Finance & Revenue

Massachusetts Governor tax proposal for sports betting and fantasy sports operations will :

• generate $35 million in taxes and licensing fees
• not require a company to ahve ties to a casino
• 10% tax for in-person betting
• 12.5%  for online wagering

Boston Globe | Here’s how the state’s sports betting proposal breaks new ground 

Who overwhlemingly used ESAs in Arizona?

• 70% by students in high performing schools
• 10 times as many students used ESAs in AZ from high performing schools as from low performing schools. 10 TIMES
• 58% were special needs students

The response from supporters of ESAs? Its because public schools do not address “autism spectrum”

Governing | Do School Vouchers Only Benefit the Wealthy?  

Requestor: Texas Board of Nursing

Question for the Office of Attorney General to answer: Can criminal records be disclosed during licensing issues because CHapter 411 of the Government Code has been amended since the previous OAG opinion GA-0919?

The reason to pay attention to this opinion:

• it has a broader contained question that could impact for all state agencies: Is there a duty on agenices about disclosure of criminal records in either Section 411.075 or 411.0765, Government Code.

RQ-0236-KP 

From the Texas House Committee on Agriculture and Livestock interim report on industrial hemp:

• Global market for hemp consists of more than 25,000 products in 9 submarkets
• 30 countries approve industrial hemp 
• 41 U.S. states and territories have an agricultural hemp program
• 2018 US hemp is estiamted at $1 billion market
• Economic growth of 16% in 2017
• Environmentally friendly

Recommendations:

• 1. Define industrial hemp

  2. Amend the definition of “marihuana” and “tetrahydrocannabinols” in the Texas Controlled Substances Act to exclude hemp and related products

  3. Align legislation, registration, fees, cultivation, and processing requirements with the minimum standard with 2018 farm bill

  4. Texas Department of Agriculture to establish rules and a regulatory framework for the cultivation, production, and sale of industrial hemp as food, supplements, ointments, feed, and fiber.

  5. Require robust pre-harvest testing 

  6. Allow naturally derived cannabinoids to be extracted

  7. Establish applications for institutes of higher education to obtain permits so they may grow hemp for research-related purposes

  8. Provide legal protections for growers and processors

  2017 Interim Report Hosue Committee Report on Agriculture and Livestock 

 Senate Bill 1221 (2017 | TX) required reporting of hotel motel taxes. It did not require posting on the web.

Nonetheless, the Comptroller will make reported information available online with downloadable datasets.

Texas Comptroller | MUNICIPAL HOTEL OCCUPANCY TAX REPORTING

Texas Comptroller has relased a new data tool that tracks financial and tax information of special purpose districts.

What data can be had?

• if it imposes an ad valorem tax
• if it imposes a  sales and use tax;
•  if it charges an assessment
• if it charges a fee
• are the outsstanding bonds in the recent fiscal year?bonds outstanding;
• gross receipts in excess of $250,000
• cash and temporary investments in excess of $250,000?

​Texas Comptroller | SPECIAL PURPOSE DISTRICT FINANCIAL AND TAX REPORTING

Economic and Small Business Development:

• Aerospace. conform deductions for the aviation, aerospace, and defense manufacturing industry to the costs definitions contained in the Federal Acquisition Regulations

• The House Committee on Economic and Small Business Development has been dissolved
• Economic Development jurisdiction rests with the House Committee on International Relations and Economic Development

Refresher: The recommendations of the Interim Committee Report by the House Committee on Economic and Small Business Development:

• Support higher ed. & medical schools adequately “as they are truly a breeding ground for innovation and future economic success”
• Do more to ensure IT certifications for students and workers
• Our economy must be diverse, including in responses to Harvey recovery
• Endorse policies that support Economically Targeted Initiatives 
  • this is academic talk for supporting policies/investments that provide some additional economic benefit to the state

What do I need to know about special districts and committees?

• The substantive House Committee was delted in HR 4, the House Rules.
  • Land and Resource Management will take over jurisdiction for municipal utility districts
  • Natural Resources will cover districts concerning water without a required subcommittee

Interim Committee Recommendations from the Special Purpose District House Committee:

• The threshold to dissolve a special purpose district should be lower than the current 75% of landowners
• Require dissolution plans from district boards
• New template bill language for Municipal Management Districts  at page 41

What question is the Texas Attorney General answering?

Is any portion of the Permanenet School Fund spendable? If so, how much & how can it be spent?

Why is this question being asked? because the Legislature has not expressly said the PSF is nonspendable

The answer: The Texas Constitution article VII, section 5says the Legislature cannot appropriate any portion of the PSF. The only thing that can happen from the PSF is making distributions that are specifically permited and only within a set period of time.

KP-0229 (2019)

Retirement Systems of Alabama is the sole owner of CHNI LLC, that owns 68 daily newspapers and more than 40 non-dailies plus websites in 22 states.

AP | Alabama pension fund now sole owner of local newspaper chain

California has marijuana tax revenues for a year. Here’s a look at the revenue:

• the revenue estimate: $1 billion in revenue a year
• the 1st full year of revenue: $471 million in revenue

3 Reasons given for lower than estaimted revenues:

• Complex regulations
• High taxes
  • An example in Los Angeles:
    • 15% state excise tax
    • 10% recreational marijuana tax by the city of Los Angeles
    • 9.5% in sales tax by the county and state
    • Totaling a markup of more than 34%
• Cities banning cannabis shops
  • 20% of cities in California — 89 of 482 — allow retail shops to sell cannabis for recreational use
  • In 2018, 64 California cities and counties that voted on cannabis ballot measures
    • 8 banned the sale of cannabis or turned down taxation measures
    • 7 allowed sales
    • 49 approved taxes on pot businesses

Governing | Legal Pot Sales Fall Short of Expectations in California

Where: Arkansas

What is Arkansas legislature set to consider: Education Savings Accounts + Education Scholarships

What is the opposition saying?

• divert state tax payments
• “Call it what you will, these are school voucher programs”
• “It would be like a law allowing me to divert my state tax money to Planned Parenthood to finance abortions.”
• “public money laundering scheme”
• “I don’t mind continuing to send dollars to public education, but I do mind subsidizing unaccountable private education for those who reject it.”

Arkansas Times| Editorial| Euphemism watch: ‘Education savings accounts’ law means school vouchers

Connecticut State Comptroller Kevin Lembo launched a new pension transparency website.

The details about how the website operates:

• real time updates (real time = every pay cycle)

What data is disclosed:

• How many retirees in the state system
• How many of those retirees are still living in Connecticut
• Average pension earnings
• How much the state paid toward state employee pensions in a given year
• the average pension at $36,826
• top earning pensioner

Yankee Institute for Public Policy | Comptroller Releases New Pension Transparency Website

Michigan Govenror Snyder vetoed a fantasy sports bill, The Fantasy Contests Consumer Protection Act, because:

• it was part of a package of gambling bills (including internet gaming)
• there are unknown factors (hint: revenue. will schools lose lottry funding?)

HB 6420 (2018 | MI)

Veto Statement on Fantasy Sports HB 6420 (2018 | MI)

Michigan’s outgoing Governor vetoed the Legislature’s a trio of gambling bills that also included internet gaming:

• authorized online gambling in Michigan through Detroit’s three casinos
• and via out-state tribal casinos

Highlights from the veto statement:

• Kudos for getting stakeholders too agree- but that’s not enough
• Not enough Data to know if the revenue will be there
• Too many budget concerns
• This coud take revenue from the lottery which funds public education
• Cannot justify more gambling, if there is also a concern about lost revenue for public education

Veto Statement MI Governor Snyder HB 4726, 4727, 4728 (MI | 2018)

Crain’s Detroit Business | Snyder vetoes online gambling, fantasy sports betting bills

Six months into fantasy sports legalization in Pennsylvania revenue is:

•  $3.24 million for November= $486,000 in tax revenue
  • Up from the initial month of May $1.33 million & $200,000 in tax revenue
• Revenues increased during football season

Fantasy Provider/Revenue/State tax

DraftKings / $1,749,422.06 / $262,413.31

FanDuel / $1,420,165.49 / $213,024.82

DRAFT / $46,570.08 / $6,985.51

Yahoo Fantasy Sports / $20,792.03 / $3,118.80

Fantasy Draft / $2,310.40 / $346.56

Sportshub Technologies / $1,297.20 / $194.58

Boom Fantasy / $603.77 / $90.57

Full Time Fantasy Sports / $0.00 / $0.00

Fantasy Football Players Championship / $0.00 / $0.00

Total / $3,241,161.03 / $486,174.15

LVB | May, sports betting brought in about $1.33 million and $200,000 in taxes. 

Michigan Legislature expanded the definition of ” qualified new job” for its state economic development programs to permit the hiring of out of state employees.

The definition still requires 75% of hires to be from in-state

Detroit News | House OK’s state tax incentives for firms hiring out-of-state workers

Viriginia’s Joint Legislative Audit and Review Commission found Virginia’s tax credits & tax incentives ineffective but a free market think tank and watchdog group both find grants ok.

Why are grants better?

• More economic benefits to the state from grant programs targeting “businesses that sell most of their good or services out of state, pay high wages and rely on local suppliers”
  • like manufacturing
• more economic benefits from programs that require job creation and capital investment
  • a requirement in the Virginia grant program

Watchdog.org | Virginia study: State’s tax incentives are ineffective

Alaska’s Permanent Fund is looking for approval to offer incentive pay for the state employees that manage the portfolio.

The touted benefits:

• retain top employees
• recruit talented managers

Why does this matter? Alaska has shift investments from private managers to state management.

The incentive target: up to 50% of investment managers’ salaries

KTOO | Alaska Permanent Fund looks to pay investment managers incentives 

In early 2018, Norway raised its 1922 sugar tax by much as an 83%.

Norwegians tax all sugar containing products.

The 2018 increase increased the total tax on chocolate to nearly $2 per lb.

Is there an economic effect? Yes, Sweden sees an increase in purchases by Norwegians for candy during the holidays.

Norstjernan | The benefits of the candy tax 

The question for the Office of Attorney General? Can a company that has “contracted with a county to collect amounts owed to a county’s court, charge a fee for the use of credit cards by the defendant to pay those debts?”

Who is asking for this opinion? Cooke County Auditor

What’s the background?  Opinion KP-0095 looks to say that the fee can be charged by 3rd party vendors & counties are excluded from surcharge fee prohibition in the Business & Commerce Code.

RQ-0261-KP

HB 494 (TX | 2019) & HJR 36 (TX | 2019) would set up this gaming network:

• Limited to Jefferson, Galveston and Nueces Counties
  • The Jefferson County location requires commissioner court approval
• Oversight by the Lottery Commission
• Limits gaming to 9 casino licenses 
  • including 3 horse/dog tracks in Harris and Bexar Counties
• The State Gaming Account created
• funded by 18% tax on a casino’s gross gaming revenue
• windstorm funding:
  • lesser of 50% of revenues OR amount needed by TWIA for insured losses and operating expenses
  • Held in the CATASTROPHIC FLOODING ASSISTANCE TRUST FUND

ABC 13 | Could casino gambling become a reality in Houston and Galveston?  

WHO & WHERE: City of Ft. Worth, its firefighters & police officers

WHAT: A compromise to resolve its pension fund stability

HOW does the compromise look?

• 4.5% cost to taxpayers
• 2.9% cost on local government employees
• 4 years could bring escalation, if the fund iunder performs
• cost of living adjustments emain as they are
• unfunded liability will be reduced
• Approved by City Council 
• next step: approval by employees in the plans

Fort Worth Star Telegram | Fort Worth reaches pension compromise. Will employees approve it?

State: Iowa

Legislation: HB 2481 (2017-2019 | IA)

What would HB 2481 (2017-2019 | IA) do?

• Extends a sales tax increase of 1 cent
• Dedicates the revenue from the increase to property tax reduction
• Adds $981 per pupil to use toward infrastructure in 2019, increasing to $1,495 per pupil in 2050

Des Moines Register | Editorial: Iowa Legislature should extend sales tax for school infrastructure 

The Georgia Department of Revenue has billed Uber $22.1 million for sales taxes.

What have other states done? It varies. Most levy no tax.  Alabama and South Carolina impose % ride fees.

WSB TV | Your next Uber, Lyft ride could be more expensive thanks to tax bill 

Who: The  Public Pension Management and Asset Investment Review Commission

Where: Pennsylvania

What takeaways:

• investment managers have underreported fees by $3.8 billion due to a charge called “carried interest,
• able to identify at least $3 billion in savings

Tribune Democrat | Public pension commission eyes cost-saving measures

Michigan bcame the first midwest state to legalize recreational marijuana

Michigan is the 10th state (plus the District of Columbia)

What does MI’s law look like?

• carry up to 2.5 ounces, highest recreational carry limit in the nation
• 10 ounces & 12 plants at home
• applications for sale licenses begins in 2020
• 10% tax on all sales is planned

The Hill | Recreational marijuana officially legal in Michigan

New rules for fantasy sposrts betting have been released and include:

• FEES
  • all operators will be charged a $500 permit fee
  • additional fee of $5,000 for operators with revenue up to $49,999
  • or an additional fee of  $50,000 for operators who have a gross revenue of $250,000
• DEFINE FANTASY SPORTS BET
  • bets would have to be based on “actual individuals participating in real competitions or athletic events,”
  • limit individuals to 1 user name and 1 account
  • No credit for sports betting
  • No transfering funds to other players
  • 5 day window to draw funds from a player’s  account
  •  operators would have to provide proof that they maintain their equipment
  •  annual audits
  • restrict the operators from mingling money from bets with other accounts
  • Statistical information that could affect fantasy sports is treated as non-disclosable
  • no betting on high school sports
  • no betting by people barred from casinos
  • no underage bettors
  • Complaints: response within 10 days, retained for 7 years

New Jersey.com | New Jersey proposes new rules for fantasy sports betting

Texas Piublic Policy Foundation in What’s Next for Texas’ Rainy Day Fund? raises these issues with the Rainy Day Fund:

• Voters approved 2 reasons for the Rainy Day Fund: disaster & deficit reduction.
• 30% of the $11.6 billion in Rainy Day Fund expenditures since 1990 have gone to those 2 things
• The Rainy Day Fund Needs these 3 fixes:
  • ​4/5 vote by each chamber to access the fund
  • the constitutional limit should be reduced from 10% to 7%
  • excess severence taxes should be tax relief.

Orgeon has a “kicker tax.” And, only Oregon has a kicker tax.

What is this kicker tax rebate? “The kicker tax rebate is triggered when tax revenues for a two-year budget cycle come in more than 2 percent above economists’ forecast from the start of the cycle.”

Oregonians Tax Rebate = 2 year revenues 2% above forecasts

Seattle Times | Might Oregon kill ‘kicker tax’ rebate to help education?

The Texas Public Policy Foundation raises these criticisms of a LBB Fiscal Size Up chart on page 205 that lists school funding sources from 2010-2019:

• The chart includes 1 time federal funding in 2009
• If one time federal funding were not included the drop in funding would be less
• it excludes local proerty taxes funding local bonds for schools
• it excludes TRS payments
• Texas doesn’t want to be NY and CA which have:
  • worse student achievement for minority children and
  • worse economic growth than Texas.

Included in this is that the following items are untrue:

• “hardworking families and businesses — don’t spend enough on public schools at the “state level;”
• poor school districts are hit hardest by underfunding; and
• if taxpayers just spent much more at the “state level,” then student outcomes would be improved.

TribTalk | What the pesky little chart left out of the public education tax picture

Social Divestment & ESG investing, a strategy based on an asset’s environmental, social and governance factors, by the numbers:

• $23 trillion globally in ESG investments
• 600% growth in the last 10 years
• 7  U.S. pension funds that signatories to the U.N.-supported Principles for Responsible Investment
  • What are the Principles for Responsible Investment? Calls for “certain factors such as climate change and human rights can affect a company’s performance and should therefore be considered alongside more traditional financial factors”
• fees in the ESG funds are roughly 100 basis points higher than their counterparts
• State Examples
  • ​MA lost $79 million on its $1.6 billion fossil fuel holdings from 2012-2017
  • MA would have gained $1 billion in ananti-fossil fuel index fund
  • CA created a division to “monitor ESG investing across its entire portfolio”
  • The purpose is to assess the fund’s future exposure to environmental, social or governance dangers

Governing | Politicizing the Portfolio. 

Why do Texas pension systems fail to meet the returns of low cost index funds?

• Texas pension funds hired the wrong outside fund managers
• real estate invetments by pensions are harder to manage
• alternative investments by pensions take more management power and cost more to manage
• pensions also report their performance before feesa re taken out, so we get a false sense of what’s happening

Dallas Morning News | Scott Burns: Texas pension funds don’t measure up to low-cost index fund

Ohio’s State Treasurer spearheads an inivitative to allow businesses to pay taxes via it coin. 

• Ohio is the 1st state to accept bitcoin for tax payments and may make the state a 
• On OhioCrypto.com 23 Ohio taxes can be paid via bitcoin
• Bitcoin tax payments will be limited to Businesses
  • After a successful pilot with businesses, then the bitcoin tax payments will open for individual OH taxpayers
• FLORIDA in May announced a similar plan but has not launched the initiative for bitcoin tax payments

Crypto Currency News | Ohio Accepts Bitcoin for Tax Payments: A Much-Needed Silver Lining. 

Texas Public Policy Foundation says educational savings accounts will:

• help economically disadvantaged urban kids with underperforming math & reading scores
• parents could choose an education that meets the child’s unique  needs
• Texas should have more than 46% of urban, economically disadvantaged kids prepared for post high school

TPPF | How Education Savings Accounts Could Help Texas’ Most Vulnerable Students Succeed

Expanding Arizona’s Educational Savings Accounts to include educational costs for:

• children with special needs
• foster children
• children with parents in the military
• children in the poorest-performing schools

Failed 65:35

AZ Central | ‘Echoing at the state Capitol’: Arizona Prop. 305 to expand school vouchers defeated 

The ruling by the 5th circuit affirms the US Department of Education $33 million fine for Texas cutting special educaiton funding by $33 million in 2012.

Some say the fine should be paid through the Rainy Day Fund.

Some say Texas will not have to pay federal legal fees if it waives its right to appeal.

San Antonio Express news | 5th Circuit delivers expensive message to state 

97% of the total $8.73 illion in local bond propositions passed in Texas on November 6, 2018.

What was the largest bond proposal to fail? San Angelo School District’s $153 million proposal.

Bond Buyer | Texas voters approved almost all the bonds on local ballots

Texas Comptroller Bond RoundUp 2018  

A New York, Albany County  State Supreme Court judge (in other states liken it to a district court) said fantasy sports is like sports betting or poker.

But, its also not illegal in New York. 

What? Its legal to play fantasy sports, the regulatory structure is not valid. 

What’s the take away? legally complex

Bloomberg | State Judge Voids New York’s Online Fantasy Sports Law

WLNY | Judge Rules Daily Fantasy Sports Are Gambling And Illegal In New York

Albany Times Union | Split ruling on fantasy sports sites 

SJR 1 (2019 | TX) by Nelson

informed:intel on March 23, 2017:

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

The Comptroller’s proposed idea:

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

Comptroller | Investing to Address Long-Term Obligations

and 

Lege TREND. Bill Adds Online Sales Tax. Grants Manufacturer Tax Breaks + Ends Online Sales Tax Agreements.

State: Utah

The legislation: In special session, the Utah Legislature passed HB 2003 (UT 2nd Special Session | 2018) and SB 2001 (UT 2nd special session | 2018)

What do the bills do?

• Ends agreements with collectors of online sales tax, like Airbnb and Amazon, that allowed the companies to retain up to 18% of their sales tax collections
• The online sales tax will only apply if the company does 200 sales or $100,000 in sales in UT
• Tax cuts for manufacturers to boost the state economy

US News & World Report | Utah Legislature Passes Requirement for Online Sales Tax

What tax can texas cities impose by ordinance to avoid property tax increases?

A utility sales tax:  Most Texas cities repealed their sales tax on utiltiies in the late 1970s: 141 Cities in Texas repealed their sales tax on utilities

How can this sales tax be implemented: Some say it can be revived by city ordinance

Where is it being considered? El Paso as an alternative to raising property tax revenues

KVIA | ​City of El Paso Considering a Sales tacx for utility services. 

California’s SB 946 (2018 | CA) will:

• legalize street vendors statewide
• create a permitting system
• preempt local criminal ordinances against street vendors
• allows residential areas to restrict stationary vendors 

The bill was messaged as:

• “EloteJustice”
• “elote with a side of justice”

What is the argument supporting the small business, street vendors?

The bill will override excessive local control over the streets and public spaces 

Streetsblog  Los Angeles | Bill Legalizing Sidewalk Vending Statewide Moves Through Legislature, Awaits Governor’s Signature

California passed AB 1884 (2018 |CA) preventing local bans on straws and providing for straws upon request.

Sacramento Bee | Plastic straws only for those who ask in California? It’s up to Jerry Brown

WHERE: Maryland

WHAT: Cybersecurity Investment Incentive Tax Credit  SB 228 (2018 | MD)

HOW does it work? To attract more capital the tax incentive would:

• 1/3 tax credit to invest at least $25,000 in a cybersecurity business with fewer than 50 employees

• If the business receiving the investment is located Allegany, Dorchester, Garrett, or Somerset counties a credit of 50%

• Permitts convertible debt as a form of investing.

• Applications must be submitted 1 month ahead of the investment

•  $250,000 cap for an investor within a fiscal year.

  Technically Baltimore | Maryland just opened up a tax credit for cybersecurity investors

The anatomy of fantasy sports betting proposition in Louisiana:

• Approval will be parrish by parrish
• After voter approval, the Louisiana Gaming Control Board would make rules for licensing, regulation and set tax rates
• Supporters:
  • Created the Fairness for Fantasy Sports to support the measure
• HB 484 (2018 | LA)

KSLA 12 | Elections 2018: Louisiana voters to consider fantasy sports gaming

Legal Sports Report | FanDuel Creates Advocacy Group To Push For Louisiana DFS Ballot Measure

Who is the study by? MIT researchers, who were approached by Fan Duel

What did the study say? Skill is rewarded in Daily Fantasy Sports

How did they get there?

• Examined 2013 and 2014 data from fantasy sports contests in baseball, basketball, hockey, and football 
• They examined every players performance and found it consistent through the season, if it were a game of chance the consistency would not be found
• They exmained how often people won if they played a lot or a little. They found statistically higher win fraction for people who play a lot versus a little, which indicates skill.
• they exmained player performance versus a random algorithim and found player performance beat the algorithim

MIT News | Study: There’s real skill in fantasy sports

Where & What? Lousiana legislature passed a bill to permit fantasy sports if parishes voted to approve it.

How much? Legalized fantasy sports passed in 2 parishes & failed in 4

• Yes in Calcasieu (56%) and Cameron (55%)
• No in Allen (54% NO), Beauregard (56% NO), Jeff Davis (51% NO) and Vernon (58% NO)

KPLC | Two SWLA parishes vote to allow fantasy sports betting, four vote the measure down

Arizona voters approved a constitutional ban on service taxes this week.

Other states with constitutional bans on taxing services, including Netflix? Missouri

Who is behind these bans? real estate groups

Governing | Not My Netflix or Yoga: A Second State Bans Service Taxes

This link takes you to Comptroller Hegar’s draft online sales tax legislation.

New Hampshire voters will vote to fight their governments—-in court. Adieu soveriegn immunity. it’s been real.

Who supports it? New Hampshire’s State Republican and Democratic Parties

Governing | One State’s Voters Fight for Their Right to Sue the Government 

IN 2017, the Texas Legislature provided for direct petition to the Supreme Court when property is taxed by two county taxing jurisdictions.

What property was at issue? Oxy’s facility in San Patricio & Nueces Counties

What county prevailed? San Patricio which according to Justice Hecht’s opinion, the piers installed in San Patricio County waters are derivied from the ownership of the upland property

Will this be something for the 2019 Texas Legislature? Yes, potentially the Texas Supreme Court is also set to rule on a similar case for the merits, a case pre-dating the 2017 law.

Legal News Line | Texas Supreme Court backs San Patricio County on property tax location dispute

• eliminate the port of entry tax on alcohol
  • ​why? it costs more to implement than it collects
  • savings: $7.6 million in agency costs
• align taxes on beer & malt beverages
  • why? no reason to have 2 tax structures
  • Texas system should be modernized for regulatory clarity & administrative efficiency

Sunset Adviosry Commission | Texas Alcoholic Beverage Commission

LeRoy, Texas, in McLellan County, will vote whether the town of 345 people should unincorporate.

How did we get to this? 

• 80 residents signed a petition calling for the election
• the 80 residents were motivated by the imposition of a new property tax
• residents don’t want to pay for road work on roads they do not use
  • the proeprty tax revenue was to repair damaged roadways

KWTX | Small Central Texas town could vote itself out of existence

South Carolina expanded its economic development programs to apply to more projects by:

• reduced from 175 to 125 job requirements at a single location 
• reduced to 100 jobs (from 150) at a single location comprised of a building or portion of a building that has been vacant for at least 12 consecutive months before the taxpayer’s investment 
• reduced to 75 jobs (from 100) at a single location and the jobs that have an average cash compensation level of more than 1.5 times the lower of state per capita income or per capita income in the county where the jobs are located 
• expanded the list of qualifying industries
• applied it to entities with 50 jobs at a single location and the jobs that have an average cash compensation level of more than 2 times the lower of state per capita income or per capita income in the county where the jobs are located
• applied it to entities with 25 jobs at a single location and the jobs that have an average cash compensation level of more than 2.5 times the lower of state per capita income or per capita income in the county where the jobs are located

Market Insider | South Carolina Expands Economic Development Incentives  

Oregon constititionally requires a supermajority for tax increases.

The Oregon Supreme Court said this supermajority does not apply to tax credits, deductions, exemptions etc…

November 2018 Oregorn voters will vote whether to require a supermajority for increasing “state revenue through changes in tax exemptions, credits, deductions or fees”

What group is pushing the measure? Business interests 

Governing | Oregon Voters Could Make It Harder to Raise Revenue

A ballot proposition in Oregon to prohibit new sales taxes on groceries, will effectively prohibit a local soda tax passed by Multnomah County.

Washington State voters will also vote on a ban on new grocery taxes but it will not apply retroactively like the Oregon proposal.

Governing | Groceries, Tampons, Tobacco: Voters Get to Decide What’s Taxed

WHO: Los Angeles voters

WHAT: A Novmeber 2018 ballot proposition to establish a public bank to finance:

• finance housing
• infrastructure
• community development

HOW? Public banks were common, now only the Bank of North Dakota exists.

3 Points from Bank Opposition:

• taxpayer dollars capitalize the bank & that risks tax dollars
• no clarity as to defaults
• startup costs could run into the billions

Governing | The Issues on Local Ballots: Teen Voting, Campaign Finance, Housing and More

WHERE: Indiana

WHAT: Collegiate athletes sued Daily Fantasy Sports in Indiana over using the athletes’ likenesses

WHY? The Indiana Supreme Court found that Daily Fantasy Sports Did NOT support the althetes claim to their sports data and likeness saying:

• “”material that has newsworthy value.”
• the data DFS uses is verys imilar to what appears in news and on websites
• the information is publicly available

Indianapolis Star | Indiana Supreme Court backs online fantasy sports companies in nationally watched case 

• Since 2009 35 states increased employee contribution rates
• Colorado in 2018: raised the retirement age for new hires after 2020 to 64 yr
• Kentucky in 2013: Suspended all COLAs until the fund is 100% funded
• Oregon in 2018: earmarked  alcohol and marijuana and lottery revenues for pensions
• New Jersey in 2017: dedicated all earnings from the state lottery to the public pension fund
• Oklahoma in 2014: tried to move to 401Ks, the compromise that emerged was that new state employees would be moved to a 401(k) plan after November 2015
• 2005 Alaksa switched to 401K styke plans: Public Safety Officers are finding work in other states

Front Line | How States Have Tried To Close Their Pension Funding Gaps 

Louisiana voters in Novmeber 2018 will decide whether to permit Daily Fantasy Sports on a parish by parish basis.

Supporters say:

• this is not gambling. this is entertainment . this is personal choice.
• people are going to do it anyway & the state should get its cut of the proceeds (tax)
• Fairness for Fantasy Sports, the group supporting the proposition, has populist messaging that the state cannot tell us what to do with our money

Opponents say:

• this is gambling
• DraftKings and FanDuel settled with the NY Attorney General over claims that “they employed false and deceptive advertising practices that included misleading players about the likelihood that they would earn a positive return”
• Louisiana Family Forum opposes it
• children must be protected

NOLA | Fantasy sports betting is gambling, which means there are more losers than winners

Sales between January through August hit over $1,000,000,000. The easrliest the state has hit $1 billion in sales.

Tht’s $200 M in tax revenue.

Where is the sales growth?

• edible products
• concentrates like hash oil
• live resin 

What’s the rate of growth on sales?

• 2018 year to date sales up 2.6%
• 2017 sales were up 18.7%
• 2016 sales were up 31.5%

Sales growth is slowing.

Denver Post | Colorado cracks a billion in annual marijuana sales in record time, generating $200M in tax revenue

Looking at Pennsylvania, since the NFL season started Daily Fantasy Sports Revenue has:

• increased 126%
• what does the mean to Pennsylvania coffers?
  • $2,133,714 DFS  in September = $320,057 in state tax revenue 
  • $943,620 in August
• how does PA derive its revenue? the state gets 15% of adjusted revenue

Leigh Valley Live | How much money fantasy sports generated for Pa. once the NFL season started

The anatomy of fantasy sports betting proposition in Louisiana:

• Approval will be parrish by parrish
• After voter approval, the Louisiana Gaming Control Board would make rules for licensing, regulation and set tax rates
• Supporters:
  • Created the Fairness for Fantasy Sports to support the measure
• HB 484 (2018 | LA)

KSLA 12 | Elections 2018: Louisiana voters to consider fantasy sports gaming

Legal Sports Report | FanDuel Creates Advocacy Group To Push For Louisiana DFS Ballot Measure

States taxing services like fitness memberships: WA, TX, UT, AZ, NM, CO, OK, KS, NE, ND, SD, MN, IA, MO, LA, MS,FL, TN, OH, WV, NJ, CT, VT

Netlfix taxes: Chicago, PA, & FL

AZ: A constitutional proposition in Nov. to prohibit taxing services, making it the 2nd state to do so

Governing | A Second State Could Ban Service Taxes

Association of Fitness Studios | Understanding Sales Tax for Fitness Studios

Where:  Utah

The legislative compromise: The Utah Legislature and Supports of Increasing School Funding made a deal that would:

• put a 10cent gas tax question to the voters and then require legislative implementation after the vote
•  the Legislature in exchange:
  • froze the state basic property tax rate for 5 years
  • created a new tax rate for the weighted pupil unit thereby creating a $292 million increase in education funding.
  • if the gas tax is approved, funds would be divded like this:
    • 70% to schools
    • 30% to transportation projects

Park City Record | Ballot question will ask Utah voters if they support gas tax increase for public education funding

WHERE: California

WHAT: November 2018 election in California will include a proposition to split the property tax rolls

HOW would the property tax rolls be split?

• The 1978 cap, Prop 13 would continue to apply to residential property
• The proposition removes the cap for commercial and industrial property
• Exemptions from the split roll would apply to 3 types of property:
  • Small businesses
  • agricultural land
  • up to a half million dollars worth of tangible property

Question answered by the TX Attorney General opinion:  Whether the Teacher Retirement System may invest in indexed universal life insurance policies funded by leveraged premiums.

Answer: Maybe, but it depends on the individual indexed universal life policies

What 2 questions can be asked in the future to find out if TRS can invest in a certain product?

• Is the investment  a security?
  • article XVI, section 67 of the constitution,
    • a security “includes any investment instrument within the meaning ofthe term as defined by” a specified section in one of three statutory sources:
    • (1) the Texas Securities Act;
    • (2) the federal Securities Act of 1933; or
    • (3) the federal Securities Exchange Act of 1934.
  • TEX.Gov’t Code § 825.301(a).5
• Does the investment meet the standards for prudence and overall strategy in the Texas Constitution & statutes.
  • 117.004(b) of the Property Code
  • TEX. Gov’t Code § 825.30l(a)

What would change the answer?  defining an indexed universal life insurance policies funded by leveraged premiums as a security

Texas Attorney General Opinion KP-0220 (2018)

Trib Talk has two parallel pieces on cash bail:

Dallas County’s money-bail problem by an attorney & a faith leader says:

• We agree with the federal judge that halted Dallas Co. cash bail system
• Cash bail is a “destructive and inequitable relic” that should end forever and ever
• ” unconstitutionally and inhumanely punishes the poor”
• paid by people who are not convicted of a crime
• paid by people who are not charged with a crime
• a bail hearing lasts 15 seconds with no attorney present
• these people lose their jobs, homes, and children

Sound familiar? It should. Similar arguments made by right leaning organizations against civil asset forefeiture.

Money bail is essential to criminal justice by United Bail of America says:

• The federal judge in Dallas halted it only because it was halted in Harris Co.
• We have to look at ewhat has happened since this was halted:
  • “Failure-to-appear rates have significantly increased in Harris County”
  • Up to 40% from 8% before
  • 114 who failed to appear had previous criminal records
• New Jersey tried this and they have to round up sexual predators & people who make terroristic threats who are released 

WHERE: Arizona

WHO (Supporters): Arizona Realtors via Citizens for Fair Tax Policy

WHO (Opposition Coalition): 

WHAT: Arizona Proposition 126

• Supporters, Citizens for Fair Tax Policy, say:
  • the goal is to “head off any push to add sales or transaction taxes to services such as veterinarian and health care expenses, and real estate commissions”
  •  bar the state, counties and cities from imposing a new or increased tax on services not already in effect on December 31, 2017
• Opponents say a report from  Grand Canyon Institute says:
  • $250 million hit to the state’s schools starting in 2021
  • 33 to 44 percent cuts in regional transportation
  • Prop 126 is basically “loopholes for lobbyists”

KTAR| via AP | Arizona group says Prop. 126 will hurt education, transporting funding

Texas Public Policy Foundation arguements against local governmental entities hiring lobbyists are:

• its not the lobbyists we have a problem with, its that government should not lobby government
  • “does government itself have the right to lobby?”
• local control can harm state economic interests.
  • “what if local control is injurious to freedom? What if local control hurts the larger state economy?”
• the constitution. government has no rights to lobby. Rights are with the people.

As a bonus: local govenrment lobbying is effective and a good return on investment.

“Spending a few tens of millions to influence how some of that $116 billion was spent appears to be a good return on investment.”

TPPF recommends trying again with the 1997 HB 2501 by Elkins to prohibit local government lobbying.

Texas Public Policy Foundation | Government Spends Millions To Lobby Government–Time To End The Practice

Who: State Representative Gary Elkins

His legislative proposal as his 1st bill of 2019:  

• partial use of the state’s rainy day reserve fund
• use the Rainy Day Funds to help:
  • with Hurricane Harvey recovery
  • down payment for draining down federal funds to get infrastructure moving to prevent future flooding

Community Impact | ELECTION Q&A: Candidates for State Rep. District 135 say what their first bills would be if elected and more

The workers in Kentucky: In 2016, 202 hourly wage positions at Western Kentucky University were moved from university employees with a pension to  Sodexo employees.

These workers previously paid into : Kentucky Employee Retirement System

So, what? The Pension system unfunded liability is further strained with these employees nopt paying into a system but still able to receive benefits.

What key words do I need to know?

• ‘pension orphans,’ employees whose liabilities are left in the system without any cash flow to contribute to them

Lexington Herald Leader | As state agencies privatize jobs, ‘orphaned’ pension debts threaten Kentucky taxpayers

Where: Arizona

What: Proposition 125 on the November 2018 ballot

The Savings: “save taxpayers an additional $275 million over the next several decades.”

the Pitch:

• Replace annual increases with:
• a reasonable, sustainable Cost of Living Allowance tied to the CPI in Phoenix and Mesa

AZ Central | Voters saved public safety pensions. Prop. 125 would do the same for corrections officers

• innate structural disincetive to consider long term pension viability
  • “Political appointees are responsive to constituencies”
  • Elected board members are “tempted to trade pension savings tomorrow for higher salaries today”
• “more worker representation on boards and stronger public unions led to more fiscally irresponsible decisions”
• “Political appointees also tend to favor investing in local industries — whether or not they are actually profitable”
• These incentives “don’t protect employees and taxpayers from major financial risks”

The proposed solutions for Pension Boards:

• require greater financial expertise
• more clearly define fiduciary duties
• “defined-benefit plans a thing of the past would wisely eliminate the need for pension fund boards altogether”

Governing | A senior fellow at the Manhattan Institute and associate professor at the City College of New York-CUNY| How Public Pension Boards Are Making a Crisis Worse

Where: Wyoming

New Wildlife fees: fees on hikers, bird watcher and nature photographers

So how do you get those who don’t fish or hunt to pay?

• create a new recreation stamp
• attach a new fee to the existing conservation stamp
• responsioble agencies would be: Game and Fish & the Office of State Lands and Investment

What do the numbers look like?

• $10 fee for annual access
• revenue dedicated to education

Is this new?

• MT has a $2 conservation stamp with revenue dedicated to its school trust
• the fee does not apply to non-residents thatpurchase short 1-5 day temporary licenses

Casper Star Ttribune | Wyoming Legislature considers fees for hikers, photographers and birdwatchers

• In 2007 TRS Board voted to invest 10% of its assets in emerging markets during a period of economic prosperity
  • One of the investments was a Turkish steel company now “in the crosshairs of President Donald Trump.”
  • The vote opened up investments in these countries:
    • Brazil
    • Russia
    • India
    • China
    • Mexico
    • South Africa
    • Turkey
• Created a structural investment probelm in TRS in that professional investors “can rush in and out of emerging-market stocks when market sentiment shifts”, TRS cannot so easily

The investments have returned 1.1%

Other state pensions did this like NY and CA, what made TRS different? TRS devoted 10% of its assets, in contract CA capped it at 4%

The Street | In Texas, Teachers See Savings Eroded by Bad Bets on Exotic Stocks

California and Lousiana both have property tax reform on the November 2018 ballot. 

California ballot proposition 5 tackles proeprty taxes by:

• allow home buyers who are seniors, disabled or homeless due to natural disaster to pay taxes on only a portion of their new home’s market value
• expands prop. 13, the state’s existing constitutional limit on property taxes
• cities and schools say it will create a first year loss of $150 million in total revenue for schools and local governments across, and th eloss will be cumulative
• Supporters say it frees up inventory to encourag eyounger home buyers and softens the the Prop. 13 moving penalty

Lousiana ballot proposition, Amendment 6, will:

• phase in homeowners’ new property taxes over 4 years
• relief to homeowners who haven’t made any significant improvements & have an evaluation more than 50% higher

California Budget Office analysis on Prop 5 (2018)

Governing | The Week in Public Finance: Amid Rising Home Prices, 2 States Take Property Tax Proposals to Voters

After Puerto Rico’s 2018 hurricanes, utility companies helped rebuild Puerto Rico’s grid. 

Local governments then sought to impose these two taxes on the utility companies:

• license tax
• construction tax

What is the impact of these taxes?

• Florida Power & Light:  $2 million + r $333,000 more in taxes, fees, penalties and interest
• Ameren and the Sacramento Municipal Utility District received bills for nearly $3 million

has this happened on the US main land? Yes, after Hurricane Sandy in NY, but the taxes were waived

How were the taxes covered in emergency services contracts? Written into the contracts that FEMA would cover the taxes imposed

Seattle Times | Utilities that helped Puerto Rico fix power grid now face hefty tax bills

This Novmeber California ballot proposition is asking voters to vote to repeal a gas tax increase.

Polling shows 52% oppose repealing the gas tax increase.

Polling also shows that Republicans do not favor the repeal initiative.

Sacramento Bee | Are you sticking with the gas tax increase? Poll says most California voters now plan to

Recommendations in report:

• pension plan reporting should keep track with the pace of risk
• disclose their net return after fees and include costs like performance fees
• implement stress-test reporting

Pew Report | Governing | Pensions Are Shelling Out Billions in Fees — and It’s Not Paying Off

The new budget coalition in Texas: Conservative Texas Budget

6 point plan:

• Conservative Budget $234.1 billion in All Funds $156.5 in State Funds Based on an increase in population growth and inflation for 2017-18
• Spending Limits for State & Cities  based on last 2 fiscal years and capped at no more than population growth and inflation
• property tax relief automatic local rollback trigger rate at 2.5% and use state dollars to eliminate school maintenance and operations property taxes
• No margins tax
• Tax relief Fund  to return tax dollars
• zero-based budgeting and promote efficiency audits to eliminate government waste

Coalition members:

*Americans forProsperity–Texas            
*Americans for Tax Reform
*Citizens Against Government Waste        
*Grassroots America—We the People
*Heartland Institute                                 
*Heritage Alliance                       
*Institute for Policy Innovation                  
*Lone Star Policy Institute 
*National Taxpayers Union                      
*Our America Initiative
*R Street Institute                                     
*Reason Foundation 
*State Budget Solutions                                     
*Texans for Fiscal Responsibility 
*Texans 4 Truth                             
*Texas Eagle Forum           
*Texas Public Policy Foundation               
*Young Conservatives of Texas 

What question is the Texas Attorney General answering? 

Where: Oregron

Why heavier refillable beer bottles?  Oregon launched the first statewide refillable bottle system

Future Procurement opportunities:  statewide infrastructure for collecting bottles

Business opporunities in a refillable bottle system:

• producing larger refillable bottles
• recycling glass for the larger refillable bottles
• collecting bottles

 NPR | Oregon Launches First Statewide Refillable Bottle System In U.S.

A free market think tank in Ohio is supporting Educational Savings Accounts (ESAs) because ESAs will:

• help low income and minority students
• will close the achievement gap
• more parental control

News 6 KPVI | Ohio group says education alternatives needed to close achievement gaps

The Houston Chronicle Editorial, Texas keeps slurping up local property taxes [Editorial], offers these points about property taxes:

• the state is “sucking up” local property taxes
• why? TEA says the sate will spend $3.5illion less in General Revenue and recoup the funds with local proeprty taxes
• more state dollars should be spent locally for school funding
• The Governor isn’t focused on it, he wants to constitutionally prohibit an income tax
• The Lt. Gov. isn’t focused on it, he is actively talking about the bathroom bill

State: Nebraska

The revenue being eyed for a property tax reduction:

• Cutting all sales tax exemptions
• State tax incentives for business development and expansion in the Nebraska Advantage Act

Beatrice Daily Sun | Sales tax exemptions eyed to fund Nebraska property tax relief. 

Minnesota Legislature & 10 other states are considering an opioid distribution tax. 

The states:

• Minnesota
• California
• Delaware
• Iowa
• Kentucky
• Maine
• Massachusetts
• Montana
• New Jersey
• Tennessee
• Vermont

NY’s opioid tax became effective July 1st.

Kaiser Health News via Governing | Opioid Tax Proponents Pin Hopes on November Elections

West Central Tribune | State Legislature Should Oppose Opioid Tax

Texas Public Policy Foundations offer the following recommendations for local pension systems:

• Restore local control of local retirement systems to allow for greater local oversight

These numbers were repeated in TPPFs supporting information: 

TPPF Legislator’s Guide to the Issues 2019

Texas Public Policy Foundation recommends:

• Freeze enrollment in the current defined benefit system
• 401K system for new hires and non-vested state employees
• Lower assumed rates of return to “realistic” rate of return
• No additinal state funding for pensions without reform

TPPF Legislator’s Guide 2019

WHERE: Maryland

WHAT: Cybersecurity Investment Incentive Tax Credit  SB 228 (2018 | MD)

HOW does it work? To attract more capital the tax incentive would:

• 1/3 tax credit to invest at least $25,000 in a cybersecurity business with fewer than 50 employees

• If the business receiving the investment is located Allegany, Dorchester, Garrett, or Somerset counties a credit of 50%

• Permitts convertible debt as a form of investing.

• Applications must be submitted 1 month ahead of the investment

•  $250,000 cap for an investor within a fiscal year.

  Technically Baltimore | Maryland just opened up a tax credit for cybersecurity investors

In 2018, Wyoming passed legislation to:

• freely trade cryptocurrency
• exempt from property tax virtual currency
• corporations can use blockchain technology to store company records
• “initial coin offerings” are legal

Rapid growth in cryptocurrency and blockchain in Wyoming also brings a rise in :

• fraud
•  hacks
• illegal activity

The solution: include enforcement mechanisms and consumer safeguards in legislation.

Wyoming Tribune Eagle | Risks of unregulated blockchain laws in Wyoming may be overlooked

WHERE: Oklahoma

WHAT: New Oklahoma Rural Association

WHO are members of the ORA?

• energy
• agribusiness
• manufacturing
• financial services
• equipment
• utilities sectors
• including associations like: Farm Bureau, American Farmers and Ranchers, the Cattlemen’s Association
• corporations
• &  landowners.

Additional Issues they will engage the Legislature on:

•  education
• health care

The Oklahoman | New Oklahoma Lobbying Group to represent rural communities

Refreshing our recollection. After the US Supreme Court decision in Wayfair, the Texas Comptoller provided initial guidance that:

• Rules will not include any retroactive application of the new law to remote sellers that have no physical presence in Texas
•  target effective date for rule amendments: Early 2019
• Seeking input from: 
  • interested parties
  • retailers
  • remote sellers
  • trade associations
  • the Comptroller’s Taxpayer and Business Advisory Group
• consult with local taxing entities on impact to local revenues

Texas Governor Greg Abbott proposes a constitutional amendment prohibiting a state income tax by:

• wholly banning a state income tax
  • currently voters may approval a state income tax
• require a 2/3 vote by both the House and Senate
• and require approval of a majority of voters

Ft. Worth Star Telegram | Gov. Greg Abbott wants to change the Texas Constitution to ban the possibility of income tax

See this example: HJR58 by Schofield (2017 | TX) 

The Tax Foundation says that states like TX, PA, CA, FL, IL, VA and NY need to take the following legislative actions to impose an online sales tax:

• Complete the requirements established in Wayfair
• Adopt uniform definitions
• Simplify sales tax systems
• Allow sellers to register with SSUTA rather than requiring state-by-state registrations
• Limit multistate audits
• Alow SSUTA service providers to work with their state
• Provide taxability, exemption, rate, and boundary data for download on their websites

Tax Foundation | Post Wayfair Options for States 

The problems identified by the Texas State Auditor related to these 2 contracts:

Tembo contract.

• Inappropriately requalified after disqualification
• Advanced proposal to the final round with a lower score than other proposals
• Awarded contract without an explanation when another vendor with the same final score

Texas SAO | Selected Contracts at the Texas Education Agency | Report No. 18-044

California Legislature passed AB 987 (2018 | CA) that streamlines building a new stadium for the Clippers & construction by the Oakland A’s by:

• In exchange for tort reform measures to make stadium building quicker,
• sets standards to limit the number of vehicle trips to the stadium by establishing transportation alternatives
• requires litigation to be resolved within 270 days of the filing of the certified record of proceedings

NBC Sports | Pro Basketball Talk | State legislature helps Clippers take next step toward new home arena 

San Francisco Chronicle | Legislature passes bill to help Oakland A’s streamline construction of a Howard Terminal stadium