Finance & Revenue

St. Louis is home to the Rams- an animal frequently associated with the missouri wilderness.  To keep their beloved revenue generating Rams, St. Louis is encouraged to build a new stadium. St. Louis Dispatch

The City is eager to keep its economic engine, the Rams, started moving forward on funding for a new stadium. Two tax payers and property owners said, hey, wait a minute, we want some public input. So, they sued. 

The City’s funding plan was to add a cool $1 billion, by extending the bonds used to pay for the Edwards Jones Dome. What citizen would notice an extra billion in local debt?

Courthouse News Service

Georgia is touting its film incetives. It offers a 30% credit. That’s mroe generous than Claifornia. Plus, the tax credit can be used for more expenses, such as:

•  salaries of directors and actors as long as the payment is for work performed within the state
• No cap on the credits
• The tax credits are transferrable

Georgia is now #3 in production after California and New York.

Variety

 Governor Deal made appointments to a new Advisory Board for its Film Music and Digital Entertainment Office.

The Appointees from Middle Georgia CEO

Last Friday, Governor Jindal signed a $180 million cap on the film tax cerdits in Louisianna. The film industry opposed the cap, because what industry doesn’t want access to tax credits? 

The Republican Lt. Gov. seeking the Governorship says the cap is too low. He also claims Disney/ABC Films is refusing to film in Louisianna until the cap is fixed. He says it’s bad for Louisian’as economy and bad for tourism.

The Lt. Gov. is trailing U.S. Senator Vitter, because Louisianna loves a Governor with a good sex scandal.

Deadline Hollywood

Houston Municipal Employee Pension System egal wrangling continues.  Pension lawsuits and Houston go together like Humbolt Fog and orange blossom honey.

 This spring the Texas Supreme Court upheld the Pension adding entertainment venues and convention center employees in the pension system.

The ruling was not favorable to the City. But, how does the Pension system ensure that Houston is covering all these new pension enrollees properly? The City is not forthcoming. So, the Pension  filed suit for employee data.

Courthouse News Service

Great new data visual from the Comptroller that shows Texas as it compares to the other 49 states on dozens of economic indicators including:

• Best State for Business (TX #1)
• Best State to Earn a Living (TX #1)
• Cost of Living (TX #15)
• GDP per capita (TX #15)
• Domestic Migration (TX #1)
• Business Tax Burden (TX #10)
• Local Debt Per Capita (TX #48)

Comptroller 50 State Projecthttp://www.comptroller.texas.gov/fiscalnotes/50states/

The Texas Supreme Court last week dealt a blow to the City of Houston by finding the ballot language insufficient to implment the often controversil drainage tax. 

Breitbart Highlights that the drainage tax:

• “cost Houston residents an estimated $400 million in what may now be illegally-collected fees”
• was ardently opposed by now-Senator Bettencourt, who offered this:
  • “This ruling is not only a big victory for City of Houston Taxpayers to stop the drainage tax eventually, but a warning to all governments in Texas to tell the public the truth when using proposition ballot language presented in the voting booth public for voter approval,” Sen. Bettencourt told Breitbart Texas in a written response to an inquiry.”
• was used to fund $32 million in salaries

Breitbart

The Texas Supreme Court denied to review a 3rd Court of Appeals Ruling that permitted Titan Transportation to exlcude from the calculation of the franchise tax, funds which Titan is contractually required to pay out to subcontractors.

Any restructuring/revising/elimination of the franchise/margins tax will address pass through payments/taxable revenue.  

Hegar & Paxton vs. Titan Transportation    Grant Throton LLP Tax Alert

Governor Abbott signed Senate Bill 1396 providing “sales and use-tax reforms for general aviation (GA) aircraft based in or visiting Texas.”

National Business Aviation Association lauds the victory to level the playing field for general aviation.

Aviation Pros

National Business Aviation Association

The Financial Services Institute claims victory in the repeal of the Texas Occupations Tax signed by Gov. Abbott.

The occupations tax + the franchise tax + licensing fees created a “unnecessary financial burden” on small businesses.

Investment News

Sergio Contreras is the new interim director of Pharr Economic Development Corporation. He supports regional cooperation.

His background:

• Born and raised in Alamo, Texas.
• Worked for AT&T for 20 years, rising to the position of director of external affairs.
• Currently serves on the board of directors for:
  • the Rio Grande Valley Partnership
  •  the Border Trade Alliance
  • the Alliance for I-69
  • and the PSJA Foundation.
• He has served on the boards of:
  • Texas Association of Mexican American Chambers of Commerce
  • San Antonio Hispanic Chamber of Commerce
  • Laredo Chamber of Commerce
  • Brownsville Chamber of Commerce
  • McAllen Hispanic Chamber of Commerce
  • Alamo/San Juan Boys and Girls Club

Rio Grande Guardian

Local governments love stadiums. Stadiums bring revenue and economic vitality.

Building stadiums is much harder than it is to reap the benefits. In California, environmental reviews of construction projects can be fast tracked with the help of the Governor’s approval granting your project as a “certified environmental leadership project.”

But, this fast track process has time lines too. And, when you don’t meet those deadlines, which is what the Warriors new stadium faces, lawsuits to stop your stadium gain steam.

What’s the fix? Legislation, naturally. In a bill linked to the budget, it is predicted that the timelines for the Warrior’s stadium construction will be extended to block the opposition.

The Recorder

Deborah Leliaert, a UNT employee, and Paula Woolworth filed suit against Employee Retirement System on June 11th in the U.S. District Court for Western Texas, Austin Division.  

Case No. 1:15-cv-00506

Southeast Texas Record

Senator Nichols has requested an Attorney General opinion as to METRO’s role in a rapid transit bus project down Post Oak in the Uptown Management District. 

The background:

• 2003 Voters approve light rail down Post Oak Blvd. The language included that the proposition created a binding and enforceable contract between the City of Houston, Uptown, and METRO
• Now the proposal is to use the same land area but utilize rapid bus transit rather than light rail
• METRO will probably not provide funding
• METRO will operate the buses

What inquiring minds want to know: Can the voter approved light rail be converted to buses and there still be an existing, enforceable contract?

RQ-0028-KP

DC United is building a new futbol stadium. For the American audience,  a futbol stadium is used for a sport that Americans calls soccer.  Now that we’re on the same page, stadiums are expensive.

In structuring the DC United Stadium deal, it calls for D.C. United to reimburse D.C. 50% of the excess cost (above $89 million on land acquisition and $61 million on land preparation) to a maximum amount of $10 million, paid in annual installments as part of the team’s ground lease.

Washington Business Journal

In 2013 Massachusettes taxed the cloud, as in cloud data storage, not mother nature. Two months later Massachusettes repealed the “tech tax.”

How to tax cloud based and technology based services? In 2012 Texas Comptroller defined cloud computing as data processing services for tax purposes. 

Tech companies dislike the murky, state taxation rule adjustments as much as they dislike new state laws, which leaves tech taxation and cloud taxation up to future legislatures to solve.

Governing

This week Comptroller Hegar alerted us to a pending lawsuit that could cost the margins tax revenue up to $1.5B per year. For those keeping count, that could be at least 1/4 of the margin tax revenue. Oops.

Double oops on the impact to school finance once the TX Supreme Court issues its ruling later this year.

The legal case: American Multi Cinemas  

Texas Tribune

June 15th is the deadline for Chapter 313 Annual Eligibility Report, Form 50-772A (PDF). From Comptroller Hegar:

Upcoming Deadline for Chapter 313 Annual Eligibility Report

The Chapter 313 Annual Eligibility Report, Form 50-772A (PDF), must be submitted to the Comptroller’s office by June 15. This form is a tool school districts can use to determine the annual eligibility of the applicant subject to the limitation agreement. Under the statute, enforcement is the responsibility of the school district.

Parties to the agreement should complete Form 50-772A using information from the previous tax (calendar) year. School districts should review the completed forms, retain the original and submit PDF scans of the signed forms and any attachments to the Comptroller’s office by June 15, 2015.

Completing Section 5 of the Report

Section 5 of the report is separated into parts A and B; Each applicant will only need to complete one part of this section. 

• Section 5A: Applicants who submitted applications prior to Jan. 1, 2014 (Applications #1 through 999) need to complete Section 5A.
   
• Section 5B: Applicants who submitted applications after  Jan. 1, 2014 (applications #1000 and above) need to complete Section 5B.

If you have not done so already, we urge the school district to contact any businesses having a Chapter 313 agreement with the district to complete the form. Please submit the form and any attachments to chapter313@cpa.state.tx.us by the mandated deadline.

If you have any questions, please contact us at chapter313@cpa.state.tx.us.

The New Jersey Supreme Court ruled that if pension reform statutes cause the state to violate debt spending limits in the State’s constitution, then the pension reofrms cannot be enforced.

It’s a win for Chris Christie, who had diverted $2.5 Billion from pensions to cover state expenses.

New Jersey Law Journal  Governing

California is considering a constitutional proposition to require ANNUAL commerical property tax valuations to ensure that commerical and industrial property valuations follow current market value.

The annual property valuations for commerical & industrial property is estimated to generate $9 Billion per year for local government & schools. 

Sacramento Bee

The head of Pharr’s Economic Development Corporation, Fred Sandoval, has left his position. An interim executive director may be appointed as soon as Saturday.

A special meeting of the Pharr EDC has been called for Saturday, starting at 1 p.m. at City Hall. Rio Grande Guardian

Philadelphia collects roughly $2.2 million per year under civil forfeiture. The funds go straight to city coffers. We’re not talking seizing drug kinpin property, the amounts are lower than one would expect:

• 60% of the funds sized are in quantities below $250
• 33% are less than $100
• 1 in 10 asset siezures are more than $1,000

Washington Post

Big Jolly Politics says civil forfeiture is an issue Republicans should run on in 2016 in Texas. In Texas both TPPF and ACLU support civil asset foreiture reform which means revenue losses to local governments- most likely local police coffers.

Non-profits, charities, who monitors and watches them? NYTimes raised this issue after 4 cancer charities weren’t all that charitable, but were self-indulgent.

Enforcement of bad acting non-profits in Texas rests with the Attorney General. The office has a method to receive public complaints. 

“A group calling itself Mission Bay Alliance announced that Boies will lead a team of prominent land-use plaintiffs lawyers that includes San Francisco attorneys Susan Brandt-Hawley and Thomas Lippe as well as Osha Meserve and Patrick Soluri of Sacramento. Their retention comes days before the city is scheduled to release its environmental analysis of the 18,000-seat arena and accompanying office and retail development.”
The Recorder
 

Viriginia is rethinking whether it saves money with public private partnerships. Spefically, when the P3 investments involve infrastructure like transportation. The state is considering design-build and bond financing to save state revenue on future transportation projects.

The change of heart from the state that has been actively using P3s for 20 years, is controversy. The details:

” The most significant controversy involved a proposed 55-mile toll road linking the Norfolk area to Interstate 95, a major commercial corridor along the East Coast.The project started as a P3 but morphed into a more conventional contract, albeit one shrouded in the type of secrecy that had been afforded to those public-private deals.”  

Governing

The California Senate has set up a system of 24 hour, on call, drivers for Senators, who seem to like to over indulge in adult beverages. 

As the Sacramento Bee notes, it’s logical, but out of touch. I wonder if the list of rides are subject to open records?

Round #3 for a ballot proposal on moving CALPERs to a defined benefit plan.

The 2014 attempt ended up in a lawsuit when the reformers sued California Attorney General Kamala Harris over the language she used on the ballot. The courts sided with the Attroney General. 

Sacramento Bee

The Legislature has fully passed SB 849 to allow small businesses to protest property tax appraisals just as a residential property owner can.

This new tool will be availbale for small businesses with property valued at less than $3 million. 

Austin Business Journal

The Comptroller reminds us that there may be available tax exemptions during disasters & a list of resources:

The two-year, $3.8 billion tax-cut package, presuming final passage this weekend, will:

Cut the Franchise tax rates by 25 %  at a cost of $2.56 billion over two years. Comptroller Hegar Offers a History of the Franchise/Margins Tax.

Increase homestead exemptions on school property taxes from $15,000 to $25,000, with voter approval Nov. 3. The measure would save the average Texas property owner $125 per year.

Require a 60 percent vote by a local governing body before it could increase property tax rates.

Governor Abbott Statement (meaningful tax relief for Texans)

Lt. Gov. Patrick Statement (brings lasting, deserved property tax relief)

Comptroller Hegar (aplauds Legislature for making tax relief a priority)

Dallas Morning News Editorial   (needs (public education & TXDOT are unmet) Houston Chronicle Editorial (Cheap & unwise tax cut)

Empower Texas (tax payers still winning)

TPPF (Legislature right to cut franchise tax) (needed relief from excessive property taxes)

CPPP (Majority of texans will see little benefit & unfunded needs)

New AG opinion on the horizon to guide local government show to build infrastructure in ETJs.

Collin County is asking the Attorney General to specifically clarify :

Prince George County Maryland is on the clock to clean up Chespaeake Bay. This project will require:

• Over 10 years,  it must convert 15,000 acres of watertight surfaces into surfaces that will either soak up or treat rainwater. T
• it will have to add 46,000 stormwater devices

The P3 will:

• Install rain gardens, cisterns, permeable pavements, and other devices for filtering and absorbing stormwater.
• Finance 30- 40% of the program’s costs immediately to speed along construction

Governing

“The $3.8 billion tax relief package is a huge win for Texans. “

​Their description of the package deal:

• Cut the business franchise tax $2.6 billion by permanently reducing the rates 25 percent and increasing the ceiling to $20 million to file the EZ form.
• $1.2 billion cut in property tax relief by raising the homestead exemption $10,000.

Which groups are in the Conservative Budget Coalition?

Americans for Prosperity – Texas
Americans for Tax Reform
Grassroots America – We The People
Heritage Alliance
Institute for Policy Innovation
National Federation of Independent Business – Texas
National Taxpayers Union
Our America Initiative
R Street Institute
State Budget Solutions
Tea Party Caucus Legislative Advisory Committee
Texas Eagle Forum
Texans for Fiscal Responsibility
Texas Public Policy Foundation
Young Conservatives of Texas

Tennessee has the highest beer excise tax in the nation at $1.29 per gallon. Texas excise tax rate per gallon is $.20, while the lowest beer tax belongs to Wyoming at $.02.

 To cogitate: Are the taxes higher or cost of imported hops higher in your beer?

Tax Foundation

LBB is releasing budget documents, as they becomes available.

LBB (Look at the middle column, “What’s new”)

The sporting goods sales tax, which many think funds state parks, has been divied up with part going to the Historical Commission and 60% used to balance the state budget.

Have access to less than 40% of the sporting good sales tax, has created a system of underfunded state parks. Never fear- the Legislature to the rescue!

HB 158 sitting on the Governor’s desk dedicates the sporting good sales tax to the state parks and wildlife. 

TribTalk by Andrew Sansom

• Property tax reform is as important as tax relief
• The answer is SB 1760  which “proposes to make it harder for local governments to raise taxes by requiring 60 percent of the governing body of a local taxing jurisdiction to approve property tax increases”
• SB 1760 has been sent to House Local & Consent, the sponsor is Speaker Pro Tem Bonnen

Breitbart

The Pharr EDC is looking toward a new direction after a new board of directors was appointed this week. 

The Board will now include: Pharr Mayor Hernandez, and city commissioners Roberto ‘Bobby’ Carrillo, Oscar Elizondo, Edmund Maldonado, and Ricardo Medina. Also on the board are Dr. Ramiro Caballer and a representative from Matt’s Cash and Carry.

The EDC and its performance was an issue during this month’s city commissioner elections.  

Rio Grande Guardian

A property tax protest took to the sidewalk in Ft. Bend. “Angry” citizens were protesting higher property taxes.

Tax officials directed protestors to the other local governments that set the tax rates. 

ABC 13 Eye Witness News

The local bond elections on May 9th produced mixed results. 20 measures were defeated. 102 were approved. 

The most commonly defeated: school construction, renovations, and new buildings.

Texas Transparency

Bond creditors sued to stop San Bernadino from making pension payments. Why? So the creditors could get paid. 

San Bernadino filed for bankruptcy in 2012. In the process, it agreed to pay its $24 million in pension payments to CALPERS. The creditors that sued are owed $59 million. 

If San Bernadino would have paid less than full to CALPERS a complicated legal system would have been triggered and pension benefits would be reduced to curent retirees. 

Sacramento Bee

A 2 cent-per-ounce tax on sugary beverages thagt would have raised $3.5 billion a year for health education and dental programs failed to pass a California legislative committee.

” The California Chamber of Commerce labeled Bloom’s bill a “job killer.”

Sacramento Bee

The Texas triangle– Dallas, Houston, San Antonio, and Austin accounts for:

• 68% of Texas jobs
• 73% of the state’s income

Texas A&M Real Estate Center

Volvo has a $500 Million facility to build. Competiting economic devleopment incentives were offered by Georgia and South Carolina. 

Volvo is anticipating 4,000 jobs over the next decade.

Georgia was said to offer:

• Access to railways and ports
• Grants (GA added $0 Million to its economic incentive programs for Volvo & others)
• Education Programs

South Carolina is rumored to be offering  $120 million in bonds to draw Volvo. 

Atlanta Journal Constitution

Texas is up for 3 Presidential Debates:

• Houston Community College
• Texas A&M University
• city authorities in McAllen  

As of Tuesday, the House gave these potential Presidential debate host sites a funding mechanism- the Majpor Events Trust Fund, which is reimbursement fund administered by the Comptroller.

The Senate has been sitting on the companion bill, SB 541 by Van Taylor.

Statesman   HB 1318 by Chen Button

St. Louis is building a new stadium at a price tag of $1 billion. $450 million will be private funding. The remainder will be public funding. The course of public funding they are exmaining are:

• $250 million in additional Bonding authority
• $150 million Increase in tax credits, to reduce the necessary revenue levels

The stadium has lingering land aquisition issues as it only has 62% of the land it needs under potential contract. 

St. Louis Business Journal

Lt. Gov. Patrick highlights the key property tax bills of the session:

• Senate Bill 1 (SB 1) by Nelson, et. al. – provides $2.15 billion in homestead property tax relief for Texas homeowners.
• Senate Bill 545/SJR 30 by Taylor – includes a property tax exemption for real property leased to certain schools that are used exclusively by the school for educational purposes.
• Senate Bill 683 by Hancock – ensures citizens, or their representatives if they so choose, automatically receive funds for which they qualify and have properly requested.
• Senate Bill 762 and Senate Bill 849 by Bettencourt, et. al. – relate to the exemption from ad valorem taxation of income-producing tangible personal property having a value of less than a certain amount.
• Senate Bill 1760 by Creighton – requires all local taxing districts that wish to exceed the effective tax rate to first have a vote of at least 60% of the governing body in support of the tax increase.
• Senate Bill 1821/SJR 60 by Campbell – allows businesses that hire an honorably discharged veteran to receive an exemption of up to $15,000 on the ad valorem tax of the appraised value of the property.

Lt. Gov. Press Release

This week the Association of Broadcasters filed an amicus brief in pending Greater Houston Partnership (GHP) v. Paxton to determine whether GHP is subject to open records.

The Broadcasters’ point of view:

• GHP gets tax dollars & is therefore a public entity
• GHP shares a common purpose with the entity from which it receives tax dollars
• GHP often stands in place of the City of Houston
  • GHP can make appointments within the airport system

Association of Broadcasters Brief of Amici Cuiae

Cleveland has a jock tax that taxes visiting professional athletes. Taxing people who can’t vote for you is always smart, as they can’t vote you out of office.

This tax scheme was foiled not by voters, but by the Ohio Supreme Court. The Court did not like the method by which Cleveland used to calculate the tax, which was a games played method. 

Here’s an example of Cleveland’s “jock tax” from the Wall Street Journal:

“Mr. Hillenmeyer, a former Chicago Bears linebacker who retired in 2010, played one game a year in Cleveland — over a 20-game season — between 2004 and 2006. Cleveland applied its income tax to 5% (1/20) of his earnings.”

WallStreet Journal

CEO Magazine for the last 11 years has named Texas the #1 state for business. 

The results are based on responses to an annual survey from 511 CEOs across the U.S. 

Highlighted Texas Facts:

• Since the recession began in December 2007, 1.2 million net jobs have been created in Texas.
  •  700,000 net jobs were created in the other 49 states combined.
• According to one CEO, “California and Oregon are essentially anti-business, whereas Texas and Tennessee do everything possible to make business comfortable and more successful.”

CEO Magazine

State legislative trends show that Legislatures are favoring:

• reducing income based taxes
• increasing sales taxes

In 1990 Texas:

• sales tax collections were 80.5% of Texas revenue. 
• property taxes were 8.3% 
• license tax was 11.2%

In 2014 Texas:

• sales tax collections were 82.8% of Texas revenue. 
• property taxes were 10.9% 
• license tax was 6.3%

License taxes peaked in 2010 at 16.6%. Governing

A group of health care advocates have submitted requisite petitions to get an additional $2 per pack tax on the California ballot. The coalition is Save Lives California:

• American Heart Association
• American Lung Association
• American Cancer Society
• California Medical Association and
• SEIU California
  Its expected to generate $1.5 billion in revenue.

NJ Supreme Court heard oral arguments about reforms to the state pension systems. The state facing a budget shortfall and a Governor with Presidential aspirations reformed the pension system, including:

• suspending cost-of-living adjustments
• raising the retirement age
• increasing workers’ contributions into the fund and
• requiring the state tomove toward full payment recommendations from actuaries.

The chain of events:

• NJ paid up for two years
• Then revenues slowed and NJ cut pension payments
• Pension argues the State broke the law by withholding $1.57 billion in pension payments from the current budget.
• NJ argues that the 2011 law conflicts with a constitutional clause barring the state from taking on new debt without the voters’ approval and another barring the state from telling future Legislatures how to spend its money. In short, the law prohibits NJ from funding the pensions.

New Jersey Advance Media

Forbes has a handy chart on the House v. Senate Margins Tax Duel. Visit : 

Forbes

The Canadian City of Edmonton has discovered it has a novel and marketable method of collecting waste. It is sharing its expertise in this area as a consultant for other local governments that seek to increase efficiency in waste management. 

What’s so great about waste management in Edmonton?

• It diverts 60% of its refuse away from landfills by:
  •  recycling
  •  composting
  • converting household waste into biofuel.
• Its waste management center gets 15,000 visitors a year, many hailing from other governments that want to study the Edmonton way. 
• In 2013 Edmonton created Waste RE-Solutions, an independent for-profit company with the city as its sole shareholder.

8% of the city revenue comes from its consulting fees. Governing 

Picture this:

• You’re a district court judge
• You get hired by a petrochemical company & leave the bench
• Your agreement with the pretorchmical company is that you’ll help reduce its property tax burden
• For that work you get a salary of $50,000/month &  33 1/3% of the property tax savings the petrochemical company gets
• Then you discover that your boss at the petrochemical company likes to pad the books
• You refuse to agree to the book padding scheme and your boss stops paying you
• You’re out contractual pay of $50,000/month & $5 million contingency fee for the property tax savings.
• You sue to recoup lost wages and earnings
• Then it comes to light your time on the bench was all shiny

Lots of drama in Beaumont. SE Texas Record

Repeal Margins Tax.

TPPF

HB 590  permits for-profit special purpose research corporations to commercialize univeristy research. This research coporation that could partner with universities or an entity at the Texas Medical Center, and would receive a 15 year exemption on ad valorem taxes, sales and use taxes, and franchise taxes.

Houston Business Journal  Fiscal Note

“Today the House voted to provide all Texans with tax relief that encourages job creation and economic growth. The House looks forward to a productive conversation with the Senate about how best to deliver results on this issue and the many others that matter to our economy and to Texas families.”  

Speaker Straus Press Release

Georgia Legislature added a $5 tax per room per night on lodging. It’s expected to generate $200 million per year in revenue and will fund transportationn projects.

The lodging tax was a last minute swap for a tax on rental cars. The opponents to additional taxes on rental cars said it would unfairly impact  Georgians seeking temporary vehicles during car repairs. 

Tax researchers say it will cause hotels in Savannah and Atlanta to reduce revenues by $130 M annually. 

Savannah Now

• $23 million in tax credits
• Of that, $17.3 million is based on 5-year tax credits given  in exchange for each new job brought to Georgia
• state business taxes will be reduced by up to $4,000/year for up to 5 years for each new job
• $6 million in development funds
• local tax abatement for ten years

​Mercedes left New Jersey to set up headquarters in Georgia. According to an Texas A&M’s Kenneth J. Meier, economic development incentives are “a rounding error for a company like Mercedes.”

​Wall Street Journal  WABE Atlanta’s NPR 

HB 31  (sales tax) and HB 32  (franchise tax) will be debated on Tuesday April 28th. Let the games begin. Welcome the LLMs in tax law to Austin. 

Calendar Committee Rule: 10AM Monday  (April 27th) deadline for Amendments.

Small businesses with property valued at less than $3 million would be able to protest their property tax valauation just as home owners do under SB 849  by Bettencourt.

SB 849 passed the Senate on Thursday the 23rd, and has been received by the House. 

Austin Business Journal

• Local Pensions have created  “a bureaucratic barrier to local reform benefits” by putting local pensions in state statute
• “these systems are effectively locking in place plan elements that are advantageous to its members while locking out non-members who might have other”
• leads to bad financial outcomes
• The Pension Review Board says local pensions operate at a deficit of a “collective $7.4 billion or more than $150,000 per active member”
• locals should have a seat at the table to make local pension decisions

TPPF

• $300,000 sales tax break over 6 years
• 15 year lease
• $2.65 million investment by Hobby Lobby 
• $4Million/year projected annual sales
• Minimum wage: $15/hour

Waxahachie Daily Light

The Oscars of the Motions to Instruct the House Conferees on HB 1:

Most Likely to Succeed:  Chairman Darby’s no tax policy changes in HB 1. 

Least Likely to Succeed: Representative Simpson’s request that the House approve every instance when the conference committee goes outside the bounds. We’d need to add 100 days to session to cover that debate, and who wants that?

Most Likely to Harm the Texas Economy: Representative Leach request to include a ban on embryonic stem cell research for the first time in Texas history. Its hard to recruit biomedical researchers and biomedical research firms to Texas when the legislative landscape attacks their research to cure cancer, MS, and repair spinal injuries. 

The Greater Houston Partnership is asking the Texas Supreme Court to allow it to not disclose information under an open records request.

The Dallas Morning News sent a public information request to the Greater Houston Partnership. The Attorney General issued an opinion that was expansive calling for the Partnerhsip to disclose information, after which the issue moved into the court system.

The Texas Association of Business, joined by other Chambers of Commerce are asking the Texas Supreme Court to protect the information at the Greater Houston Partnership because the entity is private and should be protected to support economic development projects. In short, making the Greater Houston Partnership comply with an open records request is bad for business. 

Texas Association of Business April 17, 2015 Amicus Letter

February 29, 2012 Open Records Opinion which found GHP to be within the definition of governmental entity

Institute on Taxation & Economic Policy’s (ITEP) Who Pays? A Distributional Analysis of the Tax Systems in All Fifty States, also known as An Insomniac’s Guide to Sound Sleep, declared:

• Texas has one of the most regressive tax systems
• California has one the least regressive tax systems

Federal Funds Information for States retorted that fairness is but one aspect of analyzing taxes. Tax analysis should also include:

• adequacy
• simplicity
• transparency and
• ease of administration. 

Governing

Specific border contracts at the Department of Public Safety were being investigated by the Public Integrity Unit. Chupacabras, while a possibility on the border, were not involved.

That investigation halted, some say, due to the 2013 veto of funding for the Public Integrity Unit. Commissioner McCraw, wanting an all clear for his agency, called on the Public Integrity Unit to continue its investigation. KUT

The State Auditor issued its last report on DPS contracts in June 2013. While different contracts were audited, DPS was found to  have “sufficiently performed several planning, procurement, formation, and oversight activities.” That’s auditor speak for PASS on a PASS/FAIL scale.  SAO

An event called Space ATX is launching in Austin to promote commercialization in space. KUT

Might seem like Space ATX is light years ahead, but SpaceX (Elon Musk) publicly supports SB 458 by Lucio to add space projects to the Governor’s economic development office.

Space X has invested $70M in infrastructure at its McGregor, TX facility according to Space X testimony on SB 458 in Senate Natural Resources.  SB 458 has passed the Senate and has been received by the House. 

Rio Grande Guardian

TPPF says the Committee Substitute for Chairman Bonnen’s HB 32 will result in the following economic benefits, if HB 32 also includes repeal of the margins tax (that’s in the fine print):   

• $10.8 billion in new real (inflation-adjusted) personal income in the 1st year
• $16 billion, cumulative in 5 years
• 67,800 new, private sector, nonfarm jobs in the 1st year
• 129,200 new, private sector, nonfarm jobs, cumulative, in 5 years

TPPF

Taxpayer Rights:

• RIGHT to Fair and Equitable Treatment
• RIGHT to Privacy and Confidentiality
• RIGHT to Understand the Taxes You Pay
• RIGHT to Pay Only What You Owe
• RIGHT to Representation
• RIGHT to Contest a Decision
• RIGHT to Request a Waiver of Penalties
• RIGHT to Simpler Tax Filing
• RIGHT to Courteous, Accessible Assistance from a Real Person
• RIGHT to Know How Government Spends Your Tax Dollars

Comptroller’s Taxpayer Bill of Rights

A study at the Royal Holloway University in London shows that fee has higher negatives than taxes. Additionally, people would “overwhelmingly” rather pay a tax than a fee. 

Washington Post 

Governor Abbott had a tax day press conference with vcfo promoting his plan to reduce the business franchise tax. The Governor says reducing the business franchise tax will:

• create more jobs
• spur economic growth

He also refers to the economic benefits of eliminating the margins tax. 

Governor Abbott Press Release   SE Texas Legal Record  RioGrande Guardian

Wind generates electricity and revenue in Texas. In the last 14 years it has:

• Generated $85 million in taxes annually in rural Texas counties
• Added more than $9 billion in new taxable assets 
• Created 30,000 jobs

Big Country

House

• Tax Relief in the form of a sales tax cut & 25% cut in margins tax rate
• $4.87 Billion total tax savings 
• First ever sales tax cut to a 6% state sales tax rate
• TPPF commends lowering the margins tax rate on wholesalers & retailers to .375% and the top rate for other businesses at .75%, but calls it a starting point
• HB 31 (sales tax relief) & HB 32 (margins tax relief)
• Senator Patrick’s Response: “is out of step with Texans, my office, the Senate and the governor.”

Senate

• Tax relief in the form of a property tax cut & margins tax reform
• $4.4 Billion total tax cut
• $2.4 billion margins tax relief hailed by TPPF
• SB 1 (property tax relief), SB 7 (margins tax relief) , SB 8  (Margins tax exception expansion)
• Chairman Bonnen’s Response: ““I respect the work of Lieutenant Governor Patrick and the Senate in crafting a tax cut plan. Our plan shrinks government, provides permanent tax relief, and protects the state spending cap. It is the most fiscally conservative plan on the table. That’s why it has widespread support from members of the business community.”

Austin Business Journal   Statesman  Dallas Morning News  Brietbart (Fireworks over Taxes)

Option #3

Senator Eltife is firm in his position that tax cuts are not a solution. He supports focusing on:

• paying down debt
• stopping the pattern of deferred maintenance
• focusing on unfunded liabilities in pensions 

Texas Tribune 

Montgomery County Judge Doyle talks of a needed long term mobility plan to address road congestion. To combat road congestion, a $350 million bond package was proposed. 

Gordy Bunch responded by creating an online petition opposing the bond package. Former Representative Steve Toth commented that bond packages do not equal mobility. 

Empower Texas regales us with stories of activists, and refers to the Woodland Parkway extension as the poison pill in the bond package.

The Strike Force Report on the 21CT Contract at HHSC 

State Auditor on the 21CT Contract at HHSC

State Auditor on Terrell State Hospital Contract Issues at DSHS and HHSC

State Auditor Report on Recent Contract Audits January 2015

State Auditor on the Telecommunication Contract (AT&T) at HHSC

State Auditor on delegations of authority to contract for state entities to contract for external audits

State Auditor on the Health Select Contract

John and Ann Arnold Foundation is the largest contributor to pension reform pushes. The foundation supports no one specific cause and supports pension reform efforts through out the country. To follow the money, read this Inside Philanthropy article. 

In the fall of 2014, Moody’s estimated the unfunded liability of states pension systems at $2 Trillion. 

The quirky layers of local government taxation are revealed by HB 2389, like when you stick a fork in tiramisu as a kid and realize that lady fingers aren’t actual fingers.The City of Houston has statutory authority to enter into contracts with special purpose districts, like MUDs. These contracts allow:

• The City of Houston can levy a 1% sales tax outside the city limits
• In exchange, the City will not annex the area for 30 years

There are as may as 200 of these contracts that generate revenue of $100M per year. 

HB2389 would require 1/2 of the sales tax collected in these areas under these contracts, must be spent on projects within 5 miles of the special purpose district’s boundaries. 

Opponents say:

• An agreement is an agreement (City of Houston)
• This is a way for Counties to get a piece of the revenue pie

Supporters Say:

• Citizens who live outside special purpose districts are hit with higher sales taxes when they shop in these areas (Ft. Bend Commissioner Meyers)

Houston Chronicle 

Average California property taxes: $1,431

Average Texas property taxes: $3,327

In 1978 California passed a constitutional amendment to cap property tax at 1% home value at the time of purchase & restrict annual increases to 2% per year until the property is sold.

In total taxes, Californians pay about $9,509 in state and local taxes on average.  

Sacramento Business Journal

A new study on Louisianna Entertrainment tax Credits revealed that for every $1 the state kicks into the programs, it costs the state $4.48.

The incentive programs involved were the:

• Film Production
• Sound Production
• Live Performance Production
• Film Infrastructure
• Sound Recording infrastructure
• Live Performance Infrastructure 

The report conducted by Loren C Scott & Associates also found:

• State spending on these programs is decreasing
• The cost per job is between $6,983 and $14,157 per job in 2014
• Low return on investment for big name projects, because the big names are not Louisiana residents

Recommendations for the entertainment incentive program are:

• “removing qualification for the programs for some expenses like finance fees, air fare and interest payments”
• “improving the quality of independent application audits, which area already mandated by the programs; “
• ” automating the application process for film expenditure reviews.”   

NOLA.com

The 14th Court of Appeals sided with the Appraisal District to restore the value of a Valero refinery.

A jury had shaved off $190 Million from Valero’s appraised value, siding with Valero’s comparable value comparisions. 

The 14th Court of Appeals opinion states, “…the evidence is legally insufficient to support the jury’s equal and uniform valuation of Valero’s refinery,”

It’s a short term win for the appraisal district because the 14th Court of Appeals ordered a new trial.

Why it matters to the Lege: A legal win for appraisal districts on commerical comparable value analysis will encourage property tax reformers, who believe lower commercial appraisals shift the property tax burden to residential tax payers.  Southeast Record

Smithee: Senator Eltife and Representatives Bonnen, Larson, and Pickett have all sounded the bell on the rising state debt.

The state debt is estimated to be $44 Billion, and here’s what legislators are saying it: 

• Larson: “…we need to be talking about reducing our debt when we are spending $3.6 billion (a year) on debt service…”
• Pickett: ““In cash, TxDOT is paying more on debt than on road construction and maintenance.” “So, we are actually paying more on the credit card than we’re paying cash.”
• Hughes: “If you look at us compared to other states, we are still better off than most. It is manageable but it is becoming a problem.”
• Price:  is confident that in addition to the proposed tax cuts (the Senate has already voted for a $4.6 billion package), the Legislature will approve debt reduction.
• Smithee: “I don’t think anything that has happened yet that is a crisis situation.”

Lubbock Avalanche Journal

Think vouchers is the only fight over public education revenue? Think again. Here’s what’s whirling around the country:

• Nevada: Tax credits for businesses that support private-school scholarships
• Mississippi: education savings accounts
  • Arizona and Florida implemented education savings accounts in 2014
• 34 states are considering proposals to create or amend programs that offer private education options (Wall Street Journal maps the state plans)
• Minnesota: education savings accounts to parents of special-needs students

Today General Paxton announced Attorney General Opinion KP-011 settling “Whether a public school district may expend funds for the management of county school lands to determine if a lessee of a mineral estate is fulfilling its duty to explore and develop the mineral estate?”

The answer: 

• No, a school district cannot pay for this. A County has to pay to fulfill its obligation as trustee over the school lands.
• Also, the county can’t get clever, sell the trustee lands, with potential miineral rights, to the school disrrict for $1. Trustees over school lands have fiduciary duties, a $1 sale doesn’t meet those duties. 

California, home of the moving picture industry, is proposing to amend their film incentive program by requiring that more of a film’s music be sourced from California to qualify for the full California film incentive credit. 

From Deadline Hollywood:

“AB 1199, however, would require that a minimum of 75%, or an expenditure of $100,000, for music scoring and track-recording be done in-state for productions to qualify for the added 5% credit.” 

In Audit Report 15-030, the State Auditor lays out a laundry list of what to do & what not to do when negotiating a state contract. Failing to complete all the flagged items below led to the cancellation of the $30M contract.

What to do, the good things:

• Have the solicitation reviewed by the State’s Contract Advisory Team
• Publicly post the solicitation
• Screen vendor proposals for completeness
• Evaluating the only vendor proposal that it determined was complete​

The auditor flagged these items:

• Make certain the agency, in this case HHSC, complies with its policies to complete a needs assessment and cost-benefit analysis to support outsourcing those operations
• Ensure there is documentation to support the contract amount
• Make certain the AG looks at big contracts, especially if it falls in nor near the thresholds of Government Code Section 531.018 
• If the solicitiation removed price as part of the best value analysis flags will fly. 
• If you’re bidding on a solicitiation and it references appendices and the agency doesn’t have appendices for the solicitation drafted. Heed this warning:
  • The State Auditor will notice abnd it will impact your contract
  • Your attorneys should be crying foul. Appendices and words matter in contracts.
• After 2015, agencies will do a better job of verifying information provided by vendors. None of the information provided byt he vendor was verified by the agency in this contract.
• If your contract requires the Executive Director’s approval, and after 2015 many more contracts will, make sure you get it.
• If your bidding, make sure your legal entity is qualified to do business in Texas. A quick informal check is by searching the Comptroller’s tax records. 

SAO 15-030  Statesman

• Abilene $45,975,000  for Streets & Roads 
• Abilene $2,810,000  for a Civic Center
• Abilene  $3,820,000  for Sidewalks 
• Abilene  $12,865,000  for Police & Fire $
• Abilene  $1,030,000 for Zoo 
• Abilene  $6,000,000 for Aquatic Facilities 
• Abilene $2,500,000 for Splash Pads 
•  Abilene  $1,490,000 for Parks & Recreation
• Abilene $4,200,000 for Airport Improvements 
• Alief ISD  $341,000,000 New Construction, Safety & Security, Transportation 
• Bremond ISD $3,000,000 School Building & Buses 
• Bullard ISD I$40,000,000 School Additions & Renovations
•  Canyon ISD $34,800,000 School Building 
• Carthage ISD $8,570,000 School Building & Buses 
•  Carthage ISD $19,750,000 Auditorium
•  Carthage ISD$905,000 Athletic Field 
• Chapel Hill ISD (Smith County)  $45,000,000 School Construction and Renovations 
• Chico ISD $7,000,000 Building Upgrades 
• Cleburne ISD  $150,000,000 for School Building 
• Clint ISD $80,000,000 School Additions & Renovations, Safety and Security 
• Coleman County Hospital District $12,000,000 Hospital Addition 
• Comal ISD $147,400,000 New Schools, Renovations 
• Decatur ISD  $9,988,500  Transportation, Security, Technology, Facilities
• Decatur ISD $3,500,000 Multi-Purpose Center 
• Eanes ISD  $52,500,000  School Building & Technology
• El Campo $10,500,000 Public Safety Facility 
• Fairfield ISD $3,000,000 Maintenance, Technology, and Transportation 
• Fredericksburg ISD  $16,000,000 School Renovations
• Frisco  $41,500,000 Public Safety Projects 
• Frisco $125,000,000 Streets & Roads
• Frisco  $3,325,000  Fleet Center Improvement 
• Frisco $37,000,000 Municipal Center 
• Frisco  $9,000,000 Senior Citizen Center 
• Frisco $32,000,000  Parks & Rec
• Frisco  $10,000,000 Performing Arts
• Frisco  $10,000,000  Parks
• Georgetown $105,000,000 Roads
• Gilmer ISD $28,500,000 New High School Building 
• Gregory-Portland ISD $117,000,000 School Construction and Renovations 
• Harlandale ISD  $64,900,000 School Building & Security
• Joshua ISD  $50,000,000 Future Growth, Security & Technology 
•  Kerr County  $15,000,000  Jail Expansion
•  Klein ISD $498,100,000 Growth, Safety & Security, School Buses, Renovations, and Technology 
• Lancaster ISD $125,900,000 New Schools and Safety & Security
• LaPoynor ISD  $4,120,000 New School 
• LaPoynor ISD $4,870,000 Gymnasium 
•  Liberty ISD $33,500,000 School Building 
• Malakoff ISD $3,000,000 Transportation, Security & Technology, Athletic Fields 
• Marshall ISD  $109,210,000 New Schools, Renovations
• McAllen ISD $297,000,000 School Upgrades 
• Mesquite ISD  $280,000,000 New School Construction, Renovations, Purchasing Sites, & Technology 
•  Milano ISD $3,825,000 School Building 
• Montgomery County $350,000,000 Roads 
• Montgomery ISD $256,750,000 Growth, Renovations, Safety, Security Upgrades 
• New Caney ISD $173,000,000 New Campuses, Renovations, Purchase of Land for Future Growth 
• New Summerfield ISD $8,000,000 School Building and Gymnasiums 
• Pecos County  $35,000,000 Hospital Upgrades 
• Pettus ISD $32,300,000 New Schools, Renovations, Athletics 
• Pleasanton ISD $63,000,000 New School Building
• Post ISD  $18,000,000 New School Building 
• Rowlett $18,932,340 Streets 
• Rowlett $4,206,110  Parks 
• Rowlett $2,631,050  Public Safety Projects 
• Selma $9,000,000 Roads 
• Slaton ISD $14,400,000 School Buildings 
• Thrall ISD  $15,000,000  School Building & Technology 
• Travis County WCID 10 $45,900,000 Fire- safety water system 
•  Waxahachie ISD $125,000,000 Growth & Facility Improvements
•   Weatherford ISD  $18,800,000 Renovations 
•  Weatherford ISD $49,500,000 Growth 
•  Weatherford ISD $6,600,000 Safety & Security 
• Whitney ISD $11,000,000 Athletic Facilities 
• Wichita Falls ISD $59,500,000 Career and Technical Education Center, Renovations, Athletic Facility
•  Wylie ISD (Taylor County) $15,000,000 School Building & Security 
•  Ysleta ISD $451,000,000 Repurposing, Consolidating & Rebuilding Schools 

Texas Transparency by Comptroller Hegar

Minnesota, Home of the Vikings, is hosting the 2018 Super Bowl. Minnesotans are working on how to fund hosting a large event. The funding scheme includes:

• No sales tax on super bowl taxes. (Enacted for the 1992 Super Bowl)
• New tax proposals include exempting:
  • events related to the game, such as:
    • an interactive zone for fans or certain tailgating events.
• Tax Incentives that are a NO-GO:
  • Waiving player income taxes for the time they’re in Minnesota. 

Most Super Bowl expenses will be paid for by private donations, a total of $30 million-$40 million. The income tax on the players will also be covered by private donations.

CPA Practice Advisor

Small Businesses thus far seem to be leading the race on tax cuts in 2015. Here’s why:

• Small Business Saturday, a sales tax holiday after Black Friday, is getting a warm reception
• The inventory tax cut that faovrs manufacturing and large businesses got scrapped by Senate FInance
• $2.1 billion of SB 1 tax cuts favor small business directly

CPA Pratice Advisor

Taxing e-cigs can take many forms:

• taxing the volume of the liquid nicotine
• tax the vapor device
• tax the businesses that sell e-cigarette products

To this end, Hawaii is proposing a 80% tax on e-cigs. Hawaii also proposes an 80% sales tax on  snuff, chewing tobacco, small cigars, & loose tobacco. 

CPA Practive Advisor

Empower Texas purports that Senator Seliger’s SB 1027  will allow a 100% tax cut for race tracks. The short statement links the bill to:

• Speaker Straus
• Wallace Hall’s persecution
• Historical Racing rulemaking at the Racing Commission
• The Senate Republican Caucus opposition to the Racing Commission rulemaking

Empower Texas

This week the U.S. Supreme Court denied cert to review the Texas Supreme Court ruling upholding the $5 strip club tax. Law 360

HB2694 filed by Chair Chen Button creates a tax free holiday, Small Business Saturday, to help small business retailers during Black Friday. 

Statesman

Senate Finance favorably voting out of committee its $4Billion tax cuts garnered quite the headline.  Won’t be the last time we see this tag line.  WOAI 

In discussing legislation to address the Denton fracking ban, Texas Association of Business, ties local ordinances to harm to economic development:

“You cannot have rational economic development at the state level if every home-rule city can adopt an ordinance through referendum or initiative that trumps the state law,” said Steven Minick of the business association.

Dallas Morning News

The Director of strategic programs for the National Association of State Procurement offers 4 best practices for e-procurement by following in Virginia’s footsteps, and creating:

• A single online point of entry
•  Self-service supplier registration
• A centralized bidders’ list
• Use of push technology

​​Governing 

TPPF is announcing the formation of the Economic Development Transparency Coalition. It will include:

• Texas Public Policy Foundation
• Public Citizen
• Texas Public Interest Research Group
• Americans for Prosperity
• Freedom of Information Foundation, and
• Grassroots America We the People. 

TPPF  Economic Development Transperancy Coalition Letter

• SB 1 & SJR 1 provide for more than $2 billion in property tax relief by:
  • setting the homestead exemption to 25%  of the state’s home median market value.
• SB 7 provides $1.8 billion in business tax relief by:
  • reducing the business franchise tax rate, also known as the margins tax, by 15%
  • Increase the availability of the E-Z tax calculation to businesses with revenue of $20 million, or less, and decrease the E-Z tax rate.

Senator Nelson Press Release

Gov. Brian Sandoval (R-NV) and the Nevada Legislature have been battling budget shortfalls which go hand in hand with pension issues.  

Pension ideas from the very libertarian-like Nevada:

• Assembly Bill 387, by Minority Leader Marilyn Kirkpatrick, D-North Las Vegas, would allow public employees to purchase up to 5 years of retirement credits.
  • Purchased retirement credits could not be used to calculate an earlier retirement date
  • Purchased retirement credits could be used to increase annuity payments
  • Applies to only new employees
• Another bill aligns the state retirement age with social security eligibility
  • Police and firefighter retirement age would be social security eligibility minus 10 years
• Assembly Bill 312 by Assemblyman Glenn Trowbridge, R-Las Vegas, would require a pension to be calculated using 5 years of the highest annual earnings instead of 3.
  • The change could lower pension amounts  upon retirement.
  • Applies to only new employees
• A defined contribution plan to replace the current NV pension system appears DOA due to the large fiscal note.

Las Vegas Review Journal