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BPAA State Policy Update - April 9

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TAX

  • Kentucky: “Kentucky auto repair, bowling centers, pet groomers brace for new sales tax plan” – Kentucky business owners and managers who groom dogs, collect greens fees at golf courses and run auto-repair shops are bracing for a change in state law that would force them to start charging sale taxes. While they say it's tricky to predict how the potential new tax might impact their revenues, it's a snap to forecast that the new tax scheme would generate a huge windfall for the state. "It's going to make a significant difference," said Kevin Greenwell, the golf professional at Seneca Golf Course in Louisville, one of the state's busiest municipal courses. Kentucky lawmakers on Monday passed House Bill 366, which requires the state's 6 percent sales tax be added to an array of services and other items that previously hadn't been taxed, such as bowling games, greens fees and the labor performed on car repairs. The measure has gone to Gov. Matt Bevin's desk, but he has not indicated whether he'll sign or veto the bill. In a statement Monday, he said he doesn't like House Bill 366 or the separate budget bill. He has until midnight April 13 to decide.
  • Kentucky: “Kentucky Policy Group Criticizes State Tax Reform Plan” – A tax reform bill that passed Monday by Kentucky lawmakers is now awaiting a decision from Governor Matt Bevin. Some economists are saying the tax plan is more of a tax shift from wealthy individuals to middle and low income Kentuckians. The plan would reduce the income tax rate for individuals as well as corporations. It would also broaden the services that could be taxed, such as landscaping, pet grooming and janitorial work. Jason Bailey is the executive director of the liberal-leaning Kentucky Center for Economic Policy. He said a consumption-based tax system isn’t sustainable for Kentucky and would put the burden of taxes on people who earn less. “Makes it harder to generate revenue because most of the income in the economy is going to the people at the top and you’re taxing them less then you’re collecting less for our schools, for our infrastructure, for our human services,” he said. Bailey said he’s also troubled by the way the plan moved through the legislature. He said the legislation should have had public input and debate. “It’s just the wrong way to govern. Any big complex issue like tax reform needs to see the light of day and needs to have lots of public input and public debate and this didn’t have that. It’s governing at its worst,” he said. He said the state has already experienced 19 rounds of budget cuts over the past ten years, and the new tax plan could put the state’s public schools and services at risk for even more cuts.
  • Oklahoma lawmakers passed an education funding package this week that included an increase in the state's tobacco, gas, and gross production taxes.
  • Missouri: Competing, but similar, proposals to cut taxes in Missouri continue to advance, as the Senate approved its version and the House moved another step closer to passing its own version. The bills differ primarily in the extent to which they would slash income tax rates and how they would raise revenue for state roads.
  • Iowa lawmakers continue to debate tax cuts even while the consequences of underfunding core services stare them in the face.
  • Nebraska: The primary effort to cut taxes in Nebraska this year has stalled after failing to overcome a filibuster. A separate bill that would pay for property tax cuts with sales and cigarette tax increases will be debated soon.
  • New York lawmakers passed a state budget this week. The bill includes two provisions designed as direct responses to the Trump-GOP tax law passed late last year. To circumvent the new federal cap on deductions for state and local tax payments, taxpayers can opt to donate to two new statewide charitable funds rather than paying state income tax (the donations are reimbursed with state tax credits), and businesses can take part in a voluntary payroll tax that, unlike the state’s income tax, should be fully deductible under federal law.
  • Maryland: “Negotiators reach deal in principle to alleviate expected Maryland income tax increase” – Negotiators reached a deal late Tuesday to alleviate by $100 million an expected $500 million state income hike tax for Maryland residents next year. The agreement in principle between top negotiators in the House of Delegates and the Maryland Senate requires final approval by committees Wednesday, but includes 10 different tax cuts and credits designed to dampen the impact of rising state tax bills. Federal tax cuts approved in December inadvertently triggered higher state taxes here because Congress eliminated many of the deductions that benefit residents in wealthy, high-tax states such as Maryland, New York and California. Without those federal deductions, Maryland residents will pay state tax on a greater amount of income. Although the federal tax breaks pressed by President Donald J. Trump and enacted by Congress would lower federal tax bills for most people in Maryland, state tax bills are expected to go up and swell state coffers. The deal reached Tuesday would increase Maryland’s standard deduction for the first time in more than 30 years and index it to inflation, which would allow the tax benefit to grow over time. That break amounts to about $40 for joint filers and $20 for single filers next year.

Maine: “Maine Tax Conformity Bill a Step Toward Better Policy” – The Tax Cuts and Jobs Act didn’t end the debate on tax reform – it’s shifted the discussion to state capitols across the country, and Maine Governor Paul LePage (R) is joining the conversation. Governor LePage has put forth a comprehensive tax bill that cuts taxes by $111 million over the next two years and conforms Maine’s code to many of the recent federal tax code changes. The bill, LD 1655, makes substantial changes to both the individual and corporate income sections of the tax code. The bill eliminates the personal exemption in Maine (it was previously tied to the federal amount, which is now $0), but creates a new 0 percent tax bracket, effectively exempting the first $4,150 (or $8,300 for joint filers) in income from taxation. The bill recouples Maine’s standard deduction to the federal level, raising the amount to $12,000 for single filers and $24,000 for joint filers. It also raises the estate tax exemption level to the new federal amount, $11.2 million, and creates new child and dependent tax credits. On the corporate side, the bill will conform Maine to the federal treatment of bonus depreciation, net operating losses, and the interest deduction. Maine will conform to the new full expensing of short-lived assets rules, allowing businesses to immediately deduct 100 percent of the value of newly purchased assets. This change is incredibly important and one of the most pro-growth elements in tax reform. Coupling to full expensing will incentivize investment in Maine and encourage the growth of Maine’s economy.

MINIMUM WAGE

Louisiana: “La. lags behind in raising minimum wage, closing gender pay gap” – A new study by the Institute for Women’s Policy Research claims the Bayou State will not achieve pay equity until 2115. To spare some time for those who are attempting the math, that would be 97 years from now. One of the snubbed bills would have extended an existing equal pay law that bans state agencies from paying unequal wages on the basis of gender to also apply to any business that receives a state contract. The other bill would have prohibited employers from taking action against employees who discuss or disclose their pay with fellow employees. On top of that, state lawmakers also failed to pass a raise of the state’s minimum wage from the $7.25-per-hour federal level to $8 in 2019 and $8.50 in 2020. It’s the third year in a row Gov. John Bel Edwards has advocated for such issues in the state’s legislature, and his growing frustration is understandable due to the overwhelming support the proposals have received from the public. The 2017 Louisiana Survey found that 91 percent of Louisiana residents support the state requiring employers to pay men and women the same amount for the same work. The survey also stated that 71 percent of Louisiana residents believe the country needs to continue making changes to give men and women equality in the workplace. The 2016 Louisiana Survey found 76 percent of Louisiana residents favor raising the minimum wage to $8.50 an hour. Eighteen states raised their minimum wage at the beginning of 2018, and the minimum wage is currently set higher than the federal standard of $7.25 in 29 states and D.C. Louisiana’s neighboring state, Arkansas, set its minimum wage at $8.50 in the beginning of 2017. Women in Louisiana, West Virginia, Utah, Montana and Indiana each earn less than 75 percent of what men earn in those states. Louisiana is ranked as the worst state, where women earn less than 70 percent of what men earn.

LABOR

Kentucky & Oklahoma: “Thousands of teachers, students converge on Oklahoma and Kentucky capitals for labor rallies” – Braving chilly weather, tens of thousands of public school teachers in Kentucky and Oklahoma converged on their state capitals today demanding higher wages and better classroom resources. Teachers in the two red states, both run by Republican governors and Republican-dominated legislatures, said they're fed up with persistent cuts in education funding. Many of the demonstrators Monday wore red T-shirt reading "I Support Public Schools," in solidarity with the nationwide #RedForEd grass-roots movement started online. The Oklahoma teachers plan to continue the classroom walkout on Tuesday at the state capitol, prompting the Oklahoma City, Tulsa and other districts to cancel school for a second day. Thousands of teachers and supporters in Kentucky joined outside the Kentucky Education Association headquarters in Frankfort around 9 a.m., many fuming over their state legislature's decision to overhaul their pension plan without any say from them.

FOOD & BEVERAGE

Bills to Ban Local Soda Taxes Are Moving In the States, Coke and Pepsi Borrow from the Tobacco Playbook” – Watch out public health advocates – as soda tax campaigns are bubbling up in cities across the nation to combat obesity, diabetes and other serious health conditions – the beverage industry is working to choke off this expression of local democracy. A state bill banning localities from taxing food and beverages came out of nowhere in Michigan and was signed into law by Governor Rick Snyder within weeks. Last week, Governor Doug Ducey in Arizona signed a similarly fast tracked bill. These are clear instances of corporate special interests convincing legislators to block local laws that would hurt their profitability. In Washington State, the soda industry is going a step further. After watching Seattle’s soda tax take effect last month, industry started a state wide ballot initiative campaign that would prevent other cities in the state from implementing a similar tax. The public health community – pediatricians, dentists, the American Heart Association and more – are energized to take action as never before on soda and other sugary drinks because new data is showing that consuming sugar in liquid form increases risks of serious health conditions, such as heart disease, Type 2 diabetes, nonalcoholic fatty liver disease, and obesity in a much more significant way than was previously known.

INTERLOCK DEVICES

  • Alabama: ​“Alabama to require ignition interlock devices for drunk drivers” – Stricter regulations will be imposed on drunk drivers in Alabama - a bill to close a loophole in state law passed a final vote in the House on the last legislative day. Thursday's vote was 78-14 for the bill aimed at reducing road deaths. The legislation sponsored by Republican state Sen. Jim McClendon will require anyone in pretrial diversion for drunk driving to use an ignition interlock device, which keeps a car from starting if it finds alcohol on a driver's breath. A law passed in 2014 didn't require the device for offenders entering pretrial diversion. Mississippi does. According to Mothers Against Drunk Driving, Mississippi kept twice as many drunk drivers off the road as Alabama in 2016. The bill goes to the governor to be signed into law.
  • Idaho: “MADD: Ignition interlock bill is ‘biggest DUI reform to pass Idaho Legislature since ‘97’” – Mothers Against Drunk Driving is applauding the Idaho Senate’s passage this week of HB 551, which would require an ignition interlock device – something the driver blows into, and the car won’t start if the device detects alcohol on their breath – for first-time drunken driving offenders in Idaho and those who refuse a roadside alcohol test. Current law in Idaho requires the devices only for repeat offenders; 30 other states already have laws like HB 551, which requires use of the device for a year. The bill passed the Senate on Monday on a 21-12 vote; it earlier passed the House, 55-14, and now is headed to Gov. Butch Otter.

Massachusetts: “Massachusetts only state without ignition interlocks for first offenders” – Massachusetts is now the only state in the nation that does not allow for drunk-driving offenders to use ignition interlocks after a first offense. Previously, Idaho and Massachusetts were the remaining two states without any type of program for first-time offenders to use the in-car breathalyzers rather than face license suspension. Idaho Gov. C.L. “Butch” Otter last week signed into law legislation that requires first-time offenders to install an ignition interlock for one year. Ignition interlocks prevent a vehicle from starting if alcohol is detected on the driver’s breath. 

GAMING

 

  • Minnesota: Charitable gambling could see sales tax exemption – As part of an effort to pass more money onto worthy causes, organizations could see a sales tax exemption for items related to charitable gambling. Sponsored by Jim Knoblach (R-St. Cloud), HF3384 would provide a sales tax exemption for equipment used, and items purchased as prizes, for charitable gambling. The bill was held over by the House Taxes Committee Thursday for possible omnibus bill inclusion. Its companion, SF3384, sponsored by Sen. Jerry Newton (DFL-Coon Rapids), awaits action by the Senate Taxes Committee. The bill would also extend the sales tax exemption for items purchased for prizes at festivals, fairs and carnivals to include those for charitable gambling, with an added provision to exempt the lease or purchase of gambling equipment for an organization licensed to conduct lawful gambling.
  • Nevada: “Gaming Policy Committee Decides Gaming and Marijuana Shouldn’t Mix” – The Governor’s 12-member Gaming Policy Committee was unanimous. They’re maintaining the state’s previously approved position that licensed gaming companies must not have business relationships with Nevada’s marijuana industry. The panel met Monday to consider recommendations about whether regulators should change existing policies about marijuana and gaming. But because the federal government still prohibits possession and use, gaming regulators have barred casinos from being involved. But Governor Sandoval’s policy committee, also reaffirmed that conventions related to networking on sales can continue to occur in resort convention centers and exhibition halls.

South Dakota: “Gaming commission adopts new age-related notification, policy rules for casinos” – Tuesday, at a public hearing to adopt proposed rule changes, the South Dakota Commission on Gaming unanimously approved the adoption of two new rules; one regarding notification of legal age to gamble and the other regarding policies involving persons under age 21 in a casino. The first rule change occurs in administrative rule 20:18:12.01:22, operation of gaming establishments, legal age to gamble – notification requirement and reads: “All licensed gaming establishments shall prominently display a sign at each entrance to a licensed establishment which notifies the public in a conspicuous manner that gaming patrons must be 21 years of age to gamble. All licensed gaming devices shall have a sign permanently affixed to the device notifying the public that gaming patrons must be 21 years of age to gamble.” The second rule change occurs in administrative rule 20:18:12.01:23, age of participants and reads: “No licensee may allow any person under 21 years of age to gamble, loiter in the gaming area of a casino or be present at a gambling table, slot machine, or other area in which gambling is conducted unless an exemption or deviation from this rule is approved by the executive secretary. Nothing shall prevent any person under 21 years of age from passing through a casino to nongaming areas.”

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