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BPAA State Policy Update - August 24

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The last 2018 legislative sessions are coming to a close: According to Ballotpedia, 87 of the nation's 99 state legislative chambers will hold elections this year, and nearly 82% of all state legislative seats will be up for grabs. California and Ohio are the only states currently in regular session. Puerto Rico is also in regular session. Next year’s session are just around the corner, and activity for 2019 has already begun. Florida, Kentucky, Montana, Nevada, North Dakota, Oklahoma, Utah, and Virginia are currently posting 2019 bill drafts, prefiles, and interim studies. The following states are currently holding 2019 interim committee hearings: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida (House), Hawaii, Idaho, Illinois (Senate), Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Minnesota, Mississippi (Senate), Missouri, Montana, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oklahoma (House), Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming.

TAX

  • Massachusetts: Massachusetts Creates Commission to Study Tax Breaks: The fiscal impact of tax breaks in Massachusetts will be scrutinized by a newly created independent commission rather than the Department of Revenue under the fiscal year 2019 budget. The commission was created by an amendment to the state budget (H. 4820) signed Aug. 9 by Gov. Charlie Baker (R). The commission “shall examine, evaluate and report on the administration, effectiveness and fiscal impact of tax expenditures,” according to the amendment. The Legislature had passed an amendment to the state budget placing the responsibility of reviewing tax breaks on the DOR. But in his July 26 letter to the Legislature, Baker said the DOR “is not the appropriate entity” to do the work, and recommended the establishment of a standing, independent commission. The last time Massachusetts had a commission with a similar purpose was 2012, the governor said. “An independent commission can draw upon the expertise of a diverse set of stakeholders and provide an independent voice on tax expenditures,” he said. 
  • South Carolina’s Grocery Taxes Still Need Sorting: How groceries are taxed in South Carolina still needs to be addressed, despite recent guidance on remote sales taxation, a tax practitioner said. “The major issue South Carolina has cannot be resolved in a revenue ruling,” Richard Handel, a tax law professor at the University of South Carolina and former general counsel for the DOR, told Bloomberg Tax Aug. 22. South Carolina doesn’t tax sales of groceries, but some of its jurisdictions do, according to Handel. “Hopefully, the General Assembly will take up local sales taxes and completely conform all of the local sales taxes with the state sales taxes,” he said. Action this year appears unlikely, as state lawmakers are focused on conforming South Carolina’s tax code with the 2017 federal tax law (Pub. L. No. 115-97) and the Bipartisan Budget Act of 2018. A Senate panel working on that issue has been urged to move expeditiously to ease compliance and avoid tackling broader changes to the state’s tax scheme.
  • Voters in Colorado will decide whether to raise an additional $1.6 billion for education this November. Initiative 93 is the third attempt in seven years to allocate more public funding in support of education. If approved, the corporate income tax rate and personal income tax rates on those with more than $150,000 in taxable income would increase, generating monies to help fund full-day kindergarten, expand preschool opportunities, and boost special services for those with different abilities and English as Second Language Learners.
  • In California, supporters of an initiative that would change how commercial properties are assessed report they have collected enough signatures to appear on the 2020 ballot. If passed, this initiative would remove property tax protections on business that were put in place 40 years ago by Proposition 13.
  • Also in Mountain View, CALIFORNIA, voters will determine whether they think large business (like Google) should pay more via employee surcharges (similar to the “head tax” proposed and killed by Amazon in Seattle earlier this year).
  • Virginia lawmakers opted to wait until 2019 to decide how to respond to the federal tax cut bill that will slash taxes for wealthy individuals and corporations and, due to an unusual relationship between the Virginia and federal tax codes, raise around $500 million in state revenue. Gov. Ralph Northam has an idea for them to use about half of the revenue gain to make the state’s Earned Income Tax Credit (EITC) fully refundable, delivering benefits to the low- and middle-income working families who could most use the help and were mostly ignored in the federal bill.
  • Voters in Boulder, Colorado will decide this November if the city can keep extra tax revenues raised by the soda tax or if the revenues will have to be returned to distributors per TABOR. The soda tax passed via ballot in 2016 and raised closer to $5.2 million than the originally projected $3.8 million. 

SPORTS BETTING

  • West Virginia:
    • Sports Betting Officially Kicks Off September 1 At Hollywood Casino: Hollywood Casino at Charles Town Races will open its sportsbook September 1, according to its owner, Penn National. The launch will make West Virginia the fifth state to offer legal sports bettingand the fourth to start after the repeal of PASPA in May. William Hill will operate the sportsbook at Charles Town, as Legal Sports Report confirmed last week. The bookmaker previously announced a mystery partner in West Virginia sports betting whose identity is now confirmed.
    • Bloomberg Government: NFL Kickoff Will Mark Legalized Sports Betting in West Virginia: Sports betting in West Virginia should be available in time for the beginning of the National Football League’s season. The state Lottery Commission has set the stage to allow for the launch of sports wagering in West Virginia by Sept. 1, Danielle Boyd, the commission’s general counsel, told Bloomberg Tax Aug. 10. However, she said, offerings at the five casinos authorized to provide for such betting are likely to be staggered during the next few weeks. The commission estimates the state will generate some $5.5 million through a tax on sports betting during the first year it is allowed, and between $13 million and $18 million annually after that. West Virginia would be the four new state to offer legalized sports betting after the U.S. Supreme Court’s May 14 decision in Murphy v. NCAA, which struck down the Professional and Amateur Sports Protection Act. That federal law had prohibited such betting outside of Nevada and was challenged by New Jersey, which along with Delaware and Mississippi has launched legalized sports betting. New York and Pennsylvania are among the next states moving toward legalization.
  •  Better Luck Next Year: Governor’s Connecticut Sports Betting Efforts Stall: Put away whatever hope remained for Connecticut sports betting in 2018. Connecticut Gov. Dannel Malloy abandoned this week a potential special session to address sports betting legislation after failing to reach consensus with legislative leaders. The state passed a sports betting law in 2017, but tribal issues and expansion questions persist. Connecticut also did not issue regulations based on the earlier law. A report in the Republican-American of Waterbury cited resistance from legislative leaders as Malloy’s reason for stopping talks with tribal officials. Even with legislative support, Malloy’s talks with the tribes enjoyed no guarantee of success.
  • First Full Month Of New Jersey Sports Betting Nets Nearly $4 Million In Revenue: Sports bettors in New Jersey generated more than $3.8 million in total revenue for the group of five operators running sportsbooks in July. The Division of Gaming Enforcement released its monthly report Tuesday, providing the second update since NJ sports betting went live in June. The first report covered just 17 days, so July’s data represents the first full month of revenue.

LABOR/MINIMUM WAGE

  • Pa. Businesses Push Back on Plan to Boost Overtime Eligibility: Pennsylvania is pushing to double the salary threshold for overtime eligibility less than two years after a federal judge struck down a similar Obama-era overtime rule. Up to 460,000 salaried workers in Pennsylvania would become eligible to earn time-and-a-half pay for more than 40 hours worked in a week under proposed changes to Pennsylvania’s Minimum Wage Act,. If implemented, the proposal would increase Pennsylvania’s overtime salary threshold—under which an employee would be entitled to overtime pay to more than twice the federal level. Scores of small business owners, nonprofit service organizations, schools, townships, and other employer groups are pushing back, warning that workers will lose their jobs, services with be cut, costs will go up, and employers will be confused if the rule goes into effect. Approximately 230,000 businesses, including at least 225,400 small businesses, would need to comply with the new rules, according to the state’s regulatory analysis.
  • Minnesota Minimum Wage: Minnesota’s hourly minimum wage is expected to rise in 2019 to $9.86 from $9.65 for large employers and to $8.04 from $7.87 for small employers, according to Bloomberg Tax calculations.

HEALTHCARE

  • Indiana: State's alcohol tax being reviewed: Legislators discussed simplifying and streamlining the process of collecting alcoholic beverage taxes Thursday but shied away from any move to raise the stagnant tax rates. This despite the Alcohol Code Revision Commission last year recommending an increase in alcohol taxes to help state regulators with expenses. “It's not really our charge,” said House Ways and Means Chairman Tim Brown, R-Crawfordsville. He chairs the interim fiscal policy committee, which was assigned to look at using technology to improve revenue compliance and reporting. Lisa Hutcheson, director of the Indiana Coalition to Reduce Underage Drinking, reminded the panel that the last time alcohol taxes have been raised Ronald Reagan had just been elected the first time and Prince Charles and Lady Diana got married. Read more at the Journal Gazette.
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