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Budget & Taxes
New Rules Could Swell States' Unfunded Liabilities
According to a report last year from bond-rating company Standard & Poor’s, states have $529.8 billion in unfunded liabilities for health care and other benefits separate from pensions. But that figure could go up significantly soon.
Under rules approved last week by the Governmental Accounting Standards Board, GASB Statement Nos. 74 and 75, states and municipalities will have to report billions of dollars in non-pension liabilities categorized as “other postemployment benefits,” or OPEB -- such as public retiree health insurance, for example -- on their balance sheets, instead of disclosing them only in the footnotes of their financial statements.
“Because OPEB promises represent a very significant liability for many state and local governments, it is critical that taxpayers, policymakers, bond analysts, and others are equipped with enhanced information, which will enable them to better assess the related financial obligations and annual costs of providing OPEB,” said GASB Chairman David Vaudt in a written statement.
The new OPEB standards parallel those the GASB issued for pensions in 2012, GASB Statement Nos. 67 & 68. Statement No. 74 will take effect on June 15, 2016. Statement No. 75 will take effect on June 15, 2017. (BLOOMBERG BUSINESS, ACCOUNTING WEB, NEW YORK TIMES)
LA Senate Spares Tax Holiday For Guns But Not Storms
Last week Louisiana’s Senate Committee on Revenue and Fiscal Affairs voted 7-2 in favor of a measure that would eliminate sales tax holidays on back-to-school purchases in early August and hurricane preparedness supplies next May in order to help close a $1.6 billion state budget hole. But as approved, the measure (HCR 15) would also spare a sales tax holiday the first weekend in September on all hunting equipment, including firearms and ammunition.
“It [sic] very hard for me to justify that we provide an exemption for guns, but not for hurricane equipment,” said Sen. J.P. Morrell (D), one of the committee members who voted against the proposal.
The committee’s chairman, Sen. Neil Riser (R), explained that because hunting shops had already purchased inventory in anticipation of the September tax holiday weekend, eliminating it would have hurt those businesses.
“Sales are so large on that particular day,” he said, adding that there were “a lot of worthy exemptions out there.”
Morrell said committee members had also received a letter from U.S. Sen. and gubernatorial candidate David Vitter (R), urging them to vote against the repeal of the hunting sales tax holiday.
But ultimately Vitter may not get his way. The version of HCR 15 that was passed by the House 82-8 last month scrapped all three sales tax holidays, and its sponsor, Rep. Jack Montoucet (D), said he’s going to pull the measure because of the Senate committee's changes.
“I don’t think that's fair,” he said. (TIMES-PICAYUNE [NEW ORLEANS])
Oil Price Increase Saves ND Hundreds of Millions of Dollars
As of the morning of May 29th, North Dakota sweet crude was fetching $58.33 a barrel, which was music to the ears of state officials. It meant that for the month of May the price of oil would average $4.50 above the $55.09 below which it had averaged the previous four months, allowing the state to collect nearly half a billion dollars in extraction taxes from oil producers. An initiative passed by voters in 1980 requires the state to exempt producers from the tax if the average price of oil falls below a trigger price set by the state’s Tax Department five months in a row.
“We’re clearly not going to trigger,” said North Dakota Tax Commissioner Ryan Rauschenberger. (BISMARCK TRIBUNE)
Budgets In Brief - June 8 2015
NV Omnibus Tax Measure to Provide Education Funding: The NEVADA Legislature passed a $1.5 billion omnibus tax measure combining AB 464 and SB 483 that, if signed by Gov. Brian Sandoval (R), will provide $600 million in additional funding for education over the next two years (LAS VEGAS SUN, LEXISNEXIS STATE NET). * TN Audit Discovers $98 Million Mistake: An audit by the TENNESSEE Comptroller's Office found that the state has mistakenly paid out $98 million in unemployment claims over the past six years, including checks to prisoners and deceased people. Auditors said the figure could have grown to as much as $171 million since the audit was completed and made public in March (TENNESSEAN [NASHVILLE]). * CN Assembly Approves Business Tax Raise: CONNECTICUT’s Democrat-controlled General Assembly approved a $40.29 billion two-year budget last week that raises taxes on businesses and the state’s top earners. Gov. Dannel Malloy is expected to sign it into law (WALL STREET JOURNAL). * Internet Gambling a Possibility In PA: Republicans who control the PENNSYLVANIA Senate plan to introduce legislation to allow Internet gambling at the state’s casinos (WPXI [PITTSBURGH]). * KS House Passes Multibillion Dollar Budget: Without argument or discussion, the KANSAS House passed a multibillion dollar state budget last week that authorizes $400 million more in spending than the state expects to collect in revenue. But the state’s lawmakers are working on a tax package to close the gap (TOPEKA CAPITAL-JOURNAL).
- Compiled by KOREY CLARK
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