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BPAA State Policy Update - December 18

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Alabama: Bloomberg news reports, The Alabama Department of Revenue adopted Ala. Admin. Code r. 810-3-39-.02, 810-3-39-.03, 810-3-39-.05 and repealed Ala. Admin. Code r. 810-3-39-.04, concerning corporate income tax returns. The amendments include: 1) the extension of time for filing a corporate return; 2) consolidated filing; and 3) taxable years following an election period for an affiliated group. They also repeal incentive rules for affiliated groups filing consolidated income tax returns. The rules are effective Jan. 1, 2018.

Arizona: Bloomberg Law reports, Arizona Announces Tax Rate Increase for Prescott - The Arizona Department of Revenue announced a sales and use tax rate increase for the city of Prescott, effective Jan. 1, 2018. Most of the qualified voters in the city approved Proposition 443, adopting a transaction privilege tax increase of three-quarters of 1 percent. The tax rate will increase from 2 percent to 2.75 percent.

Bloomberg news reports, Early State Revenue Outlook Is Good: State Government Group - Early results from the National Conference of State Legislatures’ survey of fiscal offices show the revenue outlook is “good” overall for fiscal year 2018, according to a NCSL representative. The NCSL is still compiling data from state fiscal offices for its November survey, which allows the group to keep tabs on the status of state budgets throughout the year. But Arturo Pérez, director of fiscal programs for NCSL, released some preliminary information Dec. 11. He said at this point, only three of the reporting states—Arizona, Missouri, and Montana—have said they are unlikely to meet their revenue forecasts. Four states—Florida, Idaho, New Mexico, and Utah—have reported they will exceed their forecasts.

MINIMUM WAGE

Florida: The Tampa Bay Times reports, “State law strikes down Miami Beach minimum wage hike, says appeals court” - In a win for business groups, a South Florida appeals court Wednesday said state law prevents Miami Beach from moving forward with a local minimum wage. A panel of the 3rd District Court of Appeal upheld a circuit judge's ruling against the city minimum wage, which was expected to take effect in 2018. The appeals court said a state "preemption" law bars local governments from establishing minimum wages. The Miami Beach City Commission last year approved an ordinance that set a minimum wage of $10.31 an hour to take effect in 2018, with the wage going up $1 a year to $13.31 on Jan. 1, 2021. That is higher than the statewide minimum wage, which is $8.10 this year and will go to $8.25 in 2018. Opponents, including the Florida Retail Federation, the Florida Chamber of Commerce and the Florida Restaurant & Lodging Association, filed a lawsuit challenging the ordinance. The case, in part, focused on a 2004 constitutional amendment that created a higher minimum wage in Florida than the federal minimum wage. Miami Beach contended that the constitutional amendment also allowed it to set a different minimum wage. But the appeals court said an earlier state law prevented local governments from setting minimum wages and that the constitutional amendment did not change that "preemption" law.

California: California’s Minimum Wage to Increase to $11 and $10.50 per Hour - Under landmark legislation to increase the minimum wage to $15 per hour over time, California’s minimum wage will increase on January 1 to $11 per hour for employers with 26 employees or more and $10.50 for employers with 25 or fewer employees. State law requires that most California workers be paid the minimum wage. Some cities and counties have a local minimum wage that is higher than the state rate. Workers paid less than the minimum wage are urged to contact the Labor Commissioner’s Office in their area to file a wage claim. Employers must post information on wages, hours and working conditions at a worksite area accessible to employees. Notices for the wage orders in English and Spanish can be downloaded and printed from the workplace postings page on the DIR website. Governor Brown signed landmark legislation on April 4, 2016 making California the first state in the nation to commit to raising the minimum wage to $15 per hour statewide by 2022 for large businesses, and by 2023 for small businesses. The legislation increases the minimum wage over time, consistent with economic expansion, while providing safety valves to pause wage hikes if negative economic or budgetary conditions emerge.

FOOD & BEVERAGE

Indiana: Indiana Public Media reports, “Monroe Co. Council Passes 1 Percent Food And Beverage Tax” After five hours of public comment and discussion, the county council voted 4-3 Wednesday night to pay a 1 percent food and beverage tax starting in February. It will fund a long-awaited expansion of the county convention center. The $35 million expansion itself wasn’t controversial, but residents and county leaders disagreed on how the project should be funded. Several Indiana University students spoke out against the proposal, arguing they would be disproportionately impacted. “Students don’t have any extra money,” says Emma Coats, Speaker of Congress for the IU Student Association. “Many of them have thousands of dollars in student loans they have to worry about paying for. So, if you want to renovate your convention center, don’t put that burden on us.” Others say the tax is regressive and will make food insecurity an even bigger issue for those with low wages. William Ellis is chair of the Monroe County Republican Party. He says the tax could be bad for some businesses, too. “What’s going to happen, they’re going to have the same exact amount of people going through their drive thru,” Ellis says. “So, next thing, oh they’re a little short of money, so instead of getting the double, they’ll get the single. Doesn’t sound like much, but you’re going to have less of an average check or dollar amount [per] order.” But several local business owners spoke in favor of the proposed tax. “I feel that tourism can really help support the restaurants downtown,” says Susan Bright, who owns Nick’s English Hut. Many supporters of the measure pointed to the potential for additional economic development and job growth the county could see as a result of the expanded convention center.

GAMING

New Jersey: Bloomberg news reports, Gaming Industry Planning for Regulated Sports Betting - The gaming industry and some state legislators are preparing for a scenario where sports betting is legal and regulated within the states while the U.S. Supreme Court mulls New Jersey's challenge to the federal Professional and Amateur Sports Protection Act of 1992. The high court heard oral arguments Dec. 4 in Christie v. NCAA, and seemed unsure how to balance power between state governments and the federal government. There should be a decision in the case before June, Lauren M. Blas of Gibson, a Los Angeles-based associate attorney with Gibson, Dunn & Crutcher LLP, said Dec. 11 during NCSL's Capitol Forum in Coronado, Calif. At issue in the case is New Jersey's attempt to repeal part of its state ban on sports betting in an effort to revive the struggling Atlantic City region. A ruling from the U.S. Court of Appeals for the Third Circuit found that the partial repeal violated the PASPA, which prohibits states from “authorizing” gambling related to professional and amateur sports leagues. New Jersey has argued that the federal government can't prohibit the state from repealing its own ban. That would violate the anti-commandeering doctrine, which says the federal government can't conscript states into enforcing federal policy, the state has argued. However, the federal government and the sports leagues challenging New Jersey's repeal have said the federal government can do that—it does it all the time when it preempts state laws that conflict with federal ones. It's possible the Supreme Court will conclude that the act commandeers the states by telling them how to regulate sports betting, and that the rest of the statute doesn't make sense if you get rid of that prohibition, Blas told attendees. “One outcome is that the entire statute just falls away,” she said. “Another option is that the court says most of the statute is fine, but we have to let New Jersey do its partial repeal of prohibitions on casinos and racetracks.” The Supreme Court could also greenlight full repeals and examine partial repeals on a case-by-case basis, which could lead to further litigation, or affirm the Third Circuit's ruling against New Jersey. If the PASPA is stricken or a partial repeal is allowed, however, that could give other states a “blueprint” to follow for legalization, Blas said.

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