Finance & Revenue

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

+26 House: 

• Valoree Swanson
  • Baylor. Concerned Women of America. Real Estate Broker.
• Shawn Thierry
  • Attorney. Howard Univ. & South TX College of Law. Big Borther Big Sisters.
• Mary Ann Perez
  • U of H. Insurance. Former HCC Trustee.
• Jarvis D. Johnson
  • Former Houston Council Member. Restraunteur & Consultant African Trade. Texas Southern.
• Tom Oliverson
  • Anesthesiologist. Home Schools. Baylor College of Medicine.
• Briscoe Cain
  • U of H. South Texas College of Law. Raised working class. 
• Kevin Roberts
  • Texas Tech. Riased by Grandparents in Amarillo. COO Lanier Lawfirm.
• Barbara Gervin-Hawkins
  • Univeristy of Eastern Michigan. Sister of NBA Player George Gervin. Together founded community center and charter school.
• Tomas Uresti
  • Former School Board member. Legal Assistant. Uresti Law Firm.
• Philip Cortez
  • UT Austin. Working on PhD in Educational Administration. Fraternal Order of the Eagles.
• Diana Arevalo
  • Executive Director for an after school affordable music program. Former DNC staff. BBA from UTSA.
• Victoria Neave
  • Attorney. Texas Southern University. Community Service focused on the elderly.
• Lina Ortega
  • UT Austin. Attorney. Helped Created El Paso Co. Code of Ethics. 
• Kyle Biedermann
  • Univ. of South Florida. Small Business Owner. Primary Win touted by Empower Texas.
• Stan Lambert
  • Abilene Christian Univ. SMU. Former Banking Exec. Athletic Director at Abilene Christian. Former School Board Trustee.
• Lynn Stucky (Mr.)
  • Veterinarian.  Kansas State. Former School Board Trustee.
• Mike Lang
  • Grew up on a farm in Illinois. TCU. Retired law enforcmeent officer.
•  Hugh Shine
  • Held the seat 30 years ago. Sam Houston State. Army retired after 30 years of service. Colonel Shine.  MBA Baylor.
• Scott Cosper
  • Former Mayor of Killeen. Former City Council member. Cosper Custom Homes and Construction. Member of the Texas Department of Transportation Policy Board for 16 years
• Gina Hinojosa
  • UT-Austin. George Washington Univ. Attorney. School Board Trustee. 
• Justin Holland
  • City Council Member. Mayor Pro Tem. Realtor.Texas Tech.
• Terry Wilson
  • Combat veteran. Retired from Army after 30 years. Touted by Empower Texas/
• Ernest Bailes
  • Texas A&M. Whitetail deer genetics company founder. Served on an Appraisal Board.
• Jay Dean
  • Former Mayor of Longview. The mayor who paid to stop Ted Nugent from performing a 4th of July concert. LSU.
• Cole Hefner
  • Former Upshur Co. Commissioner. Independent Insurance Agent. Pilot.
• Lance Gooden
  • Will be his 3rd session. UT Austin. Business Development Consultant.

+3 Senate: 

• Dawn Buckingham
  • Volunteer firefighter. UT-Austin. Lake Travis ISD trustee.
• Borris Miles
  • Sam Houston State. Former law enforcement officer. 
• Bryan Hughes
  • UT-Tyler. Baylor School of law. Supported by the Lt. Gov. during the 2016 primary.

Where:  Nevada passed a sales tax exemption for durable medical equipment

The proponents: Medical goods manufacturers

The opponents: Say the the exemption reduces revenues for fire and emergency medical care

Health Care Dive | Nevada passes measure to exempt medical equipment from sales tax

• 51 total bond elections
• 41 bond packages passed (80%)
• 10 bond packages failed (20%)
• Amarillo voters knocked off 5 bonds( municipal facilities, parks, civic center, athletic facilities, and fleets) but passed 2 for streets and public safety.
• The other 5 defeats were in rural areas

Texas Comptroller | BOND ELECTION RESULTS

• School Finance. Texas lags every state in per pupil spending.
• If you increase education spending, you decrease social services spending
• For every $1 in incremental State investment in education returns  $50 additional spending
• For every $1 the state spends on innovative initiatives to reduce hunger, $16 additional economic output
• Texas refuses millions in federal healthcare spending & substantial reform is needed
• Pensions. Must adjust State contribution levels.

PERRYMAN:Time for action in the Texas Legislature

TML’s Executive Director’s op-ed in the San Antonio Express NEws this week lays out the opposition to property tax caps. 

The opponents to property tax caps say:

• Cities only collect 16% of property taxes, school districts need a cap too since schools collect 55% of property taxes
• 16 + 55 does not equal 100%. There are 2,000 special districts that also collect propety taxes and also need a cap
• Capping property taxes at the city level does not solve the problem. the math isn’t there.
• State tax revenues from 2009-2016 have risen more than 2x as fast
• A city property tax cap would cut  economic development spending. 
  • Au revoir to projects like bringing a Toyota plant to San Antonio

San Antonio Express News | Property tax cap: Bad idea and scant tax relief to boot

Comptroller’s Transparency project has a searchable database for all public pensions in Texas.

The pension database offers charts, graphs and visuals good for offense & good for defense.

Here’s the information that’s available by pension:

• pension background: creation, contact information
• pension member information: how many pension beneficiaries
• financials: contributions, investment income, beneficiary payments, administrative and investment expenses
• historical return information
• acturial data and actuarial assumptions.

Comptroller Transperancy | Pension Database

The November 2016 tax election trends:

• Expreimental taxes failed.
  • Carbon tax in WA defeated with 58%
  • Gross Receipts in OR defeated with 59%
  • Payroll & income tax for universal health care failed in CO with 80% opposing it
• Populist taxes on high earners passed in CA and ME.
• Sin taxes pass, unless its the midwest.
  • The soda tax,  passed in Boulder, CO & 3 CA cities.
    • Chicago passed it on November 10th.
  • Tobacco taxes passed in CA but failed in CO, MO, & ND 
• Education sales tax increase fails in OK.
• Transit sales taxes win on the west coast in Seattle and Los Angeles
• Legalizing and taxing marijuana wins  in CA, ME, MA & NV  1 in 5 Americans will now live in a state with legal marijuana.
• Service Sales Tax Prohibition wins in Missouri
• Solar measure fail in the Sunshine state.

Tax Foundation | Guide to Tax-Related Ballot Questions (UPDATED WITH RESULTS)

Governing | The Most Important and Interesting Ballot Measure Results

Chicago Tribune | Cook County Soda tax with Preckwinkle Breaking Tie Vote

Comptroller Hegar highlights the $600 Billion annual trade viaTexas Ports.

The numbers from Texas Ports:

• 29 ports of entry in Texas
• ports support nearly 1.6 million Texas jobs
• ports add $224.3 billion to the gross state product
• $600 billion in total annual trade passes through Texas ports.

Comptroller Hegar | Port Data and Port Tour for November & December 2016

The Texas Comptroller’s State of Texas Annual Cash Report is available. Insomnia is cured.

What’s making waves from the Annual Cash Report?

• Texas doing better than other oil and gas states
• But, Texas still has less cash on hand
• General Revenue fund is down 45.1% from the end of 2015
• Tax revenues down
  • Sales tax revenues down 2.3%
  • Oil and gas revenues down 40.8%
  • Franchise tax revenues down 16.6%
•  Spending is up with Medicaid spending increasing by $4.2 Billion

Houston Chronicle | Texas’ annual cash report shows a depleted state bank account

UPDATE: 64% of Californians said yes to a 3 day waiting period to pass bills & permitting legislative footage to be used in campaigns.

Los Angles Times | Election Results

informed intel on October 18, 2016:

Golden State Prop. Requires More Legislative Transparency. Be Informed Now Before Sunshine Lovers Bring this Home.

California Proposition 54 has a target- the Legislature. Specifically, amendments.

What does Prop. 54 do?

• The public must  have online access to everything the legislature votes on 72 hours in advance.
• Target is the final vote on a bill.
  • A republican Assemblyman supporting the measure wants to get to those amendments that pass bills that weren’t before the chamber.

The opposition: Democratic Party and Labor

The supporters: League of Women Voters of California, California Common Cause, Howard Jarvis Taxpayers Association, California Taxpayers Association, California Chamber of Commerce, Latin Business Association, League of California Cities, California Planning and Conservation League

The Sun | Increase Legislature’s transparency by passing Prop. 54: Jay Obernolte

Yes on Prop 54

No on Prop 54

New York Times | California Today: Combating the Legislature’s ‘Sausage Making Behind Closed Doors’

Which mayor is tying pensions to bankruptcy? Dallas Mayor

Where was this link made? State Pension Review Board meeting Thursday

What numbers are at play?

• Police and Fire Pension System says it needs a city buy-in of $1.1 billion
• The Mayor says that would require a 130% increase in property taxes to increase city revenue to pay for the pension plan
• In 6 weeks this August and September, plan members withdrew $220 million from the pension system in DROP payments.

Dallas Morning News  | Mayor Mike Rawlings tells state board pension crisis could help bankrupt Dallas

• Arizona Proposition 205: Marijuana Legalization
• California Proposition 55: Extension of Temporary Income Tax Increase
• California Proposition 56: Tobacco Tax Increase
• California Proposition 64: Marijuana Legalization
• California Local Measure HH, Proposition V, and Measure 01: Soda Taxes
• California – Los Angeles Measure M; Sacramento Measure B; San Diego Measures A, C, D, and N; and San Francisco Propositions J and K
• Colorado Amendment 69: ColoradoCare Payroll and Income Tax
• Colorado Amendment 72: Cigarette Tax Increase
• Colorado – Boulder Measure 2H: Soda Tax
• Georgia – Fulton County TSPLOST, Atlanta TSPLOST, and MARTA Referendum
• Louisiana Amendment 3: Repeal of Federal Deductibility of Corporate Income Tax
• Maine Question 1: Marijuana Legalization
• Maine Question 2: Individual Income Surtax
• Michigan – Southeast Michigan: Property Tax
• Massachusetts Question 4: Marijuana Legalization
• Missouri Proposition A and Amendment 3: Tobacco Tax Increases
• Missouri Amendment 4: Constitutional Prohibition of Sales Tax Service Expansion
• Nevada Question 2: Marijuana Legalization
• North Dakota Measure 4: Tobacco Tax Increase
• Ohio – Cleveland Issue 32: Income Tax
• Oklahoma Question 779: Sales Tax Rate Increase
• Oregon Measure 26-180 (City of Portland, Multnomah County, Clackamas County, Washington County): Marijuana Tax
• Oregon Measure 97: Gross Receipts Tax
• Texas – Arlington: Ballpark Sales Tax
• Virginia – Fairfax County: Meals Tax
• Washington Initiative 732: Carbon Tax
• Washington – King, Pierce, and Snohomish Counties Regional Measure ST3: Transportation Taxes
• Washington – Olympia Initiative 1: Income Tax

Tax Foundation | Top State Tax Ballot Initiatives to Watch in 2016

The State: Louisiana

The Special Commission looking at state budget, revenue and taxes:  TASK FORCE ON STRUCTURAL CHANGES IN BUDGET AND TAX POLICY 

4 Key recommendations:

• Tone of the study. The study focuses on these terms:
  • “financial crisis”
  • ” inadequate funding”
  • ” irresponsible benefit[s]”
  • “poor investment decisions”
  • “mismanaged”
  • “reckless decisions”
• Proposed solution:
  • The Legislature must give city leaders local control of the police and fire fund
  • The City must take steps to stabilize DROP
  • The City must develop a plan to pay down the pension debt ​
  • The City must adopt a better funding policy
  • Prudent investment policies must be established
  • New employees must be put in a  Defined Contribution or Cash Balance plan
• What happens if there is no pension reform:
  • ​taxes increase
  • wages will decrease for public servants

Laura and John Arnold Foundation Report on Dallas Pensions October 2016

Fox 4 News | Report criticizes transparency of Dallas Police and Fire Pension System

On October 25th, Del Rio’s City Council unanimously voted to create its first economic development corporation.

Del Rio News Herald | City takes next steps in creating economic development corporation

Where: Iowa

Which pensions: Iowa state employee pension & the Des Moines Teacher Pension

Why? Currently teachers in the Des Moines teacher fund cannot transfer their service credit among state pension funds

Details about the 2 pensions:

• Iowa state pension fund is 83% funded
• Des Menoines teacher fund is 100% funded

What benefit to the ISD teacher fund? The 448 from the Des Moines Tacher Fund would be fully funded

The 3 approvals necessary:

• the legislature has to change laws to allow for the merger
• the 2 pension systems have to agree

The Des Moines Register | IPERS mulls $66 million pension merger with Des Moines teachers

The state: Massachusettes

What type of bill created a special commission on fantasy sports? An economic development bill

What’s the deal with this special commission?

• All in the Name: Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports
• Jurisdiction:  regulation of online gaming, fantasy sports gaming and daily fantasy sports, including “economic development, consumer protection, taxation, legal and regulatory structures, implications for existing gaming, burdens and benefits to the commonwealth and any other factors the commission deems relevant.”
  • Specifically excluded from review: the lottery and online lottery
• Membership: 
  • Co-chair by a Sen. & a Rep.
  • Gaming Commission appointee (its Chairman)
  • Senate President appointee
  • House Minority Leader appointee
  • Attorney General appointee
  • appointtees by the Governor, the House Speaker and Senate Minority Leader 

South Coast Today | Experts joining state lawmakers to study online gaming

Sunset Commission has the available ERS decision materials with modifications.

What do I need to know?

• NEW ISSUE. Senator Taylor wants to make sure there is a way to get otherwise confidential retiree information. Currently the information is protected from disclosure.
• MODIFICATION. Chairman Flynn wants to address alternative investment recommendation by:
  • “directing ERS to report the final actual amounts of profit shared for each alternative investment at the conclusion of the investment and
  • direct ERS to make all profit-sharing information readily available on its website “
     
• NEW ISSUE. Sen. Taylor wants 2 taxypaer representatives on the ERS board.
• NEW ISSUE. Chairman FLynn wants to require the Gov. appointee to the ERS baord to be an active retiree with a background in health insurance, employee benefits, investments or a related field
• NEW ISSUE. Sen. Schwertner wants ERS to adjust actuarial assumptions every 4 years instead of every 5 years
• NEW ISSUE. Sen. Schwertner wants ERS Board to approve every investment over $100 million
• NEW ISSUE. Sen. Schwertner wants ERS 2017 audit to include best practices in inesment decision making, including:
  • the composition of its internal investment committees,
  • investment authority,
  • veto authority, and
  • board oversight and use of the Investment Advisory Committee. 

In a surprise to no one, Texas school fiannce system is potentially facing conflicting court rulings, attorney general opinions, school district actions, and TEA commisioner related statutes. 

Its a field of dreams for education law attorneys. 

Commissioner Morath wants the Attorney General to answer these questions:

• Must the Commissioner of Education, in computing state funding for school districts receiving ASATR, recognize and use LOHE that, under the analysis in A.G. Op. No. KP-0072 (2016), were not authorized to be adopted?
• Alternatively, in light of A.G. Op. No. KP-0072 (2016), must the commissioner disregard a local change to the homestead exemption for the purposes of determining ASATR even if the change has not been nullified through an administrative or judicial process?
• Does the answer change if the school district modifications to the local option homestead occur prior to or after the approval of the constitutional amendment by voters on November 3, 2015?
• If a court determines that the law prohibiting the modification of the LOHE meets constitutional muster but the court only provides prospective relief, must the commissioner withhold the funds to the district or does the commissioner’s duty to make the adjustment apply regardless of whether the underlying action was done illegally? 

TEA Commissioner Morath Attorney General Opinion Request KP-0137-KP

Which state: Alaska

Who wanted pension obligation bonds in Alaska? Governor Bill Walker intended to have the state offer bonds for sale to cover a multibillion dollar budget deficit in Alaska

Who stopped the Governor from proceeding? The Alaska Senate Finance Committee

What argument did the Senate Finance Committee offer to stop the sale of pension bonds? 

• Senate Finance members objected to the state taking on more debt
• + 
• S&P Global Ratings warned that Alaska credit rating  would be downgraded

Reuters | Alaska governor halts sale of pension obligation bonds

Take aways:

• Texas Public Policy Foundation’s says it is unfortunate that Houston City Council voted to  approve the Mayor’s Pension Reform Plan
• TPPF says it is unfortunate for 2 reasons:
  • the reform “does nothing for local control”
  • the vote shows that city council members “are not serious about making needed structural changes [to the pension systems]”

TPPF Statement on Houston City Council Endorsement of Pension Reform

The Dallas Police and Fire Pension Board has approved these pension reforms:

• Dallas will contribute $1 billion
• Increase contribution rates for police and fire personnel who are not in DROP plans from 8.5% to 9.0%
• Increase contributions of active police officers and firefighters who are in DROP would rise from 4 percent to 9 percent
• Dallas will increase its contribution  from 27.5% to 28.8%, highest allowed by statute
• Cost of Living Adjustments drop significantly

What’s required to move the reform forward?

• 65% of plice and fire fighters must approve the deal
• The reforms cover 55% of the funding shortfall, the remainder will be covered by taxpayers
  • Most likely funding source: a bond proposal

WFAA | Dallas Police and Fire Pension Board approve plan to help failing retirement fund

How did fantasy sports regulations begin moving in New York? A letter from constituent in Queens.

Was this consituent actively interested in government before this? No. In his words, “I’ll be completely honest with you — never,”

How did this gy who had no interest in govenment get connected with his legislator? Fantasy sports operators had proactively encouraged he visit a website, FantasySportsForAll.com

What was the legal environment in New York? The Attorney General had actively pursued comapnies as operating illegal gaming operations

What did the strategic plan include? Advertising and “a mix of tech-savvy guerrilla campaigning and good old fashioned celebrity hand-shaking”

New York Post | Meet the man who saved fantasy sports in New York

Texas Public Policy Foundation put out an October 2016 Policy Perspective entitled, “Pension Cost Burdens on Texas Cities and Counties “

The word “burden” should be our tipoff that this isn’t going to be rosy glasses, unicorns and butterflies. Leave happy-go-lucky to recharge and let’s go find the kernels of info:

TPPF cost burden analysis take aways:

• Pensions eat up a lot of local money. 
• More costs, the more the risk for taxpayers & beneficiaries
• Defined Benefit System is like the boyfriend who over-promises and over-delivers, but instead of thinking you hit the boyfriend jackpot, TPPF wants you to dump him.
• Multi-employer plans are not as burdened as single employer plans, and by single employer plans, like Houston
• Texas local government pensions are doing better than other megastates, like California

TPPF Recommendations:

• Restoration of local control of state- governed pension plans
• Legislators should focus on fixing the single employer plans of the big cities, see recommendation #1, rinse and repeat
• Cities and counties should migrate to defined contribution systems.

Local issue du jour: plastic bag ban environmental fee in Brownsville

The intervention by the Attorney General: Attorney General sued Brownsville alleging the environmental fee imposed on plastic bags amounts to a sales tax

What’s the thought process?

• The city says it has the ability to do what it needs to keep the city clean
• The Attorney General says that managing waste has to be managed by taxes already collected not from assessing taxes or fees at the cash register.  

Brownsville Herald | Texas AG Paxton calls bag fee ‘an illegal sales tax’

The state pension fast becoming the envy ofother pensions: Nevada Public Employees’ Retirement System

What does the Nevada pension investment staff look like: 1 guy. Bare bones to the extreme.

Investment strategy: React to nothing. Do nothing. All investments are in low cost funds that mimic indexes. One outside consultant advises. 

Nevada‘s investment returns:  Better than CALPERS with exceptionally low costs

Other states making the move: CALPERS is severing ties to outside private investors, New York is reigning in outside investor use.

Why does this matter? Sunset is looking at ERS investment protocols.
 

Wall Street Journal | What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Goal of proposed property tax exemption: exempt the surviving spouse of any fallen Texas first responder from having to pay future property taxes on their homestead

Modeled after: Current exemption for combat veterans who were killed in the line of duty

Lt. Gov. Press Conference

California Proposition 54 has a target- the Legislature. Specifically, amendments.

What does Prop. 54 do?

• The public must  have online access to everything the legislature votes on 72 hours in advance.
• Target is the final vote on a bill.
  • A republican Assemblyman supporting the measure wants to get to those amendments that pass bills that weren’t before the chamber.

The opposition: Democratic Party and Labor

The supporters: League of Women Voters of California, California Common Cause, Howard Jarvis Taxpayers Association, California Taxpayers Association, California Chamber of Commerce, Latin Business Association, League of California Cities, California Planning and Conservation League

The Sun | Increase Legislature’s transparency by passing Prop. 54: Jay Obernolte

Yes on Prop 54

No on Prop 54

New York Times | California Today: Combating the Legislature’s ‘Sausage Making Behind Closed Doors’

• Hotel Tax Increase approved to fund $750 M of the stadium
  • Raises Las Vegas hotel tax up 1.4% from its current 12%
• $650 M from Sheldon Adelson
• $500 M from the Raiders
• $420 M for reonvating a dated convention center in Las Vegas
• The economic impact is estimated at: 451,000 new visitors and an additional $620 M

ESPN | Nevada Legislature approves plan to build NFL stadium in Las Vegas

The Democrat County Judge: Bexar County Judge Nelson Wolff

The Judge’s reasoning:

• The swap cuts off the arguments about rising property tax bills
• The agremeement came in response to TPPF proposal of a 10.98 percent universal tax on sales and services
• As an alternative, fund schools through a sales tax and cut half the property taxes

Watchdog.org Texas | Top Democrat supports scrapping property tax for sales tax

The company:  Wrapify app

The sharing economy angle: Drivers who are willing, have their cars wrapped in mobile advertising.

The potential revenue source: The mobile ad, its like a billboard that can drive to targeted locations.

The data issue:  The wrapped cars collect data that is sold. The data ranges from the traffic to the type of road and time of day. 

CCTV America | New startup turns cars into moving billboards

• Gross receipet taxes lack economic efficiency
• Gross receipt taxes treat firms differently based on their structure
• Gross receipt taxes are problematically nontransparent
• Gross receipt taxes shift taxes onto consumers

Tax Foundation | Gross Receipts Taxes: Theory and Recent Evidence

The problems with Texas Rainy Day Fund according to TPPF:

• too easily raided for too many purposes
• too easily raided by a low vote threshold
• the cap is too high, money should be the taxpayers

The solutions:

• Require a 4/5 vote to use Rainy Day Funds
• Create a single maximum limit cap of 7% “of certain biennial general revenue (GR)-related funds”
• Use the funds above the cap to return to tax payers via a Sales Tax Reduction Fund or pay down state liabilities

The kicker for the solutions: They all require 2/3 vote of each chamber as constitutional amendments.

TPPF | Leaky Umbrella: The Need to Reform Texas’ Rainy Day Fund 

Oregon’s unfunded state pension liabilities are $22 billion. The people responsible for managing the Oregon pension system made this recommendation:

• Issue $20 billion in pension obligation bonds to help Oregon pay down its debt

What are the numbers behind Oregon’s pension system?

• 7.5% current rate of return
• $69 billion in assets
• $5500 pension liability per capita
• $0 cuts for existing pension contributors per the Oregon Supreme Court 

Statesman Journal | Pension managers to lawmakers: Reform PERS now

Economic Development Gold: Music Festivals

The numbers on music festivals via Trips Reddy of the Umbel consulting firm:

• 800 annual music festivals in the US
• 30 million attendees
• Top 5 festival combined ticket sales are: $200 million in 2016

The economic benefits of music festivals:

•  involve few fixed costs
• flexible venues
• flexible programming

The biggest cost of music festivals: security

Governing | For Economic Development Gold, Listen to the Music

New Jersey Legislature passed a 23 cent gas tax increase to fund transportation. 

What do I need to know about the 23 cent tax gas increase?

• Offset by other tax cuts ($16 billion or $1.4 billion depending who you ask)
  • elimination of the estate tax
  • cuts the sales from 7 cents to 6.625 cents
  • increased tax benefits for the working poor and veterans
• Also created a 4 member transportation project approval board consisting of:
  • Governor appointees
  • Senate President appointee
  • Speaker appointee

Asbury Park Press | Legislature OKs higher gas tax; heads to Christie

Why are Municipal Utility Districts getting the label unchecked? 

• “unlimited power” to raise taxes
• unlimited power to issue bonds
• no spending oversight

Total MUD debt? $60 billion

Houston Chronicle | MUDs sell bonds, levy taxes for developers who court conservative politicians with campaign cash

What calculation makes Dallas’ pension debt seems smaller than other cities? Overlapping debt analysis that considers the debt of pension systems in shared property tax bases

An example of overlapping debt analysis:

• Dallas unfunded liabilities at the end of 2015 were $1,371 per capita
• For the same time period, Denver had unfunded pension liabilities of $709 per capita
• Factor in overlapping taxing district unfunded liabilities, Dallas liabilities are $1,362 per capita
  • This adds in pension liabilities for the 20 overlapping taxing districts
• Factor in overlapping taxing district unfunded liabilities, Denver’s unfunded pension liabilities are $4,876 per capita
  • This adds in pension liabilities for 1 overlapping taxing district, the Denver Public Schools

Governing | A Better Way to Measure Pension Debt’s Danger

2 swing states could address fantasy sports this year:

• Ohio
  • S 356 makes fantasy sports legal only if no revenue is retained by the fantasy sports platform
• Pennsylvania
  • A court ruling threw gambling revenue into chaos making gaming legislation more likely this year

Legal Sports Report | These State Legislatures Could Still Tackle Daily Fantasy Sports This Year

The state: New York

The people opposed to the new fantasy sports regulation: 4 people, impacted by gambling disorders

What claims are alleged? That fantasy sports are a game of chance and thereby illegal gmaing under the state constitution

The proposed solution: Let the citizens of New York vote on it.

Bonjour! Constitutional Amendments for Fantasy Sports.

NY Post | New Yorkers want to block new fantasy sports gambling law

Anyone who is double dipping by receiving any government pension is not a safe hire in Burlington County New Jersey. Double Dutch enthusiasts breathe a sigh of relief that they’re safe.

Where:  Burlington County New Jersey

The pension prohibition: The County cannot hire anyone who is receiving an annuity under a tax payer funded pension

The exemptions: Current employees and military personnel

Governing | To Prevent Pension Abuse, County Bans ‘Double Dipping’

The 5 states considering leglaizing marijuana and imposing a tax:

• Arizona
  • 15% tax
  • tax to fund  health and education initiatives
  • creates the Department of Marijuana Licenses and Control
• California
  • 15% sales tax
  • cultivation tax of $9.25 per ounce for flowers and $2.75 per ounce for leaves sold in state-regulated retailers
  • Claims it will “reduce criminal justice costs by tens of millions of dollars annually.”
• Maine
  • 10% sales tax
  • Requires  municipal approval for vendors
• Massachusettes
  • state sales tax +  3.75% excise tax
• Nevada
  • 15% excise tax 
  • location restrictions on retailers like Alaska, Oregon and Washington and somehwat similar to TX alcohol free school zones

Governing | States Voting on Marijuana, Medical or Recreational, in November

The 7th largest pension: Texas’ own, TRS

The current alternative investment/hedge fund invesment: 8.3% of the $129 Billion Fund

The average rate of return for TRS by hedge funds? 2.7% over 3 years

Before official TRS action to cut hedge funds, these cuts are occuring:

• TRS staff has terminated some hedge funds
• TRS staff is moving for fee cuts

The Street | Texas Teachers May Be the Next Big Pension Plan to Snub Hedge Funds

The State: Pennsylvania

The 2015 E-Cig Tax: A 40% wholesale tax on e-cigarette goods

What happened before the 40% tax went into effect? Stores liquidated their goods and closed leaving the state without its revenue source

The revised proposal: Replace the wholesale tax with a 5cent per mL tax

PennLive | Vape tax takes effect as shops close, Legislature mulls rollback

The State: New Jersey

The pension board vote: To cut by 52% the investment in hedge funds

When did the board take this action? August 2016

Any mitigating facts in New Jersey? It wasn’t a bonus for the investment industry that one of the private investment firms that manage pension funds is being investigated for bribery 

Salt Lake Tribune | New Jersey pension pulls $190M from hedge fund

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

• Ohio has a new fantasy sports bill
• Ohio’s Attorney General says fantasy sports isn’t legal and isn’t illegal – lawyers… its never a clear cut answer
• Ohio’s bill isn’t super industry friendly for these reasons:
  • It doesn’t call fantasy sports a game of skill or chance but rather a “scheme of chance”
  • 100% of entry fees have to go back to players

Ohio SB 356

Legal Sports Report | Ohio’s New Daily Fantasy Sports Bill, And Why Framing Matters At The State Level

• As of September 2016 LBB has reporting information on 22,600 contracts 
• In the last year the total value of contracts reported to LBB increased from $5.7 Billion to $82.6 Billion
• Latest and largest chunk of reported contracts comes from Institutions of Higher Education

LBB Contract Reporting and Oversight September 2016 

LBB Contracts Chart

The Comptroller has a new hotel tax data base that allows you to search by:

• Type of filer (montly or quarterly)
• Date
• Location
• City Limits restrictions

Texas Comptroller | Transparency | TEXAS HOTEL DATA SEARCH

San Diego in 2012 reduced its pension payouts. Labor groups sued. Pension cuts are caught in the courts.

The costs facing San Diego from the 2012 pension costs:

• Attorney fees for labor groups. No estimate of amount, but guesses are high.
• Cost of the pension cut payout: $100 Million  to $20 Million (people disagree)
• $20.1 million to retroactively create pensions for new hires, if the city is forced into this route

What’s the timeline for the 2012 cuts? An appeals court should rule in 2018.

Next stop: California Supreme Court. 

San Diego Union Tribune | Pension case could cost city millions

Which state’s governor cut university budgets by 2% mid-budget cycle? Kentucky

What was the Governor’s argument? Universities were part of the executive branch and he has broad discretion to cut executive branch budgets

What did the court say? Whatever power the Governor has to reduce budgets does not apply to univerisites. universities are indpendent, with distinct control over their budgets, with appropriations going directly to the university and not through the state treasury.

Governing |  Court: Kentucky Governor Lacks Authority to Cut Universities’ Funding