Tax Law

State Net Capitol Journal – January 25, 2016; Utah Looking to Force Action on Internet Sales Taxes

Budget & Taxes

UT Looking to Force Action on Internet Sales Taxes

Utah Sen. Curt Bramble (R) said he and his colleagues will debate a bill this year requiring Utah-based businesses that sell on the Internet to collect sales taxes on those transactions and saying to businesses that do not, “We’re going to assess it against you because you failed to collect it.”

The measure is part of a national effort backed by the National Conference of State Legislatures (NCSL), for which Bramble serves as president, to grant states the sales tax revenue they’ve been losing to the Internet.

Utah Sen. Lyle Hillyard (R) told a conference of the Utah Taxpayers Association last week that his state missed out on “$160 million to $190 million” in such revenue last year. And Bramble said the lost revenue is particularly concerning because Internet sales are growing by double-digit percentages every year.

Bramble also told the conference that the Utah Legislature could actually consider several bills addressing the issue this session, with at least one closely mirroring NCSL recommendations intended to increase the likelihood of a legal challenge ultimately leading the U.S. Supreme Court to reverse previous rulings limiting online sales tax collections. But Bramble said the real hope is that enough states will take similar action that Congress will be pressured into addressing the issue.

“States believe that a federal solution is the best solution,” he said. (SALT LAKE TRIBUNE)

Atlantic City Facing Drastic Fiscal Measures

Atlantic City was once the nation’s second-largest gambling market. But that industry and the city’s financial health have crumbled in recent years as newer casinos in New York and Pennsylvania have lured daytrip gamblers away.

In 2011 Gov. Chris Christie (R) initiated a five-year turnaround plan for the city that included tax incentives, marketing and a state-run tourism district. Three years later, four of the city’s casinos closed. By January of last year, Moody’s Investors Service and Standard & Poor’s had both downgraded the city’s bond rating to junk. And an emergency manager appointed by the governor reported in March that there were “no substantive subsequent updates.” This year, the state had to help the city close a budget hole, and the city is facing a $90 million shortfall - a third of its annual budget - next year.

Jason Diefenthaler, who manages a high-yield municipal fund at Wasmer Schroeder & Co. in Naples, Florida, attributes Atlantic City’s faltering finances to its reliance on gambling.

“With most municipalities, at least from a creditor standpoint, you want to see as many legs to the economic stool as possible,” he said. “In Atlantic City’s case, they are kind of a one-legged stool.”

Senate President Steve Sweeney (D), meanwhile, said in a statement that the city has a “bloated” budget that amounts to $6,717 per capita, compared to $2,736 per capita in New Jersey’s largest city, Newark.

Whatever the cause, Sweeney and his fellow state lawmakers have evidently had enough. They’ve proposed taking control of the city’s finances for 15 years, and Sweeney (D) said if that takeover isn’t approved in short order, the city should declare bankruptcy.

“This is a very clear statement to Atlantic City: Get your act together, knock off the B.S. and start addressing what you need to address,” he said. “The state is not going to come in and bail you out any more. You need to fix this.”

Atlantic City Mayor Don Guardian said the takeover proposal wasn’t appropriate for a city working to repair its finances while its principal industry is in crisis.

“If they are allowed to do this in Atlantic City, they will be allowed to do it anywhere,” he said. “It’s a terrible precedent. The people of New Jersey elect the state legislature to run the state, not take over its cities.” (BLOOMBERG BUSINESS)

CA Gov Proposes $122.6B Budget

California Gov. Jerry Brown (D) proposed a $122.6 billion General Fund budget for 2016-17 that balances fiscal restraint with increased investment in government services cut during the recession. Among other things, the plan includes a new $1.1 billion tax on health insurers to replace one expiring in June, a $2-billion deposit into the state’s Rainy Day Fund, an increase in K-12 education funding by $10,591 per student, and $36 billion over the next decade to maintain and improve the state’s transportation infrastructure.

The state’s nonpartisan Legislative Analyst’s Office said the plan’s “emphasis on reserves is appropriate.”

“We believe this general approach is prudent as a large budget reserve is the key to weathering the next recession with minimal disruption to public programs,” it said, adding that the state had enjoyed “remarkable economic growth over the past year” and “may be reaching the peak of a long economic expansion.”

But the LAO also said Brown’s revenue estimates for local property taxes over the next two years are about $1 billion too low. And The Sacramento Bee pointed out that the governor’s plan relies heavily on personal income taxes, 20 percent more than in 1995-96 (68 percent compared to 39 percent). (SACRAMENTO BEE, PRESS-ENTERPRISE [RIVERSIDE])

Budgets in Brief - January 18 2016

Chicago to Consider Airbnb fee: Chicago Mayor Rahm Emanuel has proposed an ordinance that would impose a 2-percent surcharge on home-sharing and vacation rentals like those offered through services like Airbnb and VRBO. The proposal also seeks to require home-sharing hosts to register with the city. (CHICAGO TRIBUNE) * GE Moving to Boston: General Electric announced last week it is moving its headquarters - and about 800 jobs - from Fairfield, CONNECTICUT to Boston, thanks to as much as $145 million in incentives offered by MASSACHUSETTS officials. The company began looking to leave Connecticut last year after state lawmakers threatened to raise corporate taxes there. (BOSTON GLOBE) * KS Study Proposes $2B in Savings: An efficiency study in KANSAS offered 105 recommendations for how the state could save $2 billion over five years. The recommendations include moving state workers to a high-deductible health plan. (TOPEKA CAPITAL-JOURNAL)

- Compiled by KOREY CLARK

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