Hawaii’s House and Senate both passed bills last week that would require short-term rental platforms like Airbnb to collect and pay taxes on behalf of their hosts.
Collection of the state’s transient accommodations and general excise taxes have been complicated by the fact that many vacation rentals in the state are operated without permits. It’s been estimated that the state’s most populous county, Honolulu, has about 10 times as many illegal rental units as legal ones, 8,000 versus 800.
Hotel operators have been calling for more thorough taxation of vacation rentals for years, according to Mufi Hannemann, president of the Hawaii Lodging and Tourism Association.
“We want a level playing field,” he said. “If we’re paying taxes, if we’re paying fees, we want them to do the same.”
Vacation rental companies oppose the bills, contending they would require them to turn over personal information about their rental hosts.
The state’s Legislature actually passed a similar measure several years ago, but Gov. David Ige (D) vetoed it over concerns it would foster illegal rentals. Lawmakers say they’ve been working with the governor’s chief of staff and other state officials to avoid repeating that scenario. (ASSOCIATED PRESS)
A call for the first sales tax increase in Texas in nearly 30 years came from an unlikely source last week: Republican Gov. Greg Abbott, who has routinely touted his state as a haven for tax- and regulation-averse conservatives.
His proposed penny increase would raise the state’s sales tax rate from 6.25 percent to 7.25 percent, tying it with California’s as the highest in the nation.
But the governor and Republican lawmakers have promised property tax relief and more money for education after suffering uncharacteristic losses in last year’s election, and the state’s legislative session is nearing its May adjournment date.
“Texans are fed up with skyrocketing property taxes,” the governor said in a joint statement with GOP leaders of the House and Senate. “If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term.” (ASSOCIATED PRESS, DALLAS MORNING NEWS)
A provision extending NEW YORK’s film and television credit for two years was quietly inserted into the state budget shortly before it was approved last month. The credit, which cost the state $25 million when it was first offered in 2004, is now a $420 million annual commitment, making it state’s the priciest such tax break for an individual industry by far. (TIMES UNION [ALBANY])
TEXAS education officials estimate the state may owe the federal government $223 million - almost a quarter of the total amount of the state’s federal special education grant - for decreasing funding for children with disabilities in violation of federal law. That estimate is nearly $190 million more than officials said in October they would likely owe. (TEXAS TRIBUNE [AUSTIN])
-- Compiled by KOREY CLARK
All district, appellate and Supreme Court judges in Nevada are currently elected by voters. But that would change under a proposed constitutional amendment in the state’s Assembly Legislative Operations and Elections Committee.
Under the proposed measure, AJR 9, district, appellate and Supreme Court judges would be appointed by the governor from a list of three candidates chosen by a commission.
The proposal is modeled after a system used in Delaware but with some additional provisions. For instance, it would limit judges to four, six-year terms and require them to undergo periodic performance reviews, evaluating their legal knowledge, judicial temperament, communication skills and work ethic.
If approved, the new judicial selection system would take effect in January 2026. (NEVADA APPEAL [CARSON CITY], LEXISNEXIS STATE NET)
As of April 9, at least 10 states had introduced bans on the sale of flavored tobacco products, including e-cigarettes and other vaping devices. Most of the proposals would exempt establishments that prohibit minors. Some would apply only to e-liquids used to refill vaping products. But at least two states, California and Hawaii, have introduced measures that would ban all sales of all flavored tobacco products, although the House version of Hawaii’s proposal, HB 276, was amended to allow sales of menthol-flavored products.
Oregon appears poised to become the next state to join the National Popular Vote Compact, after the state’s Senate approved legislation to do so last week.
Bills to ratify that agreement, which pledges the electoral votes of its signatory states to the presidential candidate who wins the popular vote if enough states to constitute an electoral majority do the same, have been introduced in the state repeatedly but have never been voted on by the full Senate. The reason for that is Senate President Peter Courtney (D) has opposed apportioning the state’s electoral votes without getting the approval of voters first.
But Courtney finally decided to allow a vote, and after a spirited debate, this year’s bill, SB 870, passed 17-12, with three Democrats, including Courtney, opposing it and two Republicans supporting it.
SB 870 moved on to the House, which has passed similar measures four times since 2007. The office of Gov. Kate Brown (D) has also indicated she supports the bill. (OREGON PUBLIC BROADCASTING, LEXISNEXIS STATE NET)
MARYLAND House Speaker Michael Busch died last week after being hospitalized with pneumonia. The 72-year-old was the longest-serving speaker in the state’s history, having initially assumed that post in 2003. (NBC NEWS, CBS BALTIMORE)
In a unanimous decision, the WISCONSIN Court of Appeals declined to force Gov. Tony Evers (D) to reinstate 15 appointments made by former Gov. Scott Walker (R) that Evers rescinded last month. The ruling stems from a lame-duck session Republicans convened in December to confirm Walker’s appointees and limit the powers of the incoming Democratic governor, which has spurred multiple lawsuits. (MILWAUKEE JOURNAL SENTINEL)
Attorneys for MISSISSIPPI Gov. Phil Bryant (R) and Secretary of State Delbert Hosemann (R) filed papers with the 5th U.S. Circuit Court of Appeals last week seeking to block a court-ordered redrawing of state Senate District 22. In February U.S. District Judge Carlton Reeves ruled the way that district was drawn diluted black voting power. (ASSOCIATED PRESS)
In his January State of the State address, Arizona Gov. Doug Ducey (R) called on lawmakers to pass legislation that would make the Grand Canyon State the first to accept out-of-state professional licenses. Lawmakers responded by sending him HB 2569 last week, a measure he quickly signed.
“You don’t lose your skills simply because you pack up a U-Haul truck and make the decision to move to Arizona,” Ducey said at a press conference announcing the signing.
The new law applies to any profession that requires a professional license, allowing anyone with an unblemished professional history in their state to automatically ply their trade in Arizona.
The bill drew opposition from critics that argued some states have easier licensing requirements, potentially allowing less-qualified doctors, hair stylists and home inspectors to take advantage of Arizona consumers.
“We have shortages in teaching, medicine and nursing, we know that,” Democratic Rep. Pamela Powers Hannley said during the House debate over the proposal. “But we don’t have shortages across the board. So why should we dumb down our standards when it’s really not necessary to build up the workforce?”
Some licensed pros said the new law could also lead to direct harm.
“Flatirons are 400°F,” said Cindy Rogers, a Phoenix-area cosmetologist. “They can burn your hair off in a minute. The customer has no recourse.”
But bill supporters countered that the state’s restrictive licensing requirements are not as much about consumer protection as about giving licensed pros a way to keep down potential new competition. It is a theme Ducey has echoed as well. He has regularly called the state’s licensing boards “bullies” who only care about protecting their “cronies.”
Other states also allow license reciprocity, but only for military spouses. Arizona, for now, becomes the only state to honor another state’s professional licenses across the board. (ABC15 [PHOENIX], ASSOCIATED PRESS, WASHINGTON POST)
Without any comment, Massachusetts Gov. Charlie Baker (R) has signed a bill making the Bay State the 16th (and with Washington D.C.) to ban so-called “conversion therapy,” a controversial practice aimed at changing a minor’s sexual orientation. The bill (HB 140) bars mental health professionals from using the therapy on anyone under 18. It does not bar the practice from being used with adults, and it specifically exempts therapies that focus on acceptance, facilitate coping, or are sexual orientation-neutral.
Opponents of the bill claim conversion therapy does work, and that the law violates a parents’ First Amendment rights. At least one conservative group, the Massachusetts Family Institute, has said it will sue to block the measure, which is set to take effect immediately. (MASSLIVE.COM, BOSTON HERALD, STATE HOUSE NEWS SERVICE [BOSTON])
CALIFORNIA Gov. Gavin Newsom (D) announced his administration would partner with a handful of Golden State cities to help develop affordable housing on state-owned properties. The announcement came after the state Department of General Services completed an audit to determine the total number of vacant state-owned properties that could possibly be used for housing. (CALIFORNIA GOVERNOR’S OFFICE)
Two county Republican Party committees adopted votes of no confidence in WEST VIRGINIA Gov. Jim Justice (R) last week after revelations that the governor still owes $4 million in fines to the federal government over safety violations at coal mines he owns. News stories also revealed that federal authorities are investigating another family-owned business, the Greenbrier Resort, home of the PGA’s Greenbrier Classic tournament. (METRO NEWS [CHARLESTON], NPR)
The NORTH DAKOTA House Budget Committee rejected Gov. Doug Burgum’s proposal to have the Department of Human Services administer Medicaid expansion and cut provider reimbursement rates. Burgum said the changes would free up money to “reinvest in access to behavioral health services.” (BISMARCK TRIBUNE)
IOWA Gov. Kim Reynolds (R) signed legislation (SF 210) that will ensure a voluntary family caregiver is recorded when a person is admitted into a hospital. The designation is voluntary, and that family caregiver must be notified when the patient is scheduled to be discharged. Hospital personnel are further bound to discuss the caregivers’ abilities and limitations and to provide the caregiver with an explanation of the patient’s care needs at home. (WATERLOO COURIER)
Saying “we’re living in a world where it’s becoming almost impossible to get out of high school and go get a good job,” RHODE ISLAND Gov. Gina Raimondo (D) asked lawmakers to expand the state’s free college tuition program. Under Raimondo’s proposal, the state would fund scholarships for the last two years of college for in-state students and grant free tuition and fees at the Community College of Rhode Island to all state residents 25 years or older without a degree, provided they enroll continuously. (BROWN DAILY HERALD [PROVIDENCE])
-- Compiled by RICH EHISEN
The COLORADO House and Senate give final approval to SB 78, net-neutrality legislation that would bar internet service providers from receiving state taxpayer money if they slow access to the internet or unfairly favor certain websites. It moves to Gov. Jared Polis (D), who has indicated he will sign it into law (DENVER POST).
Following the murder of a college student by someone posing as a ridesharing service driver, the SOUTH CAROLINA House approves HB 4380, which would require rideshare drivers to display illuminated signs that more easily identify them to customers. It moves to the Senate (STATE [COLUMBIA]).
The ARIZONA House approves SB 1401, a bill that would remove a requirement that hair stylists be licensed by the state. It moves to Gov. Doug Ducey (R), who has indicated he will sign it into law (ARIZONA DAILY STAR [TUCSON]).
A CALIFORNIA lawmaker pulls AB 766, which would have banned restaurants and grocery stores from selling sugary drinks served in unsealed containers larger than 16 fluid ounces. Assemblymember David Chiu (D) said he would pursue the measure next session (SAN FRANCISCO CHRONICLE).
INDIANA Gov. Eric Holcomb (R) signs SB 632, which requires the Hoosier State Department of Health to educate schools about how to test for radon. The law takes effect July 1 (INDYCHANNEL).
NORTH DAKOTA Gov. Doug Burgum (R) signs HB 1332, which allows Flickertail State schools without a school resource officer or at great distance from law enforcement to develop a plan with the North Dakota Department of Public Instruction for an “armed first responder.” That person may not be anyone with direct supervision of students (BILLINGS GAZETTE).
ARIZONA Gov. Doug Ducey (R) signs SB 1346, which repeals sections of the state education code that barred teachers from presenting homosexuality as a positive lifestyle (ARIZONA DAILY STAR [TUCSON]).
ILLINOIS Gov. J.B. Pritzker (D) signs HB 345, which raises the age for legally buying tobacco products in the Prairie State to 21. The bill, which takes effect on July 1, covers all tobacco and vaping products, including cigarettes, chewing tobacco, e-cigarettes and vapes (CHICAGO TRIBUNE).
The TEXAS Senate approves SB 21, which would raise the Lone Star State smoking age to 21. It moves to the House (TEXAS TRIBUNE).
GEORGIA Gov. Brian Kemp (R) signs HB 217, which legalizes needle exchange programs in the Peach State. The measure allows pharmacy workers, doctors and other licensed health professionals to sell, give away, exchange or rent, and “otherwise distribute” hypodermic syringes or needles for “legitimate medical purposes.” The law takes effect on July 1 (WRBL [COLUMBUS].
IDAHO Gov. Brad Little (R) signs SB 1204, which will expand Medicaid coverage to residents earning up to 138 percent of the federal poverty level. The measure also requires the state to seek a waiver to allow those in the expansion to stay on the state’s health insurance exchange rather than go on Medicaid (MODERN HEALTH CARE, IDAHO GOVERNOR’S OFFICE).
OHIO Gov. Mike DeWine (R) signs SB 23, which bans Buckeye State doctors from performing an abortion once a fetal heartbeat is detected, roughly six weeks into pregnancy. The measure would also allow for doctors who perform the procedure anyway to be prosecuted (CINCINNATI ENQUIRER).
ILLINOIS Medicaid officials announce they are developing rules to ensure coverage of gender-affirming surgeries for transgender adults who meet certain diagnostic criteria. The rules are expected to be revealed this summer (CNN).
NORTH DAKOTA Gov. Doug Burgum (R) signs HB 1546, a bill that makes it a crime for a doctor performing a second-trimester abortion to use instruments such as clamps, scissors and forceps to remove the fetus from the womb. Opponents say they will file suit to block the bill from going into effect (ASSOCIATED PRESS).
The ARKANSAS House gives final approval to SB 411, a bill that would bar Razorback State cities from becoming so-called “sanctuary cities,” which bar law enforcement from cooperating with federal immigration authorities. The bill moves to Gov. Asa Hutchinson (R), who has said he will sign it into law (ASSOCIATED PRESS).
A NEW YORK state court blocks Rockland County from imposing a ban on unvaccinated people under age 18 in public places. The ban was an attempt to contain a measles outbreak in the county, where at least 167 cases have been reported this year. Judge Rolf Thorsen disputed the county’s claim that the outbreak was an epidemic. County officials are weighing an appeal (JURIST).
Citing the measles outbreak, NEW YORK CITY Mayor Bill de Blasio declares a state of emergency that will require all unvaccinated residents of the Brooklyn community of Williamsburg to be vaccinated against the disease or face fines up to $1,000. The city has experienced 285 cases of measles since last fall (NEW YORK TIMES).
The LOS ANGELES City Council unanimously votes to impose a fine of $1,100, the maximum penalty allowed under state law, on people who hang fraudulent or expired disabled placards in their vehicles to take prime parking spots. The measure goes to Mayor Eric Garcetti (D) for consideration (LOS ANGELES TIMES).
- Compiled by RICH EHISEN
It’s a safe bet that many of the folks living in the affluent Bay Area suburb of Hillsborough grew up on the 1960s-era Flintstones cartoon. But city officials have filed suit against a wealthy homeowner who has turned her entire property into a homage to Fred, Wilma, Barney, Betty and Dino. As the Associated Press reports, that tribute includes painting the house red and purple and placing a vast array of large sculptures depicting the characters around the grounds. City officials complain that the whimsical motif doesn’t jibe with the rest of the neighborhood’s well-manicured environs. A lawyer for 84-year-old Betty Yang counters that they are just being snobs, saying “Mrs. Fang has made people smile, she’s giving them joy. What’s not to love about Dino, who acts like a dog? What is wrong with these people?” A judge will soon answer that question.
Since the end of World War II, Swiss officials have required various food importers and retailers to stockpile a variety of products considered staples to mitigate the impact of another war. But one of those staples is about to come off the “must stockpile” list: coffee. Yes, as the Associated Press reports, Swiss officials have determined that coffee is not crucial to human survival and thus should not be hoarded to get folks through in the case of war or even an epic natural disaster. Well, let me tell you something – the lack of coffee would be a natural disaster. It would also constitute an act of war for someone to not ensure that doesn’t happen. And I’m not the only one. Of the 15 companies required by law to stockpile coffee, 12 have asked the government to reconsider. Presumably because they don’t want to be the ones trying to stop coffee-crazed residents from storming their outlets should the need arise.
California Gov. Gavin Newsom (D) said last week that the Golden State’s lucrative surfing culture could serve as an example for building a thriving tourism industry in poverty- and violence-plagued El Salvador. Newsom made the remarks after a three-day visit he says was sparked by his interest in seeing first-hand the circumstances driving El Salvadorans to attempt to emigrate to America. Sure. But as CALmatters reports, the visit was also seen by many people – a.k.a. people with working eyeballs – as a way for Newsom to grow his national profile for a potential future presidential run. Because of course it was. Duh.
-- By RICH EHISEN
Is anyone really surprised by the college admissions bribery scandal? Sure, it’s nice to think that academia is a bastion for the best and the brightest. But there’s a longstanding tradition where the family name—and perhaps an endowment—greases the wheels for less academically-inclined legacy students. And it’s not just admissions offices that face bribery and corruption risk . Just last year, the U.S. Attorney’s Office for the Southern District of New York announced charges in a three-year FBI investigation into bribes paid to basketball coaches “ … to steer NBA-bound players toward sports agents, financial advisers and apparel companies.” Perhaps it’s time for colleges to embrace the risk management approaches used by the corporate world. The anti-bribery system established in ISO 37001 could be a good starting point, writes Worth MacMurray on FCPAblog.com.
How does ISO 37001 work?
When introducing the ISO 37001 anti-bribery standard in 2016, the International Organization for Standardization noted, “With over $1 trillion paid in bribes each year, the consequences are catastrophic, reducing quality of life, increasing poverty and eroding public trust.”
ISO 37001 was developed based on global anti-bribery best practices and designed to help organizations establish, implement, maintain and improve anti-bribery compliance programs. Moreover, the standard is quite flexible, making it appropriate from small to large businesses and non-governmental organizations—colleges included.
MacMurray suggests, “Certification publicly communicates a simple trust-rebuilding message: ‘consistent with the seriousness of the situation and our values, we took action -- we’ve implemented and become certified under the leading global anti-bribery management system: ISO 37001.’”
A robust approach to risk mitigation protects against more than bribery and corruption; it helps universities vet third-parties and monitor for emerging risks—from identifying potential supply chain disruption from a vendor bankruptcy to identifying a possible reputational threat through association with a donor. By seeing risks more clearly, universities can be more proactive in their responses.
Given the on-going media coverage of what the FBI has dubbed ‘Operation Varsity Blues,’ it’s unlikely the question of campus corruption is going away soon. Taking an aggressive stance on addressing bribery and corruption risk is one step universities can take to begin to regain trust. As MacMurray says, “As additional facts come to light—approximately 800 persons are reportedly involved and only around 50 have been identified to date—the value of a thorough, standards-based anti-bribery methodology applied to the college admissions process will only become more apparent.”
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This year is the 20th anniversary of the implementation of the OECD’s Anti-Bribery Convention. So, we went to Paris to meet Patrick Moulette, Head of the OECD Anti-Corruption Division. He explained that the global spread of negotiated settlements, particularly Deferred Prosecution Agreements, prompted the OECD to recently launch a new study into DPAs. He warned that recent challenges to globalization must not be allowed to stop international cooperation to fight corruption.
What is the main trend you see for anti-corruption compliance in 2019?
“The overall trend is that corruption remains a global threat and maybe it has become even more on the top of the international agenda, it is the number one issue. I think in all countries in the world there is a corruption issue and you can see it in the light of the recent elections in some countries.”
Tell us about a trend in anti-corruption enforcement?
“The use of negotiated settlements to resolve foreign bribery cases is a major trend. It has really grown - the OECD published its Foreign Bribery Report at the end of 2014 which found that 69% of the bribery cases were concluded on the basis of such a settlement. This trend will only increase—it is now developing in Europe, for example with Sapin II in France.”
“Negotiated settlements did not really exist to this extent when the OECD Anti-Bribery Convention was adopted so we need to draw the lessons from this historical evolution—for example, whether negotiated settlements are more effective, why are they used, what are the safeguards.”
“We plan to launch a cross-country study on the use of settlements. With this study, we will have a unique picture of the situation. It should open the way for recommendations for countries and the private sector.For example, we know that settlements need to be transparent. It is very important for the public at large to know what its conditions were.”
What is the overall trend in global anti-bribery and corruption legislation?
“Since the adoption of the OECD Anti-Bribery Convention in 1997 and its implementation in 1999, the trend has without any doubt been towards stronger legislation and measures. What is really changing is enforcement and the actual results and there are more and more cases. But almost half of the countries who signed the Convention have still not concluded a case of foreign bribery, so this is still a matter of concern. Progress is slow but sometimes there are waves of improvement, like if there has been an international commitment in the context of the G20 or OECD which boosts reforms.”
“But there are now challenges coming from those who question the benefits of globalization. To fight corruption effectively, the response needs to be global and if this is put into question, the fight will be less efficient than it has been so far.”
Are countries increasingly working together to tackle corruption?
“In all the treaties, whether it is the OECD or the UN, there are provisions to ensure that countries provide each other with information about cases of corruption. Good international cooperation is fundamental to tackling corruption because there is not a single corruption case which stays in a given country—even domestic corruption cases have international ramifications, and it’s even more true for bribery in international business transactions. There are some interesting recent cases which show increasing evidence of international cooperation, for example the agreement in the Odebrecht case reached by the U.S., Switzerland and Brazil which led to the biggest international settlement. But maybe there are not enough examples of this scale.”
“A bigger issue than what these treaties say is how they work in practice. In the OECD Working Group on Bribery, there is a special group of law enforcement officials - prosecutors, judges and police—who meet separately twice a year for confidential meetings in which they discuss trends and cases. This has been a very helpful development, even though it is only 44 countries who signed the OECD Anti-Bribery Convention so we cannot solve all the world’s corruption issues. Having networks of prosecutors is an important factor for good and effective mutual legal assistance, and more of these have been developed in Eastern Europe and Central Asia and in Asia-Pacific and, as of October 2018, a new one bringing together 14 countries in Latin America has been established.”
How is technology affecting the fight against bribery and corruption?
“The question for us is whether new technologies are a corruption risk or a remedy, and I think they are both. The anti-corruption community is lagging behind the criminals and we need to do more work to look at trends like virtual currencies being used for bribery or money laundering. The trends in criminal activities emerge at first and it usually takes some time before the community of regulators and policymakers becomes fully cognizant and then addresses the issue. Indeed, new technology and corruption will be the main topic of the OECD Global Forum on Anti-Corruption and Integrity.”
“Technology is obviously a welcome tool and it should be used more and more. New blockchain technologies can help as a remedy by monitoring the situation and securing information that law enforcement agencies need to share. New technologies like Artificial Intelligence can also help. But a human judgement is still important and necessary in some cases. Technology helps you to access the first flow of information more easily and quickly but at some point, you cannot avoid the need to use the brain’s thoughts, feelings and sensitivity. We should not rely on automatic and virtual solutions alone to solve the problem of corruption.”
What role does the private sector have in combating corruption?
“The private sector should be seen not only as a problem but as part of the solution to tackling bribery and corruption. Business definitely has a key role to play and we are seeing that more and more companies want to be part of the solution.”
“Corruption risks are higher in specific sectors than others, for example it is higher in the areas of infrastructure, communication and natural resources, so we should encourage companies to develop guidance or collective action which prevent and fight corruption within a sector. We are already seeing examples of this and there is big potential here.”
“It is always important to keep in mind that there are various types of companies and the multinationals are obviously at a different level than SMEs. Multinationals can assist SMEs because the latter also face important corruption risks—it is not the case that because you are small you do not face the same risk of corruption, in some cases it is quite the opposite. It is the duty of the multinationals to help other companies because they need the SMEs in the global supply chain. We know that multinationals can afford services from major law firms and it is easier for them to be equipped with the right compliance programs and resources. SMEs do not necessarily have those resources.”
What advice do you have for CEOs looking to put in place better ABC measures?
“The main message is let’s not rely on an automatic approach, ticking the boxes of meeting regulatory requirements around anti-corruption, which is something that is done in some companies. Instead, companies should treat anti-bribery and corruption as an overall cultural issue, rather than being too automatic or mechanical.”
How do corruption risks vary by country?
“Here there are preconceived ideas and then the reality. One of the conclusions of the OECD’s 2014 Report on Foreign Bribery was that bribery does not only take place from the north to the south but most of the time it is between countries with high to very-high levels of human development.”
“Unfortunately, some of the major economies and members of the G20 like China, India and Indonesia have not signed the Anti-Bribery Convention so they are outside this environment where there are high standards and a robust evaluation system to ensure effective implementation. This is a real issue, not only for these countries themselves, but also worldwide given the importance of their economy.”
What is being done to tackle hidden beneficial ownership?
“There has been a recent trend towards the development and adoption of standards around the issue of beneficial ownership by fora including the OECD, FATF and G20. But there remain issues in the implementation of these standards. Law enforcement authorities still have huge difficulties in finding out who is the beneficial owner of a company and where the illegal money has actually gone. We see it from the feedback we get from law enforcement officials. Despite recent progress, the issue has not been fully solved and maybe the rules need to be refined to help the authorities access information and share it with their counterparts in the same country or other countries.”
What role does the media have to play in exposing bribery and corruption in 2019?
“The media has a key role to play. The OECD recently produced a report on investigative journalism which shows that the role of the media in detecting bribery is a clear trend. We are counting on journalists to reveal cases or at least to mention allegations of bribery and then, if law enforcement does their job, they will look at the information, compile the press articles and draw some conclusions. It has become a key source in the detection of corruption cases.”
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We’re still 10 months away from California’s historic first-in-the-nation data privacy law taking effect. Which to lawmakers, tech companies and maybe even Gov. Gavin Newsom (D) means there is still plenty of time to change it.
According to LexisNexis State Net, at least 19 bills seeking to amend the California Consumer Privacy Act are pending in the Golden State Legislature. Most are minor tweaks, but a handful would make substantive changes vehemently opposed by the tech industry and business lobbies.
As signed into law last year by then-Gov. Jerry Brown (D), the law grants consumers significant control over how data acquired by tech companies may be used. Specifically, it requires companies to tell customers what data they’ve collected on them and who they are selling that information to. Customers would then have the ability to opt out of having their data sold, with the company barred from imposing any kind of penalty on them for doing so.
The measure, however, also limits the ability of consumers to take legal action against companies that violate the law. But that would change under several of the measures introduced this session.
One such measure is SB 561, introduced by Sen. Hannah-Beth Jackson (D) and state Attorney General Xavier Becerra (D), which would do away with a tenet of the law that allows tech companies to avoid litigation if they inform consumers of data breaches within 30 days. During a Senate Judiciary Committee hearing last month, Jackson called industry claims that changing that portion of the law would lead to a flood of lawsuits “laughable.”
“If you don’t violate the law, you are not going to get sued,” she said.
Another potentially significant measure is AB 1790, sponsored by Bay Area Assemblymember Buffy Wicks (D), which would not only force companies to reveal what information they have collected, how it is being used and to whom it is being sold, but also require that consumers opt-in to having their data shared and sold rather than having to opt out. Companies would also be barred from raising prices or slowing down service to customers that choose not to opt in. Most important to the industry, it would also allow consumers to sue companies that violate the law.
The measure has received backing from dozens of consumer privacy groups, including the ACLU of California, Common Sense Kids Action, the Council on American-Islamic Relations, the Electronic Frontier Foundation, Privacy Rights Clearinghouse, and the Greenlining Institute.
“Companies are making enormous profits off the sharing, use, and even abuse of consumers’ data — we need to level the playing field,” Wicks said in a statement.
Potential litigation is also the stick in a four-bill package filed by a quartet of Republican lawmakers in February:
AB 1395, authored by Assemblymember Jordan Cunningham (R), would “prohibit smart speaker manufacturers from storing and data mining voice recordings made with smart speakers.”
AB 288, also from Cunningham, would require social media companies to provide users who close their accounts the option to permanently scrub their personally identifiable information from the company’s database and bar it from being sold.
AB 1138, from Assembly member James Gallagher (R), would bar anyone under 16 from obtaining a social media account without parental permission.
AB 1035, from Assemblymember Chad Mayes (R), would require companies to notify consumers of a data breach within 72 hours.
Not every new measure is aimed at punishing businesses for transgressions. One measure, AB 981, would instead exempt insurers from the California Consumer Privacy Act. That proposal received unanimous approval last week (14-0) by the Assembly Insurance Committee. It now goes to the full Assembly.
But the year’s biggest potential data issue is still awaiting its big reveal. In his State of the State address in February, Gov. Gavin Newsom (D) said his team is working on a proposal to require tech companies to pay consumers a “digital dividend” that would allow consumers “to share in the wealth that is created from their data.”
The premise is simple. Companies like Google and Facebook make money by collecting and selling consumers’ data all the time, so those consumers should be compensated for the use of that info. The governor offered no details on how such a dividend would work, and he also praised the state’s impending privacy law, saying that “those collecting, curating and monetizing our personal data have a duty to protect it. Consumers have a right to know and control how their data is being used.”
But would that knowledge and control also effectively compromise the very security consumers seek? That is certainly what some data privacy advocates believe would happen.
“The whole thing is really an absurd concept, and one that is really ironic for California, which is trying to position itself as a privacy leader,” says Jeff Chester of the Center for Digital Democracy, a privacy advocacy group.
Chester and other privacy advocates believe that no matter what kind of system might be implemented it would essentially create “a surveillance economy” that gives companies a green light to do anything they like with consumers’ personal information. It would also give them almost limitless ability to influence people’s buying behaviors.
“The danger is that it would sanction and justify what is a personally demeaning system where people have no choice but to allow these companies to use their information in ways that are unaccountable and far reaching,” he says.
Pointing to the role of Cambridge Analytica in the 2016 presidential election, he says that influence also stretches far beyond the ability to sell us shoes or cars or dish soap.
The other challenge is technical – how would it be done? Ash Bhagwat, a law professor at the University of California Davis School of Law, notes there are two basic options: companies could offer consumers direct payment or a discount on services in exchange for the rights to use their data, or the state or local government could impose a broad tax on the use of that data and then develop a vehicle for returning it to consumers. But in particular regard to a taxation plan, the big question is how do you determine what that data is worth, and thus how it should be taxed?
“We don’t have any good way to evaluate data,” he says. “Companies monetize it in really different ways.”
Facebook and Google, he says, are pretty straightforward in that they simply sell advertising based on your data. Amazon, on the other hand, has a much more complex system for data usage that would be very difficult to assess in a dividend system. That same quandary could also apply to virtually any company that collects, stores or uses consumer data as part of its revenue model.
“To tax something you have to be able to assess a value to it,” he says. “Something like oil, for example, is the easiest thing in the world because there is a world price on a barrel of oil. But data is much harder.”
California Controller Betty Yee – who is a staunch advocate for comprehensive reform of the state’s entire tax code rather than piecemeal adjustments - agrees on that point. Taxation is tough discussion at any time, she says, but particularly when it is centered on something that impacts virtually everybody at all times.
“It would be an uncomfortable conversation because it doesn’t fit anything we’re used to now,” she says.
Yee declines to speculate about what the governor’s proposal will eventually look like, but she says the state’s impending privacy law could be the biggest hurdle to a dividend becoming reality.
And with half of the states having introduced their own data privacy bills this year (see Bird’s Eye View in this issue), a lot of people will be anxiously waiting to see if California can pull off its plan.
It is a big hurdle, Yee says, but not an impossible one.
“There’s got to be a way,” she says. “It just won’t be something we’ve ever done before.”
In the original version of this week’s Spotlight story “California Data Protection Law in Flux,” we made a reference to a bill introduced by Assemblymember Buffy Wicks that would require consumers to opt-in to having their data used by companies that collect such information. We mistakenly referred to that bill as AB 1761. It is actually AB 1790. The information has been corrected in the text of the story.
We sincerely regret the error.
Legislation dealing with consumer data privacy has been introduced this year in at least 25 states, according to information from the National Conference of State Legislatures and LexisNexis State Net. As of April 3, such measures had been passed by their chambers of origin in five states - Arkansas, Hawaii, Maryland, Montana and Washington - and enacted in one, North Dakota.
“Congestion pricing,” charging drivers for accessing heavily trafficked areas, has long been considered a politically toxic idea by city officials. But that could change with traffic slowing to a crawl in more and more cities - and the adoption of the congestion pricing in the busiest borough of the nation’s largest city, New York’s Manhattan, after a months-long campaign and a strong push by Gov. Andrew Cuomo (D) to get it approved as part of the state budget.
“New York’s use of congestion pricing could be a game-changer,” said Travis Brouwer, an assistant director of transportation in Oregon, which is eying congestion pricing for its biggest city. “If New York City can prove that congestion pricing can work and gain public acceptance, it could give cities like Portland a boost as we look to introduce pricing.”
Philadelphia will also be monitoring New York’s experiment, set to begin in 2021, “to see how this can help improve equity, safety, sustainability and mobility,” according to Kelly Cofrancisco, a spokeswoman for the city’s mayor, Jim Kenney (D).
Los Angeles and San Francisco have already started laying the groundwork for congestion pricing, and Seattle Mayor Jenny Durkan (D) is spearheading efforts to have it in place there by 2021.
“It really does help to be able to point to some peer city and say ‘They’re doing this and it’s working,’” said Michael Manville, an associate professor of urban planning at The University of California, Los Angeles. “At the very least, it changes the conversation in other cities.”
Some aren’t sold on the idea, however. Kathryn Barger, a Los Angeles county supervisor, has said congestion pricing could penalize drivers in communities where public transit is limited and “driving isn’t a choice, it’s a necessity.” Some drivers and critics in the handful of cities in Asia and Europe where the policy is already in place have, likewise, called it an unfair tax on the poor.
But Stuart Cohen, founding director of TransForm, a California-based group that advocates for walkable communities with affordable, environmentally sensitive transportation options, said, “There’s a critical mass forming where people are saying, ‘enough is enough.’”
“They’ve tried everything else and nothing’s working,” he said. (NEW YORK TIMES, TRANSFORM)
Included in the 2017 federal tax overhaul was a substantial tax break for investments in businesses and properties located in economically distressed areas. Although state governors had a hand in selecting the nearly 9,000 “opportunity zones” eligible for the incentive, the federal law gave states little say over what types of projects investors actually put their money into.
But lawmakers in at least 17 states have considered measures this year dealing with opportunity zones, including those aimed at steering investors toward certain projects, according to Novogradac & Company, an accounting firm that is tracking such legislation. For instance, California Gov. Gavin Newsom (D) has proposed a state tax break for investments in green technology and affordable housing. And Washington state Rep. Mike Chapman (D) has introduced a bill (H 1324) offering a tax credit for opportunity zone investments in rural areas.
“Through the added incentives, states can encourage the type of development they want to see in opportunity zones,” said Michael Novogradac, managing partner of Novogradac & Co.
However, Novogradac noted that cities and counties may have greater influence than states over what ultimately gets built in opportunity zones. For instance, Boulder, Colorado’s city council stopped some development in its opportunity zone last year, saying more planning was needed.
“I do think [states] can bend the curve to be sure,” Novogradac said. “But at the end of the day it really depends on local government and local policies.” (STATELINE.ORG, LEXISNEXIS STATE NET)
Revenue from sports betting has fallen well short of projections in four of the six states that legalized such wagering soon after the Supreme Court authorized it last year. RHODE ISLAND’s 51 percent tax on sports betting, expected to produce over $1 million per month, has only generated about $50,000 per month, although that’s due at least in part to the state’s $2.35 million loss from all the winning bets placed on New England in the Super Bowl. (ASSOCIATED PRESS)
WISCONSIN will face a $1.9 billion general fund shortfall going into the 2021-23 fiscal year, given the state’s current spending commitments, including tax credits for Foxconn Technology Group and funding for K-12 education and public employee raises, according to analysis by the state. The projected deficit is the largest since the $2.5 billion shortfall forecast ahead of the 2011-13 fiscal year. (ASSOCIATED PRESS)
KENTUCKY Gov. Matt Bevin (R) has signed legislation (HB 354) expected to eventually cost the state’s general fund $106.6 million a year. Among other things, the bill provides tax cuts for banks. (LEXINGTON HERALD LEADER, LEXISNEXIS STATE NET)
Denver is planning to start charging residents for trash collection based on the amount of garbage they generate. The aim of the “pay-as-you-throw” program is to improve the city’s recycling rate, currently at 22 percent, which is considerably below the national rate of 35 percent. (DENVER POST)
OHIO Gov. Mike DeWine (R) signed legislation last week that will increase the state tax on motor fuel by 10.5 cents per gallon, to 38.5 cents. The increase is considerably less that the 18 cents-per-gallon hike the governor had initially requested. (CINCINNATI ENQUIRER)