requirements &  Texas Rangers are doing with their pubic integrity unit
  • ERS  member contributions &  proposed reforms TRS
• ​Senate Natural Resources
  • Economic Development: “​Effectiveness and necessity of programs and resources currently used to support economic development in Texas”
  • Monitor aerospace tax incentives
• ​Senate Inter-governmental Relations
  • ​Debt transparency at the ballot box
• Senate Finance
  • Appraisal Process (Select Subcommittee on Property Tax Reform & Relief)
  • Reduce tax burden on property owners (Select Subcommittee on Property Tax Reform & Relief)
  • Franchise Tax: eliminate, study dynamic effects, alternative to fund property tax relief
  • Sales tax holidays- is there an economic benefit?
  • Property tax relief
  • Reduce state pension liability
  • Monitor the gradual phase out of franchise tax
  • Monitor contracting reform
• Senate Business & Commerce
  • Property tax liens

LBB has new info on the state contract data base it is tasked with maintaining as a result of the 2015 session. 

LBB is adding new information including:

• Agency Approval Date
• Requisition Date

Consulting Contracts in higher education have new pre-award notifications to the LBB and the Governor’s Nudget and Planning Office. Notifications will be required if:

• a consulting contract valued at more than $15,000 for a junior college
• a consulting contract valued at more than $25,000 for any other institute of higher education

LBB Contract Oversight Team October 2015

Environmentalist mega-donor Tom Steyer is bankrolling a California proposition to a $2 a pack  health care-funding tobacco tax ballot initiative.

Sacramento Bee | Tom Steyer spending for California cigarette tax

CALPERS is set to be divested from any coal investments with Governor Brow’s signature on SB 185. 

The total divestment in all California pension plans will be $340 Million. 

Sacramento Bee | California bans microbeads, divests retirement funds from coal

Because your clients want to know what the competition is getting:

• Incentives
  • Sugar Land Development Corporation direct incentive of $2.5 million  over 10 years in annual payments.
  • 1 time construction-related sales tax reimbursement grant of $750,000 will be paid once the project is completed.
• Tax Abatement
  • The city of Sugar Land will give a 100% abatement to the company over 10 years on real improvements and personal property.
  • The estimated value of this is $5.3 million over 10 years.
• Road Widening
  •  The city of Sugar Land will widen Industrial Boulevard to a four-lane divided roadway by 2017 as part of the agreement.
  • Add drainage improvements such as storm sewers and channels.  
  • The city costs will be $4.2 million
  • Fort Bend County will provide up to 25%, with a maximum of $1 million.

Houston Chronicle | Sugar Land City Council approves incentive package for Schlumberger campus

What hotel, where? hotel developer Supreme Bright Amarillo II (Amarillo, TX)

Which TIRZ is involved? The Center City Tax Reinvestment Zone No. 1 (Amarillo, TX)

What actions did the TIRZ take? 

1. It unanimously agreed that Supreme Bright will “put its leases with Amarillo Local Government Corp. for the hotel to be owned by the city and for 150 spaces in the parking garage up for collateral.”
2. TIRZ granted tax rebates will be given to Supreme Bright “will actually go to lead lender Southwest Bank”

What tax incentives were awarded to the hotel?

• 90 percent property tax rebate for 20 years
• The TIRZ will contribute $2.7 million toward streetscaping around the hotel
•  It will receive a rebate of some sales taxes
• It will receive a rebate of hotel occupancy tax it generates

Amarillo Globe News | A done deal? City issues building permit for downtown hotel

Who: The Texas Organizing Project protested tax incentives given to Houston developments because:

Why are they protesting tax incentives? the developments did not create quality jobs hat pay livable wage

Which tax incentives did they openly protest? Westin Houston Downtown, owned by Landry’s & a Heights area  Walmart

Their goal: For Houston’s “next mayor can really make good jobs a priority for our neighborhoods”

Houston Public Media | Group Calls For Stricter Standards For Developers Receiving Tax Incentives In Houston

In Jeffrson County 3 more commercial property appraisals are being litigatged:

• Valero
• BASF
• Total

“In September, 13 lawsuits were filed in the 58th District Court against the Jefferson County Appraisal District.”

Beaumont Enterprise | Valero, BASF, Total protest in ‘ongoing’ property tax battle

• that  appraisals rise “7-to-9 percent annually while incomes only grow 2-to-3 percent “just doesn’t work.”

Does anyone see a recommendation brewing for an appraisal cap reform bill?

Corpus Christi Caller Times | Lt. Gov. Patrick urges support for propositions

• Prop 1 will help save people property tax money
• Prop 1 will prohibit transfer taxes when any property is sold
• Prop 7 will allow the state to put 2.5 billion dollars more to transportation without increasing taxes.
  •  He also stressed that there was “not adequate transportation funding to West Texas in the past”
  • “Now that I’m Lieutenant Governor, we want to be sure that West Texas gets their fair share,”

News West 9 | Texas Lt. Gov. Discusses State Propositions at Odessa Country Club

In an interview with Global Trade magazine, Texas Economic Development Corp. CEO Tracye McDaniel, highlights 5 reasons behind Texas economic development success:

• Talented workforce driven by 36 public universities and 50 community college districts
• Strong Infrastructure
  • fifth-largest cargo airport in the nation
  • highest concentration of public roads and freight railroads in the U.S
• World-class port infrastructure
• Strategic port location led Texas to be ranked as the nation’s top exporter since 2002
• Texas Enterprise Fund Reforms that
  • represent the largest deal-closing fund of its kind
  • cut approval time from 90 to 30 days

Global Trade | Texas Sized Opportunities

A representative from LCRA stressed to Bandera County Economic Development Partnership that successful economic development must consider 2 things:

1. the economy

2. the ecology translated to people that drive the economy

The economic development lesson: infrastructure drives economic development. Also known as, don’t be like Austin and don’t build roads so people won’t come. Plan and build infrastructure with reasonable and flexible codes and code enforcement.

Bandera Courier | Bandera – to develop or not, Part 3

New leadership of Woodlands Economic Development Partnership:

• Terry Sellers of Gallagher Benefit Services (Chair)
• Debra Sukin of Houston Methodist The Woodlands Hospital (vice chairman)
• Heidi Carney of Prosperity Bank (secretary)
• Mike Shultz of Consolidated Communication (treasurer)
• Stuart Lapp of Stibbs & Co. PLLC (immediate past chair)

Woodlands Economic Development Partnership

Houston City Council this week approved changes to develop a spaceport at Ellington Field. City Council made these 5 moves:

1. Houston City Council approved the $6.9 million purchase of a 53,000-square-foot building on the grounds of the future spaceport
2. Only airport funds will be used for the purchase
3. Creating development for incubators that will house early-stage companies
4. A TIRZ, a Management District? No, its an innovation district 
5. Intent from anchor tenant-  Intuitive Machines

Houston Business Journal | Houston Airport System takes major step in developing spaceport facilities (Video)

In June The Texas Supreme Court issued an opinion about Open Records concerning a contract between Boeing & the Port Authority of San Antonio.

How did the TXSCT help keep private company information private? The Texas Supreme Court overturned the appellate court and said that the ability to withhold information under the Public Information Act applies to private companies & to governments alike.

What kind of information can be withheld?information that ” will benefit the private party’s competitors and thus “give advantage to a competitor.”

What was at the heart of this issue for the contract? A private company’s ability to protect its “

Boeing & Port Authority of San Antonio v. Paxton

Texas Tribune | Texas Supreme Court Ruling Shields Contract Details

Its not just ride share that is facing lawsuits of their sharing economy model. it’s also food delivery services like  GrubHub and DoorDash.

What’s the issue that takes this to courts and then to the legislatures?
Whether drivers are employees or independent contractors.

Why does this employee status matter?
An employee has certain legal rights and access to employment benefits that an independent contractor does not. 

The Recorder | More On-Demand Delivery Apps Hit With Driver Suits

The Economic talk: Do increasing local pension liabilities threaten to ruin bond holders?

Maybe. Probably yes. 

Why would local bonds be impacted by pensions? Looking at the bankruptcy fiings of San Bernardino, Stockton, Vallejo and Detroit shows that odds are highest that bankruptcy courts will fund pensions and will leave bond holders with $0.

Governing | Municipal Bondholders Beware

• Bill King and Ben Hall want TIRZ reform
• Bill King Says
  • TIRZs are not transparent
  • TIRZs issue debt with no voter approval
  • TIRZs should be for blight and they are used in Memorial, Uptown and Upper Kirby
  • Eliminate TIRZs
  • Deride the Uptown TIRZ are the #1 target
• Ben Hall Says
  • TIRZs are not doing what they’re designed to do
  • TIRZs divert general fund money to fund projects in Memorial and Bellaire
  • Asked Mayor Parker to delay votes on TIRZ budgets
  • Deride the Uptown TIRZ are the #1 target

Dolcefino | Hall calls on mayor to delay TIRZ votes

BigJolly Politics | Bill King follows Ben Hall’s lead on reforming TIRZ’s

What’s the governmental infighting in Alaska?  The Legislature passed a series of pension reforms that the retirement system agency won’t follow.

What pension reforms were passed to cause the brouhaha?  Use of real market values each year and not averages (AKA asset smoothing is bad)

Where is the governor in this?  His staff says the agency is acting pridently and suggested the Legislature didn’t know what they were doing.

Alaska Dispatch News | Alaska retirement board challenges Legislature on pension payments

A bill in North Carolina would have limited the authority of local governments to pass ordinances that :

• Create a “higher minimum wage or other regulations involving private employment practices.”
• Govern “housing and rental practices, likely including policies that mandate affordable housing.”
• “Mandate or prohibit the provision of goods, services, or accommodation to any member of the public by nongovernmental businesses.”

Hampton Inn in Port Arthur is challenging its property tax appraisal in Jefferson County. 

The court remedies Hampton Inn wants:

•  “the court determine the value and reduce the appraised value to the equal and uniform value”
• “to pay the greater of one-half of the tax due the value of the property as determined by the appraisal review board”
• court costs and attorney fees

If the TX legislature changes this practice in 2017, now is the time to reset commercial appraised values in court.

Southeast Texas Record | Hampton Inn challenges property appraisal for Port Arthur location

1. Alabama: 
   • ​30 years of tax breaks
   • for data centers investing $400 million
   • that create at least 20 jobs
   • with an average annual compensation of $40,000
2. Alaska NONE
3. Arkansas None specific to data centers, have used other tax incentives for data centers
4. California NONE
5. ColoradoNONE
   • in 2015 Colorado tried to pass a sales tax refund on equipment for data centers
6. Connecticut 
   • A state economic development ffice granted $6 million to a data center
7. Delaware NONE
8. Florida, none specific to data centers, have used other tax incentives for data centers
9. Georgia
   • ​sales tax exemption for equipment in data centers investing at least $15 million annually
10. Hawaii,  none specific to data centers, have used other job creation incentives for data centers
11. ​Idaho NONE
12. Illinois NONE
13. Indiana
    • data centers investing at least $10 million can receive local personal property tax exemptions on their equipment
    • Other tax incentives have also been awarded
14. Iowa
    • ​sales tax breaks to data centers investing as little as $1 million
    • larger incentives for projects topping $200 million
    • Iowa has no property tax on equipment
15. Kansas, none specific to data centers, but
    • Kansas imposes no property tax on new equipment
16. Kentucky
    • ​sales tax refund for computer system equipment for data centers investing at least $100 million
17. Louisianna NONE
18. Maine, None specific to data centers, have used general economic-development programs for data centers
19. Maryland, non specific to data centers, but did authorize a conditional loan for $300,000 to a data center
20. Massachusettes, None specific to data centers, but have awarded $25 million grant and $14.5 million in tax credits to data centers
21. Michigan, none specific to data centers, but does use other economic development programs for data centers to a tune of $7 mllion
22. Minnesota
    • ​data centers with 25,000 square feet
    • costing at least $30 million
    • qualify for 20-year sales tax exemption on equipment and energy
    • + a permanent property tax exemption on equipment
23. Mississippi
    • ​sales tax exemption on computer equipment for data centers
    • that invest at least $50 million
    • that create at least 50 jobs
    • these jobs must pay 150% of the average state wage
24. Missouri
    • ​New data centers can qualify for $25 million if
      • they employ at least 10 people in well-paying jobs.
    • Older data centers can qualify by:
      • investing at least $5 million and adding five well-paying jobs
25. Montana NONE
    • And, no state sales tax
26. Nebraska
    • ​Has a tiered system that allows  $3 million if the data center:
      • Employs at least 30 people, or
      • It invests at least $37 million while holding employment steady
27. Nevada
    • ​ Expanded sales and property tax exemptions for data centers
      • amounted to  $229 million of tax breaks for Switch
28. New Hampshire “No incentives for businesses”
29. New Jersey
    • “​authorized a projected $134 million in incentives to about a dozen businesses for data-center projects since 2000″
30. New Mexico NONE
31. New York 
    • sales tax exemption for equipment used by Internet data centers
32. North Carolina
    • ​sales tax exemption for equipment and electricity used by data centers that invest at least $150 million in poorer counties or $225 million in other counties.
33. North Dakota
    • ​sales tax exemption on computer equipment for data centers of at least 16,000 square feet.
34. Ohio
    • ​ sales tax break for data centers that invest at least $100 million &
    • have a required payroll threshold of  $1.5 million
35. Oklahoma
    • ​sales tax exemption for equipment bought by businesses engaged in computer services or data processing, as long as most of the revenue comes from out-of-state sales
36. Oregon None Specific to data centers, but
    • ​no sales tax & 
    • property tax exemptions through local enterprise zones
37. Pennsylvania None
    • Bills calling for a sales tax exemption for data centers are pending  in the current legislatie session
38. Rhode Island  NONE​
39. South Carolina 
    • ​sales tax exemption on computer equipment and electricity used in data centers
    • that invest at least $50 million
    • employ at least 25 people in well-paying jobs.
40. South Dakota None, but have used general economic development programs
41. Tennessee
    • ​sales tax breaks on computer equipment and electricity for data centers that invest at least $250 million
42. Texas
    • ​sales tax exemption on equipment and electricity for data centers
    • that contain at least 100,000 square feet
    • invest at least $200 million
    • employ at least 20 people at above-average wage
43. Utah ​None, but have used general economic development programs
44. Vermont  NONE
45. Virginia
    • ​sales tax exemptions for data centers
    • it is estimated Virginia authorized $48 million in incentives for data centers
46. Washington
    • ​sales tax exemption
47. West Virginia 
    • ​sales tax exemption and a property tax break on equipment
48. Wisconsin  None, but have used general economic development programs
49. Wyoming 
    • ​Data centers that invest at least $5 million, receive  a sales tax exemption on computer equipment.
    • Data centers that invest at least $50 million also can get a sales tax break on power supplies and cooling equipment.

• NY Times | via AP | State-By-State Look at Incentives for Computer Data Centers

A developer, a univeristy, and a TIRZ walk into a bar…

Who is involved in this land deal?

• A developer
• The city of McAllen, which recently annexed the developers land
• County of Hidalgo
• A newly formed Tax Increment Reinvestment Zone
• Texas A&M

What tax revenue is involved?

• Texas A&M, via a letter between the City & the County, gets:
  • 100 acres of land donated
  • $10 million for the construction of the facility
  • $6.8 million to cover part of the investment in infrastructure
• The developer, via the City and County, gets:
  • to enter into a TIRZ with the city & county to assist with the initial $24.5 million investment in infrastructure
    • “city will use 80 percent of the maintenance and operations tax levied by that area alone”
    • ” the county will contribute 77 percent of its maintenance and operations tax, as well”

McAllen Monitor | Tres Lagos developer talks plans after Texas A&M announcement

3 Big tax issues coming:

1. Prop # 7 dedicates sales tax revenue to transportation funding   KGBT 4
2. Prop # 1 homestead exemption raised to $25,000 (it’s your “big property tax cut”)  KUT
3. The TX Supreme Court’s  school finance ruling in early 2016 which could spark another tax overhaul like in 2006.

What’s going on? a loose coalition wants natural gas comapnies to be able to explore on university lands. Specifically, fracking on UT & A&M lands.

Who wants this? North Texans for Natural Gas (Devon Energy, EnerVest, EOG Resources and XTO Energy)

What is North Texans for Natural Gas Doing to Gin up Support? A petition urging UT Chancellor William McRaven and Texas A&M Chancellor John Sharp to support hydraulic fracturing and the extraction of oil and gas on University Lands.

Where do they want to explore for natural gas? On 2.1 million acres in West Texas  constitutionally set aside  as an endowment for the state’s two leading university systems.

What’s in it for Universities? Revenue to the Permanent University Fund

Who is opposed? Environmental groups like Environment Texas Research and Policy Center and the California-based Frontier Group

Fuel FIX | Pro-industry group throws support behind drilling on Texas university land

Paxton Steps Aside in Opinion:

Attorney General Opinion KP- 00037 has an interesting start- a cover letter in which General Paxton delegates repsonsibility to his first assistant attornery general.  Why? “I [Paxton] may have an actual or perceived conflict of interest or in which my involvement gives even the appearance of impropriety.”

What is KP-00037 about?

Whether a county official, who is found not guilty on criminal charges, can have attorney fees reimbursed.

Does KP-00037 allow for attorney fee reimbursement for these elected officials?

Yes, but there’s a 2 part test to get there:

1. there must be legitimate interests of the [political subdivisions]-and not just the personal interests of the officers or employees-require the assertion of a vigorous legal defense on behalf of the public interest. [A political subdivision] may not use public funds when the principal interest to be defended is a purely private one. 

2. It must be determined that the “officer or employee committed the alleged act or omission that was the basis of the lawsuit while acting in good faith and within the scope of official duties. 

#13 isn’t only unlucky, but its also not good enough for Texas Policy Policy Foundation. It has 3 recommendations to improve Texas government transperancy:

1. Move from a strategic planning and budgeting system to a program-based budgeting system.
2. Adopt zero-based budgeting to ensure taxpayers get the most value of the programs and departments they fund.
3. Provide budget information online in near real-time throughout the legislative process.

The public share of the new Sacramento Kings stadium is $272.9 million in bond financing. 

Why the bonds? The stadium had received a short term cash influx from the City of Sacramento when the project hit a snag. The bond financing replaces the city’s bridge loan.

Details on the debt financing:

• annual debt service will come to $18 million
  • 2/3 s will come from the Kings & lease payments and property taxes generated by the new Golden 1 Center

Sacramento Bee: Sacramento completes Kings arena financing with $272.9 million bond sale​
 

Mayor Emanual is proposing the following tax increases on Chicagoans:

• A property-tax hike reaching $543 million over four years
• $45 million in property taxes to pay for capital projects at Chicago Public Schools, or CPS
• $62 million from a new garbage-collection fee
• $60 million from new fees on taxis and ridesharing services, such as Uber and Lyft
• $13 million from higher building-permit fees
• $1 million from a tax on e-cigarettes

Americans for Tax Reform call it the largest tax increase in the city’s history.

North Carolina legislature passed economic incentive package reforms. Here’s what it does:

• Extends North Carolina Competes Program to 2018
• Increases by $5 million the annual value of authorized Job Development Investment Grants
  • That’s up to $35 million if there is a “high-yield project,” like a major manufacturing plant with 2,000 jobs and making a capital investment of at least $750 million
• Focus on helping economically distressed counties more.
• Sales tax exemptions expanded for computer data centers
• Extended sales tax exemptions on aviation fuel to all interstate airlines on sales and use tax paid on fuel in excess of $1.25 million

WXII:Reinvigorated incentives get final OK from NC legislature

Winston-Salem Journal: House gives final approval to NC Competes 

North Carolina’s HB 117

The wealthiest households claim 90% of the $7500 federal tax credit for electric cars. 

This trend follows for other green energy purchases and tax credits:

• residential energy-efficiency improvements
• solar panel installation 

Tax “susidies” are not popular among populist minded Tea Party types & a repeal of the electric car tax credit occured in Georgia this year.

WSJ| Real Time Economics Blog | The Wealthiest Households Claim 90% of Tax Credits for Buying Electric Cars

Ecomento: Georgia electric car tax credit ends

WHO:  Lincoln Clean Energy’S $183 million solar power project

WHAT: The first commercial-grade solar project in the Panhandle will produce 100 megawatts or more

ECONOMIC INCENTIVES:

• Tulia Independent School District is  capping the taxable value of the project at $20 million a year for 10 years
• Comptroller estimates this to be a $9 million dollar savings in maintenance and operations taxes for the solar project.

Amarillo Globe News:  $183M solar project heats up 

Or, so says United Against Nuclear Iran. 

Pension Divestment to hit a State Constitution near you.  Defund Iran wants state constitutional amendments in 2016 to mandate divestment.

What’s the divestment band wagon? Does it mean private companies that do business in Iran too?  YES. Yes, it does. In Florida,  more than $1.1 billion has been withdrawn since 2007 from companies involved with Iran. We’re talking about divestment from:

• Royal Dutch Shell Plc
• Cnooc Ltd.
• Daelim Industrial Co.

Campaign Issue in the Making. 15 Governors sent a letter to President Obama calling for Iran divestment. Including:Bobby Jindal of Louisiana, New Jersey’s Chris Christie, John Kasich of Ohio and Wisconsin’s Scott Walker.

Governing: Republican Governors Use Pensions to Oppose Iran Deal

1. Highest Tax Supported Debt: Dallas ISD $2.6 Billion
2. Highest Proposed Bond: Dallas ISD $1.6 Billion
3. 3 Bond proposals belong to ISDs with $0 tax supported debt
4. 31 ISD bond proposals
5. 34 City bond proposals
6. Largest City Bond Proposal: $125 million in Mequite
7. Largest County Bond Proposal: $848 million in Harris County

Texas Transparency: Upcoming Bond Election Roundup

Republican-controlled Alabama Legislature increased cigarette taxes by 25 cents per pack. 

AP: Alabama Legislature approves cigarette tax increase

In the Pro Corner, a Plaintiff, Austin Mayor Adler:

• Current system is unfair to residential homeowners
• We should have a fair property tax system
• This is about transparency & being able to challenge a system that is unfair

In the Con Corner, the “Tax Man”, Senator Bettencourt:

• Lawsuit is abuse of property tax code
• He has asked Lt. Gov. Patrick for an interim charge on this issue
• This lawsuit is about 1 thing and 1 thing only– mandatory sales price disclosure

TribTalk Bettencourt

TribTalk Adler