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BPAA Biweekly State Policy Updates - May 17, 2019

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BPAA is pleased to provide the following biweekly update on state policy. Please contact Tom Schreibel at tbschreibel@michaelbeststrategies.com if you have any questions or updates on activity in your state.

 

Visit BPAA’s website at http://bpaa.com/bpaa/government-affairs/government-affairs  to read previous federal and state policy updates.

 

MINIMUM WAGE

  • Connecticut Senate gives final approval to $15 minimum wage; Gov. Ned Lamont pledges to sign bill: Following a deeply personal and highly partisan debate, the Connecticut Senate gave final legislative approval early Friday to a bill that would lift the state’s hourly minimum wage to $15 by 2023. Democratic Gov. Ned Lamont is a supporter and has pledged to sign the bill into law. Over the course of six and a half hours, Republican lawmakers shared stories of businesses owners who cannot afford to provide a raise to their employees, given the state’s tepid economy. Democrats, meanwhile, spoke of how a higher wage would provide an important boost to those on the lower rungs of the income scale. Sitting in the ornate Senate chamber, listening to it all, was Takara Gilbert, a 20-year-old Hartford resident who works as a food preparer and cashier at McDonald’s, earning $10.10 per hour, Connecticut’s current minimum wage.
    • The bill would gradually increase the minimum wage, going to $11 per hour in October, and rising by $1 per year for each of the next four years, before reaching $15 in 2023.
    • In a concession to the business community and municipalities who hire teenagers for the summer, the legislation includes a provision for a “training wage” of $10.10 per hour for workers aged 16 and 17 who work less than 90 days per year.
    • Read more at the Hartford Courant.
  • More Evidence from California: Minimum Wage Hikes Cause More Harm than Good: The Golden State, which is known for its progressive policies, was one of the first states to implement a $15 minimum wage. While the wage mandate is still a few years out from being fully implemented, its harmful effects are already being felt across the state. A recent study from the University of California Riverside found that California’s minimum wage increases have contributed to a decline in restaurant growth. For high-income regions such as Los Angeles and the Bay Area, the full-service restaurant industry will have created 30,000 fewer jobs between 2017 to 2022 as a consequence of a rapidly-rising minimum wage without a tip credit. In low-income areas, the relative damage to the restaurant industry is even greater: from 2013-2022, restaurant growth will be half of what it would have been absent California’s aggressive minimum wage experiment. Economists at Harvard Business School and Mathematica Policy Research also examined restaurant closures in the Bay Area. They found that a one-dollar increase in the minimum wage led to a 10 percent increase in the likelihood of restaurant closures for a median 3.5-star restaurant and a four to six percent reduction in the likelihood of restaurants entering the market to begin with. Read more here at MinimumWage.com.
  • House Panel Oks Study That Would Examine Impacts Of $15 Per Hour Minimum Wage: How will boosting the minimum wage to $15 per hour, as St. Paul and Minneapolis have done, affect residents of those cities? Will jobs be lost or gained? Will it hurt or help small businesses? Will the effects be different for tipped employees compared to workers who don’t rely on tips? To answer those and other questions, HF2821 would authorize the Federal Reserve Bank of Minneapolis to use taxpayer data from the Department of Revenue to conduct and publish “economic research studies regarding the impact of implementation of minimum wage ordinances adopted by Minneapolis, Saint Paul, and other Minnesota cities that adopt similar ordinances.” The bill, as amended, was approved by the House Judiciary Finance and Civil Law Division Monday and sent to the House Floor. There is no Senate companion. Sponsored by Rep. John Lesch (DFL-St. Paul), the bill would permit the use of taxpayer data to conduct the study, but any published studies “must not include the identity of a taxpayer” and the bank must keep taxpayer data secure from unauthorized access, among other data protection provisions. Lesch said the bill’s impetus was an offer from the Federal Reserve Bank of Minneapolis, soon after St. Paul and Minneapolis passed their minimum wage ordinances, to conduct multi-year studies – free of charge – for each city. Read more at the Min. House Rep. Website.
  • Vermont House Committee Pushes Back $15 Minimum Wage Timeline To 2026 Or Later: The House Appropriation Committee narrowly approved a compromise proposal on Monday that might not hit the Legislature’s $15 minimum wage target until 2028. A bill passed by the Senate would have hit that figure by 2024. Committee members voted 6-5 to advance the amended bill to the House floor. Rep. David Yacovone, D-Morrisville, was the only Democrat to vote against it. He was unhappy with the lack of action to support health care providers. Read more at the Vermont Digger.

 

  • California Is Beginning To Feel The Negative Side Of Minimum Wage Hikes: After Massachusetts and New York, California is beginning to experience the negative side of minimum wage hikes, too; job losses. That’s according to a recent  UC Riverside School of Business study, which shows that California’s minimum wage hikes have slowed job growth in the state’s booming restaurant industry. California was among the first states to launch minimum wage hikes towards the “living wage” of $15 per hour by 2022—a 50% hike over 2012. “Data analysis suggests that while the restaurant industry in California has grown significantly as the minimum wage has increased, employment in the industry has grown more slowly than it would have without minimum wage hikes,” the study says. “The slower employment is nevertheless real for those workers who may have found a career in the industry.” Read more at Forbes.

 

TAX UPDATE

  • Kansas' Democratic governor vetoes 2nd GOP tax relief plan: Kelly's action Friday is likely to lead to an effort by GOP lawmakers to override her veto on May 29, their last day in session this year. She said the measure would "decimate" the state budget. The bill was designed to provide relief to individuals and businesses that have been paying more in state income taxes because of changes in federal tax laws at the end of 2017. It would save taxpayers roughly $90 million during the budget year beginning in July and about $240 million over three years. It was less than half the size of a GOP tax relief plan that Kelly vetoed in late March. Read here statement here at KSN.com.

 

  • Oregon Governor Signs Multibillion-Dollar Tax And Education Funding Bill Into Law: Oregon has a new business tax expected to raise billions of dollars for targeted investments in early childhood and K-12 education, after Gov. Kate Brown signed the sweeping legislation into law on Thursday morning. Senate Democrats passed House Bill 3427 in a party-line vote on Monday, after Brown cut a deal with the chamber’s Republicans to bring them back from a nearly weeklong walkout. That boycott had stymied Democrats, who needed at least two Republicans present to achieve the quorum necessary to vote on the bill. Brown agreed to kill bills to tighten Oregon’s vaccine mandate and increase regulations on guns in order to secure Republicans’ return to Salem.
    • The new 0.57 percent tax is set to take effect in 2020 and expected to eventually raise more than $1 billion a year. It will be calculated on businesses’ sales in Oregon above $1 million annually and businesses will be allowed to subtract 35 percent of either their labor or capital costs from their sales. Read more at OregonLive.

 

  • Florida Governor signs tax cut bill just in time to save when you buy hurricane supplies: Hurricane-tested Floridians and back-to-school shoppers will be able to once again take advantage of sales-tax “holidays” as they prepare for the upcoming storm season and the new school year. Gov. Ron DeSantis on Wednesday signed a tax package (HB 7123) that features the disaster-preparedness and school tax holidays, as well as relief for business owners who rent commercial space and storm-impacted farmers. With hurricane season starting June 1, DeSantis signed the bill while attending the annual Governor’s Hurricane Conference in West Palm Beach. Read more at the Miami Herald.

 

  • Philly Soda Tax Study Sees Sales Dip, Health Impact Unclear: The new results were published Tuesday in the Journal of the American Medical Association. Bloomberg Philanthropies, a charitable group that supports anti-obesity measures including soda taxes, paid for the study but otherwise had no role in the research. While Americans’ soda intake has declined in recent years, physician groups including the AMA support soda taxes as a way to combat obesity. The beverage industry and many merchants have fought back, with court cases and ballot initiatives, with mixed success. Last year, Pennsylvania’s highest court upheld Philadelphia’s tax, which is levied on distributors. Philadelphia’s tax has generated more than $130 million that’s paying for free preschool programs and other community services. The study has no data on beverage consumption or obesity rates, but lead author Dr. Christina Roberto of the University of Pennsylvania says the sales decline suggests Philadelphians are drinking less soda and is a promising sign. Read more at Associated Press.

 

  • Swap Of Payroll Tax For Income Tax Has Capitol Abuzz, But Questions Are Aplenty: The plan, written by the nonpartisan Connecticut School Finance Project and first reported by Hearst Connecticut Media, would replace most of the state income tax with a payroll tax, creating a new way to raise capital for the state and providing most of Connecticut’s taxpayers with a break on their federal taxes. While it sounds easy enough, the list of hurdles is long and would likely involve long conversations with the federal government as the plan is essentially a way around the $10,000 cap on a widely utilized personal income tax deduction for state and local taxes known as SALT. And those conversations take time.

 

  • Texas Gop Struggles To Overhaul Tax Code: A plan in Texas to trade a higher sales tax for lower property taxes may be in trouble, the Dallas Morning News says. Lawmakers yanked it from a scheduled House vote Tuesday. "It's because they don't have the votes," one lawmaker told the paper. Republicans are wrestling with questions about school funding as well as the progressivity of the state's tax code. Texas Tribune goes deep on the issue, reporting it's precisely the sort of tax overhaul plan former Gov. George W. Bush tried and failed to push through the legislature. "With just a month left in this legislative session, it's unclear if the plan will survive," the Tribune says.
  • House Democrats ‘Closing In’ On Votes Needed For Illinois Tax Overhaul: With only two weeks remaining in the 2019 regular session, Democrats in the Illinois House say they are close to securing the 71 votes needed to pass one of Gov. J.B. Pritzker’s top priorities, a constitutional amendment to overhaul the state’s income tax system. “I think we are rapidly closing in on 71, and I’m confident the governor will, with the personal meetings he’s having with members, get us over the hump,” said state Rep. Robert Martwick, a Chicago Democrat and the lead sponsor of the measure in the House. The proposed amendment, which cleared the Senate on May 1, would allow the General Assembly to replace the state’s “flat” income tax system, where all tax filers pay the same rate, regardless of their income, with a multibracket “graduated” tax that would impose higher rates on higher levels of income. Read more at MDJOnline.

 

SPORTS BETTING UPDATE

  • Bloomberg Government reports - New Hampshire About to Legalize Sports Betting: New Hampshire is poised to become the next state to bet on new tax revenue from sports wagering. The Senate passed a bill (H.B. 480-FN) by voice vote May 15 that would legalize sports betting in the Granite State. The House passed the bill March 19. The bill heads to the Senate Finance Committee, which is required for any bill touching on state finances, and will get one more vote before heading to the desk of Gov. Chris Sununu (R).
    • Sununu supports legalizing sports betting, having included a sports betting provision in his fiscal 2020 state budget bill (H.B. 2). The bill would allow betting online and at retail locations, but online bets could only be placed by bettors physically located in New Hampshire. Voters in the state’s cities and towns will get to decide whether to allow retail sports betting locations in their communities.
    • Legislators added an amendment to cap the number of licenses for retail betting establishments statewide at 10, and online establishments at five. The request came from the New Hampshire Lottery Commission, which will oversee legalized sports betting in the state. Sununu estimated sports betting would raise $10 million annually in new tax revenue. According to an analysis of the bill by the Office of Legislative Budget Assistant, estimated total revenue from sports betting would be $225 million in fiscal year 2021. That would generate $11.5 million in annual tax revenue on a 5% state “hold.” The program would cost $1.3 million per year for the lottery commission to administer.
    • Legislators estimated that it could take six months to establish the new industry and that first bets could be placed by July 1, 2020.

 

  • Bloomberg Government reports - Indiana Enacts Law Legalizing, Taxing Sports Betting: Indiana has become the latest state to legalize sports betting and tap the industry for a new state revenue stream. Gov. Eric Holcomb (R) signed House Bill 1015, a massive gaming overhaul, late May 8. The bill opens the state’s casinos to sports betting and places a 9.5% tax on the total amount of bets minus payouts. “By modernizing our laws, this legislation will spur positive economic growth for our state and for an industry that employs over 11,000 Hoosiers,” Holcomb said in a May 8 statement.
    • The new sports betting tax could raise roughly $12 million annually, the state estimates.
    • The law allows mobile betting and applies to professional and collegiate sports.
    • The bill doesn’t include an “integrity fee"—a statutory payment to sports leagues—but does leave open the possibility that future state rules could mandate casinos use official league data, which could create revenue for the leagues.
    • According to an American Gaming Association tracker, Indiana has joined more than 10 other states that have legalized sports betting following the U.S. Supreme Court’s May 2018 ruling in Murphy v. NCAA, which repealed a federal law prohibiting states from enacting sports gambling. Nevada was the only state to have legalized sports bettting before that ruling.

 

  • Bloomberg Government reports - Nearly Half of Sports Betting States Are Behind Tax Projections: In the 12 months since the U.S. Supreme Court said states could legalize sports betting, just over half of states with statewide sports betting are in line to meet tax revenue projections, according to a new report. Tax and gambling officials attribute the shortfalls to limited online gambling options and low consumer awareness. However, they foresee the second half of 2019 and 2020 will be dominated by state efforts to expand internet gambling, and other betting options. “Nevada and New Jersey really stand out when it comes to tax revenue—they’re both right around $20 million—and I completely believe this is because of online sports betting,” Richard Auxier, a research associate at the Urban-Brookings Tax Policy Center, told Bloomberg Tax. Auxier is also the author of a May 13 report which in part details state sports betting revenues. On May 14, 2018, the high court handed down its ruling in Murphy v. NCAA, which repealed the federal Professional and Amateur Sports Protection Act of 1992 (PASPA). That law prohibited states from “authorizing” gambling related to professional and amateur sports leagues.
    • Fast forward one year, and seven states now offer statewide betting. Sports betting also is legal in Arkansas, Montana, New York, Oregon, Indiana, Iowa, and the District of Columbia, but those jurisdictions aren’t taking bets yet. In New Mexico, only tribal casinos can take sports bets. Sixteen other states are currently considering legalizing sports betting, according to the American Gaming Association (AGA).
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