** REVISION **
SENATE

NOTICE OF PUBLIC HEARING

COMMITTEE:    Intergovernmental Relations  

TIME & DATE:  9:30 AM, Wednesday, December 02, 2015  

PLACE:        E1.012 (Hearing Room)  
CHAIR:        Senator Eddie Lucio, Jr.  

The Senate Committee on Intergovernmental Relations will hold an organizational hearing and will have a preliminary overview of the following charges:

Charge 2: Examine the processes used by home rule municipalities to adopt ordinances, rules, and regulations, including those initiated by petition and voter referendum. Determine if additional statutory safeguards are necessary to ensure that ballot language accurately describes proposed initiatives. Identify ways to improve transparency and make recommendations, if needed, to ensure that local propositions and the means by which they are put forth to voters, conform with existing state law.

Charge 3:  Review natural disaster preparedness planning and coordination in the wake of a growing range of threats. Evaluate whether existing processes maximize regional cooperation to rebuild housing and infrastructure, and allow for the timely dissemination of funds to units of local governments for reconstruction following a federal declaration. Develop recommendations, if necessary, to improve the efficiency of disaster recovery efforts, incorporating best practices identified from other states, as well as lessons-learned from past reconstruction efforts in Texas.

Charge 6: Examine ways to improve government accountability in elections regarding the issuance of public debt. Include a review of the information that is currently provided to individuals in the voting booth and provide statutory recommendations, if necessary, to improve transparency.

The hearing will include invited testimony only.

** See Committee Coordinator for previous versions of the schedule **
 

Revenue

TAXES | THE INTERIM CHARGES

• Agriculture & Livestock: property tax and rollback rates
• Appropriations: revenue sources, reliance on oil & gas; Strategic Fiscal Reviews; Rainy Day Fund Projections & Accountability
• Economic & Small Business Development + Energy Resources: reliance on oil & gas revenue
• Higher Education: community college taxing districts
• Special Purpose Districts: tax assessments by municipal management districts
• State Affairs: preparing for state revenue disaster
• Ways & Means: rising property tax levies & taxpayer dissatisfaction; repeal of franchise tax; ongoing tax litigation impact on revenue stability; monitor homestead exemption increase

TAXES | YOUR INFORMED INTEL

• Rollback Rate for City Property Tax Tops Ship Channel Agenda
• Big City Mayors: Support Local Control Over Property Tax Revenue
• TPPF: Slow Economy = Property Tax Reform. 5 Points
• A TIRZ? A MMD? No,It is an Innovation District coming to a TX City near you
• TIRZ Reform & Houston Mayoral Race. 3 Things to Know Now
• Lege Trend: State Reigning in Local Governments
• Eco Devo Trend: Eco Devo 101. TIRZ Begets a University Facility
• 4 Reasons not Taxing Municipal Bonds is Good. Good for Stadiums and Hospitals
• Comparison Charts on State and Local Spending. Stadiums or Roads get more tax revenue?
• Trend: Tax the Cloud. 5 Examples from across the country
• 3 More Commercial Property Appraisals Lawsuits Come to Light
• Key Point from Lt. Gov. on Property Appraisals in Corpus Christi
• Pro/Con: 3 Points from Mayor Adler / 3 Points from Sen. Bettencourt. Austin Commercial Property Tax Valuation Lawsuit
• Commercial Appraisal Lawsuit Status Check: 1 new lawsuit. 6 Homeowners. 1 State Senator Bettencourt weighs in with Interim Charge
• Denton County on Full Alert to City of Austin Commercial Property Tax Suit
• Lege Trend: Business Tax Credits for GEDs
• AL Special Session to fill Budget Shortfall. 7 Republican Supported Revenue Sources
• Rep. Wray on the Franchise Tax/Margins Tax 2015 Reforms
• Kolkhorst Goal for Business Taxes
• Margin Tax: TXSupreme Court & the $1.5 Billion Question
• Franchise Tax Loss for Out of State Companies
• Lege on the Horizon: Pass Through Payments & the Franchise Tax
• Legal Trend Forecasting: Margins Tax Woes
• #1. 11th Year in a Row. TX is #1 for Business
• Economic Benefit of Margin Tax Reform Courtesy of TPPF
• City Council Moves Forward with Spaceport to Benefit Airport

ECONOMIC DEVELOPMENT | THE INTERIM CHARGES

• Business & Industry: business tax credits for employing those receiving government benefits or consistently having faced significant barriers to employment
• Culture, Recreation & Tourism: economic development via heritage, cultural, recreational, historical, nature, and preservation practices
• Defense & Veteran Affairs: economic development around military bases
• Economic & Small Business Development: attract more businesses; Texas’ competitiveness; incentives for growth & expansion of small business; best practices for economic development incentives
• Environmental Regulation: incentives for consumers & retailers to promote hazardous waste disposal
• Investments & Financial Services: investment climate and resources bringing new businesses & jobs?
• Natural Resources: coastal economies
• Public Education + Economic & Small Business Development: incentives for business to invest in training and equipment for schools
• Urban Affairs: low income tax credit in light of U.S. Supreme Court ruling in TDHCA v. Inclusive Communities
• Ways & Means: SAO Review of Chapter 313; Marine Goods taxation competitiveness

ECONOMIC DEVELOPMENT | YOUR INFORMED INTEL

• West Texas TIRZ incentives for Hotel. Who. What. How much.
• Eco Devo In Bandera: Where Economy Meets Ecology
• A TIRZ? A MMD? No,It is an Innovation District coming to a TX City near you.
• Eco Devo Trend: Eco Devo 101. TIRZ Begets a University Facility.
• ECO DEVO: $9 Million in economic incentives for Panhandle Solar Project
• New Economic Development Office at the Port
• Poll Results: 4 Things that Matter to Small Business. Economic Development Programs to Choosing Texas.
• Lege Trend: State Audit Powers on Corporations that Get Eco Devo Dollars
• Eco Devo Deal. Geographically Limited Jobs. $750Million.
• Eco Devo: US Senator Opposition to Ex-Im Kicks TX out of Running for New Corporate Offices
• Tax Incentives on the Chopping Block in the South via a Constitutional Amendment
• 5 Reasons Tracye McDaniel of TEDC Says Texas Dominates Economic Development
• Data Center Tax Incentives State by State
• SAO: Auditing the 313 Agreements. 6 Fixes for 313s

PENSIONS | THE INTERIM CHARGES

• Appropriations: pension funding & actuarial soundness
• Insurance: 2013’s HB 2929 impact on ERS and TRS
• Pensions: impact of global market; GASb compliance; unfunded liabilities in LECOS & ERS; structural reforms for actuarial soundness; investment performance benchmarks
• Select Committee on State & Federal Power & Responsibility: pension divestment in foreign nations

PENSIONS | YOUR INFORMED INTEL

• Pension Liabilities Downgrade Dallas Debt Rating. 4 Reasons Why. 2 Things That Would Up the Rating
• Trend from the East Coast: Pension. Police. Fire. No City Control. No Legislative Action to Help City
• Trend: Pension Liabilities Threaten Municipal Bonds. Bondholders v. Retirees
• Lege Trend: Pension Divested from Coal to the tune of $340 Million
• AK Pension Reforms. Agency Rebuffs Legislature
• 30 State Pensions Ban Investment in Iran
• Campaign Trend: Pension Divestment
• Lege Trend: Pension Forfeiture Reform
• TexPERS Counters TPPF on Pension Reform
• TPPF: 4 Reasons Texas has a $57 BILLION Pension Problem
• Initiative & Referendum: Pension Reform in 3 steps
• Moodys Downgrades Houston Debt Rating
• Local Pension Funding. One City Mayor Calling for Funding Shift to the State
• Legal Trend: Sue For Pension Data. Lawsuits Bandied About in Houston

STATE CONTRACTING | THE INTERIM CHARGES

• Appropriations: study state contracting trends, monitor transparency & judiciousness
• General Investigating & Ethics: contracting practices at major agencies. more reforms? is there public confidence and trust?
• State Affairs: Contract monitoring, management, performance evaluation and notifications; best value recommendations; prevention of conflict of interest

STATE CONTRACTING | YOUR INFORMED INTEL

• AG Opinion: Local Contracting Opportunities. Calling All Parking Enforcement Aficionados.
• Contract Reform Update. LBB State Contract Database. New Info at your Fingertips for State Contracting.
• State Contracting. TXSCT says certain parts of state contracts are private.
• Procurement Contracts: Data Security Clauses
• SAO Report. Top 4 Reasons the GLO Contracting Process is Not Great.
• Contract Reform: Link Time. SAO, Strike Force Report. All in One Place.
• State Auditor: More Procurement Contracting Issues that Can Kill Your Contract

SHARING ECONOMY | THE INTERIM CHARGES

• Business & Industry: how to make Texas a sharing economy hotspot
• Economic & Small Business Development: how to support & grow the sharing economy in Texas

SHARING ECONOMY | YOUR INFORMED INTEL

• Legal Trend: Sharing Economy Leads to More Lawsuits. Leads to More Legislation.
• Private Property Rights. Sharing Economy. Local Ordinance Hoopla.
• Campaign Trend: Private Property Rights. Short Term rentals. The $3.6 Million + Local Election Issue
• Are ride share regulations a taking of cab property?
• Sharing Economy: Ride Share Fee to Offset Cab Costs.
• Legal & Lege Trend: Air Share Regulation
• NY Governor Says State Should Regulate Ride Share. Not Local Governments. 3 Reasons Why.
• Local Gov. Trend: Deregulate Ride Share to Level the Field
• Regulatory Trend: Update to Ride Share Rules from the Silver Mine State
• Ride Share. Sharing Economy. Regulatory trend: Employees or Independent Contractors

DEBT | THE INTERIM CHARGES

• Elections: improve transparency in bond elections
• Public Education: facility bond debt
• Special Purpose Districts: Municipal Management District debt

DEBT | YOUR INFORMED INTEL

• TX #11 on State & Local Debt Per Capita
• Pension Liabilities Downgrade Dallas Debt Rating. 4 Reasons Why. 2 Things That Would Up the Rating
• Moodys Downgrades Houston Debt Rating.
• 107 local bond elections. November. 2015. 13 Category Breakdown of Bond Projects.
• 3 Points from Empower Texans on Tarrant County JPS Debt
• May 9th Bond Election Results. Odds of losing 1 in 5ish.
• 4,700 Signatures Opposing Montgomery County Bond Proposition
• The Next Appropriation Challenge: State Debt from the mouths of elected officials

• The Top 10 States:
  • 1. Wyoming
  • 2. South Dakota
  • 3. Alaska
  • 4. Florida
  • 5. Nevada
  • 6. Montana
  • 7. New Hampshire
  • 8. Indiana
  • 9. Utah
  • 10. Texas 
• The break down for all of Texas businesses tax rankings for 2016
  • #41 corporate tax rank
  • #6 individual income tax rank
  • #37 sales tax rank
  • #15 unemployment insurance tax rank
  • #34 property tax rank
• Why is Texas #6 on individual income tax rank? Because Texas applies the gross receipts taxes to limited liability corporations (LLCs) and S corporations 

Tax Foundation | 2016 State Business Tax Climate Index 

Which Court Ruled What? Colorado’s highest court ruled that lawsuit lending entities must comply with pay day lending rules. 

What’s the background of applying pay day lending laws to lawsuit lending?  The State Consumer Credit Commission ruled that lawsuit lenders should be held to the same disclosure and licensing requirements.

Once the issue ended up in court, the state attorney general countersued the companies alleging unlicensed lending and charging “exorbitant” interest rates to plaintiffs.​

“Forbes notes how the case was an example of the Chamber of Commerce pushing for more, not less, regulation.”

WallStreet Journal | Payday Lending Rules Apply to Litigation Funding, Colorado Court Rules

Members:

Sen. Brian Birdwell (Chair)

Sen. Kevin Eltife

Sen. Jose Menendez

Sen. Larry Taylor

Sen. Kirk Watson

The committee is tasked with:

• Study potential ways to ensure the state is able to identify, track, and maintain real proeprty information
• Specifically look to the location, condition, and replacement value of all real property owned by the state
• Report to the legislature by January 13, 2017.

Lt. Governor Patrick Press Release 

Chair /Presiding Officer: Sanjiv Yajnik

• Dallas
• President of Financial Services at Capital One Financial Corporation
• Chairman & founding member of the Collin County Business Alliance
• Treasurer & board member of the National Academy Foundation
• Executive board member of the Dallas Symphony Association
• Founding member of the Indian American Professionals Network.
• MBA from the University of Western Ontario & is a graduate of the Stanford Executive Management Program.

Nancy Windham

• Nacogdoches
• President & CEO of the Nacogdoches Economic Development Corporation
• Former vice president of the Frisco Economic Development Corporation.
• Board member & an honorary life member of the Texas Economic Development Council
• Member of the Industrial Assets Management Council, TexasOne, Texas Forest Country Partnership Board of Directors, International Economic Development Council, and the International Council of Shopping Centers.
• Stephen F. Austin State University & is a graduate of the Economic Development Institute at the University of Oklahoma.

Mike Rollins 

• Austin
•  President & CEOGreater Austin Chamber of Commerce
• Certified Chamber Executive
• Former president & CEO of the Nashville Area Chamber of Commerce and the Asheville Chamber of Commerce, and general manager of the Columbia Chamber of Commerce.
• Board member of the TX Association of Chamber of Commerce
• Chairman of the Metro 8 Chamber of Commerce.
• B.A. from the University of South Carolina.

Alejandro “Alex” Meade

• Mission
• CEO of the Mission Economic Development Corporation
• Board member of the Texas Economic Development Council, Border Trade Alliance, I-69 Alliance, Rio Grande Valley Partnership, and RGV Lead
• Chairman of LeadTexas
• Member of the Texas State Affordable Housing Corporation
• Certified as an Economic Development Finance Professional (EDFP) by the National Development Council
• Certified Public Manager (CPM) by the National Certified Public Manager Consortium
• Bachelor of Business Administration in Economics from St. Edward’s University, MBA from The University of Texas at Brownsville, and MPA from The University of Texas Pan American

Mark Griffin 

• Lubbock
• President & eneral counsel for Rip Griffin Truck Service Center, L.P.
• President of Pro Petroleum, Inc.
• Member of the State Bar of Texas and the Lubbock County Bar Association
• Director of the Lubbock Economic Development Alliance and Plains Capital Bank. 
• Former board member of Covenant Health System, the Texas Guaranteed Student Loan Corporation, and the Lubbock Independent School District Foundation.
•  Bachelor of Business Administration from The University of Texas at Austin and a Juris Doctor from Texas Tech University School of Law.

Steve Head 

• The Woodlands
• Chancellor of the Lone Star College System
• Board member of the American Association of Community Colleges, Cypress Fairbanks Medical Center Governing Board, and the Greenspoint Management District 
• Member of the Greater Houston Partnership, The Woodlands Economic Development Partnership, Community Colleges for International Development Executive Committee, and the Sam Houston State University Educational Leadership Program Advisory Council
•  Bachelor of Arts and Master of Arts from Lamar University and a Doctor of Philosophy from Texas Tech University

Governor Abbott Press Release 

Select Committee on Property Tax Reform and Relief

Sen. Paul Bettencourt – Chair
Sen. Brandon Creighton
Sen. Kelly Hancock
Sen. Eduardo A. “Eddie” Lucio, Jr.
Sen. Charles Perry
Sen. Van Taylor
Sen. Carlos Uresti

The Committee will travel the state holding public hearings to:

• Look  for ways to improve the property tax process
• Look for ways to reduce the burden on property owners

Lt. Governor Patrick Press Release

Oklahoma collected $92 million in unpaid state taxes within 2 months by waiving all surcharges, interest and fees. The idea was the brain child of the Oklahoma House Appropriations Chairman 7 has exceeded projections. 

Note to self: Oklahoma has a population less than Harris County. Extrapolate to Texas and it could be $500 Million revenue within 2 months. 

NewsOK | Oklahoma Tax Commission collects more than $92.8 million in past-due taxes

Which state is reigning in business tax decuductions? LOL- Land of Lincoln

Which deduction is on the chopping block? A business tax cut that allowed a deduction for the cost of creating new jobs even when the same company cut the same number of jobs somewhere else in the state. 

The deduction allowed a business that overall cut jobs to get a tax deduction? yes. The Illinois Tax Code allowed every location, division or subsidiary to be treated for tax purposes as an independent operation.

Governing | Illinois Governor Ends Controversial Business Tax Loophole

Which state wants to split its pension system? Connecticut

Why split the pension?  A generous accounting system has left the pension 50% of the assets to meet liabilitiies.

Who thought of the split the pension idea? Center for Retirement Research

How would they split the pension? One pension for workers who started before 1984 & one pension for workers who started after 1984.

           The post-84 workers are the cheaper lot for a pension.

What are the pros/cons?

• The pre-1984 hires would be paid for directly out of the state’s annual budget. 
• The unfunded liabilities would be removed from the pension plan’s overall liabilities.
• CT State Treasurer thinks the idea is unconstitutional

Governing | The Week in Public Finance: Splitting Pensions, Going Hyperlocal and Charter Schools’ Impact on Credit Ratings

Oregon is the only state to be testing, pay as you drive, taxing structure for its citizens.

How does it work? A green box is attached to a car’s steering column, and reports speed, braking, and distance to a 3rd party contractor. 

The fee for pay as you drive in Oregon? 1.5 cents per mile.

Unlike the gas tax a Prius and F-150 would pay equal amounts.

It changes driving habits. One Prius driver reported breaking less.

A non-GPS device option will be available for statewide use, to quell concerns of privacy advocates of a state tracking its residents.

California will begina  similar pilot program in 2017.

Governing | A Real Way to Replace the Gas Tax

• Economically responsible compromises to bring back the film tax credit
• Delay enactment of the film tax credits until the 2016 budget is enacted. 
  • Use the film tax credit as leverage since Chicago is the heart of 3 primetime tv shows
• Offer an up to 30% tax credit

Deadline Hollywood | The Land Of Lincoln And ‘Empire’ Brings Back Film Tax Credits – Kind Of

• The $300 million Circuit of the Americas will built on a “deal” for $250 million over 10 years from the State of Texas
• The Major Events Trust Fund moved in 2015 from the Office of the Comptroller to the Office of the Governor
• A new calculation method at the Office of the Governor reduces the funds going to the Circuit of the Americas from $25 million to $19.5 million
• The Track says the deal was built around the calculations that arrived at $25 million, and the Texas is changing the terms
• The State says the Major Events Trust Fund is a tax reimbursmeent based on out of state generated tax revenues due to the event, and the numbers provided don’t add up
• This week a competing F1 Circuit opened in the Americas in Mexico City.

Road and Track | Budget Problems Could Kill F1 at Circuit of the Americas [Update]

Statesman | Why the future of Austin’s F1 race is in doubt

Motor Sport | US GP future under threat as Texas cuts state subsidy

States want to peek into corporate books? Yes. 

Why? An audit and investigative journalism revealed that tax credits for films in Massachusettes were sold more often than they were utilized by the recipient.

What’s the legislative fix? To allow the state to audit the books of entities that receive economic development funds for the sole purpose of determining the use of economic development funds by the recipient.

Governing : A Reel Bad Deal on Tax Giveaways

The Greater Green Bay Chamber supports raising the gas tax with these 3 pitches:

• Transportation funding is a Return on Investment:
  • it is an enhanced tax base
  • promotes new development
  • provides a safe, efficient and reliable mode of transporting raw materials, finished products and people
• Delays in transportation cost people and businesses money
• Fuel efficeint cars are good for the environment and our pocketbooks but bad for transportation funding, and we can fix that

Green Bay Press Gazette | Invest in transportation infrastructure

“Dallas is drowning in debt”

TPPF | TPPF Statement on Dallas’ Downgraded Debt Rating

Related: Moody’s Statement on Moody’s downgrades Dallas, TX’s GOLT bonds to Aa2 from Aa1; outlook stable

Moody’s downgraded Dallas debt rating to Aa2.

Why the downgrade?

• Dallas has $1.4 billion in outstanding debt
• + very large and growing unfunded pension liabilities
• + a high fixed cost burden
• +  basic infrastructure needs which we expect to keep the direct debt burden elevated

Dallas’ rating could increase with:

• Material improvement to annual pension funding thereby reducing Moody’s calculatino of adjusted net pension liability

• Significant increase to Dallas’ operation reserves and liquidity (More Local Revenue)

Moody’s downgrades Dallas, TX’s GOLT bonds to Aa2 from Aa1; outlook stable

• Oil producing counties are a state revenue source. Eagle Ford Shale counties alone contribute $323 million of severance tax receipts a year.
• Unfair revenue exchange with oil counties. In the same year that DeWitt county contributed $57.5 Million in severence taxes, it received $112,000 from the comptroller for money generated from gasoline tax remittances and overweight axle fees
  • Now the oil producing counties are left with dangerous roads. This was the catalyst for a county transportation infrastructure fund grant program 
• Time for the state to stop getting a “free ride.” Oil counties want the legislature to:
  • Establish requirements and timelines on how repairs should be made
  • Establish requirements for how the money is distributed — including the loose wording that only requires a county have increased energy production
  • Must be an ongoing program for transportation funding
  • Must have greater trickle down to the oil producing counties

Victoria Advocate | Texas counties call for oil, gas tax distribution reform

• 45 school projects
• 9 jails & public safety
• 1 golf course
• 16 roads
• 2 aquatic centers
• 11 parks and recreation
• 7 water drainage
• 7 municipal and county buildings
• 3 libraries
• 3 animal control
• 1 fairgrounds
• 1 health center
• 1 airport improvement

Texas Transparency | Upcoming Bond Election Roundup

Jess Fields, running for Texas House District 14, signed Americans for Prosperity’s Taxpayer  Protection Pledge. 

Americans for Prosperity | Jess Fields Signs Taxpayer Protection Pledge

Why does this matter to Texas? It echoes sentiments bandied about around local pensions for police and fire in Texas.

Where is this happening too? Florida

What’s the deal in Florida? Local governments say they need legislative help to gain control over rising cost sin police and fire pension systems.

What’s the legislative history in Florida? 25 years ago, local police and fire pension systems were permitted to operate like “independent agencies”

What sparked the legislator outcry to act? a forensic investigationlambasted the police and fire pension system. In 2014, Governor Rick Scott was asked by legislators to investigate the pensions, and his office declined. 

Jacksonville| Jacksonville councilman: State Legislature can put Pension Fund ‘monster’ back in cage

Which state is offering this economic development deal? New York

How much?  Up to $750 Million has been pledged by Governor Cuomo

What project is getting the $750 Million? A 1.2 million-square-foot SolarCity factory. Scheduled to open in early 2016, will create 5,000 jobs, with 3,000 of them in western New York.

Why the geographic limitation on added jobs? Because Western New York job market was hurt when steel declined.

Governing | New York Governor Takes a Big Bet on Solar Power

NYTimes | Despite Risks, Cuomo Bets on Solar Power to Lift Buffalo

Which state is also getting sued over its school finance system? Arizona

What’s the deal with the settlement offer from the state? The state wants to offer school funding from state trust land proceeds.

What did the State Comptroller, AKA Treasurer, say about it? Irresponsible. Illegal.

Why? What economic impact would the settlement have on school funding?

• Taking state trust land proceeds would reduce future school finance funding
• The Rainy Day Fund is flush and would be more fiscally prudent

What’s the Arizona Legislature Say? The Lege may vote this week to approve a fiscal settlement.

Arizona Capital Times | State treasurer says school finance deal is irresponsible, likely illegal

Fire District property tax increases in California have failed at the rate of nearly 2/3 since 2012.

Why are these fire protection tax increases failing?

• The tax increases for special districts, like a fire district, requires 2/3 to pass
• more than 1/2 of the failed measures received more than majority support

Sacramento Bee | Fire districts losing tax votes point finger at state fee

Why is the Tax Foundation on the topic of a soda tax? The Tax Foundation is responding to an October 13th New York Times piece touting the success of Mexico’s soda tax.

2 Retorts from the Tax Foundation:

• Taxing Soda Probably Doesn’t Translate to the Health Results You Want. Citing a 2010 health study they say kids will switch to a higher calorie beverage, milk, and a 2012 study says adults will switch to another higher calorie beverage, beer. 
• Tax Code Changes are not Predictable. It is far too early to find results in Mexico’s soda tax.

Tax Foundation | A Letter to the New York Times on Soda Taxes

The Texas Supreme Court will hear oral arguments on 12/8/15 concerning the Texas Small Tobacco Coalition suit against House Bill 3536 (2013) is constitutional. 

Who is getting involved?

• Comptroller
• Small Tobacco Coalition
• McLane Compny (a distributor)
• TMA
• TTARA
• The State of Indiana

What are they arguing about?

Whether HB3536 is a tax or a fee + some procedural issues raised by the state.

Why does this matter? 2 reasons

• tax policy consquences
• the courts have different review standards for fees & for taxes
  • a fee must meet the standards of due process and equal protection
  • a tax must meet the standard of equal and uniform

What happened to get us to this point?

• District Court ruled for the Small Tobacco Coalition fudning HB3536 unconstitutional tax
• The 3rd Court of Appeals agreed with the district court.
• This keeps the state from collecting the revenue that would be generated by HB 3536

Case 14-0747

• Texas needs the right policy in place for economic success
• Texas has an onerous property tax system that is tough on property owners and businesses
• Tax Foundation says Texas has the 14th worst property tax system that costs each Texan $1600 per year
• A 2012 Texas Comptroller Report says Texas property Tax outpaced population growth at a rate of 5:1
• Texas needs to do 3 things:
  • immediate relief
  • provide long lasting reform
  • property tax system should be replaced with an expanded sales tax

TribTalk | TPPF | Slowing Texas Economy Underscores Need for Property Tax Reform

• “significant weaknesses in its processes for the expenditure of state asset forfeiture funds”
• 10% of expenditures did not comply with state requirements for use of asset forfeiture property
• 18% of asset forefeiture expenditures did not have adequate documents
• Dallas County District Attorney Office should clarify its budgeting process to reflect permitted uses of asset forefeiture property
• During the SAO investigation the State Auditor received a “complaint regarding potential fraud relating to revenue deposits at the District Attorney’s Office.”
  • The SAO is investigation.

State Auditor | An Audit Report on the Expenditure of State Asset Forfeiture Funds at the Dallas County District Attorney’s Office

California Public Utilities Commission is considering rules about incentives for roof top solar ability to sell electricty back to the grid under net metering rules.

Why the new regulatory framework for rooftop solar? The grid operators say the cost of operating the grid is high and want to pay less for the electricity generated from rooftop solar.

What’s the policy goal in California? Generate 50% of its electricity from renewable sources by 2030.

Why would it matter if grid operators paid less for rooftop solar? It would increase cost to the customer and disincentivize the addition of more rooftop solar.

The Atlanta Business Journal says that opposition to the renewal of the Export-Import Bank by Texas’ U.S. Senators directly harms Texas ability to lure new corporate offices for GE.

An independent corporate selection consultation service labels Texas as out of the process for the General Electric headquarters because “politics do matter.”

The other items that matter:

• tax policy
• airports
• tech presence

Atlanta Business Chronicle | Atlanta, Triangle or N.Y.? Consultant weighs in on GE’s HQ relocation

Louisiana voters are considering a constitutional amendment that would allow legislators to rein in corporate tax incentives.

Why change the constitution on tax incentives? Louisiana takes up budget issues in a separate session from the general session which would consider tax incentives. The constitutional amendment would allow tax incentives to be considered in the budget legislative session.

Why does Louisiana want to cut back on tax incentives? Two words- budget shortfall.

Governing | Why Tax Incentives Could Change Louisiana’s Constitution

Georgia raised its gas tax before gas prices fell. Which turned into a win-win:

• gas prices went down
• revenue went up
• Transportation got an extra $74.3 million in September.

Georgia Governor Deal | September tax revenues up 4.6 percent

Texas takes in $1,970 in taxes per capita. That’s 42nd.

The highs and lows:

• #1 in state tax collection per capita: North Dakota at $7,438
• NY is #8 at $3,746
• California #11 at $3,490
• Florida is # 48 at $1,820
• Ohio #33 at $2,380

Tax Foundation | How Much Does Your State Collect in Taxes Per Capita? 

Comptroller’s revised revenue forecast for the 85th Legislature is $110.4 Billion.

Why the decrease? 2.3% decline in general revenue, reflecting a decline in oil and gas and the energy sector. 

What’s the impact to Rainy Day Fund (Economic Stabilization Fund)? The fund balance should be $10.7 Billion by the end of fiscal year 2017 on August 31, 2016. 

Coverage:

• AP via Click2Houston | Texas lowers projected tax revenue by $4.7B amid oil prices
• Ft. Worth Star Telegram | Comptroller revises revenue estimate due to lower oil prices
• Dallas Morning News | Texas comptroller Hegar concedes budget forecast was too rosy
• High Plains Public Radio | As Energy Sector Struggles, Texas Sales Tax Revenues Slump

• Veteran Affairs and Military Installations Subcommittee on Border Security
  • Will examine sanctuary cities
• Senate State Affairs
  • Ethics laws: transparent and ethically principled government; public officials’ reporting requirements &  Texas Rangers are doing with their pubic integrity unit
  • ERS  member contributions &  proposed reforms TRS
• ​Senate Natural Resources
  • Economic Development: “​Effectiveness and necessity of programs and resources currently used to support economic development in Texas”
  • Monitor aerospace tax incentives
• ​Senate Inter-governmental Relations
  • ​Debt transparency at the ballot box
• Senate Finance
  • Appraisal Process (Select Subcommittee on Property Tax Reform & Relief)
  • Reduce tax burden on property owners (Select Subcommittee on Property Tax Reform & Relief)
  • Franchise Tax: eliminate, study dynamic effects, alternative to fund property tax relief
  • Sales tax holidays- is there an economic benefit?
  • Property tax relief
  • Reduce state pension liability
  • Monitor the gradual phase out of franchise tax
  • Monitor contracting reform
• Senate Business & Commerce
  • Property tax liens

LBB has new info on the state contract data base it is tasked with maintaining as a result of the 2015 session. 

LBB is adding new information including:

• Agency Approval Date
• Requisition Date

Consulting Contracts in higher education have new pre-award notifications to the LBB and the Governor’s Nudget and Planning Office. Notifications will be required if:

• a consulting contract valued at more than $15,000 for a junior college
• a consulting contract valued at more than $25,000 for any other institute of higher education

LBB Contract Oversight Team October 2015

Environmentalist mega-donor Tom Steyer is bankrolling a California proposition to a $2 a pack  health care-funding tobacco tax ballot initiative.

Sacramento Bee | Tom Steyer spending for California cigarette tax

CALPERS is set to be divested from any coal investments with Governor Brow’s signature on SB 185. 

The total divestment in all California pension plans will be $340 Million. 

Sacramento Bee | California bans microbeads, divests retirement funds from coal

Because your clients want to know what the competition is getting:

• Incentives
  • Sugar Land Development Corporation direct incentive of $2.5 million  over 10 years in annual payments.
  • 1 time construction-related sales tax reimbursement grant of $750,000 will be paid once the project is completed.
• Tax Abatement
  • The city of Sugar Land will give a 100% abatement to the company over 10 years on real improvements and personal property.
  • The estimated value of this is $5.3 million over 10 years.
• Road Widening
  •  The city of Sugar Land will widen Industrial Boulevard to a four-lane divided roadway by 2017 as part of the agreement.
  • Add drainage improvements such as storm sewers and channels.  
  • The city costs will be $4.2 million
  • Fort Bend County will provide up to 25%, with a maximum of $1 million.

Houston Chronicle | Sugar Land City Council approves incentive package for Schlumberger campus

What hotel, where? hotel developer Supreme Bright Amarillo II (Amarillo, TX)

Which TIRZ is involved? The Center City Tax Reinvestment Zone No. 1 (Amarillo, TX)

What actions did the TIRZ take? 

1. It unanimously agreed that Supreme Bright will “put its leases with Amarillo Local Government Corp. for the hotel to be owned by the city and for 150 spaces in the parking garage up for collateral.”
2. TIRZ granted tax rebates will be given to Supreme Bright “will actually go to lead lender Southwest Bank”

What tax incentives were awarded to the hotel?

• 90 percent property tax rebate for 20 years
• The TIRZ will contribute $2.7 million toward streetscaping around the hotel
•  It will receive a rebate of some sales taxes
• It will receive a rebate of hotel occupancy tax it generates

Amarillo Globe News | A done deal? City issues building permit for downtown hotel

Who: The Texas Organizing Project protested tax incentives given to Houston developments because:

Why are they protesting tax incentives? the developments did not create quality jobs hat pay livable wage

Which tax incentives did they openly protest? Westin Houston Downtown, owned by Landry’s & a Heights area  Walmart

Their goal: For Houston’s “next mayor can really make good jobs a priority for our neighborhoods”

Houston Public Media | Group Calls For Stricter Standards For Developers Receiving Tax Incentives In Houston

In Jeffrson County 3 more commercial property appraisals are being litigatged:

• Valero
• BASF
• Total

“In September, 13 lawsuits were filed in the 58th District Court against the Jefferson County Appraisal District.”

Beaumont Enterprise | Valero, BASF, Total protest in ‘ongoing’ property tax battle

• that  appraisals rise “7-to-9 percent annually while incomes only grow 2-to-3 percent “just doesn’t work.”

Does anyone see a recommendation brewing for an appraisal cap reform bill?

Corpus Christi Caller Times | Lt. Gov. Patrick urges support for propositions

• Prop 1 will help save people property tax money
• Prop 1 will prohibit transfer taxes when any property is sold
• Prop 7 will allow the state to put 2.5 billion dollars more to transportation without increasing taxes.
  •  He also stressed that there was “not adequate transportation funding to West Texas in the past”
  • “Now that I’m Lieutenant Governor, we want to be sure that West Texas gets their fair share,”

News West 9 | Texas Lt. Gov. Discusses State Propositions at Odessa Country Club

In an interview with Global Trade magazine, Texas Economic Development Corp. CEO Tracye McDaniel, highlights 5 reasons behind Texas economic development success:

• Talented workforce driven by 36 public universities and 50 community college districts
• Strong Infrastructure
  • fifth-largest cargo airport in the nation
  • highest concentration of public roads and freight railroads in the U.S
• World-class port infrastructure
• Strategic port location led Texas to be ranked as the nation’s top exporter since 2002
• Texas Enterprise Fund Reforms that
  • represent the largest deal-closing fund of its kind
  • cut approval time from 90 to 30 days

Global Trade | Texas Sized Opportunities

A representative from LCRA stressed to Bandera County Economic Development Partnership that successful economic development must consider 2 things:

1. the economy

2. the ecology translated to people that drive the economy

The economic development lesson: infrastructure drives economic development. Also known as, don’t be like Austin and don’t build roads so people won’t come. Plan and build infrastructure with reasonable and flexible codes and code enforcement.

Bandera Courier | Bandera – to develop or not, Part 3

New leadership of Woodlands Economic Development Partnership:

• Terry Sellers of Gallagher Benefit Services (Chair)
• Debra Sukin of Houston Methodist The Woodlands Hospital (vice chairman)
• Heidi Carney of Prosperity Bank (secretary)
• Mike Shultz of Consolidated Communication (treasurer)
• Stuart Lapp of Stibbs & Co. PLLC (immediate past chair)

Woodlands Economic Development Partnership

Houston City Council this week approved changes to develop a spaceport at Ellington Field. City Council made these 5 moves:

1. Houston City Council approved the $6.9 million purchase of a 53,000-square-foot building on the grounds of the future spaceport
2. Only airport funds will be used for the purchase
3. Creating development for incubators that will house early-stage companies
4. A TIRZ, a Management District? No, its an innovation district 
5. Intent from anchor tenant-  Intuitive Machines

Houston Business Journal | Houston Airport System takes major step in developing spaceport facilities (Video)

In June The Texas Supreme Court issued an opinion about Open Records concerning a contract between Boeing & the Port Authority of San Antonio.

How did the TXSCT help keep private company information private? The Texas Supreme Court overturned the appellate court and said that the ability to withhold information under the Public Information Act applies to private companies & to governments alike.

What kind of information can be withheld?information that ” will benefit the private party’s competitors and thus “give advantage to a competitor.”

What was at the heart of this issue for the contract? A private company’s ability to protect its “

Boeing & Port Authority of San Antonio v. Paxton

Texas Tribune | Texas Supreme Court Ruling Shields Contract Details

Its not just ride share that is facing lawsuits of their sharing economy model. it’s also food delivery services like  GrubHub and DoorDash.

What’s the issue that takes this to courts and then to the legislatures?
Whether drivers are employees or independent contractors.

Why does this employee status matter?
An employee has certain legal rights and access to employment benefits that an independent contractor does not. 

The Recorder | More On-Demand Delivery Apps Hit With Driver Suits

The Economic talk: Do increasing local pension liabilities threaten to ruin bond holders?

Maybe. Probably yes. 

Why would local bonds be impacted by pensions? Looking at the bankruptcy fiings of San Bernardino, Stockton, Vallejo and Detroit shows that odds are highest that bankruptcy courts will fund pensions and will leave bond holders with $0.

Governing | Municipal Bondholders Beware

• Bill King and Ben Hall want TIRZ reform
• Bill King Says
  • TIRZs are not transparent
  • TIRZs issue debt with no voter approval
  • TIRZs should be for blight and they are used in Memorial, Uptown and Upper Kirby
  • Eliminate TIRZs
  • Deride the Uptown TIRZ are the #1 target
• Ben Hall Says
  • TIRZs are not doing what they’re designed to do
  • TIRZs divert general fund money to fund projects in Memorial and Bellaire
  • Asked Mayor Parker to delay votes on TIRZ budgets
  • Deride the Uptown TIRZ are the #1 target

Dolcefino | Hall calls on mayor to delay TIRZ votes

BigJolly Politics | Bill King follows Ben Hall’s lead on reforming TIRZ’s

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

A bill in North Carolina would have limited the authority of local governments to pass ordinances that :

• Create a “higher minimum wage or other regulations involving private employment practices.”
• Govern “housing and rental practices, likely including policies that mandate affordable housing.”
• “Mandate or prohibit the provision of goods, services, or accommodation to any member of the public by nongovernmental businesses.”

Hampton Inn in Port Arthur is challenging its property tax appraisal in Jefferson County. 

The court remedies Hampton Inn wants:

•  “the court determine the value and reduce the appraised value to the equal and uniform value”
• “to pay the greater of one-half of the tax due the value of the property as determined by the appraisal review board”
• court costs and attorney fees

If the TX legislature changes this practice in 2017, now is the time to reset commercial appraised values in court.

Southeast Texas Record | Hampton Inn challenges property appraisal for Port Arthur location

1. Alabama: 
   • ​30 years of tax breaks
   • for data centers investing $400 million
   • that create at least 20 jobs
   • with an average annual compensation of $40,000
2. Alaska NONE
3. Arkansas None specific to data centers, have used other tax incentives for data centers
4. California NONE
5. ColoradoNONE
   • in 2015 Colorado tried to pass a sales tax refund on equipment for data centers
6. Connecticut 
   • A state economic development ffice granted $6 million to a data center
7. Delaware NONE
8. Florida, none specific to data centers, have used other tax incentives for data centers
9. Georgia
   • ​sales tax exemption for equipment in data centers investing at least $15 million annually
10. Hawaii,  none specific to data centers, have used other job creation incentives for data centers
11. ​Idaho NONE
12. Illinois NONE
13. Indiana
    • data centers investing at least $10 million can receive local personal property tax exemptions on their equipment
    • Other tax incentives have also been awarded
14. Iowa
    • ​sales tax breaks to data centers investing as little as $1 million
    • larger incentives for projects topping $200 million
    • Iowa has no property tax on equipment
15. Kansas, none specific to data centers, but
    • Kansas imposes no property tax on new equipment
16. Kentucky
    • ​sales tax refund for computer system equipment for data centers investing at least $100 million
17. Louisianna NONE
18. Maine, None specific to data centers, have used general economic-development programs for data centers
19. Maryland, non specific to data centers, but did authorize a conditional loan for $300,000 to a data center
20. Massachusettes, None specific to data centers, but have awarded $25 million grant and $14.5 million in tax credits to data centers
21. Michigan, none specific to data centers, but does use other economic development programs for data centers to a tune of $7 mllion
22. Minnesota
    • ​data centers with 25,000 square feet
    • costing at least $30 million
    • qualify for 20-year sales tax exemption on equipment and energy
    • + a permanent property tax exemption on equipment
23. Mississippi
    • ​sales tax exemption on computer equipment for data centers
    • that invest at least $50 million
    • that create at least 50 jobs
    • these jobs must pay 150% of the average state wage
24. Missouri
    • ​New data centers can qualify for $25 million if
      • they employ at least 10 people in well-paying jobs.
    • Older data centers can qualify by:
      • investing at least $5 million and adding five well-paying jobs
25. Montana NONE
    • And, no state sales tax
26. Nebraska
    • ​Has a tiered system that allows  $3 million if the data center:
      • Employs at least 30 people, or
      • It invests at least $37 million while holding employment steady
27. Nevada
    • ​ Expanded sales and property tax exemptions for data centers
      • amounted to  $229 million of tax breaks for Switch
28. New Hampshire “No incentives for businesses”
29. New Jersey
    • “​authorized a projected $134 million in incentives to about a dozen businesses for data-center projects since 2000″
30. New Mexico NONE
31. New York 
    • sales tax exemption for equipment used by Internet data centers
32. North Carolina
    • ​sales tax exemption for equipment and electricity used by data centers that invest at least $150 million in poorer counties or $225 million in other counties.
33. North Dakota
    • ​sales tax exemption on computer equipment for data centers of at least 16,000 square feet.
34. Ohio
    • ​ sales tax break for data centers that invest at least $100 million &
    • have a required payroll threshold of  $1.5 million
35. Oklahoma
    • ​sales tax exemption for equipment bought by businesses engaged in computer services or data processing, as long as most of the revenue comes from out-of-state sales
36. Oregon None Specific to data centers, but
    • ​no sales tax & 
    • property tax exemptions through local enterprise zones
37. Pennsylvania None
    • Bills calling for a sales tax exemption for data centers are pending  in the current legislatie session
38. Rhode Island  NONE​
39. South Carolina 
    • ​sales tax exemption on computer equipment and electricity used in data centers
    • that invest at least $50 million
    • employ at least 25 people in well-paying jobs.
40. South Dakota None, but have used general economic development programs
41. Tennessee
    • ​sales tax breaks on computer equipment and electricity for data centers that invest at least $250 million
42. Texas
    • ​sales tax exemption on equipment and electricity for data centers
    • that contain at least 100,000 square feet
    • invest at least $200 million
    • employ at least 20 people at above-average wage
43. Utah ​None, but have used general economic development programs
44. Vermont  NONE
45. Virginia
    • ​sales tax exemptions for data centers
    • it is estimated Virginia authorized $48 million in incentives for data centers
46. Washington
    • ​sales tax exemption
47. West Virginia 
    • ​sales tax exemption and a property tax break on equipment
48. Wisconsin  None, but have used general economic development programs
49. Wyoming 
    • ​Data centers that invest at least $5 million, receive  a sales tax exemption on computer equipment.
    • Data centers that invest at least $50 million also can get a sales tax break on power supplies and cooling equipment.

• NY Times | via AP | State-By-State Look at Incentives for Computer Data Centers

A developer, a univeristy, and a TIRZ walk into a bar…

Who is involved in this land deal?

• A developer
• The city of McAllen, which recently annexed the developers land
• County of Hidalgo
• A newly formed Tax Increment Reinvestment Zone
• Texas A&M

What tax revenue is involved?

• Texas A&M, via a letter between the City & the County, gets:
  • 100 acres of land donated
  • $10 million for the construction of the facility
  • $6.8 million to cover part of the investment in infrastructure
• The developer, via the City and County, gets:
  • to enter into a TIRZ with the city & county to assist with the initial $24.5 million investment in infrastructure
    • “city will use 80 percent of the maintenance and operations tax levied by that area alone”
    • ” the county will contribute 77 percent of its maintenance and operations tax, as well”

McAllen Monitor | Tres Lagos developer talks plans after Texas A&M announcement

3 Big tax issues coming:

1. Prop # 7 dedicates sales tax revenue to transportation funding   KGBT 4
2. Prop # 1 homestead exemption raised to $25,000 (it’s your “big property tax cut”)  KUT
3. The TX Supreme Court’s  school finance ruling in early 2016 which could spark another tax overhaul like in 2006.

What’s going on? a loose coalition wants natural gas comapnies to be able to explore on university lands. Specifically, fracking on UT & A&M lands.

Who wants this? North Texans for Natural Gas (Devon Energy, EnerVest, EOG Resources and XTO Energy)

What is North Texans for Natural Gas Doing to Gin up Support? A petition urging UT Chancellor William McRaven and Texas A&M Chancellor John Sharp to support hydraulic fracturing and the extraction of oil and gas on University Lands.

Where do they want to explore for natural gas? On 2.1 million acres in West Texas  constitutionally set aside  as an endowment for the state’s two leading university systems.

What’s in it for Universities? Revenue to the Permanent University Fund

Who is opposed? Environmental groups like Environment Texas Research and Policy Center and the California-based Frontier Group

Fuel FIX | Pro-industry group throws support behind drilling on Texas university land

Paxton Steps Aside in Opinion:

Attorney General Opinion KP- 00037 has an interesting start- a cover letter in which General Paxton delegates repsonsibility to his first assistant attornery general.  Why? “I [Paxton] may have an actual or perceived conflict of interest or in which my involvement gives even the appearance of impropriety.”

What is KP-00037 about?

Whether a county official, who is found not guilty on criminal charges, can have attorney fees reimbursed.

Does KP-00037 allow for attorney fee reimbursement for these elected officials?

Yes, but there’s a 2 part test to get there:

1. there must be legitimate interests of the [political subdivisions]-and not just the personal interests of the officers or employees-require the assertion of a vigorous legal defense on behalf of the public interest. [A political subdivision] may not use public funds when the principal interest to be defended is a purely private one. 

2. It must be determined that the “officer or employee committed the alleged act or omission that was the basis of the lawsuit while acting in good faith and within the scope of official duties. 

#13 isn’t only unlucky, but its also not good enough for Texas Policy Policy Foundation. It has 3 recommendations to improve Texas government transperancy:

1. Move from a strategic planning and budgeting system to a program-based budgeting system.
2. Adopt zero-based budgeting to ensure taxpayers get the most value of the programs and departments they fund.
3. Provide budget information online in near real-time throughout the legislative process.

The public share of the new Sacramento Kings stadium is $272.9 million in bond financing. 

Why the bonds? The stadium had received a short term cash influx from the City of Sacramento when the project hit a snag. The bond financing replaces the city’s bridge loan.

Details on the debt financing:

• annual debt service will come to $18 million
  • 2/3 s will come from the Kings & lease payments and property taxes generated by the new Golden 1 Center

Sacramento Bee: Sacramento completes Kings arena financing with $272.9 million bond sale​
 

Mayor Emanual is proposing the following tax increases on Chicagoans:

• A property-tax hike reaching $543 million over four years
• $45 million in property taxes to pay for capital projects at Chicago Public Schools, or CPS
• $62 million from a new garbage-collection fee
• $60 million from new fees on taxis and ridesharing services, such as Uber and Lyft
• $13 million from higher building-permit fees
• $1 million from a tax on e-cigarettes

Americans for Tax Reform call it the largest tax increase in the city’s history.

North Carolina legislature passed economic incentive package reforms. Here’s what it does:

• Extends North Carolina Competes Program to 2018
• Increases by $5 million the annual value of authorized Job Development Investment Grants
  • That’s up to $35 million if there is a “high-yield project,” like a major manufacturing plant with 2,000 jobs and making a capital investment of at least $750 million
• Focus on helping economically distressed counties more.
• Sales tax exemptions expanded for computer data centers
• Extended sales tax exemptions on aviation fuel to all interstate airlines on sales and use tax paid on fuel in excess of $1.25 million

WXII:Reinvigorated incentives get final OK from NC legislature

Winston-Salem Journal: House gives final approval to NC Competes 

North Carolina’s HB 117

The wealthiest households claim 90% of the $7500 federal tax credit for electric cars. 

This trend follows for other green energy purchases and tax credits:

• residential energy-efficiency improvements
• solar panel installation 

Tax “susidies” are not popular among populist minded Tea Party types & a repeal of the electric car tax credit occured in Georgia this year.

WSJ| Real Time Economics Blog | The Wealthiest Households Claim 90% of Tax Credits for Buying Electric Cars

Ecomento: Georgia electric car tax credit ends

WHO:  Lincoln Clean Energy’S $183 million solar power project

WHAT: The first commercial-grade solar project in the Panhandle will produce 100 megawatts or more

ECONOMIC INCENTIVES:

• Tulia Independent School District is  capping the taxable value of the project at $20 million a year for 10 years
• Comptroller estimates this to be a $9 million dollar savings in maintenance and operations taxes for the solar project.

Amarillo Globe News:  $183M solar project heats up 

Or, so says United Against Nuclear Iran. 

Pension Divestment to hit a State Constitution near you.  Defund Iran wants state constitutional amendments in 2016 to mandate divestment.

What’s the divestment band wagon? Does it mean private companies that do business in Iran too?  YES. Yes, it does. In Florida,  more than $1.1 billion has been withdrawn since 2007 from companies involved with Iran. We’re talking about divestment from:

• Royal Dutch Shell Plc
• Cnooc Ltd.
• Daelim Industrial Co.

Campaign Issue in the Making. 15 Governors sent a letter to President Obama calling for Iran divestment. Including:Bobby Jindal of Louisiana, New Jersey’s Chris Christie, John Kasich of Ohio and Wisconsin’s Scott Walker.

Governing: Republican Governors Use Pensions to Oppose Iran Deal

1. Highest Tax Supported Debt: Dallas ISD $2.6 Billion
2. Highest Proposed Bond: Dallas ISD $1.6 Billion
3. 3 Bond proposals belong to ISDs with $0 tax supported debt
4. 31 ISD bond proposals
5. 34 City bond proposals
6. Largest City Bond Proposal: $125 million in Mequite
7. Largest County Bond Proposal: $848 million in Harris County

Texas Transparency: Upcoming Bond Election Roundup

Republican-controlled Alabama Legislature increased cigarette taxes by 25 cents per pack. 

AP: Alabama Legislature approves cigarette tax increase

In the Pro Corner, a Plaintiff, Austin Mayor Adler:

• Current system is unfair to residential homeowners
• We should have a fair property tax system
• This is about transparency & being able to challenge a system that is unfair

In the Con Corner, the “Tax Man”, Senator Bettencourt:

• Lawsuit is abuse of property tax code
• He has asked Lt. Gov. Patrick for an interim charge on this issue
• This lawsuit is about 1 thing and 1 thing only– mandatory sales price disclosure

TribTalk Bettencourt

TribTalk Adler

What’s the BiNational Economic Development Zone? Both sides of the South Texas border have joined forces in the name of expanded economic development – to the manufacturing prowess that this region has developed through its maquiladora sector

Why does the Binational Economic Development Zone matter? McAllen Monitor Editorial points to the recent visit to Mexico by Governor Abbott & the $100 Billion in economic prowess of the U.S.-Mexico relationship. 

McAllen Monitor Editorial sums it up: It is economic reality (loads of revenue) + (smart) immigration policies= beneficial relations between the US & Mexico.

McAllen Monitor

The Tax Foundation puts Texas at #11 for state and local debt per capita.

How much debt per capita for #11? $10,473

Any big states above Texas? NY, CA, IL

Which state tops the charts? NY at $17,405 per capita for state and local debt

What about California? $11,094

Which state has the lowest debt per capita? ID $3,930

Contracting for solar power on top of the new Sacramento King stadium is a benefit bonaza. Solar Power will:

• Power 15% of the stadium
• the solar company is putting in a significant capital investment “to help the Kings fund the arena”
• Offers the stadium LEED Gold certification

The solar project is estimated to cost $507 million investment by SPI Solar. SPI is committed to solar stadiums in California as it also has a solar installation at the Staples Center sports arena.

Sacramento Bee: Sacramento Kings show off solar array plans for arena rooftop

This year Georgia tinkered with its gas tax to address a transportation funding deficit.

Georgia’s Gas Tax Reform looks like this: “Drivers pay 26 cents for every gallon of unleaded gasoline and 29 cents per gallon for diesel fuel. The new single fuel tax replaced a system of excise and prepaid local and state taxes.”

Georgia threw in some other tax reforms too:

• A new $5 nightly fee on hotel and motel overnight stays generated $14.9 million in revenues last month. 
• A new highway impact fee generated $844,000 last month

Revenues Went up in year to year comparison: 13.6% increase

Gwinette Daily Post: Deal: State revenues up 13.6 percent in August

Luc Besson threatened to move production from France to Hungary for his new film ‘Valerian.’ Hungary lured hin with higher incentives until France produced incentives that kept him in France. Hollywood Reporter

Kurt Sutter cites incentives as determining how he bagan his decision making for his new series, the Bastard Executioner. “Because we’re shooting in England, there’s a UK tax incentive and that’s where our search began.”  Deadline Hollywood

Alabama is proposing a 40% excise tax on porn to cover a $250 Million spending deficit. Cut services? No, thank you. Tax Sin? Yes, please. 

What’s being taxed: any book, magazine, newspaper, printed or written matter, writing, description, picture, drawing, animation, photograph, motion picture, film, video tape, pictorial presentation, depiction, image, electrical or electronic reproduction, broadcast, transmission, video download, telephone communication, sound recording, article, device, equipment, matter, oral communication, depicting breast or genital nudity or sexual conduct.

Tax Rate: All other taxes like sales tax + 40% tax rate for being porn.

Success rate according to lawyers: Low. 1st Amendment free speech applies to things you don’t like too. 

Findlaw  AL.com

• Property Tax Relief. The ISD homestead exemption is up to 25K. The state has to pay school districts the difference. LBB says it’ll cost $1.2B in the next to years, more thereafter.
• Franchise Tax Cut. Businesses will save $1.3 billion in 2016 taxes.
• 8 Taxes Repealed. 
• Pre-K Grant Program. Funded only for 2016-2017.
• Contracting Reforms. The fiscal angle: the “sheer number of state contracts” makes it impossible to estimate how much it will cost the state. But, look for:
  • lawsuits
  • protests
• Transportation. The Highway Fund will be creditted up to $2.5 billion annually, but this reduces GR.

See a trend? Except for the obscure taxes that were repealed, every other item stresses how much it will cost Texas financially.

Hedging a bet on the revenue estimate or how much available money there is in 2017?

Comptroller Fiscal Notes Spetember 2015

Big legal week for commercial appraisals for 2 reasons:

• Travis County residential property taxpayers supporters speak
  • The Real Estate Council of Austin​ says the “my fair share” argument doesn’t hold up for commercial appraisals & thats why there is a lawsuit. Statesman
• 6 Austin homeowners interveed in the City’s lawsuit.
  • They say the City of Austinlawsuit will create ” “higher and unequal appraisals for everyone.” Statesman
• Premcor Pipeline Co., the Premcor Refining Group Inc., Port Arthur Coker Company, Valero Refining (Premcor), and Valero Energy Corp. sued the Jefferson County Appraisal District
  • Jefferson County District Court case number E-197511
  • ​Southeast Texas Record

This translates to a big interim for property taxes and appraisals:

• 2 commerical appraisal lawsuits and counting
• 1 impending Texas Supreme Court school finance ruling
• 1 State Senator Bettencourt who calls the City of Austin lawsuit, a “revenue grab” & asks for an interim charge.

• Jacquie Baly
  • Sugar Land
  • President and chief executive officer for BalyProject
  • Former SugarLand City Council member
•  Cindy Conroy
  • El Paso
  •  first executive assistant and charitable giving coordinator at WestStar Bank
  • academic background: associate dean of research and the director of the Graduate School of Biomedical Sciences at Texas Tech University Health Sciences Center El Paso
• Antonio Falcon
  • Rio Grande City
  • medical director of Family Health Center, L.L.P
  •  former member of the Parks and Wildlife Commission
• John Goodman
  • Frisco
  • founder and executive chairman of Family ER + Urgent Care Centers, and is a board member, co-founder, former executive chairman, and former chief executive officer of Goodman Networks
  • held leadership positions at Bell Atlantic, GTE, and Verizon.
• Wendy Gramm
  • Helotes
  • chairman of the Texas Public Policy Foundation Board of Directors
  • Bio stresses federal leadership roles at FTC, OBM
• James Huffines
  • Dallas
  • president and chief operations officer of PlainsCapital Corporation
  • served as chairman of The University of Texas System Board of Regents
• J. Michael Lewis
  • Dallas
  • private investor and the general partner of Coronado Resources, Olympia Royalty, and Wellspring Royalties
  • On the Board of Texas Tech Foundation
• Michael Plank
  • Houston
  • chairman and chief executive officer of The Plank Companies, Inc
  • serves on the President’s Leadership Council for Houston’s Methodist Hospital, and the Texas A&M University Engineering Advisory Council.
• Sam Susser
  • Corpus Christi
  • president of Susser Holdings II, L.P.
  • previously served as chairman of Sunoco, L.P. and Stripes, L.L.C

Interesting Fact:

• 3  appointees have ties to Texas Tech

Governor Abbott Press Release

How the new GED tax credit for businesses works in Georgia 

• Georgia businesses pay for employees to take the GED test
• Businesses earn a $400 credit for each person who passes.
• Businesses can receive a $1,200 credit for each worker who successfully completes a GED class and test if the employer pays for both. 

WABE Atlanta’s NPR: Ga. Businesses Can Get Tax Credits If Employees Earn GEDs

Bloomberg: The Tiny Town that Hates Elon Musk

Background: Boca Chica, with its 26 residents, is home to Space X launch site. Space X has a safety plan for launch days:

• The Safety Plan limits the town residents movements on launch days.
  • Texans don’t love being told what to do, when to do it. They’re an independent lot.
• SpaceX’ will be sweeping the beach with drones and video surveillance.
  • Texans love private property rights and don’t love drones spying on them.

What the residents are saying:

• “I’m like, ‘Are you out of your mind?’” said Cheryl Stevens, 55, who settled in Boca Chica Village a decade ago in search of quiet, rustic beauty. “It’s like Nazi Germany.”
• Seizures of Private Land is on their mind: “When we first moved here, I just felt closer to the Lord,” said Bonnie Heaton, a retired hairdresser, who worries that one day SpaceX will somehow seize her beloved home on Weems Street. “Well, that peace has kind of gone out the window.”

Governor John Kasich is asking Ohio Pension funds to divest from Iran.

The OH Pension response: Thank you, No, Thank you.

“No matter how worthwhile the purpose, such actions set a dangerous precedent of using the system’s money to achieve political or social agendas,” said Julie Graham-Price, the fund’s communications manager.  Governing

The State Auditor today released its report on the Texas Major Event Trust Fund.

Background: During the Audit the Fund was at the Comptroller’s Office. Today the Fund is under the guise of the Governor’s Office.

4 Legislative/Policy Changes You’ll see because of the Audit:

• More Documentation on Estimates. The SAO found that there wasn’t rational/documentation for the rational on some estimate the incremental tax receipt increases for major events. Most likely targets for this change:
  • the estimated number of out-of-state attendees
  • the estimated out of state attendees’ expected spending
• Smaller Reimbursements to Events. Why? The SAO says the CPA modeling software included increases in taxes which are not reimburseable by statute. Hence, Fund reimbursments may have been too big before. 
  • What level of reduction? Probably about 20%
    • The SAO found that the modeling software, that included tax receipts it should not have, added 22% to reimbursments.
• Greater Scrutiny for Documents from Events. The SAO found that the Comptroller’s Office did not “review and approve the methodology for calculating out-of-state attendance, and it does not review supporting documentation for out-of-state attendance.” 
  • This will change. Expect to provide more documents with more supporting evidence.
• Fewer reimbuseable costs. Expect these costs to be excluded from reimbursements: 
  •  sanctioning fees
  • large monitors and scoreboards for sporting events
  • and costs associated with ancillary events

State Audit of Major Event Trust Fund

California Senate healthcare special session committee is considering these taxes to fund healthcare and welfare programs:

• $2 per pack tobacco tax increases
  • raise an estimated $1.2 billion
• Raise E-Cig taxes to generate $100million
• revamp an existing tax on managed-care organizations
  • Health plans would face a net tax hit of an estimated $300 million
  • The increase is less than 1/2 what plans faced under a tax proposal put forward in January by Gov. Brown​

Sacramento Bee 

Alabama has a $200 million shortfall in its general revenue and its forced the legislature into special session, twice. $200 million? In Texas, that could be a rounding error, to the rest of the world- its “kinda a big deal.”

A Republican Governor, who signed the Grover Norquist Pledge, is proposing to generate revenue. Surprise! The Governor wants to cover a revenue shortfall with new revenue. Here’s the proposed tax sources:

• 25-cent-per-pack cigarette tax, and new taxes on vapes and e-cigs.
• raise the car rental tax from 1.5 to 2 percent
• raise the car title fee from $15 to $28
• raise the business privilege tax
• eliminate the state deduction for FICA taxes
• eliminate the deduction, relied on by small business, for the federal payroll tax paid
• increase taxes on nursing homes

​Americans for Tax Reform: AL Gov. Bently Proposes More Tax Hikes in 2nd Special Session

• Local governments save an estimated $714 billion in extra interest payments from 2000 to 2014
• The savings to local govenrments is “the equivalent of building a state-of-the-art stadium, ballpark and arena for every professional sports city in the U.S. and Canada 6 times over.”
• “savings can range from $80 to $210 in additional interest expenses per $1,000 of borrowed money.”
• “hospitals see some of the biggest savings on interest payments. The average hospital today saves more than $100 per $1,000 borrowed — 1 percent less in interest — than it would if the bonds were taxable.”

Municipal Bonds & Infrastructure Development: Past Present and Future

Governing

Taxing alcohol, tobacco and gaming as a revenue source is en vogue. Its also a revenue source that accounts for $32 Billion in taxes nationally. Texas doesn’t even make the Top 10 for taxing sin, but Rhode Island & Nevada lead the Top 10 with roughly 15% of their revenue coming from sin taxes.

The cons in taxing sin:

• not a reliable revenue source
• don’t generate the revenue expected over the long term
• casino revenue is often a revenue shift between state borders

The pros:

• states keep their revenues in light of over border casino gaming
• its politically feasible
• raise revenue and curb consumption of an item deemed evil

Governing: The States Most Dependent on Sin

Part revenue trend, for the City of Odessa, part business trend, part legislative/regulatory trend: contracts with local governments to access sewage water to use for fracking.

Odessa, TX signed a an 11-year, $117 million deal with Pioneer to re-use sewer water.

Oil Price.com

According to updated data from the Census Bureau, states and local governmental entities, which collectively spent an estimated $252 billion last year, are also investing more in public infrastructure this year.

• Road and transportation construction claim $30 billion of state and local spending.
• Stadiums and sports areas claim under $2 billion. 

Governing

In California school districts have  Rainy Day Funds, at the district level, with the goal of encouraging prudent spending. 

California’s Senate Bill 858 put a cap on revenues in local school rainy day funds. The cap limits school districts to reserving “no more than 6 percent of their budgets in reserve accounts to prepare for economic downturns. “

That cap puts some districts, like Salinas, in jeopardy of not only losing their reserve funds, but also their good credit rating.  The cap sparked this comment from San Diego Public School District, ““This makes a mockery of good fiscal behavior — and local control,” said McAllister, who is chairman of the San Diego Unified School District audit and finance committee.

The Californian    San Diego Union Tribune     

10 years ago, divesting public funds from DARFUR was all the rage. This week’s divestment target is coal. 

The California legislature is moving a bill to diverst CALPERS and other state investment funds from any coal investments.

Considering that the California investment funds total  $476 billion in assets, it could be no small potatoes for the state “to liquidate holdings in companies that generate at least half of their revenue from coal mining by July 2017.”

Investing from the statehouse is the new legislating from the bench and is certain to return to Texas. 

Reuters

California increased thier film incentives for 2015, and as a result has seen 4 television shows move to the Golden State.  The details:

• 5 year incentive program
• Triple the size of the original incentive program at $330 million
• expanded qualifying priductions to include high-budget feature films and TV series
• An August 2015 report on the program shows it will yierld an economic impact of:​
  • ​$5.93 Billion in total aggregate direct spending
  • $2.09 billion in below the line wages

Sacramento Bee

Information Intelligence August 27, 2015: Other States Increase Film Incentives. Texas Slashes Film Incentives.

The Port of Houston Authority has created an Office of Economic Development.

Who leads the new department? Shane Williams, Foreign Trade Zone and Economic Development Manager

What are its economic development goals? work with partner organizations to attract new businesses to the port.

GlobeNewsWire  Port of Houston Authority

The events trust fund and major events trust fund have officially set up shop in the office of the governor. 

Any email notifications you have set up will not transfer. Here’s your lifeline:  EventsFund@gov.texas.gov .

Check out the open appointments for Lt. Gov. Patrick while enjoying your morning coffee. 

Know a client that might fit the bill for an appointment, get a one up, and fill out the application too. 

HB 1 required LBB to get a contract database up and running. Today, the LBB unveiled their data masterpiece. The databases allow for:

• searching all reportable contracts
• running reports about all reportable contracts
• details on which contracts are reportable

Data is the future. 

LBB

Why does Denton County care that Austin is suing the Travis County Appraisal District, among others?

Because Denton County’s Chief Appraiser is on the Executive Board of Texas Association of Appraisal Districts, and he too sees the impact of commercial property owners legally challenging appraisals.

The appraisal challengers by commercial property owners is said to shift the property tax burden onto residential property tax payers.

Denton Record Chronicle

Texas cut 66% of the film incentive fund. Those rationalizing the cuts think it is a result of:

• infighting between film and video game companies that each receive the incentives
• The Tea Party’s low spending mantra
• The departure of Gov. Rick Perry, an advocate for economic incentives

KGSN   TexasTribune

Loyal Information Intelligence Subscribers will recall recent note of increasing incentives in Louisiana, California, and Georgia.

Who doesn’t love an audit? Anyone being audited. In November 2014, the State Auditor Office identified problems and made recommendations. Fast forward to August 2015, and the private auditors hired by school districts to review 313s found the same problems.

Here’s what will be addressed in 2017, now that we have 2 audits that point to the same deficiencies:

• School districts need to verify information, not just take some entity’s word
• The 313 agreements need more specificity.
  • Detail the jobs are being created
  • Detail the tax breaks are being given
  • Detail when, if ever, the tax breaks can be transferred
• Consistency on the issurance of tax credits. 
  • Are the tax credits future credits?
  • Are the tax credits directly awarded to the business?
• Concistency in Conflicts of Interest disclosures
• If multiple 313 agreements exist for the same project, ensure that the jobs created are not double counted.
• Consistency in records retention

SAO

Effective 9/1/15 the 2% fireworks tax is repealed. Kids spending their allowance on colorful sparklers are rejoicing. 

Fireworks lovers everywhere can thank Senate Bill 761.

Comptroller Hegar