Finance & Revenue

What state is limiting the number of tax credits? Oklahoma

What are the economic development reforms at play in Oklahoma?

• a two-year moratorium on nearly two dozen tax credits
•  

What impact did that have? 2 Boeing projects were pulled from Oklahoma & the Wind Coalition is threatening to move projects to Kansas

NONDOC | Filter: Feathers ruffled over Oklahoma tax credits

• St. Louis fought hard to keep the Rams in Missouri. A fight that cost $16 million.
• The state share is $12 million to pay off bonds for the stadium.
• The state, city and county will be paying for the stadium bonds until 2021.

Fox 2 Now St. Louis | Missouri legislators ask why $16 million was spent to keep the Rams in St. Louis

Which Southern state struck a deal with AirBnB? Alabama

Which Alablama taxes will be collected by AirBNB?

• The state’s Transient Occupancy Tax
• local lodgings taxes, if the responsibility for collection of those taxes has been assigned to the state’s tax office

is this an outlier tax agreement? No, it follows a model that other states & local taxing jurisdictions have followed

Birmingham Business Journal | Alabama strikes deal with Airbnb on tax collections

Washington Post | Airbnb is about to start collecting hotel taxes in more major cities, including Washington

• What groups are hiring lobbyists?
  • ​FanDuel
  • Draft Kings
  • Their Trade Association
• We talking state or federal legislation? State
• What’s the big picture with fantasy sport legislation in 2016?
  • ​16 + states have pending legislation carving out protections for fantasy sports
  • California, Indiana, & Virigina legislatures have all passed fantasy sport protections
• What does the legislation across the country have in common?
  • ​ no taxation  regulation of fantasy sports
  • no heavily regulation of fantasy sports

Wall Street Journal | Fantasy Sports Industry Mounts Lobbying Blitz

Far right activsits are paying attention to the voting requirements for the creation of special districts. 

What do they have their sites on? the use of temporary trailers to estbalish residency to vote for MUDs.

Big Jolly Politics | County Attorney asked for AG opinion on the use of rented voters- will he or won’t he?

What economic development question does attorney general opinion KP-0065 answer? It clarifies the meaning of the term “site improvements” under section 501.103 of the Local Government Code .

What did the attorney general say? 

• A 2014 Greg Abbott A.G. Opinion says that Section 501.103, Local Government Code, is a limited list an an economic development expenditure must be specifically listed in statute
• There is no definition of site improvement in statute, anywhere….
• the first step is to have board of the economic ·development corporation to determine if an item is a site improvement

What does this mean for 2017? A definition of site improvement is coming fast, and it will look like this :” mean an improvement or permanent enhancement that relates to the development of an area of ground on which a town, building, or monument is constructed. “

John Colyandro and Russell Whithers have an op-ed in the Ft. Worth Star Telegram laying out the rational for why fantasy sports is illegal gambling. 

Here are the Texas Conservative Coalition 3 big points against fantasy sports:

• The Conservative Coalition agrees with the Attorney General Opinion that aligns fantsasy sports with games of chance meeting the standard for illegal gambling in Texas
• There are so many exemptions to the gambling prohibition that the exemptions “swallow the rule.”
• The solutions:
  • Write clearer laws that clearly define games of chance, like the lottery, from games of knowledge or skill, like fantasy sports
  • Or, make all gambling illegal. 

Ft. Worth Star Telegram | Daily fantasy sports games are illegal, so we need better laws

County commissioners rejected, 13 to 2, an appointment to the Wayne County Employees’ Retirement System board because:

Pension retirees filed a federal lawsuit over changes to health care and tp the pension

What led to the pension changes and the rejection of an appointee:

• In 2015 some retirees were transfered from employer-paid group health care to a system in which they get a monthly stipend toward buying coverage on the federal Health Insurance Marketplace.
• health care for active county workers was cut
• health care for future retirees was eliminated
• the pension system was restructured
• these changes cut 64%  from the $1.3 billion in unfunded liabilities to $470 million in unfunded liabilities.

Detroit News | Wayne County panel rejects pension board appointment

What is philanthrocapitalism? When Zuckerberg announced he was giving away $45 billion. he didn’t set up a non-profit. He set up an LLC. 

How does it intersect with government? As an LLC it  won’t have the reporting requirements of a non-profit and can spend money on:

• funding nonprofit organizations
• making private investments
• participating in policy debates

Are there benefits to philanthrocapitalism?

• philanthrocapital could guarantee loans for storm water repairs after a toen is devasted by flood
• it could invest in Public Private Partnerships
• philanthrocapital could back stop small pensions from default

Governing | How ‘Philanthrocapitalism’ Could Transform Government

Where does Texas fall on the list of how well state procurement systems work? Texas doesn’t even make the list of Top 25,  likely due to its lack of centralization

The top of the list? Georgia

What 5 trends in procurement are identified?

• increasing up to date information on purchasing prices as technology improves
• more tracking of the procurement process for greater transperancy
• states are tracking their spending data to make get more favorable prices in their RFPs 
• more contract feedback for better customer service
• more contract management by the states
• more data tracking of WMBEs to improve diversity in contracting

Governing | Purchase Power: A Special Report on State Procurement

Where is this property tax revenue and voucher fight occuring? Wisconsin

What’s the issue? Whether a school district can raise property tax revenue to offset the cost of vouchers.

What kind of voucher program do they have in Wisconsin? A voucher program for students with disabilities

Who is on which side of this fight? 

• The Wisconsin House Speaker opposes allowing school districts to raise proeprty taxes more to offset the cost of vouchers
• Superintendents support the ability to “raise revenue to offset a state-aid reduction used to pay for students in the state’s voucher program”

Wisconsin State Journal | Robin Vos on voucher funding proposal: Superintendents’ rhetoric ‘gets ahead of the reality’

A legislator proposes a 15% sales tax on medical marijuana, but what numbers does medical marijuana generate?

• California medical marijuana is a $1 billion + in sales each year
• A 15% tax would generate $150 million per year

Sacramento Bee | California senator proposes 15 percent medical marijuana sales tax

What’s happening with fantasy sports legislation in California?  It’s moving lightening fast. It sparked ads against the 1 assemblyperson who voted against it. In short, it looked like nothing could slow its momentum.

What groups are raising concerns about the fantasy sports legislation? Tribal casinoes

What concerns does the opposition raise? 

• whether fantasy sports is even regulated gaming
• if it is regulated gaming, the legislation does nothing to punish the illegal activity of these corporate fantasy sports operators
• the bill has little vetting or deliveration
• fantasy sports is akin to online poker and their online gaming bills have failed, so let’s consider the two issues together

Sacramento Bee | Powerful casino tribes raise concerns with California fantasy sports bill

• Remember that the state’s Defined benefit pension funds are better than the average 401(k)
• Remember that 401Ks take bigger risks to prevent the fear of under performing
• It’s the private sector retirement benefit that need review, not the government pensions
• The PRB should continue to use amortization periods as the yard stick to measure financial strength
• The last 5 years of the 83 pensions under the PRB review have yielded the strongest performance

Statesman | Patterson: Texas public employee pensions remain healthy

• Study 1: University of California at Berkeley looks at CALSTRS Teacher Pension
  • ​Conclusion: For 6 of 7 teachers defined contribution plan is a better, more secure investment option than a 401K 
  • Conclusion: Pensions reduce teacher turnover
  • CAUTION: CALSTRS funded the study
• Study 2: TeacherPensions.org examined Illinois teacher pensions
  • ​Conclusion: traditional pensions disproportionately favor those who stick around for 30 or 35 years and are therefore not good for teachers
  • CAUTION: teacherpensions.org is known for critiques of traditional pensions

Governing | The Week in Public Finance: Contradictory Pension Reports, Brewing Pension Battles and Recession Worries

Why is a short bond length important? Atlanta and St. Louis are both paying debt service from bonds on stadiums that are no longer in use. 

Are local governments getting more savvy in negotiations? Yes, contract provisions may require hefty fines for abandoning a stadium before the debt financing is complete.

Aren’t stadiums economic drivers? No, not according to a host of recent econoic studies. “Publicly financed football stadiums are an especially troublesome investment because of their sheer acreage and large seating capacity.”

Governing | Rethinking the Game Plan for Stadium Bonds

Texas Senator Jane Nelson (R) and Texas Representative Dennis Bonnen (R) led the charge to significantly reduce Texas’ problematic Margin Tax, a modified gross receipts tax that is a dark mark in Texas’ otherwise well-structured tax code. For 2016, Texas businesses face rates reduced by 21 percent, from 0.95 percent to 0.75 percent (and prevented an otherwise scheduled increase to 1 percent), and extended eligibility and reduced the rate for EZ computation. HB 32 also includes language of the legislature’s intent to repeal the Margin Tax in future sessions.

Tax Foundation | 2015 Outstanding Achievement in State Tax Reform Awards

Which state had a commission reviewing pension reforms? New Jersey

What steps did it take to make recommendations? A report with recommendations was released in February 2015 & new supplmental recommendations in February 2016.

What are the 2016 supplemental recommendations?

• Keep the cost of the state employee benefits below 15% of the budget
• Align benefits more closely to private sector employer standards and new market developments 
• The reallocations for teacher retirees must not impact property taxes
• Preserve public employees’ and retirees’ health benefit packages at levels above those prevalent in the private sector
• Permit the reallocation to pension funding of over $2 billion a year in health benefits savings
• Fully-fund pension benefits earned to date while insuring that benefits earned in the future remain within the State’s means 

​​​What were the initial 2015 recommendations?

Oklahoma Legislature is moving toward a repeal of its historical tax credit that is utilized to redevelop historic structures.

How the historical tax credit works in Oklahoma:

• reimburse up to 20% of the cost of a redevelopment project
• requires that the building retains much of its original features
• implemented in 2006
• Has provided for $155.9 million in tax credits for 16 projects

How the historical tax credit works in Texas:

• reimbursement for 25% of construction costs
• implemented in 2013

Tulsa World | Historic tax credits spur redevelopment, supporters say

Lessons to learn from Florida as it grapples with a bill to reform Jacksonville’s public pension system:

• Conservative legislatures don’t like giving local pensions flexibility on administrative fees. Even 2% of a pension tax revenue was too much. 
• The new sales tax authority to clean up the local pension needed a firm date. Month, date, year is required. 

Florida Times Union | With slight changes, Curry’s pension-reform bill moves ahead in Senate committee

Previously on informedintel: Lege Trend: A SE State Legislature Tries to Act on a Local Pension. 3 Points to Know. 

Another day, another name for the sharing economy. The NY Times, in discussing a protest among ride share drivers, labled the sharing economy, the gig economy.

Why is this lexicon important? Because “sharing economy” appears in interim charges in 3 different committees – Appropriations, Business & Industry, Economic & Small Business Development

NY Times | Uber Drivers and Others in the Gig Economy Take a Stand

The Kentucky Senate is moving pension reform right along. let’s look at what it did:

• Strengthen pension transperancy & accountability by requiring the adoption of a best practices model
• Requires pension board appointees to have specific accounting skills
• New Contracting requirements for all pension related contracts, including investment contracts, with additional oversight by the board, the auditor & the state Government Contract Review Committee

WKMS | Senate Passes Pension Accountability Bill

Kentucky’s SB 2

Previously on InformedIntel:

5 Lessons from the Most Underfunded Pension in the U.S.

Kentucky, home to horses, is also home to the U.S.’s most underfunded pension. 

What has hampered the Kentucky Pension? Low investment returns, low contributions rates, the need to cash out investments & move investments to low risk, low reward bonds

What are the unfunded liabilities for Kentucky? $10 billion 

What has the Legislature done? In 2013 reforms included:

• creating a hybrid cash plan for new employees (pretty much a defind benefit plan with less risk for the state)
• eliminating COLAs (cost of living adjustments)
• required to the state to make its full actuarial payments immediately (which it hadn’t since 1990s)

Did that help? No. After the reforms, the plan suffered by:

• losing 1/3 of its assets
• only has 19% of the assets it needs to cover 30 years

Were there surprises post-pension reform legislation? Yes, surprises in how quickly the fund lost value

Governing | Kentucky’s Cautionary Tale About Underfunding Pensions

Which groups authored this report?  Workers Defense Project, in collaboration with the LBJ School’s Ray Marshall Center for the Study of Human Resources

The report does not look favorably on economic development based on these factors:

• Texas gave out $500 million in subsidies 
• The promised jobs did not come to fruition
• The jobs that are created required college degrees and went to out of state people

Austin Chronicle | Where the Money Went Report targets Texas Enterprise Fund and other incentive programs

What other pension is also underfunded? The NFL Player Pension

How underfunded is it? It has 72% of the funding to cover future retirement benefits

How does it compare to other multiemployer pension systems? The average is 85% funded

Is the NFL pension improving or declining in funding levels? Improving. 3 years ago the pension was 49% funded.

How did the NFL increase the pension’s funded level? Owners of the league’s 32 teams have contributed a combined $571 million to shore up a shortfall

Wall Street Journal | Latest Workers to Face Pension Woes: NFL Players

• Randy Davis, an Emory small business owner who is retired from the U.S. Army and currently serves in the Texas State Guard, says:
  • “I don’t believe in property taxes. I think it should be done away with.”
  • He favors a consumption tax
• Phillip Hayes, a marketing vice president and the youngest in the race, says:
  • eliminate the margins tax
  • it is bad for small businesses
  • says the margins tax eats up millions of dollars that could be used for economic development instead
  • against property taxes, but wouldn’t eliminate them because that’s how schools are funded
• Cole Hefner, who served four years as Upshur County commissioner, says:
  • margins tax is bad
  • opposed to economic development that gives away tax dollars
  • supports an educated workforce, low regulation and low taxes to lure business to Texas
• Jay Misenheimer, a Lindale small business owner and Lindale ISD board trustee, says:
  • Margins tax is bad

The Daily Tribune | GOP forum features Texas House candidates

Comptroller Hegar made the following 2 appointments to the  Economic Incentive Oversight Development Board:

• George Bayoud
  • former Texas Secretary of State
  • founder of an investment firm, Bayoud & Company Inc.
  • an advisor to the Dallas Cowboys since 2001
• D. Dale Fowler
  •  president of the Victoria Economic Development Corporation
  • certified economic developer with the International Economic Development Council
  • serves on the executive committee of the Texas Economic Development Council

What is the Economic Incentive Oversight Development Board? It reviews “the effectiveness of state incentive programs and funds administered by the offices of the governor, the comptroller and the agriculture commissioner.”

Who else is on this board? 

• Governor Appointees:
  • Adriana Cruz
  • Trevor Pearlman
  • Massey Villarreal
• Speaker has 2 appointees to be named
• Lt. Gov. has 2 appointees to be named.

Comptroller Hegar | Texas Comptroller Glenn Hegar Appoints Two Texans to Key Economic Incentive Oversight Posts

• The Legislature never intended the tax exemption would apply to oil and gas equipment
• If the Court allows the tax exemption, it will have a significant impact on the state budget
• A win for oil and gas would result in $4 billion in refunds & a $500 million per year revenue hit for the state

Why is this important? The Texas Supreme Court is set to hear oral arguments in March on  on whether the oil and gas equipment is taxable. The impact could mean a loss of billions in state revenue.

Texas Public Radio | Comptroller Warns Doing Away With Oil And Gas Tax Would Cost State Billions

Which state has a separate agency that reviews and analyzes all pension changes? Pennsylvania has an agency called the Public Employee Retirement Commission.

What’s going on with this special pension agency? The Pennsylvania line item vetoed it proclaiming each of the state and municipal pension systems already provide this analysis.

Why the fighting over this? The issue is familiar to Texas, does a line item veto shut down an agency or is legislation required to shut down an agency. 

Pittsburgh Post Gazette | Wolf takes aim at commission tasked with reviewing pension legislation for public workers

Which state legislature is working to revamp its local police and fire pension system? Arizona

What sparked the reform of local pension system by the legislature? Cities say their contribution rates too high.

What do we need to know about the compromise reform package?

• benefit increases for current employees must match actual cost of living increases
• small bump in the retirement age
• new hire pension contributions must be a 50/50 match between enrollee and local government

Is there an economic cost benefit for the new plan? For every new hire, local governments will save between 3 and 5.7% of that person’s salary on the pension each and every year. That’s a $3.6 billion savings over 30 years.

How to do enrollees feel about the reform? Public Safety Personnel Retirement System’s board voted to approve the compromise

ABC 15 | Arizona Public safety pension reforms could save taxpayers billions

Loyal subscribers will recall thge luck Georgia had when it increased its gas tax when gas prices were low and taxpayers offered little objection.

Alabama is wading into the waters with this proposal to raise the gas tax:

• 5 cent increase in the gas tax
• with the seal of approval from the Alabama Legislature’s Permanent Joint Transportation Committee
• American Petroleum Institute says the total Alabama gas tax will be 44 cents, that is including 18.4 cents of federal gas tax

The Hill | Alabama considering gas tax hike

Kentucky, home to horses, is also home to the U.S.’s most underfunded pension. 

What has hampered the Kentucky Pension? Low investment returns, low contributions rates, the need to cash out investments & move investments to low risk, low reward bonds

What are the unfunded liabilities for Kentucky? $10 billion 

What has the Legislature done? In 2013 reforms included:

• creating a hybrid cash plan for new employees (pretty much a defind benefit plan with less risk for the state)
• eliminating COLAs (cost of living adjustments)
• required to the state to make its full actuarial payments immediately (which it hadn’t since 1990s)

Did that help? No. After the reforms, the plan suffered by:

• losing 1/3 of its assets
• only has 19% of the assets it needs to cover 30 years

Were there surprises post-pension reform legislation? Yes, surprises in how quickly the fund lost value

Governing | Kentucky’s Cautionary Tale About Underfunding Pensions

The  Fantasy Sports Trade Association ran radio and internet ads targeting the one legislator who called fantasy sports illegal gambling that the Legislature cannot regulate and voted against a bill to require fantasy sports licenses.

Sacramento Bee | Daily fantasy sports industry targets California assemblyman

• Lawmakers asked California Attorney General Harris to issue an opinion on fantasy sports.
• Before the opinion could be issued, the Assembly passed a bill regulating fantasy sports on a vote of 62 to 1
• Fantasy Sports would require a license to operate in California
• Fantasy Sports Trade Association, nuetral on the bill,  saw the bill as a means to target the opponent with ads

Sacramento Bee | Video: Daily fantasy sports bill passes Assembly in blowout

California AB 1437

Which state is tinkering with legislation for industrial tourism? California is considering a new sales tax break for car manufacturers

What kind of the sales tax break is under consideration? eliminate sales tax on new automobiles manufactured in California for out-of-state buyers

• What is the purpose of a pension stabilization account?  it will work like a reserve account to shield a pension from low city contribution years
• How does a reserve account like a pension stabilization work? The city will create a fund equal to 8% of the average of the last 3 years of city contributions to the pension
• Where is this happening? San Diego
• What did the city’s independent budget analyst think? the reserve account is fiscally prudent

Fox 5 | City to consider pension stabilization measures

Nebraska’s LB 862 gives a blanket exemption from gaming prohibitions to fantasy sports. 

Pretty clean and tidy. There’s a definition of fantasy sports too, also very brief with 3 key points:

• cash prizes are ok
• the amounts of prizes have to be known
• a winning outcome is based on a players knowledge and some statistics but definitely not an actual score of an actual game.

Lincoln Journal Star | Fantasy sports: Gambling or not? Nebraska legislature could weigh in

Utah is considering repealing its film tax credit economic development program. The author of the legislation wants to replace the tax credits with multi-million dollar incentive fund which will have greater taxpayer control.

Utah House Bill 162

Fox 13 Salt lake | Bill would scrap movie-making tax credits in Utah

• California is looking at switching the gas tax to a tax on mileage
• Indiana is looking to hike the gas tax and cigarette taxes for roads
• Michigan Republicans see road funding in an increase in sales tax
• Virginia is looking at a tax on mortgage filings and  property lien filings to fund roads

Americans for Tax Reform | Meanwhile, in the States…

California’s Initiative &  Referndum to tighten pensions won’t be on the ballot. 3 Reasons why:

• fundraising problems
• union opposition
• a pending US Supreme Court ruling will strengthen the position of pension reformers.

It’s a 2 year reprieve. Supporters will push for the November 2018 ballot.

Sacramento Bee | Measure to curb California public pensions is pulled – for now

Previously on July 8, 2015 InformedIntel:

• Attorney General found fantasy sports illegal in Maryland
• Maryland Legislature isn’t touching the issue
• Maryland Senate President said “somone needs to take action” but it’s not him.
• co-chairman of the General Assembly’s gaming-oversight committee said:
  • no move to shut down fantasy sports and no action to clarify that it is legal
  • he’d like to see consumer protections either regulatory or legislative
• Maryland Comptroller has regulatory authority & is studying whether the comptroller can tax fantasy sports

Washington Post | Md. legislature quiet on fantasy sports after attorney general’s call for action

• Simpson opposes economic development funds & those funds should go directly to school funding
• Simpson believes in the protection of dedicated funds. He opposes un-dedicating funds
• Lee supports property tax reductions offset by increases in sales tax or implementing a consumption tax
• Simpson supports tax dollars following the tax payer
  • If a tax payer bought goods in Dallas and lives in Marshall, the tax revenue should go back to Marshall

Longview News Journal | Texas Senate District 1 forum focuses on taxes, refugees

The Tax Foundation declares that Texas is #46 in State and Local tax burden. Here’s why:

• Texas state and local tax burden is 7.6% of state income
• Texas per capita state and local tax burden amounts to $3,340
• Most of the least state and local tax burden states forgo a major tax
• New York is #1 at 12.7% state and local tax burden as a percentage of state income
• California is #6 at 11% state and local tax burden as a percentage of state income

Where is this happening? Florida Legislature is trying to affect the Jacksonville, Florida municipal pension program.

What caused the Legislature to act? Jacksonville’s municipal pension program, including police and fire, has “massive debt” of $2.7 billion in 30 year actuarial costs

What does the Legislature want to do to the local pension? 

• The Legislature is considering allowing the city to implement a 1/2 cent sales tax increase to handle the pension liabilities
• With that sales tax increase authority, the Legislature may mandate requirements on the pension program such as:
  • pension restrictions for new employees such as:
    • mandatory 401Ks
    • moving the city employees into the state employee retirement system
  • start a new pension system for new hires

The Florida Times Union | Legislature could try to reshape Jacksonville’s retirement programs in push to approve half-cent tax

Add Texas to the list calling for divestment in Iran.

San Antonio Express News | Abbott pledges to expand ban on Texas investments in Iran

Valley Central | Gov. Greg Abbott: Texas should pass laws to block public investment in Iran

Previously on informedintel from September 22, 2015:

What is the Economic Incentive Oversight Board? 

• HB 26 created it
• Reviews the effectiveness and efficiency of state incentive programs and funds administered by the offices of the Governor, the Comptroller and the Department of Agriculture.
• Makes recommendations to the Legislature 

The Governor Appointees:

Adriana Cruz

• president of the Greater San Marcos Partnership
• treasurer of the Foreign Trade Zone of Central Texas
• UT-Austin

Trevor Pearlman

• Founder, Tregan Partners
• National Association of Royalty Owners
• UT-Austin & J.D. from SMU

Massey Villarreal

• president of Precision Task Group, Inc
• Texas A&M Corpus Christ
• Active in Mexican American & Hispanic Chambers of Commerce

Governor Abbott | Appoints Three To Economic Incentive Oversight Board

On Tuesday, 1.19.16, Attorney General issues opinion KP-0057 finding fantasy sports illegal gaming in Texas because it violates both the constitution and state statutes by:

• Involving betting. Fantasy sports includes a bet, the fee fantasy sports participants pay
• Being a game of chance. Those wagering have no control over how players perform.
• There is a previous AG Opinion that Guides. LO-94-051 requires that to fall into the statutory exception to be a legal bet, there must be direct participation in the betting activity.
• Your office pool is ok. As long as the house doesn’t retain funds, you’re A-OK.

The Houston Chronicle Editorial calls on firegihter pension reform. 

What’s happening? New GASB rules require pension liabilities to be noted on city financials.  That puts Houston’s unfunded liability at $5 billion, up from the previous $3.2 billion estimate.

Should we be surprised? No, InformedIntel had you covered back in January 2015 with New Debt Target for State andLocal Debt: Health Care Benefits

Any hurdles for this call for reform? Yes, a March 2015 argeement for a cease fire between the City of Houston and the Firefighters. Houston Firefighters and City of Houston Reach 3 Year Pension Deal

What reforms does the Houston Chronicle editorial propose?

• static number or fewer fire fighters
  • there are fewer fires
  • fire fighters spend their time on other things like EMT services which account for 85% of their calls
• stop sending fire trucks to medical emergencies
• cut fire stations and add paramedics

Houston Chronicle editorial: Out with the old

Republican House Members in Indiana have a plan, a transportation funding plan to:

• Raise fuel taxes by 4 cents a gallon to 22 cents
• Raise cigarette taxes by $1
• Raise sales tax on fuel by 4 cents a gallon (Roughly $24 per year per motorist)
• Charge electric car owners a $100 yearly registration fee
• Allow cities to charge a “wheel tax,” which is a charge of up to $25 on car registrations to help fund local projects.
• Study turning freeways into tollways

Republican leaders say:

• this plan will end transportation funding diversions
• and increase funding to other programs, like to pay for Medicaid and health programs
• “Hoosiers want investment in roads and infrastructure.”

Opponents say now is not the time to put a burden on hardowrking Hoosiers.

Supporters include Tobacco Free Indiana.

Republican House Leadership Plan counters the Governor’s plan which calls for:

• Earmark $1 billion toward road funds from:
  • a combination of state reserves
  • new bond money
  • financial commitment from the legislature for additional spending.
  •  no additional taxes
  • fund needed highway repairs for four years

IndyStar | House Republicans outline tax plan for additional road funding

Northwest Indiana Times | House Republicans’ transport bill hits the road

Who’s hiring consultants and lobbyists? DraftKings Inc. and FanDuel Inc. are beefing up their presence in the California Capitol

Remind me, what’s the Golden State doing with fantasy sports? the Legislature, in session, is moving a bill that would:

• Allow daily fantasy sports sites to operate after paying a fee and obtaining a license
• Unlike New York and Massachusettes the California Attorney General has not taken a position.

The Recorder | Fantasy Sports Sites Add Lobbying Muscle in Sacramento

Massachusettes Attorney General is pushing reforms for fantasy sports including:

• 21 years of age requirement
• defining fantasy sports as gaming
• truthful advertising
• self reporting by fantasy sports
• limit losses to $1,000 per month
• single account per individiual
• no use of scripts
• prohibit fantasy sports employees from participating in the fantasy sports

Read the AG’s rules: http://www.mass.gov/ago/docs/regulations/proposed/940-cmr-34-draft.pdf 

Which groups are opposed? Draft Kings and the Fantasy Sports Trade Association

What’s the opposition from Fantasy Sports?

• the 21 yers of age is arbitrary and pulled from gaming
• any comparison of fantasy sports to gaming

Daily Beast | Can Massachusetts Kill DraftKings?

Previously on InformedIntel: Lege Trend: Passing Bill to Daily Regulate Fantasy Sports. 4 States Act with 3 Different Approaches.

Which Plains State is looking at property tax reform? Nebraska

What had Nebraska done for property relief last cycle? 

• Cut spending growth from 6.55 to 3.5% 
• This cut added increased the Property Tax Credit Relief Fund by more than 45%

What proeprty tax reforms are in Governor Ricketts pocket?

• limit of 3%growth on aggregate agricultural land valuations across the state

Governing | Property Tax Relief Tops Nebraska Governor’s 2016 Priorities

What’s going on in California to change Prop 13 tax caps? close the loophole that allows businesses to avoid reassessment of  commercial properties by creatively structuring changes in ownership

What’s the legislation look like? SB 259 triggers review when more than 90% of ownership interests are sold or transferred to related parties over the course of three years.

Is this a familiar plan? yes, it mirrors, some of a 2014 compromise with business interests that fell apart when liberal groups backed out

Who is opposed to SB 259? Liberal groups and tax reformers that say this creates new loopholes

Sacramento Bee | AM Alert: Change to Prop. 13 property tax limits back on the table

What city has been at odds with its firefighter pension system? New Orleans.

How long has this tension existed? More than 5 years, and 14 months of mediation, and a 1990 lawsuit over $75 million in backpay for firefighters

Which leaders led the brokered deal? New Orleans Mayor Mitch Landrieu stood with Nick Felton, president of the firefighters union

What was the solution?

• Created a “pension task force made up of business and community members who worked with consultants to find a unanimous plan for saving the failing pension”
  • New Orleans is the 3rd city to use a task force.
  • The other 2 cities are: Chattanooga, Tenn., and Lexington, Ky.
• recommended a small property tax increase
• brokered this deal between the parties:
  • 12-year payment plan for the $75 million in backpay
  • $21 million upfront in backpay
  • Triples the city’s contribution to the pension plan to about $32 million
  • Guarantees pension payments will stabilize 
  • Eliminates retirees’ cost-of-living increases until the pension is nearly fully funded
  • Gives the city oversight of the fund’s investments and governance.

Governing | Mediation Ends Longstanding Firefighter Pension Dispute in New Orleans

• In Septmeber Alaska Department of Administration told cities they want cities to share in liabities for its TRS and its ERS.
• In 2008, AK switched from defined benefit to defined contribution & fixed the unfunded liabilities for cities
• In August of 2015, the state Attorney General issued an opinion that the state isn’t liable for some of the pension liabilities, the cities are

Newsminer | Public pension fight heating up: State, municipalities spar over liabilities

TEXPERS | Lessons from Alaska: The switch to defined contribution plans continues the acrimony and financial pain

Previously on Informed Intel: AK Pension Reforms. Agency Rebuffs Legislature. 10.1.15:

What’s the governmental infighting in Alaska?  The Legislature passed a series of pension reforms that the retirement system agency won’t follow.

What pension reforms were passed to cause the brouhaha?  Use of real market values each year and not averages (AKA asset smoothing is bad)

Where is the governor in this?  His staff says the agency is acting pridently and suggested the Legislature didn’t know what they were doing.

Alaska Dispatch News | Alaska retirement board challenges Legislature on pension payments

Tyler Morning Telegraph editorial calls for the abolish of the Film Commission based on 3 reasons:

• The state of Texas doesn’t owe the filmmaker anything more than a place to make his or her films
• End Hollywood handouts because Hollywood is hostile to America’s founding principles according to Representative Shaheen
• Not the right use of tax dollars as is supported by Comptroller analysis which says any economic benefit from making films is short lived.

Previously on informedintel: Legal Trend: Texas Can Deny Film Credits for Distasteful Films (12.30.15)

Why is a court looking at Texas Film Credits? Because Texas denied film credits for Machete due to “perceived political nature.” as Texas says statute permits if the film shows Texas in a negative light.

What did the courts do? The lower court and the  Fifth U.S. Circuit Court of Appeals agreed that Texas may deny film credits based on its opinion of a film.

WallStreet Journal Law Blog | Texas Can Deny Tax Breaks to Films it Doesn’t Like, Appeals Court Rules

Texas Legislative Council was kind enought o comb through 2015 legislation to tell us all about other interim studies buried deep in bills & resolutions.

We’re talking about these bills:

• Study by the Aerospace and Aviation Office of the Texas Economic Development and Tourism Office 
• What the report will answer: what else can be done to support aerospace and aviation
• When the report is due: December 1, 2016 
• What bill triggered this: SB 458, Section 1

• ​Joint Interim Committee on the Cruise Industry 
• What the committee will answer: economic development of a cruise industry on the Texas coast between Calhoun and Cameron Counties 
• When the report is due: no report required
• What bill triggered this: HCR 108

TLC | Interim Studies Established by Enrolled Bills and Resolutions 84th Legislature

• Comptroller Hegar revised revenue collection estimates down by $3 billion
• The revision is for revenue collections to equal $110 Billion 
• The revised revenue collection remains above the Legislature’s $106 Billion Budgeted Need

WOAI | Oil Slump Will Cost Texas $3 Billion in Revenue

Fantasy Sports. 4 Large States, 3 approaches.

• New York & Illinois. Daily Fantasy Sports targeted by Attorney General. Facing prosecution.
• California Legislature moves a bill to daily regulate fantasy sports.
• Texas Radio Ads and requests that Attorney General Paxton not get involved.

What does this California bill do? Arm yourself with information before this comes to Texas.

• State regulation and licensing through the California Department of Justice
• State fee for operating in California
• Preemption of local regulation of fantasy sports
• Require that fantasy sports operations verify the age of players

 California Assembly Bill 1437

Sacramento Bee | Daily fantasy sports regulation bill passes California committee

Houston Chronicle | On fantasy sports, a familiar argument aimed at Paxton

The Tax Foundation ranks Texas as #29 in recieving federal funding. Federal unds in Texas account for 32.6% of state general revenue.

How much federal funds are other states taking in percentage of their budget? On the low end are North Dakota (19.0 percent), Hawaii (21.5 percent), Alaska (22.4 percent), Virginia (22.9 percent), and Connecticut (23.4 percent).

What do these low federal fund states have in common? High tax collections.
 

Why does it matter that Texas is #29? In HD 7 campaign the taking of federal funds is painted as a no-no by candidate Watts. 

HD 7 is a Republican Primary battle royal to replace Simpson. In 1 corner, there is Watts and in the other corner, there is former Longview Mayor Dean.

Longview News Journal | Philosophies clash in debate between Dean, Watts

House District 7. David Simpson. Longview. Republican match up between David Watts of East Mountain and former Longview Mayor Jay Dean.

Now that we’re up to speed on where these candidates are coming from,  let’s see what they said about taxes:

• Watts: Eliminate the Property tax. Adopt a consumption tax. (sales tax)
• Dean: That puts the sales tax rate over 11 percent.

Longview News Journal | Philosophies clash in debate between Dean, Watts

Where is this happening? Midland TX was considering $22 million in new debt

What was the vote:  It failed 5 to 2

What were the arguments agsindt new debt?

• Midland is facing economic downturn
• The new bonds did not require voter approval
• pay as you go is a better route

Empower Texas | Midland City Council Pumps Brakes on Debt Proposal

What state is still struggling with passing a budget? Pennsylvania

What triggered the pension reforms  in PA? A group of Senators want to reform pension systems because their version of ERS and TRS are huge budget cost drivers

Sound Familiar? Remember 2015’s Texas Senate Liberty Caucus & Ted Cruz’s Freedom Caucus

Governing | After Pension Overhaul Collapses Budget Talks, Pennsylvania Lawmakers Regroup

“Toyota, Liberty Mutual Insurance, Charles Schwab and State Farm Insurance, North Texas is the economic development envy of the country.”

What’s the biggest result from this economic development boom? More commercial development follows the economic development awards.

Dallas Morning News | 2015 real estate boom is the biggest D-FW has seen in decades

Why is a court looking at Texas Film Credits? Because Texas denied film credits for Machete due to “perceived political nature.” as Texas says statute permits if the film shows Texas in a negative light.

What did the courts do? The lower court and the  Fifth U.S. Circuit Court of Appeals agreed that Texas may deny film credits based on its opinion of a film.

WallStreet Journal Law Blog | Texas Can Deny Tax Breaks to Films it Doesn’t Like, Appeals Court Rules

Ditto for state court: 3rd Court of Appeals in Machete Chop Shop

Watchdog points to then Comptroller Susan Combs 2012 report on the proliferation of special districts.

Lest not forget the House Special Purpose District Interim Charge to reform districts, make them more transparent, for the eliminationor improvement  thereof, and/or streamline districts.

The far right uses the issue to:

• Call for the elimination of Travis County Health District
• Point out the lucrative nature of special districts for special interests

For those who buy their champage, cava, proseco, or sparkling wine by the gallon, here’s the per gallon tax rates across the U.S.:

#1 Florida $3.50 per gallon

#2 Alaksa $2.50 per gallon

#3 Hawaii $2.12

#4 Oklahoma $2.05

#5 South Dakota $2.07

#6 Minnesota $1.82

#7 Connecticut $1.80

#8 Iowa $1.75

#9 Alabama $1.70

#10 Louisiana $1.59

#29 TEXAS $ 0.52

#38 California $0.30

Most states tax champagne like their tax a chardonnay or a delightful red bordeaux. But, 15 states, including Texas use a separate tax rate for the bubbly. 

Tax Foundation Champagne Taxes 

What special session? the 29th Special Session of the Nevada State Legislature

What’s the issue before the Legislature? Faraday Future wants to builda  $1 Billion manufacturing facility for electric cars north of Las Vegas.

• NV legislators will consider $ 215 million dollars in tax breaks to the company over 15 years
•  Amend laws to allow local government agencies to waive licenses or permits
• Amend laws  to allow financing for water, rail and natural gas improvements
• Revise and fund a special workforce training program for Faraday’s expected 4500 workers.

Remind me is the Governor an R or a D? Governor Sandoval is a R

Is this the 1st time Nevada changed laws for economic development purposes in special session? No, last year it did the same for Tesla. 

• Tesla received $1.3 billion in incentives to build a $5 billion gigafactory east of Reno

News4 Reno | Nev. legislature special session underway for Faraday Future deal

Boston College Center for Retirement Research released a report this week that showed higher returns on investments for pensions than 401Ks.

Two highlights:

• “defined benefit plans outperformed 401(k)s by an average of 0.7 percent per year, even after controlling for plan size and asset allocation”
• Most 401Ks rolled into IRAs which have even lower returns on investment

Governing | Tradition Wins in Retirement

What happens when local voters approve a 1/2 cent sales tax increase for East Montgomery County Emergency Service District #7 & the Comptroller Voids the tax increase?

The District appeals for an opinion to the Attorney General to ask whether the Comptroller has the authority to void the tax increase.

What’s the Comptroller reasoning for voiding the tax increase? The vote count included areas that should ahve been excluded. Specifically, the voting area included a small economic development zone that should ahev been excluded.

So what if more voting area was included, why should that matter? The overlapping rea now has a sales tax rate that exceeds the permitted 2 percent.

East Montgomery County The Observer | East County fire department’s tax hike in limbo

Trying to avoid another scenario like NY, large fantasy sports companies are coming to a Legislature near you to propose self-regulation.

What regulation do fantasy leagues want? online gaming authority and regulation

What buzz words are fantasy leagues using to support their online gambling push?

• common-sense legislation
• ensure that fantasy contests are legal
• safe for consumers
• provide the same great entertainment value
• welcome taxation
• support restricting access for underage players
• support providing resources for problem gambling.

Sacramento Bee | DraftKings, FanDuel ask California to regulate daily fantasy sports

• The father of 401Ks says that they were ““never intended to cover everyone’s retirement.”
• The weakness of 401Ks grew in the Great Recession
• 401Ks eat away at retirement security with high fees and poor investment options
• Replacing a Pension with a 401K is risky

After naming Dallas the highest debt incurring city in Texas, Empower Texas also says the reason for high debt is pension systems. 

Empower Texas calls on future pension liabilities to be included on Dallas’ balance sheet.

It also calls pensions:

• costly for taxpayers
• risky for government workers
• links pension systems to local government bankruptcy

Empower Texas | Dallas Leads Texas Cities in “Hidden” Debt

The winner is Dallas.

Empower Texas says:

• Dallas hides billions in debt.
• Billions in debt is not disclosed on financial statements due to out dated accoutnign methods
• 3rd highest taxpayer burden for cities in the U.S.
• Each Dallas citizen burden of this debt is $17,900
• The reason the problem isn’t fixed: tax payer funded lobbyists hired by cities

Empower Texas | Dallas Leads Texas Cities in “Hidden” Debt

Michigan had allowed for temporary return to work provisions for teachers. This allowed teachers to retire, collect a pension, and return to work without jeopardizing their pension.

This return to work provision sunsetted, and the Michigan legislature continued the return to work program to meet 2 goals:

• a shortage of substitute teachers
• a shortage of full time teachers in certain subjects

What requirements exist to allow for return to work while collecting teacher retirement benefits?

• The subject area of the teacher has to meet defined shortage subject areas
• Return to work teachers may only do so for 3 year terms.
• Substitute teachers, who return to work,  receive full benefits as long as they make no more than 1/3 of their final average compensation in a year.

WILX | MI Legislature OKs Letting Retired Teachers Return with Pension

Congress is set to pass a permanent ban on internet sales tax. That’s the tax paid on access to the internet and collected by states and local governments.

What you need to know:

• Texas is 1 of 7 states that collect an inernet sales tax (Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas & Wisconsin)
• Advocates supporting the ban on internet sales tax say now is not the time to risk new taxes on the growing digital economy

The Hill | Seven states to lose millions from Internet tax ban

This week the state told the Texas Supreme Court that the lower courts got it wrong. That the 2013 tax levied on small tobacco is not unconstitutional.

Bonjour 2017 legislation to fix this mess.

Law 360 | Texas Asks State Justices To Revive ‘Small Tobacco’ Tax

• 27 of 46 states, with Rainy Day Funds,  have no clear directive for saving
• Texas Rainy Day Fund is the Second Largest in terms of dollars
• Minnesota sets the level of budget risk it wishes to offset with Rainy Day Funds
• 5 States (Connecticut, Minnesota, Nebraska, Oregon, Utah) review their Funds to determine a sufficient maximum or targeted balance for Funds

3 Recommendations from PEW Charitable Trust Review 

• States need to set an explicit purpose for the Fund savings and narrowly define it in law
• States need to study economic volatility to align savings and spending
• States need to determine the degree of risk sought to be offset

California had no idea how much CALPERS had paid out in management fees.

This triggered other states to make pension management fees more transparent. 

5 Things to Know:

• Over 25 years, California paid pension equity managers $3.4 Billion
• Performance fees, a fee attributed to alternative investments, are poorly reported by pension plans.
• CALPERS is leading the charge to adopt proposed industry-wide disclosure standards
  • Standards will require managers “to make clear the performance fees they are taking off the top of investment returns”
  • Written by Institutional Limited Partners Association (ILPA)
  • Final disclosure standards will be out in January 2016
• South Caronlina is calling for transparency
• Washington state is calling for transparency

Governing | Public Pensions Challenge Private Equity Fees

$627,000 per year, or $22 Million over the 30 year term with inflation, is the estimated loss to the City of Laredo if it approves a TIRZ to facilitate the building of a new subdivision. 

LMT Online | Firm: TIRZ would be costly

Houston City Council this week approved a new TIRZ for Montrose. 

The goal of creating the new Tax Increment Reinvestment Zone is to:

• repair and enhance infrastructure
  • new sidewalks
  • drainage system repairs
• enhance transportation & parking options

Houston Public Media | Houston City Council Unanimously Approves Establishing A TIRZ For Montrose

Houston Business Journal | New inner-Loop TIRZ approved

• Total Texas Enterprise Fund Allocations $577,357,696  
• State Auditor Pointed out 11 projecs that received $222.3 million with no TEF application
• TEF has created 77,269 jobs
• 92% of TEF cost benefit analysis were erroneous according to the State Auditor
• Article 1, Strategy C.1.4
• 3 largest TEF awards account for 39,810 new jobs
• 3 largest TEF awards account for a direct investment return of $3.2357 billion
• 49% of TEF awards did not have documentation that the award included consistent review of all required components of application according to the State Auditor.

​

TPPF also highlights these specific awards; see if your client is on the list:

• Texas A&M University System and Lexicon Pharmaceuticals 
• Sematech
• Texas Instruments
• Tyson Foods
• Hilmar Cheese Corp.
• Samsung Austin Semiconductor

TPPF| Spotlight Texas Enterprise Fund

Which local government wants to use a TIRZ to build a rodeo facility? Stephenville is considering it.

Would it be limited to rodeo use? No, the annual tractor pull or a farmer’s market are also events considered for the venue as Stephenville has no large facilities that can accommodate large gatherings.

What’s the local government goal? 20 year goal to enhance the airport & surrounding area to attract investment & development.

Stephenville Empire-Tribune | City council hears report on multi-purpose facility study

What state is returning excess revenue?  Wisconsin is returning excess revenue it thought it  needed to do work on Lambeau Field. 

How was the revenue collected?  A local sales tax surcharge with revenue required to go to Brown County stadium district to build a reserve fund for maintenance and operating costs of the iconic Green Bay stadium

The lucky recipients of the excess sales tax revenue are… Local government agencies in Brown County.

How was the funding returned to local governments? A bill signed by Gov. Scott Walker

How much excess sales tax revenue was collected?  $17.6 million.

How is the excess funding being divvied up?

• 25% to Brown County ( $4.4 million)
• 24 municipalities in Brown County will get the rest based on population.

What can the local governments do with the excess revenue? 

•  property tax relief
•  tax levy-supported debt relief 
• economic development.

Governing | Wisconsin Will Return Excess Stadium Money to Local Governments

Attorney General Opinion Request 0081- KP seeks clarification on education vendors.

Who is requesting the Attorney General Opinion? Senator Nelson

Why the Attorney General Opinion? 2015 contracting reforms and the Education Code conflict as to conflicts of interest with education vendors.

What question does Chairman Nelson want the Attorney General to answer? Whether 2015’s SB 20 Government Code provisions conflict with existing Education Code Section 51.923.

What’s the difference in these 2 code sections? SB 20 sets up a Government Code prohibits an agency’s govenrment board from entering into a contract with a vendor if a member of that government board has a financial interest. Whereas, the Education Code does the opposite. The Education Code permits institutions of higher education to enter into contracts with vendors in which members of the higher education institution;’s governing board have a financial interest. 

Moody’s is warning that its ratings analysis will include cybersecurity.

Moody’s looking to big picutre cybsersecurity:

• cyber defense
• cyber detection
• cyber prevention and response

Moody’s specific analysis will include:

• Nature of the affected assets or businesses 
• Duration of service disruption and expected time to restore
• Scope of the affected assets or businesses 

Why does this matter to Texas? Every state entity and local governmental entity that issues bonds will be impacted.

Think Advisor | Threat of Cyberattacks Could Now Affect Moody’s Ratings

Legl Tech News | Threat of Cyberattacks Could Now Affect Moody’s Ratings

Who is behind the push for local referendums on a soda tax? “Health Advocates” part of an international strategy backed by billionaires in New York and Texas, including former New York City Mayor Michael Bloomberg
 

What’s the 2016 push? Targeting up to 12 cities nationwide including Austin, TX

Politico writier calls the soda tax push  “a gift for Republicans” that could turn a “a super-sized Slurpee could be turned into a symbol of freedom”

Ted Cruz is on the case. In 2013 he offered a budget amendment that would have “prohibited federal regulations on the size or quantity of food and drinks.”

 Laura and John Arnold​ Foundation also on the case. The Arnolds’ Action Now Initiative is allegedly working with Anthony Holm
Politico | War over soda taxes coming to a polling place near you

Grist | Soft drink tax war to bubble up in cities across the U.S.

From 1982-2014, cigarette taxes in Texas increased 812%.

Sin Taxes in Texas account for:

• $3.8 billion in 2015
•  7.3% of all tax collections
• 3.5% of total state revenue

The Top 3 Sin Taxes are:

• Cigarette & tobacco taxes account for $1.5 billion (2.9% of total Texas revenue)
• Gambling accounted for $1.2 billion ( 2.19% of total Texas revenue)
• $1.1 billion from alcoholic beverages (2.16% of total Texas revenue)

Where does Texas fall compared to other states?  In 2014, Texas sin taxes accounted for 4.6% of its total revenue, that is slightly above the national average of 3.8%. Rhode Island leads the nation 15.9% of its revenues rely on sin taxes. 

Texas Comptroller | How Texas Taxes “Sin”

How did TIRZ money get to a redevelopment project?  Midland City Council approved funds from a dissolved TIRZ & the dissolved Downtown Midland Management District.

Did all the funds in the disolved TIRZ and MMD go to redevelopment? No, the economic development recipient had sought $2.9 M and recevied $900,000.

What’s the redevelopment project? Asbestos abtement and redevelopment of Midland’s Vaughn Building by Houston-based Innova Development company

Keep it in your pocket for the interim charges forcused on either economic development or MMDs.

Midland Reporter Telegram | Vaughn Building asbestos removal back in motion

Awaiting re-hearing from the 3rd Court of Appeals is a franchise tax lawsuit involving American Multi-Cinema Inc. The Comptroller maintains that if the Cineman’s Appellate win stands, Texas would lose a total of $7.1 Billion:

• $1.1 billion  in franchise tax revenue loss per year
• 4 years’ worth of refunds totaling another $6 billion

Bonjour Ways & Means Interim Charge #3

San Antonio Express News | Comptroller sees potential ‘enormous’ revenue hit from tax case

Previously on Information Intelligence:

Which city cut its pensions for police and fire? Chattanooga

What cuts did Chattanooga make?

• Reduced cost of living adjustments by amending the guaranteed annual 3% cost of living rate to an average of 1.5%, depending on the level of benefits
• Increased the employee conributions while reducing the city contributions.

How was Chattanooga able to do this? 

• The mayor first formed a 18-member task force
• The task force recommended the cuts
• The cuts reduce the city’s $150 million unfunded pension liability
• The cuts also reducde the ” increasingly unsustainable city contribution to the pension fund”
• Increased employees’ pension contributions by nearly 40%
• Saving Chattanooga  more than $227 million over the next 24 years

Did pension recipients sue? Yes, but a federal district judge this week ruled in favor of Chattanooga by finding:

• the cost of living adjustment was not a vested right nor was it a contractual obligation
• the cost of living adjustments were separate and apart from vested rights listed in city ordinance.

Chattanooga Tiems Free Press | Chattanooga wins pension lawsuit filed by retired police officers, firefighters

Governing | Pension Cuts Win Federal Court Support in Chattanooga

Leave it to the number crunchers to up the transperancy quotient.

What’s triggering the new disclosure rules for economic development deals? A change in GASB ( Governmental Accounting Standards Board) rules.

What’s the new GASB rule require?  As of 2017, governments will have to begin “tracking, tallying up and reporting the tax incentives awarded on their annual financial statements as lost tax revenue”

But, there’s a catch, one thing that need not be disclosed: The identity of the company receiving an incentive. The GASB rules only require voluntary disclosure of the identity of the economic development incentives.

3 Reasons critics think the name of companies receiving incentives should be disclosed:

•  economic development deals don’t help small business 
• don’t require details on how tax rebates are spent (think about the debate around how film tax credits are spent)
• reporting the incentive as lost revenue will negatively impact government’s finances

Governing | 3 Things the New Tax Incentive Disclosures Rule Won’t Reveal

• Pension systems have failed to disclose, or ask, how much private equity firms keep in performance fees
• When performance fees paid by pensions is revealed, the rulemaking/agency protocol/legislative solutions are 3 fold:
  • tougher scrutiny of private-equity investments
  • cut back a pension’s private equity holdings
  • negotiate lower fees
• Examples of performance fees paid around the country by state pension systems:
  • CALPERS Billions over 17 years above what was disclosed
  • New Mexico $6.3 million in performance fees
  • South Carolina $35.3million in performance fees
  • Kentucky $34.1 million
  • New Jersey $91.3 Million in performance fees
• Pension funds avoid disclosing performance fees because:
  • accounting rules didn’t require public reporting
  • returns were high enough to mitigate any cost concerns
• The issue of performance fees paid came to light nationwide after an activist blog publicly asked a CALPERS official for the amount the pension system paid to private equity firms
  • When CALPERS investigated, it was determined that the private equity firms did not know th e answer.

Bonjour, House Pension Committee Interim Charge #5

Wall Street Journal | Pensions’ Private-Equity Mystery: The Full Cost

New York Times | Calpers Paid $3.4 Billion to Private Equity Firms

• Texas wireless phone tax rate is 11.53% making it the 16th highest
• Texas combined wireless phone taxes, fees & charges total 17.99% making Texas #21
• The Top 10 states have wireless bills with fees & taxes that account for 20% of a wireless bill

Tax Foundation | Record High Taxes and Fees on Wireless Consumers in 2015

What’s the new high speed rail project? High Speed Rail from Los Angeles to Las Vegas

Which economic development office is involved and why: Nevada Governor’s Office of Economic Development because the Rail Authority signed an exclusive arrangement with a Las Vegas Company. (And Nevada relies on gaming tax revenues)

8 Facts to Know about the Project:

• It has an exclusive relationship with XpressWest ( a Las Vegas based company)
• no state dollars
• zero-emissions train
• half the time of the travel to 80 minutes
• cost less than $100 round-trip
• will ultimately connect with the California High Speed Rail Project
• Estimated to cut road traffic by 25%
• Partnership with a Chinese firm that has pledged $100 million for the $8 billion project

Sacramento Bee | Project to link Vegas and California with train gets boost

 Who is backing a cigarette tax increase? Tom Steyer

How much is he putting into it? $1 million

What’s the tobacco tax increase proposal look like?

• $2 per pack increase
• Applies to e-cigs too
• reduce smoking rates and to better fund Medi-Cal (California low income health care program)
• offer higher reimbursement rates for doctors who see Medi-Cal patients

​Who else is backing the tobacco tax increase?

• California State Council of Service Employees put in $2 million
• alliance of public health, labor and healthcare group 

An Urban Land Institute luncheon in Houston revealed the following differences with the city’s TIRZ districts:

• Budgets.  Vary from $500,000 to $10,000,000
• Redevelopment Partners Necessary. For a TIRZ to work, there needs to be a redevelopment plan that works with a corresponding Muncipal Management District
• Economic Disparity. In poorer areas the TIRZ will fix sidewalks, improving street lighting, projects the city cannot tackle. While in property wealthy areas, critics say TIRZs are a “cash cow for wealthy districts to undertake projects without oversight or voter input“

Refreshing Our Recollection: Interim Charge #1 House Committee on Special Purpose Districts. 

Houston Business Journal | Not all TIRZs created equal

Both the Beaumont Enterprise and the Midland Reporter-Telegram ran editorials supporting raising the gas tax. 

• 2015 Prop 7 is not enough for transportation funding
• The state still needs $5 billion per year for transportation funding
• “The only realistic answer is increasing the gasoline tax, which hasn’t changed since 1991”

Midland Reporter-Telegram | Texas highways need more funding, higher gasoline tax

 Base pension contributions on more realistic investment assumptions.

Charles Chieppo, research fellow at the Harvard Kennedy School’s Ash Center,  3 point rational is:

• A libertarian paper published by Reason
• Recommends Phasing in the more stringent financial standards
• Suggests a rate of 5-6%, not the current 8%

Governing | A Simple (But Hard) Way for Governments to Stay Out of Pension Trouble

Reason Policy Brief | Best Practices for Setting Public Sector Pension Fund Discount Rates 

Mandatory Sales Price Disclosure is no longer part of the goal of the City of Austin property appraisal litigation.

Austin Business Journal | Sale price disclosure off table in Austin property appraisal lawsuit