State Net Capitol Journal – November 24, 2014; No Marketplace Fairness Act This Year

Budget & Taxes

NO MARKETPLACE FAIRNESS ACT THIS YEAR: States hoping for a piece of the estimated $23 billion-plus a year in uncollected state sales taxes on Internet purchases — at least in the form of the federal Marketplace Fairness Act (MFA) — probably won't get their wish this year. That bill, which would require online retailers to collect those taxes, passed the U.S. Senate last year on a 69-27 bipartisan vote. But a spokesman for U.S. House Speaker John Boehner (R-Ohio) told reporters this month that the speaker has "significant concerns" about the measure and likely won't bring it to a vote before the end of the current lame-duck session.

That would mean supporters of the proposal would have to start over with a new Republican-controlled Congress next year. Some of them, such as Washington state Rep. Ross Hunter (D), chief budget writer for his chamber's Democratic majority, isn't very encouraged about the bill's prospects, which he compared to the chances of obtaining the source of food God provided to the Israelites in the desert following their exodus from Egypt, according to the Bible and the Quran.

"We could receive manna from heaven, too," he said. "I'm not spending a lot of time planning on it happening."

The National Conference of State Legislatures vented its frustration with the news that Congress won't be acting on the MFA yet again this year in a letter to Speaker Boehner.

"With all due respect, legislation to give states the authority to require the collection of sales taxes by remote sellers has been under review by the Judiciary Committee for more than 12 years and the subject of numerous hearings," the letter stated. "In this Congress, MFA legislation has sat in the Judiciary Committee for 19 months.... The time for consideration and adoption of this important legislation is now, 12 years of congressional consideration and debate is enough." (SEATTLE TIMES, POLITICO, STATE NET)

WI PROPOSES TAXING ELECTRIC VEHICLES: Wisconsin Gov. Scott Walker's administration wants to impose a fee on owners of electric and hybrid vehicles to make up for the gas tax revenue the state isn't collecting from them. With nearly 47,500 electric and hybrid vehicles on the road in the state — a 1,000 percent increase from the roughly 4,200 in 2005, according to the Wisconsin Department of Transportation's budget request — the $50 annual fee would generate millions of dollars a year in revenue for the state.

Environmental groups slammed the idea.

"It's completely backward," said Amber Meyer Smith, director of programs and government relations for Clean Wisconsin. "Taxing people for making sustainable choices makes no sense at all."

Steve Hiniker, executive director of 1000 Friends of Wisconsin, likewise, said, "We're investing in the past."

"We're penalizing people who are trying to do the right thing as we continue to build highways."

But the DOT contends, "While these vehicles have a positive environmental impact, owners pay little if any motor vehicle fuel tax."

"This fee will help cover the costs of department functions, including Division of State Patrol enforcement and roadways maintenance, and operations that benefit all vehicle owners."

The state's road-building lobby, meanwhile, is one of the most powerful in the statehouse. Between 2011 and this past July, Walker received over $730,000 in campaign contributions from road builders, while members of the Legislature received nearly $300,000, according to analysis by the Wisconsin Democracy Campaign.

If the state ultimately approves the fee it won't be the first to do so; Colorado, Nebraska, North Carolina, Virginia and Washington have already imposed fees on drivers of electric vehicles. But Virginia repealed its $64 fee earlier this year after drivers vehemently protested. If Wisconsin drivers are as resistant to the idea, the state's DOT has about $750 million worth of alternative proposals, including collecting odometer readings during annual auto registrations to determine whether to charge a new fee based on the number of miles people drive (LA CROSSE TRIBUNE, MILWAUKEE JOURNAL SENTINEL)

BLEAK BUDGET OUTLOOK FOR PA: Pennsylvania's Independent Fiscal Office released a budget outlook for the state last week estimating a $1.85 billion shortfall for the 2015-16 fiscal year. The office's director, Matthew Kittel, said "non-recurring revenues and one-time costs savings employed in the FY 2014-15 budget contribute significantly to this deficit," along with rising pension costs.

The state's fiscal outlook got even worse when Treasurer Rob McCord issued a press release that indicated the state was about to max out the $1.5 billion line of credit it took out in September to cover basic operating expenses.

"We see a deteriorating financial scenario that casts serious doubt on Pennsylvania's ability to balance its budget this year," he said. "The state's fiscal health remains precarious."

The state's incoming governor, Tom Wolf (D) doesn't seem too optimistic about the state's financial future either.

"Today's report showing a multi-billion dollar budget deficit is a stark reminder of the dire fiscal situation my administration will face," he said in a statement. "As bad as today's news is, what lies ahead could be worse."

Presumably he was referring to the fact that $2 billion in one-time revenue sources included in the current budget are disappearing. But he could just as easily have been talking about the fact that unlike his predecessor Tom Corbett (R), who signed that spending plan into law, he's going to have to deal with a Legislature that doesn't share his party affiliation and that has actually shifted further to the right as a result of the Nov. 4 elections. (PHILADELPHIA INQUIRER, NATIONAL CONFERENCE OF STATE LEGISLATURES)

BUDGETS IN BRIEF: After losing its automatic annual funding in a March special session, WEST VIRGINIA's Tourism Commission is asking lawmakers to double the state's liquor tax, which has stood at 11 percent for at least 25 years, to provide money for tourism. Forty percent of the new revenue would go toward municipal and county fairs and festivals, with the remaining 60 percent going toward larger operations, under the tourism officials' proposal (CHARLESTON GAZETTE). • LOUISIANA's Revenue Estimating Conference is projecting a $171 million shortfall in the state's current budget, meaning the state will have to make midyear spending cuts. Such cuts have been required six of the last seven years (TIMES-PICAYUNE [NEW ORLEANS]). • NEW YORK Assembly Speaker Sheldon Silver (D) has proposed using some of the state's $5 billion budget surplus for infrastructure projects. The idea could appeal to Gov. Andrew Cuomo (D) and others who have expressed opposition to using the surplus for recurring expenses, such as education (TIMES UNION [ALBANY]). • MISSISSIPPI Gov. Phil Bryant's (R) 2016 Executive Budget Recommendation will reportedly include a tax break for residents who earn less than $53,000 a year. The credit, which would return about $79 million to those taxpayers next year, would only be provided in years when state revenues are projected to grow at least 3 percent (WASHINGTON POST)

- Compiled by KOREY CLARK

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