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BPAA State Policy Update - November 13, 2020

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COVID-19 Updates and Tracking


Political Update

  • In The States: The AP has called enough individual races in the MN Senate for the GOP to hold its majority. The AP had called NH Senate as a GOP flip, while Republicans held majorities in the NC House, NC Senate, PA House, PA Senate, MI House, and IA House. Read more at the AP News.


  • New Hampshire’s Was Only State Legislature That Changed Parties In 2020 Election New Hampshire’s state legislature was the only one in the country where party control changed in last week's election. Granite State Republicans kept the governor’s office and took control of the State House and Senate, which had both gone Democratic in 2018. Republicans now have unified control in 24 states, according to Tim Storey, executive director of the National Conference of State Legislatures. Fifteen states are under Democratic control, he said during a webinar Thursday, and 11 are divided.
    • New Hampshire’s legislature has changed majorities in six of the last eight elections, Storey said. The state House of Representatives is especially prone to flip, he said, since each state representative has an average of about 3,400 constituents. “Those districts are very small, they’re very personal,” he said. “You’ve just got to knock on a hundred more doors and you’re going to swing a district if you’re successful with your message. So I think that has a lot to do with this – the unique nature of New Hampshire itself.”
    • Nationwide, Storey said Republicans now control about 55% of all state legislative seats, heading into a redistricting year. Read more here.
    • See the Postelection Partisan Legislative Control here.


  • No Recounts Or Recanvasses To Be Ordered For Any Pa. Statewide Election Races Pa. Secretary of State Kathy Boockvar said Friday that recounts or recanvasses will not be ordered in any of the statewide Nov. 3 general election races based on unofficial returns and margins of victory. This includes the races for President of the United States, Attorney General, Auditor General, and State Treasurer. Read more at CBS Pittsburgh.


  • Bloomberg Government reports: Georgia Starts Recount That Will Last Days: Georgia Begins Recount That Will Last Into Next Week Georgia began recounting ballots Friday in a procedure expected to last until Wednesday, and another recount could still come after that. That’s because the state is using an alternate procedure to a recount that is supposed to be used to spot-check ballot-counting equipment. The end result could be three varying tallies for the Georgia election, which Trump has said was riddled by fraud, without providing evidence.
    • After an election, many states will do an audit, in which small batches of randomly selected ballots are hand-counted and the results compared to those found by machines. Larger batches of ballots are counted until officials are satisfied that the machines worked properly. But Republican Secretary of State Brad Raffensperger ordered Georgia counties to use the audit process to re-tally all 5 million ballots cast in the presidential election and post the new results by Wednesday.
    • That may lead to slightly different results than a typical recount, which uses the same machines to re-tally results, especially since hand-counting ballots is generally less accurate. And since it’s not technically a recount, the Trump campaign could still request yet another re-tally after the results are certified next Friday. Biden currently leads in Georgia by more than 14,000 votes, far greater than what usually shifts in a recount.


  • A Round-Up of Major U.S. Ballot Measures Selecting the next U.S. president wasn’t the only high-stakes decision in this year’s election. The results are in on a number of local policy and spending measures that also appeared on the ballots. There were fewer initiatives than in previous election years as the coronavirus pandemic disrupted the campaign season for ballot measures, but across the country, local referenda revealed where voters stand on issues like transportation, the decriminalization of drugs, abortion and taxes. To highlight:
    • Florida: $15 Minimum Wage Initiative: The initiative gradually increases the state's minimum wage to $15 per hour over the next six years. Advocates say it could lift a quarter of the state's workforce, many of whom work in the service industry.
    • Illinois Allow for Graduated Income Tax Amendment: Voters rejected a measure that would have allowed the state to raise taxes on its wealthiest residents through a constitutional amendment that sought to scrap the flat income tax. That would have allowed the state to enact a new legislature-approved structure that would tax those making more than $250,000 at higher rates.
    • California Prop 15 Defeated: Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative:  Voters narrowly rejected the measure to tax commercial properties worth more than $3 million based on current market value rather than their purchase price. 
    • Arizona: Tax on Incomes Exceeding $250,000 for Teacher Salaries and Schools Initiative: Voters approved an income tax hike on the state’s highest earners to fund education.
    • Virginia: Redistricting Commission Amendment: Voters approved to transfer the task of drawing district lines every 10 years from the state legislature to a bipartisan redistricting committee of  eight citizens and eight legislative members. The constitutional amendment limits the state’s long history of partisan and racial gerrymandering. 
    • Results of 2020 State and Local Tax Ballot Measures


COVID-19 Update

  • COVID-19 infections are soaring. Lockdowns could be coming. A list of restrictions in your state. As COVID-19 cases, hospitalizations and deaths continue to rise nationwide, some states are halting phased reopening plans or imposing new coronavirus-related restrictions. Several are putting limits on social gatherings, adding states to travel quarantine lists, mandating face masks and encouraging residents to stay home, as many did in the spring. Others are restricting business hours of operation and limiting restaurant capacity. Thirty-four states – plus the District of Columbia and Puerto Rico – now require people to wear face coverings in public, according to a list maintained by AARP. Utah joined the list in recent days, Maine strengthened its mandate, and Ohio's governor reissued an order this week with new sanctions And on Friday, the governors of New Mexico, Oregon, Vermont, Virginia and West Virginia announced additional coronavirus restrictions. Read more here.
  • Shutdowns possible in Illinois, Maryland, Washington state as governors weigh more restrictions Governors for Illinois, Maryland and Washington said Thursday that they have not ruled out ramping up restrictions or enforcement, even if that means forcing businesses to close to reduce the spread of the virus. Illinois and Maryland topped their highs Thursday for their seven-day averages of new cases, while Washington state had not yet reported its daily total.
    • On the same day Illinois tallied its most reported coronavirus infections in a day, 12,702 cases, Gov. J.B. Pritzker (D) said it was “certainly likely if the numbers continue going in the wrong direction that we may take more-stringent action” — including another statewide shutdown. “Right now that seems where we are headed,” he said of the possibility of a stay-at-home order being issued in the next 30 days. Pritzker praised Chicago Mayor Lori Lightfoot (D) for issuing an advisory Thursday encouraging residents to stay home if possible, and he admonished other local officials in Illinois who were not enforcing rules or were pushing baseless claims.
    • In Maryland, where 1,477 new cases were reported, Gov. Larry Hogan (R) was asked about the possibility of a second shutdown. He said that while the state never fully locked down during the beginning of the pandemic, all options were being considered during this recent nationwide surge. “Might we have to take more restrictive actions over the coming weeks and months? Absolutely we might,” he said.
    • Washington Gov. Jay Inslee (D) said he was “strongly considering” additional shutdowns and would be making an announcement Monday. Read more here.


Tax Policy Update

  • New Jersey May Become Model for SALT Workarounds Blessed by IRS: More states are expected to pass laws letting businesses avoid the limit on personal tax deductions for state and local taxes, following IRS guidance approving the workaround. Already, states including New Jersey and Connecticut softened the blow of the $10,000 SALT cap with provisions for pass-through businesses like partnerships and S corporations, which are taxed normally at the owner level.
    • The IRS said Monday in a notice that forthcoming proposed rules will allow the states’ workaround, which involves an entity-level tax that is offset by a corresponding individual income tax credit.
    • “Now that the uncertainty has been removed, you are going to see more states enact some form of pass-through entity tax,” said Marc Finer, a Hartford, Conn.-based tax attorney at Murtha Cullina LLP, who warned last year that benefits from Connecticut’s workaround could be short-lived because of uncertainty about how the IRS would treat it.
    • Connecticut’s workaround law is mandatory, so partners or shareholders have no control over whether they keep pass-through status. The SALT cap was a politically fraught element of the 2017 Republican tax law, and is generally opposed by Democrats in high-tax states. Connecticut became the first state to enact the workaround in 2018. Since then tax advisers have generally been viewing the IRS’s silence as acquiescence.
    • Bruce Ely, a partner at Bradley Arant Boult Cummings LLP in Birmingham, Ala., estimated that as many as four more states could enact workarounds in upcoming legislative sessions. He expects Alabama to introduce a bill when its Legislature meets in February. “Right now I’m going to go back to my legislators and show them this notice,” Ely said. “There is no concern now about the validity of these taxes.”
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