Finance & Revenue

The State Auditor today released a report on the General Land Office’s contracting process. The audit results are not great for these 4 reasons:

• When the release about your audit leads with this, it’s not great : “significant weaknesses in its processes”
• The GLO did “not adequately plan, procure, or form its contract[s]” with:
  • Grant Thornton, LLP (Grant Thornton) for oil and gas royalty audit services
  • IDEA Integration Corporation (IDEA) for information technology services. 
• Oops, there was a conflict of interest involving the Grant Thornton contract during the procurement
• Oh, by the way, there are a few systemic issues in GLO’s overall procurement and contracting processes.

SAO Report      Texas Tribune

Senate Education Chair Taylor has asked Attorney General Paxton for an opinion as to whether municipalities, or their utilties, may impose impact fees on new development by an open-enrollment charter school.

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TPPF Op-Ed in Ft. Worth Star Telegram points to the following problems with Texas pension system:

• $57.5 Billion in unfunded pension liabilities ($42,073 owed per active member)
• Unfunded liabilities increase at the rate of $40M per month
• The funded ration for all pensions systems under the Pension Review Board is only 80.5%
• The solution: New employees should be placed into defined-contribution plans, like 401(k) plans

TPPF

Texas A&M is eyeing a public-private partnership for a new private dorm.  The  $355 million project will be a “high end dorm” off George Bush Drive near Penberthy Road.

The Brazos County Commissioners approved the tax exempt status last week, 3-1. The lone nay is being vocal:

• “The problem that I see is that there’s no revenue coming in to the two cities who have to pay the bills, they have to pave the roads, they have to take care of the infrastructure, the wastewater, the regular water coming in.”

KBTX

In the press release announcing the influx of $75 Million and a new CEO, the Texas Central Rail noted that investors understood the economic development picture high speed rail paints.  Texas Central Rail Press Release

This week two conservatives also stated their case for supporting high speed rail,highlighting the development opportunities that abound with rail projects. Star Telegram Op-Ed

Texas Capital Fund granted $325,000 to the city of Montgomery for infrastructure improvements and engineering services which will support:

• Creation of a restaurant facility, the Pizza Shack, operated by Azzip Enterprises, as well as create 13 new full-time jobs.
• TDA Office of Rural Affairs   Montgomery Co News  TDA News

Texas Capital Fund granted $750,000 to the city of Sonora for infrastructure improvements and engineering services  to support:

• Creation of a travel center facility operated by Love’s Travel Stops & Country Stores, Inc., along with 31 new full-time jobs.  TDA News

Colorado denied economic development dollars for a pediatric home health care services. That leaves Texas.

The company looks to rapidly expand. And, as it turns out, the other state in their sights, Texas, provides higher Medicaid reimbursement rates.

Denver Post

University of California system voted to extend the $15 minimum wage floor to all Univeristy of California employees.

The increase will impact these 3,200 CalSystem hourly workers for a total of $14 Million to its annual $12.6 Billion annual payroll:

• custodial
• food service
• bookstore staff
• lab assistants
• student workers
• includes private contract workers
  Sacramento Bee

Michigan Gov. Rick Snyder (R-MI) signed HB 4122. Michigan’s film Incentives program  will end October 1, 2016. It remains partially funded. 

Tax Policy Foundation has 3 reasons to oppose filmn incentives:

• Film Production Jobs  are temporary
• Incentives are not shown to create a permanent film industry in a state
• Film incentive programs are financial losers according to most studies
• Economic activity generated by film is questionable, but trickle down effect on films increasing othere non-film jobs is reasonable.

Tax Foundation

In a Trib Talk Perspective this week, TPPF calls for the end of corporate welfare. That means the end of:

• No federal agency loan guarantees to American companies doing busines abroad (AKA no Import Export Bank)
• End the Texas Enterprise Fund and all Texas economic development programs
• No subsidies for renewable energy generators
• No government price controls on electricity
• No government price control on housing/hotels during an emergency
• No tax abatements

The Sharing Economy encompasses tech savvy businesses like ride share, storage share, shipping share, and short term housing rentals.  In terms of labels its Lyft, Uber, AirBnB…

it’s also a campaign issue. Republicans embrace them. Democrats are concerned about the impact to traditional labor allies. The sharing economy is in a legal kerfuffle over whether it has employees or independent contractors.

LA Times

• 10-year, 40% cut on its city property taxes
• large annual refunds on ad valorem taxes on company equipment

Austin Business Journal

• 30 million in tax incentives
• 80% abatement (down from the previous 90% abatement GM had previously receoved)
• Arlington officials point to $26 million in direct and indirect economic impact from the deal

WallStreet Journal

4 Highlights from Senator Burton’s TribTalk Perspective this week:

1. Abolish the Enterprise Fund. She doesn’t like economic incentives to Facebook.
2. Companies that make a lot of money should not be subsidized, like Facebook was.
3. Bills like, HB 2712 (Geren/Hancock), that are written for specific companies also not good.
4. When the # of jobs and pay rate does not exceed the cost of the public investment, not good. Facebook jobs are costing Texas about $183,000 per Facebook job.

Cogitate: The liklihood that this is a Tea Party signal that economic development is still in its crosshairs?

The City of Chicago is proposing a 9% tax on streaming services like Netflix and Spotify.

But, city officials say it’s not a new tax, its 2 existing taxes working in tandum. They point to these taxes:

• Personal Property Lease Transaction Tax
• Amusement Tax(tacked onto tickets for concerts and sporting events.)

Attention Realtors: Chicago will also be taxing MLS service, but not Facebook, so teens everywhere rejoice.

Texas Public Radio: Chicago’s ‘Cloud Tax’ Raises The Cost Of Streaming Videos

Texas Secretary of State Carlos H. Cascos and Governor Abbott are pursuing economic development and stengthening Texas “economic bond” with Mexico.

They’re looking to Mexican Secretary of Foreign Affairs José Antonio Meade Kuribrena. Meade is also pro-business, economy minded official.

Can’t talk about Texas-Mexico and economic development without talking about Mexico’s de-regulated energy market.

• “The talks [Gov. Abbott & Secretary Meade] come amidst a request for proposals from Mexico’s state-owned electric utility for construction of a $1.5 billion, 155-mile pipeline from Nueces County to Brownsville, where it would connect with a $3.1 billion, 500-mile underwater pipeline to the Port of Tuxpan in the state of Veracruz, Mexico.”  

Valley Morning Star

John Oliver takes on publicly financed stadiums, an issue that keeps gaining steam. The concerns:

• Teams retain all the revenue from the stadiums by monitozing every aspect of the stadium
• Teams economic books are private
• Public Stadium funding is often through locally backed bonds (debt)
• Stadiums are replaced frequently
• Stadiums are property tax exempt
• Professional Sport teams use threats to leave as a reason for more local debt funding
• Stadiums do not revitalize economies nor do they provide more stable jobs according to a 20 year study by economists

Deadline Hollywood

The City of Taylor Landing wants to know if it, as a Type C general law municipality can levy a property tax.

In KP-0028, the Attorney General says yes. IN fact, “Section 302.001 of the Tax Code and section 51.051 of the Local Government Code expressly authorize a Type C general-law municipality to levy an ad valorem tax on property within its city limits. “

Two fiscal tidbits from the Comptroller this week, the latter of which was seized on as due to legislative success:

• June 2015 sales tax revenue collections are down 1.4% from June 2014. The first decline in 62 months. Comptroller Release
• Texas will not borrow to cover its cash flow issue for the first time in a long time. Comptroller Release
  • Lt. Gov. Patrick hailed it as a result of legislative success with conservative spending
    • Ft. Bend News

Impending pension doom that people like to talk about is like a he said/she said relationship squabble.

He said:

Local Officials blame the actuaries by saygin things like- People are living longer after retirement, so why are actuaries still using life expectancy tables from 1971? 

She said:

Actuaries say the real problem are “questionable” decisions my politicos such as:

•  funding pensions with borrowed money
• picking risky investments
•  “enacting benefit improvements based on lowballed costs.”

To paraphrase Sun-tzu- Know your enemy like you know yourself. 

NYTimes

Seattle has a transportation funding crisis. The mayor has called for $930 million in additional funding. 

Two City Council members tried to counter the straight $930mllion levy on property taxes with a funding plan that included:

• $600 M levy on property taxes
• with a employee hours tax and a commercial parking tax

The move failed, but the creativity in the funding structure should be appreciated.

KUOW.ORG Seattle

Economic Development Corporations will be exempt from property taxes thanks to this amendment in conference committee:

    SECTION 20.  (a)  Section 11.231, Tax Code, is amended by    adding Subsection (a-1) to read as follows:          (a-1)  In addition to an organization described by    Subsection (a), in this section, “nonprofit community business    organization” also means a Type A corporation governed by Chapter    504, Local Government Code, and a Type B corporation governed by    Chapter 505, Local Government Code.          (b)  This section applies only to ad valorem taxes imposed    for a tax year that begins on or after the effective date of this    section.

Clever move outside the bounds to a bill that began its life concerning alcohol taxes. There’s a narrow window for a point of order, but you have to act quickly.

HB1905

McAllen Monitor

California pension-reform advocates, calling for The Voter Empowerment Act, are working to get pension reform on the California ballot.

The pension reforms they want:

• amend the state constitution to require voter approval for defined-benefit pensions for new public employees
• Voter approval for any enhancements to current employees’ pensions
• Voter approval for the establishment of any pensions in which government subsidizes more than 1/2 of a public employee’s retirement benefit.

Who are the backers?

• Mayors of the bankrupt cities of mayors of San Bernardino and Vallejo

Governing

Water Revenue in California, like in Texas is big business. The water restrictions due to California’s drought are expected to cost governmental entities  $1 Billion in lost revenue.

Paying more for less makes for happy taxpayers? Probably not. Taxpayers in California, and in Austin, are not pleased with water districts raising their rates for less useage. 

Governing    US News and World Report

Moody’s revised Houston’s debt rating to Negative.

TPPF was quick to latch on:

• Calling for pension reform
• Comparing Houston to Detroit

TPPF

Mayor Parker clarified that Houston’s debt outlook can only be changed if the Legislature acts to fix Houston’s pension issues.

Houston Chronicle

Using the Pension Review Board as its analysis catalyst, TPPF points to the following pension problems in Texas:

• $57.4 billion in unfunded liabilities
  • increase of nearly $500 M since December 2014
• The plans’ funded ratios are too low
• Only  3 pension plans are fully funded at 100 percent or more
• two-thirds have amortization periods that exceed 25 years

​​TPPF  Pension Review Board June Pension Valuation (Scroll down the agenda)

Phoenix is building a research and technology campus to make it a leader in waste innovation.

The plan is to focus on:

• The “5 R’s”: reduce, reuse, recycle, reconsider and reimagine.
• For instance- turning a beer bottle into new glassware or compost into natural gas.

When announced, the procurement opportunities were flying:

• Phoenix received 117 proposals from 70 different companies
• “The Closed Loop Fund, which is composed of Fortune 100 consumer goods companies and retailers such as Coca-Cola, Procter & Gamble and Walmart, will offer below-market interest rate loans (some as low as zero percent) to the businesses selected to be part of the campus.” 

Governing

Mayor Rham Emanual is dealing with the Chicago Teacher Pension Funding Crisis. The teacher pension borrowed to make its last $634M payment to the pension system & the state is cutting education funding.

The Mayor has the following proposals to rework the local pension system:

• Ensure there is 1 statewide teacher pension system only. Illinois law separates out Chicago teachers from the rest of the statewide teacher fund.
• In the alternative, the state should fund more of Chicago’s Teacher Pension System. Chicago tax payers are paying for both the statewide teacher pension and the Chicago teacher pension sytem.

NYTimes

Governing 

The Texas Supreme Court reversed the 3rd Court of Appeals, and found that just because the Greater Houston Partnership had received tax dollars for a program does not make it subject to open records.

Southeast Texas Record  GHP v. Paxton

Previously on Information Intelligence (May 7, 2015):

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

The Broadcasters’ point of view:

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

Association of Broadcasters Brief of Amici Cuiae

The Border Coalition has returned. Originally founded by a former Economic Development leader in South Texas,  it’s new leader is:

•  former Hidalgo County Judge J.D. Salinas

The Border Coalition goals are to:

• Become (again) the go-to group for border issues
• Improve the Border’s fair sdhare of state funding, especially for transportation
• Become a stronger voice in Austin

Rio Grande Guardian

A proposal is floating around Sacramento to allow for excise taxes to be charged on high use water.

• The tax rate could be up to 3 times the normal water charge.
• Excise tax proceeds would be shared between the state & local governments for water conservation projects.

Sacramento Bee

California’s SB789

Comptroller awarded $300,000 to UT- San Antonio to study the monarch butterfly.

The State insect may soon be on an endangered species list which could cause an economic impact to Texas.

The Comptroller says, if the Monarch is listed as endangered, the following businesses can be affected:

• agriculture
•  land development
• energy production

Here’s the list of species the Comptroller has funded studying:

• Since 2013, $5 million has been appropriated per biennium for endangered species studies
• In 2012, the dunes sagebrush lizard  caused a stir as a potential endangered species, a comptroller report found that if the sagebrush was listed as endangered then:
  • it could imperil 31,195 jobs
  • harm more than $8.2 billion in investments
  • harm almost $12.5 billion in business activity 

Houston Chronicle    UTSA Today  CPA

What is this mystery tax issue before the Texas Supreme Court?

Whether films shown at theaters count as a service or whether a film is tangible personal property.

What did the 3rd Court of Appeals ruling say films are for margin tax purposes?

Tangible Personal Property, because Texas statutes say these are things that can be “perceptable to the senses.”

What’s the big deal? It’s a tax court case, I’m mentally drained just thinking about it…

the Comptroller says will cost the margins tax $1.5Billion.  For those counting, that’s a significant chunk of margin tax revenue. And, if the TXSCT agrees with the Court of Appeals, that made property tax revenue sources and school finance a whole lot more complicated.

Fiscal Notes June/July 2015

For the 1st time in 4 years, the 4th largest city saw its sales tax revenue decline by 2.3% while the state’s sales tax revenue increased by 5.2% in the same month.

A University of Houston Economists says no need to panic. 505 of Houston’s sales tax comes from business to business sales, while the other 50% is traditional retail. 

Business interests suggest Houston economy has correced itself and is returning to normal speed.

Houston Chronicle

Pecos County Attorney is asking the AG whether it is permissible under nepotism statutes for the wife of the County Judge to be an employee of the County Hospital District. 

At the time, the County Judghe cleared it with the Texas Association of Counties. TAC said- sure, we see no problem. The County Attorney points to members of the County Commissioners Court serving on the County Hospital Board and being able to impact the salary of the County Judge’s wife.

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

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

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

Courthouse News Service

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

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

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

Variety

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

The Appointees from Middle Georgia CEO

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

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

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

Deadline Hollywood

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

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

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

Courthouse News Service

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

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

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

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

Breitbart Highlights that the drainage tax:

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

Breitbart

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

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

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

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

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

Aviation Pros

National Business Aviation Association

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

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

Investment News

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

His background:

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

Rio Grande Guardian

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

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

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

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

The Recorder

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

Case No. 1:15-cv-00506

Southeast Texas Record

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

The background:

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

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

RQ-0028-KP

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

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

Washington Business Journal

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

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

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

Governing

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

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

The legal case: American Multi Cinemas  

Texas Tribune

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

Upcoming Deadline for Chapter 313 Annual Eligibility Report

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

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

Completing Section 5 of the Report

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

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

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

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

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

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

New Jersey Law Journal  Governing

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

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

Sacramento Bee

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

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

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

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

Washington Post

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

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

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

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

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

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

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

Governing

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

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

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

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

Sacramento Bee

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

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

Austin Business Journal

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

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

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

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

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

Governor Abbott Statement (meaningful tax relief for Texans)

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

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

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

Empower Texas (tax payers still winning)

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

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

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

Collin County is asking the Attorney General to specifically clarify :

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

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

The P3 will:

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

Governing

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

​Their description of the package deal:

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

Which groups are in the Conservative Budget Coalition?

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

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

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

Tax Foundation

LBB is releasing budget documents, as they becomes available.

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

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

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

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

TribTalk by Andrew Sansom

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

Breitbart

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

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

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

Rio Grande Guardian

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

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

ABC 13 Eye Witness News

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

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

Texas Transparency

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

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

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

Sacramento Bee

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

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

Sacramento Bee

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

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

Texas A&M Real Estate Center

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

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

Georgia was said to offer:

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

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

Atlanta Journal Constitution

Texas is up for 3 Presidential Debates:

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

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

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

Statesman   HB 1318 by Chen Button

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

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

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

St. Louis Business Journal

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

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

Lt. Gov. Press Release

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

The Broadcasters’ point of view:

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

Association of Broadcasters Brief of Amici Cuiae

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

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

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

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

WallStreet Journal

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

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

Highlighted Texas Facts:

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

CEO Magazine

State legislative trends show that Legislatures are favoring:

• reducing income based taxes
• increasing sales taxes

In 1990 Texas:

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

In 2014 Texas:

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

License taxes peaked in 2010 at 16.6%. Governing

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

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

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

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

The chain of events:

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

New Jersey Advance Media

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

Forbes

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

What’s so great about waste management in Edmonton?

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

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

Picture this:

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

Lots of drama in Beaumont. SE Texas Record

Repeal Margins Tax.

TPPF

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

Houston Business Journal  Fiscal Note

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

Speaker Straus Press Release

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

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

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

Savannah Now

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

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

​Wall Street Journal  WABE Atlanta’s NPR 

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

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

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

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

Austin Business Journal

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

TPPF

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

Waxahachie Daily Light