Finance & Revenue

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

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

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

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

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

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

What the Minnesota bill does:

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

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

State: North Carolina

Highlights from the bill:

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

North Carolina HB 279 (2017)

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

State: North Carolina

How has refinancing debt helped pensions in North Carolina:

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

Governing | How Refinancing Debt Can Help Pensions

State: North Carolina

The 2017 Bill: HB279

The regulatory structure for new fantasy sports regulations:

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

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

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

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

KMOO | Chairman Flynn files Dallas Pensions Bill

State: Alabama

The Supporters of Daily Fantasy Sports in Alabama Say:

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

The Opponents of Daily Fantasy Sports in Alabama Say:

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

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

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

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

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

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

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

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

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

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

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

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

State Financial Annual Audit from the SAO:

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

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

Courthouse News Service | Lawmaker Wants Public Info Restricted to Texans

Texas House Bill 526 (2017) 

State: South Carolina

The Pension Fix that unanimously passed the South Carolina Senate: 

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

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

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

Here’s Christie’s plan:

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

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

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

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

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

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

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

That caption has too many words. 

What you need to know:

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

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

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

The 2 step argument:

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

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

Josh B McGee | Transition Costs Myth

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

The TPPF recommendation #1: debt transparency.

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

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

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

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

TPPF | FRAGILITY OF TEXAS’ STATE DEBT AND PUBLIC PENSIONS

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

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

The State: Washington

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

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

KNKX | Education Plans Move Forward In Washington Legislature

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

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

TPPF | Policymakers Guide to Corporate Welfare

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

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

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

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

Rio Grande Guardian | Perryman: Killing the Goose

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

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

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

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

The State: Florida

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

What the bill does:

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

The Treasure Coast editorial opposes the bill for these reasons:

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

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

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

Of procedural notes:

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

Mississippi House Bill 967 (2017)

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

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

The state: Oregon

The coffee tax: 5 cents per pound of wholesale coffee

The education program to fund: 

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

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

CBS News | Oregon legislature considers coffee tax, officials say

The Pension Affected: Omaha, Nebraska

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

The reasons police & fire oppose the switch:

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

Nebraska LB 30 (2017)

KMTV 3 | Omaha fire and police union against pension bill

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

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

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

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

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

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

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

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

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

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

New Jersey is considering fantasy sports legislation which would:

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

NJTV | Move to Regulate Fantasy Sports in New Jersey

Which Wisconsin organization opposes fantasy sports? Citizens Against Expanded Gambling

What do they say against fantasy sports regulation? 

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

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

Wisconsin Public Radio | Wisconsin Lawmaker Plans Fantasy Gaming Regulations

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

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

Wyoming HB 236 (2017)

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

The state treasurer: South Carolina State Treasurer Curtis Loftis

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

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

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

What did the Legislature do?

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

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

The right: Texas Public Policy Foundation

The 3 issues raised about Tax Increment Reinvestment Zones:

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

TPPF | Tackling Tax Increment Reinvestment Zones 

Where: Nevada

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

What pension beneficiary information is being sought? 

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

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

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

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

Governing | Judge: Nevada Must Release Pension Recipients’ Names

In KP-0131, the Attorney General opines on whether: a municipality’s authority to use revenue from its local hotel occupancy tax to fund a feasibility study for a performing arts center as well as the construction, operation, and maintenance of the center 

What city triggered this? Lakeway

What’s the answer- aye or nay?  Probably Yes, if the 2 following things are done by the governing body of the local government:

• determine that the expenditure directly guides or manages tourists to the municipality for pleasure, recreation, education, or culture 
• determine that it fulfills one of the 11 permsisible uses in Tax Code  § 351.IOI(a)(l)-(11) 

Statesman | AG opinion confirms legality of Lakeway’s use of hotel occupancy tax

the law’s background: In 2014 the Ohio legislature passed a law that allows current pension benefits to be reduced, if it will improve the financial health of the fund.

The use of the law: Cleveland’s Iron Workers Local 17 Pension fund will cut benefits on average 20%

What pension beneficiaries say: Some say their benefits will be cut 50%

St. Lois Dispatch | In unprecedented move, pension plan cuts benefits cuts for retirees

Washington Post | In unprecedented move, pension plan cuts benefits promised to retirees

The New Jersey Legislature, in working through regulating fantasy sports,  seeks to impose either:

• a 9.25% gross revenue tax imposed quarterly
• a 10.50% gross revenue tax imposed quarterly.

Other regulatory info from the New Jersey proposals:

• The regulating agency: Division of Consumer of Affairs
  • what else does the Division of Consumer Affairs regulate? casino licensees and racetracks

AP via Washington Times | Lawmakers advance measure to regulate daily fantasy sports

North Jersey | Legal expert backs NJ daily fantasy sports bill at Assembly hearing

Meanwhile down South in Mississippi, lawmakers seek to impose an 8% tax on revenues.

Other regulatory info from the Mississippi proposal:

• regulatory agency: MS Gaming Commission
• location of fantasy sports betting: online or in casinos
• requirements on operators: background check, state license & annual audits
• requirements on participants: 21 years of age

Gaming Today | Fantasy sports betting operators could soon be taxed 8 percent on Miss. revenue

Deep in Georgia the tax rate would be 6%.

Regulatory requirements in Georgia include:

• consumer protections
• annual registration fees of $10,000 to $50,000 depending on size

Georgia’s HB 118 (2017)

Bloomberg Weekly State Tax Report | Georgia Moves to Legalize, Tax Fantasy Sports

In the Great Plains, Nebraska “tax” rate will be 6%.

Regulatory requirements in Nebraska would be:

• a tax/fee paid annually on the gross revenues at 6%
• licensing and regulation by Department of Revenue
• 19 year old age limit
• annual audits

Nebraska LB469 (2017)

Scotts Bluff Star Herald | Proposed bill would regulate fantasy sports contests

The City: Jacksonville, FL

The deal: The City of Jacksonville is offering firefighters a deal to put new hires in a 401K system and allow up to 8% of the 401K contributions to be put into a guaranteed lifetime annuity with a 25% match from the city

The benefit to the city: the risk of an unfunded liability shifts from the City to the insurance Comapny offering the annuity

Florida Times Union | City offers more concessions in bid to close out pension talks

What entities are behind this novel pension fund management fee arrangement? TRS & Albourne Partners

The fee structure has a catchy name: 1 or 30

How it works: The investor (TRS) gets 70% of its economics from its hedge fund investment with management fees getting paid back through a discount to performance fees if the fund fails to perform in a given year

What’s the maximum fee? 30% of the performance after benchmark minus 1% management fee

Institutional Investor | New Fee Structure Offers Hope to Beseiged Hedge Funds

Florida Legislature is trucking along with new fantasy sports bill, here’s what you need to know to be up to speed:

• Its tucked into a broad bill that includes lottery point of sale terminals, an agreement on tribal gaming, and fantasy sports
• Defines fantasy sports as participants using skill in the fantasy sports contests
• Prohibits a tie to live pari-mutuel events.
• license fee of $500,000
• rule making and enforcement runs through the Office of Amusements in the FL Department of Business and Professional Regulation

Florida Senate Bill 8 (2017)

Florida Politics | FanDuel calls on Florida fans to support fantasy sports

The dark store dilemma:  Big box retailers seeking a reduction in property appraisals by using comparable vacant properties for price comparison.

The legislative solutions: HB 182 by Bernal & HB397 by Bernal

• HB 182 study the economic impact of not having sales price disclosure
  • San Antonio claims an economic hit of $275 million in tax revenue over the next five years if big box retailers succeed
• HB397 mandatory sales price disclosure

Texas Public Radio | The Source: How Can Texas Defend Itself Against ‘Dark Store’ Tax Loophole, Lawsuits?

informed:intel on October 5, 2016:

What’s a dark store appraisal? On 7th of September we talked about how Michigan and other states experienced large big box retailers reducing their property appraisals by comparing the store front to what an vacant store front would garner on the open market.

First came Dallas.  The Dallas Morning news the following week talked about dark stores.

Just in time for Halloween, the spooky dark store arrives in San Antonio. 

Let’s look at the Lowe’s plight in Bexar County:

The assessed value: $82/sq. foot

Lowe’s dark store retort: $20/sq. foot (the value of empty stores)

Bettencourt comments: 

• Dark store strategy is legal
• Texas doesn’t have legal protections against it
• Its comparable to the Valero vs. Gavleston County Appraisal District suit before the Texas Supreme Court

San Antonio Current | Big Box Chain Brings “Dark Store” Tax Dodge to San Antonio

The vitcims of tobacco smuggling:

• Consumers, “who pays full price for the cigarettes”
• Texas Tax Coffers/Taxpayers – no Texas tax revenue is collected on the sale

Houston Chronicle | Quarter of Texas cigarettes are from smugglers avoiding taxes

informed:intel on January 19, 2017:

The Tax Foundation  ranks the states based on the portion of cigarette smuggling in comparison to the state tobacco taxes. How the states measure up:

• #1 NY has 55.4% of the cigarettes consumed, are smuggled cigarettes
• #10 TX has 25.9%of the cigarettes consumed, are smuggled cigarettes
• In 2013, MA raised its cigarette tax by $1, smuggling rate increased by 12% t 29.3%, making it #7
• TX smuggled cigarette rate has increased 244% since 2006

Chief Operating Officers are the new cool title for private sector solutions for state government.

Where are we finding COOs in state government? Governor’s Office, Executive Branch

The purpose of the COO: Oversight of state agencies and boards to improve efficiency & management by:

• ensuring that a governor’s policies are executed
• advocating for improved customer service
• making sure that departments work together
• targeting unnecessary rules and regulations
• troubleshooting problems
• figuring out how people, processes & technology can be leveraged to deliver better results

States with COOs: TN, AZ, RI

What type of person has been filling COO shoes? Private sector C suite executives

Governing | The Chief Operating Officer That Every State Needs

Who:

• Larry Taylor (chair)
• Paul Bettencourt
• Brian Birdwell
• Kelly Hancock
• Chuy Hinojosa
• Kel Seliger
• Royce West

What:

Make recommendations for the replacement of Texas school finance system that is:

• less complicated
• innovative
• good for students

Senate Finance | Organizational Meeting 1.23.17

Public Private Partnership (P3) Benefits:

• leverage advanced technology and innovation via the private sector
• potential to bring greater efficiency to an operation
• 2016 the GFOA issued an advisory urging caution before entering into a P3

P3 Concerns:

• complete project costs and risks not known
• equity issues related to service provision and fees
  • Ex: New Jersey city engages in P3 for water service.
    • City gets immediate investment in its broken water system.
    • Locked in low water rates were not given to residents by the Private Entity
    • Citizens conserved too much water which reduced revenues
    • Revenues fell below the contracted rate, leaving residents with a 28% increase in water rates.

Tools state & local governments need for effecitve P3s:

• staff and outside expertise to develop and manage P3s

The most popular local governmental entity funding mechanism: Tax-exempt municipal bonds which accounts for 90% of local financing

Governing | The Hidden Risks of P3s

The Tax Foundation  ranks the states based on the portion of cigarette smuggling in comparison to the state tobacco taxes. How the states measure up:

• #1 NY has 55.4% of the cigarettes consumed, are smuggled cigarettes
• #10 TX has 25.9%of the cigarettes consumed, are smuggled cigarettes
• In 2013, MA raised its cigarette tax by $1, smuggling rate increased by 12% t 29.3%, making it #7
• TX smuggled cigarette rate has increased 244% since 2006

State: Massachusettes

The tax discussion of daily fantasy sports: Massachusettes panel wants to get ahead of the curve & tax daily fantasy sports before its the go-to fantasy sports game

News 22 WWLP | State lawmakers consider regulations, tax on daily fantasy sports companies

To fund $60 million in educational savings accounts, the Governor of Nevada is calling for a 10% excise tax on recreational marijuana.

Governing | Nevada Governor Pushes Pot Tax on Legislators

Las Vegas Sun Times | Sandoval announces new marijuana tax, seeks $60 million for school vouchers

What is a certificate of obligation? ” local governments can use to fund public works without voter approval” (the lead sentence)

Where are certificates of obligation codified? Texas’ Certificate of Obligation Act of 1971

Goals of certificates of obligation?

• a quick tool for cities to fund projects with important flexibility
• for instances after a disaster or a court ruling

What entities can use certificates of obligation? 

• Cities
• counties
• health or hospital districts

What can local governments fund with COs?

• construction
• demolition
• restoration
• purchase materials, supplies, equipment, machinery, buildings
• purchase land and rights of way
• pay for related professional services

How does the funding mechanism work? 

• terms of up to 40 years
• usually are supported by property taxes or other local revenues

Have certificates of obligation been reigned in? Yes, in 2015 the Legislature added limitations

Fiscal Notes | Texas Comptroller | CERTIFICATES OF OBLIGATIONA Flexible Funding Tool for Local Projects

The State: Kansas

The tax deal between Kansas and AirBnB: Airbnb will automatically collect & remit the same state & local taxes as a hotel/motel

Will fees to property owners increase? No.

How many statewide deals has Airbnb entered into? 15

• Alabama
• Arizona
• Connecticut
• Florida
•  Illinois
• Kansas
• Louisiana
• North Carolina
•  Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• Utah
• Vermont
• Washington

Airbnb agreements with large cities:

• San Francisco
• Portland, Ore
•  Philadelphia
• Phoenix
• San Diego
• San Jose, Calif.
• Washington, D.C.

Governing | Airbnb’s Tax Deal With Kansas May Be Model for Midwest

The pension: CALPERS

The amount of investments CALPERS wants as internal? 75-80% of its $306 Billion

How will Fees be cut? By moving fund management inside CALPERS and not hiring outside fund managers

Bloomberg Markets | Calpers May Move Up to $30 Billion In-House as Pension Cuts Fees

The Background: The  Montrose Municipal Management District imposed $6.6 Million in unlaw assessments. 

What should a district do to protect itself?  Ascertain that the required property owner signatures are from the mandated list of property owners. State law limits signatures to commercial property owners. The Montrose MMD includes residential property owners. 

How could Montrose Fix this issue with its current petition?  Amend the law requiring that the MMD must be created by only commerical property owners.  

Houston Chronicle | Montrose Management District faces new lawsuit

This week:

• Hawaii grapples with a $12 B pension shortfall
• Republicans in Oregon want pension reforms, Democrats may not allow hearings. Reforms include:
  • increased contribution rates
  • change benefit calculations by adjusting the time period to the last 5 years and capping the top salary for benefit calculations
• Michigan Gov. wants to move new teacher hires to 401Ks
• In Illinois, Chicago’s pension reforms to require new hires to contribute more received legislative approval but are likely to be vetoed
  • The IL Governor wants “real pension reform”
• California CALPERS lowers its rate of return from 7.5 to 7%

• #28 Texas where federal aid represents 31.8% (as a percentage of state GR)
• #1 Mississippi 40.9%
• #2 Louisiana 40.1%
• #3 Tennessee 39.9%
• #4 Montana 39.1%
• #5 Kentucky 38.5%
• #46 Hawaii 24.8%
• #47 Nevada 24.8%
• #48 Connecticut 24.6%
• #49 Virginia 22.8%
• #50 North Dakota 16.8%
• #43 California 26%
• #22 Florida 33.2%

What’s 60% of this federal aid? Social Security & Medicare

Tax Foundation | Which States Rely the Most on Federal Aid?

City: Philadelphia

The soda tax: A local option election to tax  1.5 cents per ounce for surgary drinks. Also known as- sin tax, sugar version. The heathens…

Where did the implementation go awry and anger the sinner citizenry?

• Some stores stopped selling all drinks with sugar
• Almond milk gets the tax
• Soy milk gets the tax
• Gatorade & propel water also taxed
  • A $5.99 case of propel water added a $3.00 tax
• The tax also applies to Diet Coke and other diet drinks
• Some stores implemented a 100% tax on juice, mineral water & hot sauce
• Sports drinks are now more expensive than beer

Grub Street | Philadelphians Are Throwing a Fit About Their New Soda Tax

Tax Foundation | Sports Drinks Are Now More Expensive than Beer Thanks to the Philadelphia Soda Tax

Governing | Is a New Battle Brewing Over Soda Taxes?

• Florida’s HB 149 was filed by a Republican.
• Moves fantasy sports outside gambling prohibitions and regulations
• 2 Republicans tried the same approach in 2016 to no avail
• What caught up the last fantasy sports bills? Fantasy Sports bill got tangled in a renewed blackjack agreement with the Seminole Tribe of Florida

Calvin Ayre.com | Fantasy sports bill once again filed in Florida

State: Montana

The bill: Senate Bill 25 (2017) 

What are the parameters of minimal value fantasy sports? 

• $35 entry fee
• Prizes are things like T-shirts
• The duration of the fantasy league isthe length of the season
• No charges for draft picks or trades

Is there rule making for the minimal value part? yes at the Montana Department of Justice, Gambling Control Division

Is there more in this fantasy sports bill than just fantasy sports? yes, non profit raffles, , which could require registration by the state if th ebill is amended

Missoulian | Bill would allow for ‘minimal’ payout online fantasy sports

The state: Arizona

The school finance background: In late 2015, the Arizona legislature passed a reform package in response to a 2014 AZ Supreme Court cases requiring an influx of education funding of $331 million a year

The numbers behind the AZ school finance deal:

• $3.5 billion over 10 years, with annual increases of  $300 million to $400 million
• Has to be approved by voters
• $4.5 billion is the total AZ education budget

The response from the business community: Arizona Chamber of Commerce and Industry called it a huge win:

• “This is probably the most aggressive funding plan on the table in the country,”

AZ Republic | Funding deal doesn’t fix all Arizona school problems

The state: Kansas

Was KS under court order? Yes

 Would schools have closed but for the legislation? Yes

Was the KS Legislature in special session? Yes

How does the Property Tax Cut Work in Kansas? $38 million in new equity dollars to school districts, which will go to property tax relief.  Only lower wealth districts would trigger a property tax cut due to increased funding.

New York Times | Kansas Lawmakers Pass Bill in Bid to Stop Court From Closing Schools

Lawrence Journal World | Kansas Legislature passes school finance bill; Brownback says he will sign it

Lawrence Journal World | Latest school funding changes to lower property tax in Lawrence

Topeka Capital Journal | Legislature passes school finance plan to wrap special session

Why did the Nevada State Supreme Court find educational savings accounts unconstitutional? The funding mechanism was unconstitutional because it took money away from schools

Was there a way the Court said educational savings accounts could be funded? If there was a separate funding mechanism that was not removing  funds from public education

When did this happen? September 2016

How would have  Nevada’s educational savings accounts work?

• Parents would have been able to access up to $5,000
• The $5000  would have otherwise been distributed to their child’s public education
• parents could put the $5000 toward private education and other academic expenses

Jurist | Nevada top court rules school funding system unconstitutional

CATO Institute | Nevada Supreme Court: Education Savings Accounts Are Constitutional, Funding Mechanism Isn’t

Las Vegas Review Journal | Nevada Supreme Court strikes down school choice funding method

The House Committee on Pensions 2016 Interim Report makes the following recommendations:

• Recommends that “all pension plans work with their respective cities in order to negotiate and come to an agreement that works for both the members of the funds and the taxpaying citizens of those cities while it is still financially feasible “
• Recommends “that missed payments and contributions can be made up through use of appropriate instruments such as pension obligation bonds and/or one time payments “
• “Recommend[s] that a combination of pension obligation bonds and excess bonding capacity be used to make up for historic shortfalls in actuarially recommended contributions”

The report concludes with this message:

• Cities must act now
• If cities don’t act “severe actions” will be required
• The solution is not “simply changing the type of plans” from defined benefit to defined contribution  

The report also does NOT recommend the following:

• one time State payments for historic pension shortfalls

House Committee on Economic & Small Business Development 2016 Interim Committee Report  offers these recommendations:

• Increase outreach and tools available to small businesses
• Examine “economic incentive programs for their potential to better meet the needs of rural and small businesses“
• Chapter 313 Agreements
  • “recommends a closer look at Type A and Type B agreements to ensure that all Texas communities that choose to use this tool, are able to do so in the most effective manner possible. Additionally, the committee recommends Type A and Type B agreements be examined by the EIO Board to better allow the Board to take a comprehensive look at economic development in Texas.”
• Enterprise Fund
  • Allow for a supplemental awards or recipients who can demonstrate an investment in Texas businesses
  • “Recommends using the Enterprise Fund to reward large companies doing business with Texas based companies to potentially provide additional support for smaller businesses and those located in rural areas.”
• Venture Capital
  • “explore ways to increase access to capital and enhance the venture capital climate for small businesses in Texas “
• ​Governor’s University Research Initiative
  • Recommends including rising star researchers
• ​ Research and Development (R&D) tax credit
  • ​Recommends continuation
• Sharing Economy
  • ​Recommends statewide sharing economy policies for a stable environment for emerging industries & adequate consumer protections 
• Streamline Application process
  • ​Recommends 1 single application for economic incentives  

Maryland Comptroller’s fantasy sports regulations became official this week.

What’s the background of fantasy sports in Maryland?

• The Attorney General thinks there are good arguments about legality on both sides, and raised questions about whether fantasy sports were legal without a constitutional amendment
• Legislation was recommended, but not passed
• The Comptroller promulgated rules

Here’s the parameters for fantasy sports in the great state of Maryland:

• Users under the age of 18 may not compete in paid-entry contests.
• “Employees, principals, officers, directors or contractors” are banned from taking part in paid contests.
• College sports contests are not allowed to be offered by operators.
• “Experienced players” must be identified by operators.
• Sites must prevent the use of third-party scripts for entering contests.
• Deposit limits for users are initially set at $1,000 and can be increased; credit may not be extended to players.
• Player funds and operational funds must be segregated.
• The books of a fantasy operator must be audited annually by a CPA.

Maryland’s Fantasy Sports Regulations 

Legal Sports Report | Maryland Comptroller Officially Implements Fantasy Sports Regulations

Background:

• In 2012, San Jose Police Pension System faced a $1 billion deficit
• Reform went to the voters, and passed with 70% 

3 Goals of the San Jose Pension Compromise:

• Pension Compromise occurred after the city laid off employees, cut services & raised taxes in an attempt to deal with the fiscal crisis
• Employees will contribute more or opt for less benefits
• New Employees would get less generous benefits

3 Challenges that Emerged:

• Compromised was challenged in court.
  • Courts agreed that the city couldn’t reduce the benefits to current beneficiaries
  • In 2016, a revised compromise was negotiated & was approved by the voters
• San Jose Police Department had an exodus & needs 300 street ready officers
• Business community raised concerns about public safety

3 Goals of the Revised 2016 Pension Compromise:

• Stop the 13th check
• Cut retiree health benefits
• Cut retiree cost of living adjustments

KQED | A Case Study on Pension Reform: San Jose’s Grand Compromise

Houston area pension beneficiaries, who live under pre-1997 pensions, are voicing the following concerns about pension reform:

• Cost of Living Adjustments are the only way retirees can keep up, when their pensions did not provide as great a sum as later pensions do.

The retort: Without reform, the pension system could collapse.

How many are under pre-97 pensions? 640

Houston Chronicle | Pension reform plan has some concerned

• Kentucky. Transparency is the name of the game.
  • Open Records applies to lawmaker pensions
  • WKMS | Pension Transparency Legislation To Return In 2017
• Nebraska. Police and Firefighter pensions in Omaha and Lincoln reforms.
  • Look to move future hires to a cash balance plan, which is a hybrid of a traditional pension and a 401(k)
  • Omaha World Herald | State lawmaker proposes major changes to police and fire pensions in Omaha, Lincoln
• California. Divestment from tobacco.
  • KCRA | California public pension system to sell all tobacco stocks

Some cities, like New York City have private fundraising efforts. The facts about New York’s that’s being replicated elsewhere:

• The Mayor’s Fund to Advance New York City
• 20 year old fund
• public-private model
• Another to help fund exists to fund NYC public schools
• It was replicated in Los Angeles, which in year 2 is set to report $12 million in 2016 fundraising
• Goals: directly support city programs with partnerships as determined by the Fund’s board

Inside Philanthropy | “The Model Works.” A Look at How the Mayor’s Fund for Los Angeles Is Doing

Re-appointed:

• Deborah Hunt
  • Georgetown, TX
  • Serves as Williamson County Tax Assessor-Collector
  • Trenton State College

Fresh Appointments:

• William “Bill” Metzger
  • Sunnyvale
  • Justice of the Peace for Precinct 2, Place 2 Dallas County
  •  Former Chair, Mesquite Credit Union Board of Directors
  • Former Trustee for Dallas Community College 
  • B.A. University of Dallas
  • MBA Texas A&M University-Commerce
• Chris Davis
  • Cherokee County Judge
  • Board member: East Texas Regional Water Planning Group, East Texas Council of Government  & the East Texas Regional Review Committee
  • BA & MPA Stephen F Austin

Governor Abbott | Governor Abbott Appoints Three To Texas County And District Retirement System Board Of Trustees

New Jersey legislators are requiring the state to make payments to the state pension system quarterly. Here’s why:

• Pension system is teetering on insolvency with $44 billion in debt
• Politicians have been raiding the year end payment to the pension, like for Hurricane Sandy, but annually underfunding the New Jersey pension system
• The pension system still needs structural reform

NJTV | New Law Requires State Make Quarterly Pension Payments

The operating expenses of a school, roughly $9000 per student, do not decrease by $9,000 if a student leaves the school.

In Ray Perryman words “Thus, the funding that follows a student can have a proportionally larger impact on the public school left behind, depending on the amount of that funding.”

Ray Perryman | To Choose or Not To Choose: The School Choice Debate

• 256 million domestic visitors to TX in 2015
• 5.2% increase in doemstic visitors from previous year
• 76% is liesure travel
• annual direct travel spending in Texas is estiamted at $72.0 billion per year
• per day travel spending in Texas is $197 million- every day
• 688,000 jobs directly supported
• $128.9 billion in gross product
• 1.4 Million permanent jobs generated by travel and tourism
• $7.0 billion in state tax revenue annually
  • $5.8 billion of this is sales tax
• $3.3 billion in local tax revenue 
  • accounts for $1.2 billion in local property tax revenue
• ISDS receive $675.8 million in tax revenue from travel and tourism

Rio Grande Guardian | Perryman: The Impact of Texas Travel and Tourism

The Court: The California Supreme Court

Did the court require online booking sites to pay hotel/motel taxes? No. The Court found that the online sites were not responsible for the local taxes.

Is it more complicated than that? theoretically, yes. Practically, no.

• The online booking sites are not obligated to pay the tax
•  But, the California Supreme Court agreed with the local governments that the tax should be based on the higher amount paid to the online booking site, not the lower amount paid to the local hotel.

Governing | Local Governments Suffer Tax Blow at California Supreme Court

The Pensions:  Illinois

The pensions are increasing investments with: women and minority owned businesses

The economic impact: 

• 35% of assets are managed by women and minority owned business
• 9.98% posted benchmark-beating returns in the last 5 years, net of fees
• “It turns out that diversity is absolutely good business,”

Crain’s Chicago Business | Public pensions have a ton of leverage. They should use it.

The tax incentives:  $23 million in tax incentives offered to Amazon for distribution centers in Central Texas, including:

• refund 85%of personal property taxes for 10 years
• refund 40%  of real property taxes for 10 years
• partial sales tax refunds for 20 years

Reasons the study says tax incentives were not necessary:

• Texas is paying a company to do what its business model says it has to do- put in distribution centers in areas where customers are concentrated

​The study: Good Jobs First, a national organization that studies economic development. 

San Antonio Express News | Study: Amazon didn’t need $23 million in incentives to open Texas facilities

Colorado Racing Commission approves fantasy sports contests at 9 horse race tracks.

How does horse racing and fantasy sports fit together?  It will “pair daily fantasy sports contests with traditional horse racing odds and terminology”

Thoroughbred Daily News | Colorado Introduces Horse Racing Model for Fantasy Sports

The background of California Pensions:

• Underfunded proposed state ballot pension measures
•  Local pension reforms face ruinous litigation
• Union-controlled California Public Employees’ Retirement System has fiercely opposed pension cuts in bankrupt cities & imposed large penalties on governments attempting to withdraw

• Lower the discount rate to drop funding levels & increase the taxpayer contributions

California Supreme Court is considering whether benefits can be reduced:

• The Court will consider whether accrued benefits can remain unchanged but benefits tied to future work (of existing employees too) can be changed

Sacramento Bee | Two decisions could make big changes in California’s public pension system

Which state: Colorado

Which agency: Colorado Racing Commission

What form of in person fantasy sports is now regulated and where?

• 9 locations of of Mile High Racing & Entertainment throughout Colorado
• the fantasy sports will include professional football, basketball, hockey, baseball and other daily fantasy sports (DFS) contests
• entry fees will be as low as $1

CalvinAyre.com | Colorado regulator OKs fantasy sports operation

Savethepension.com was created by the City of Dallas

The website tells the story of “how did we get here?” which highlights the culprits of:

• DROP payments
• Cost of Living Adjustments that exceed the CPI

Offers a fix with “How are we going to fix it?”  The fix includes:

• Incentivizing financial behavior
• Increased city contributions
• future plan and benefit changes contingent upon:
  •  Members, employees and Dallas taxpayers having a say

1 Pension plan: The Dallas Police and Fire Pension

3 lawsuits: 

• A private citizen suit by the mayor of Dallas
• A decades old back pay lawsuit
• A lawsuit by pension beneficiaries to block a vote on lowering benefits

Why is a decades old back pay lawsuit relevant? 

• Pension officials believe tying to the 2 issues is the city’s strategy
• The back pay lawsuit could require payments of billions from the city

WFAA | Rawlings deamns cease on Police & Fire pension DROP withdrawals 

ABC  via AP | Dallas Mayor Files Lawsuit to Stop Pension Withdrawals

Dallas Morning News | Judge rules Dallas police and firefighters can vote on pension cuts

Amarillo Mayor Paul Harpole makes the following points about SB 2:

• SB 2 is heavy handed & overreaching local government authority
• SB 2 punishes small cities when its real target is big cities
• SB 2 will make it harder for cities to fund vital government services
• SB 2 punoshes cities that have been fiscally disciplined

Amarillo Globe News | Mayor: ‘We’ve already exhibited fiscal discipline’

To meet federal data security requirements in contracts, GSA added Adobe’s data-centric security and electronic signature solutions to GSA’s IT Schedule 70.

Read now what the states will do next.

The key facts from GSA:

• Increased acquisition efficiency for data security and electronic signatures.
• Over $350 million in potential cost savings for the American taxpayer.
• Agencies will be afforded tiered discounts by leveraging the buying power of the federal government.
• Reduced contract duplication and administrative cost with clear Terms & Conditions.
• Enhanced security of government data.
• Users afforded the option to replace paper processes with fully automated electronic signature workflows.

GSA | GSA & Adobe to Deliver Streamlined Data Security, Electronic Signature Solutions for Government

FCW| The Business of Federal Technology | GSA adds data security solutions to Schedule 70

California lawmakers are asking CALPERS to divest from all Dakota pipeline companies. 

California’s Assembly Bill 20

Los Angeles Times | State lawmakers may tell California pension funds to divest from Dakota pipeline companies

What is the Texas Tort Tax? A phrase used by Texans for Lawsuit Reform to the House Committee on Insurance to describe an increase in insurance costs due to storm litigation.

The legisaltive solution: prevent lawyers from storm chasing

Southeast Texas Record | Texas House told mass hail litigation driven by trial lawyers, triggering ‘tort tax’ upon all Texans

• Sen. Bettencourt:
  • “What we see is that values go up and tax rates don’t come down and tax bills go through the roof,”
  • “What happens is, tax bills go up faster than Texans’ pay checks,
• Texas Municipal League:
  • called SB 2 “a direct assault on public safety, economic development, and transportation.”
• San Antonio & Austin mayors:
  • the “true cause of high property taxes are the state’s school financing system and appraisal process.”
• Lt. Gov. Patrick:
  •  “Property taxes are driving people out of their homes and hampering business expansion and growth. It’s time for this to stop.”
• TPPF:
  • “The Property Tax Reform & Relief Act of 2017 promises to completely overhaul a broken system and put in place a series of safeguards to stop tax bills from growing faster than Texans’ ability to afford them.”
• Star Telegram | Bill aims for sweeping Texas property tax reform, relief
• Houston Chronicle | Bettencourt files bill to slash property tax growth
• KSAT | Mayors of San Antonio, Austin oppose proposed tax legislation
• TPPF |TPPF Statement on Property Reform & Tax Relief Legislation

• 22 states review their cities to detect fiscal distress or assess fiscal conditions
• New York’s comptroller reviews city budgets for financial indicators such as:
  • operating deficits
  • year-end fund balances
  • environmental indicators that consider a municipality’s demographics, & property values 
• Nevada formalized a process that cities deemed “fiscal watch” have to appear before a state oversight committee
• Tennessee reviews every local budget for red flag issues like:
  • not enough funds for debt service
  • not complying with state law

SB 200 by Campbell requires the Comptroller to house local governmental entity fiscal and debt information and make it available to the public. The Eyes of Texas are Upon You.

Governing | States Increase Tabs They Keep on Municipalities’ Fiscal Health

The latest city to dabble in a Netflix tax? Pasadena is 1 of 40 California cities considering it

How does a Netflix tax work? 

• Treats Streaming services, like Netflix, as a utility thereby imposing a tax
• For Pasadena, the proposed tax rate is 9.4%

The Opposition: The trade group, The Internet Association

The oppositions argument:

• streaming services are not like a utility
• where does the tax stop? do we tax podcasts and streaming music?

NY Times | California Today: Fretting Over the ‘Netflix Tax’

the cost: $5.9 million is the estimated cost to Amarillo College for participating in East Gateway Tax Increment Reinvestment Zone #2

the benefit: the TIRZ would fund a $15 million sports facility

Amarillo College Board of Regents will vote on January 24th.

Amarillo Globe News | AC regents weigh cost of tax zone

The new fantasy sports outlet: charitable fantasy sports.

How does it work? The entry fee is donated to the charity of choice by the host athelete

Inside Philathropy | Win-Win: How A Former NFL Player Aims to “Gamify” Philanthropy

the city: Lake Forest, IL

name of the fee: a public safety pension fee

how will the fee be collected? Added to water bills

what is the amount of the fee? 

• $10 per quarter for home owners
• $35 per quarter for schools and other commercial property
   

the goal of the fee: cover costs and buy time to develop a long term strategy to address pensions

does the fee require voter approval? No. city council vote is the only required vote.

Chicago Tribune | Lake Forest set to add new fee to help cover pension costs

Have time for 155 pages of the Senate Natural Resources and Economic Development Committee Interim Report? It has 708 footnotes. 708!

Skip the long read, here’s the 7 highlights on economic development:

• School districts should not be able to waive job requirements under Chapter 313
• Control Chapter 313 for depreciating investments
• Property tax reforms, including reduced roll back rates 
• Strengthen Chapter 313 by requiring auditing and eliminating self reporting
• State oversight over local economic development programs with review by the Economic Incentive Oversight Board  
• Lucio wants to see more small town and rural options under Chapter 313 to win large scale employers
• Zaffarini, Hinojosa, Uresti & Lucio say that property tax roll back reforms are outside the scope of the committee.

The Senate Finance Interim Report is available for pleasure reading. If you have a different pleasure reading priority list, here’s what you need to know:

• On the franchise tax: Cutting taxs helps the economy, hurts the budget. 
• On state budgeting: the LBB should release more detailed progammatic information on the state budget.
• On debt: Must be vigilant to control it. Texas should pay down debt when there is revenue to “maximize savings to taxpayers”
• Agency budgets: new buzz words are “incentivize and realize savings to taxpayers”
• Behavioral health: 7 operational recommendations (pg. 70 & 71)
• Sales tax holidays: the economic benefit is not the only purpose behind the sales tax holidays. As long as the sales tax holiday accomplishes its goal, then that’s the metric. 

Senate Finance 84th Legislature Interim Report November 2016 

How did economic development programs end up with new reproting requirements? GASB 77

Which economic development programs will be required to report? The Comptroller points to these programs, with the disclaimer to consult your experts:

• Enterprise Zone Program
• Chapter 313s
• And possibly these too:
  • The Skills Development Fund
  • The Texas Enterprise Fund
  • The Texas Capital Fund Infrastructure Development and Real Estate Programs
  • Franchise tax deductions could trigger GASB 77
  • Local Incentives like Chapters 380, 381, 311, 312
  •  Type A and Type B sales taxes for economic development

What triggers the reporting requirements?

• An agreement
• For a public purpose
• That impacts a tax (not a fee , but specifically a tax)

What is required to reported under GASB 77?

• purpose of the tax break;
• tax being affected;
• dollar amount of taxes;
• the types of commitments made by the recipient;
• provisions for recapturing foregone taxes if the commitments aren’t met; &
• other commitments made by a government in tax abatement agreements, such as the construction of infrastructure assets.

Fiscal Notes November 2016 | TAX INCENTIVES AND GASB 77New Transparency for Tax Breaks

What is the Economic Incentive Oversight Board? Created in 2015 by HB 26 

Refresh your recollection on HB 26: It was one of Chen Button’s economic development reform bills and will:

• Review the effectiveness & efficiency of state incentive programs and funds
• Impacts funds at the offices of the Governor, the Comptroller and the Department of Agriculture
• Recommendations will be given to the Legislature on each program
  
   

Who is serving on the board? 

• Speaker Straus appointed  Jim Goldsworthy of Gainesville
• Governor Abbott appointed Adriana Cruz of San Marcos, Trevor Pearlman of Dallas & Massey Villarreal of Sugar Land
• Comptroller Hegar appointed George Bayoud and D. Dale Fowler
• Lt. Governor Patrick appointed Windi Grimes of Houston & Bill Lavers of Snyder

State #3 to move toward swapping the gas tax for pay as your drive: Colorado

How is Colorado implementing as pay as you? In December Colorado’s Road Usage Charge Pilot Program will begin with 100 volunteers.

What should I know about the pilot program for pay as your drive ?

• 100 volunteers
• no money will be paid for the miles
• it will test the exchange of information of mileage reporting and revenue collection
• 4 month duration

Governing | Should a Mileage Tax Replace the Gas Tax? Colorado Is 3rd State to Wonder

Denver Post | CDOT to test taxing drivers by the mile instead of at the pump

Colorado became the 2nd state, after Nevada, to allow parimutual fantasy sports betting.

Is sports betting legal in Colorado? No.

So how does live betting of fantasy sports work?

• wager at off-track betting institutions
• the best are on professional sports in “a manner that crosses horse racing-style betting and odds with National Football League daily fantasy sports” 

How long has Nevada allowed this? the Nevada gaming commission authorized the first permit in June 2016.

The Gazette | Colorado becomes first state outside of Nevada to allow fantasy football-style pari-mutuel wagering

What did Ashby say about the soon to be released  interim report on TRS?

• “the report contains some options that I do not support”
• “starting point”
• doing nothing would be disasterous
• change is unavoidable

Lufkin News | ASHBY: Homeland Security & Public Safety, and the TRS

South Carolina legislator is proposing a cigarette tax increase to fund the pension system.

The pension shortfall in South Carolina: $20 billion

Are cigarette tax increases enough to fill the pension deficit? No.

4 additional reforms:

• reduce the # of state employees
• increase employee contribution rates
• move new employees into a 401K sytle plan
• use unclaimed lottery proceeds to fund pensions

The Island Packet | Cigarette tax increase considered to save SC’s failing pension fund