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Budget & Taxes
STATES KEEPING EYE ON BILLIONAIRES: When the wealthiest Americans sell large quantities of stock or suffer big losses, it can have a significant impact on the finances of the states where they reside, especially if those states are small and collect taxes on income or capital gains.
"Smaller or mid-sized states with one or two billionaires — that's not something you can ignore," said Lyman Stone, an economist for the Washington D.C.-based Tax Foundation. "States with income taxes would have an interest in tracking that."
The problem is that billionaires aren't in the habit of sharing their financial plans with state officials. So revenue estimators in many states have taken to interviewing financial planners and economists to try to get a general idea of what their local billionaires might do and what the potential tax implications would be.
"Our economic advisers maintain good relationships with the big accounting and law firms, and while they can't talk about individual taxpayers, they get an idea how those tax advisers will generally advise their clients," said Oregon Budget Director George Naughton.
The decision of many high earners to take their capital gains in 2013 to avoid an expected increase in the federal capital gains rate in 2014 — and the resulting state revenue boost and subsequent dip — would be an example of the sort of intelligence state officials are looking for.
Even big states have been known to take an interest in the financial affairs of their wealthiest residents. When Menlo Park, California-based Facebook issued its initial public stock offering in 2012 — creating at least 10 billionaires and many more millionaires — state budget officials were watching closely.
"We generally do not base our forecasting on individual wealthy individuals," said California Budget Director Michael Cohen. "California's economy and taxpayers are too diverse. One exception is with the Facebook IPO — there was enough public information and the one-time event was large enough for us to try to capture the IPO's effect on revenues separately."
Shortly before Facebook shares began trading, California's Legislative Analyst's Office (LAO) predicted that nearly 1 percent of all personal income in the state in 2012 — and around 20 percent of all personal income growth for that year — would be related to Facebook, with the dollar figure placed at $1.6 billion. That estimate wasn't too far off. The LAO later revised the number down to $1.25 billion. (STATELINE.ORG, CALIFORNIA LEGISLATIVE ANALYST'S OFFICE, BUSINESS INSIDER [NEW YORK])
GAMBLING COMPANIES BETTING BIG ON BOSTON: Two major gambling companies have gone all in for the biggest pot in New England: the Greater Boston market. The Mohegan Tribal Gaming Authority has proposed building a $1.3 billion casino at Suffolk Downs in Revere, while Wynn Resorts has proposed a $1.6 billion facility in Everett. And the Massachusetts Gaming Commission could award one of those two companies the region's only casino license this week.
Clyde W. Barrow, an expert on gambling and casinos at the University of Texas-Pan American and the former director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, said, "This is the big one."
"It's going to be the most capital investment, has the ability to generate the most tax revenues," he said. "So, I think this is the single most important decision the Commission will make on license."
But that decision could become moot in November, when Massachusetts voters will consider a referendum on a 2011 law authorizing three casinos in different parts of the state. If that referendum passes, the Boston-area casino would be nullified, along with an MGM casino already approved for Springfield. (HARTFORD COURANT)
BUDGETS IN BRIEF: WASHINGTON's Port of Seattle has won a $20 million federal grant to repair and expand one of its busiest container terminals. The grant was part of $600 million in grants set aside for critical transportation projects around the country (SEATTLE TIMES). • NEW JERSEY Gov. Chris Christie (R) has given the go-ahead for the state's racetracks and casinos to offer Las Vegas-style betting on professional sporting events (NORTHJERSEY.COM). • The Los Angeles Unified School District got a 43 percent discount on the 45,000 iPads it ordered from Apple last year, while MAINE's Department of Education only received a 14-percent discount on the 40,000 iPads it ordered around the same time (PORTLAND PRESS HERALD). • The investment portfolio managed by WEST VIRGINIA's Investment Management Board grew 15.8 percent — from $14.58 billion to $16.87 billion — in the last fiscal year (CHARLESTON GAZETTE).
- Compiled by KOREY CLARK
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