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08

BPAA State Policy Update - May 7

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TAX

  • Iowa Kim Reynolds and legislative leaders have yet to release details of their compromise tax plan despite holding a press conference last week to announce they had reached a deal. Some lawmakers and observers are urging leaders to look to the tax-cut mistakes in Kansas, Oklahoma, and elsewhere and abandon their plan to slash revenues amid already serious budget shortfalls.
  • Missouri lawmakers are still trying to push through a tax cut package despite earlier versions losing steam due to their high cost and regressive shift from wealthy Missourians to low- and middle-income families. The most recent version was poorly received in a public hearing earlier this week.
  • South Carolina legislators have taken their time in assessing the implications of the federal tax-cut bill for their tax system and are now considering a couple of competing conformity bills with only a few days left in their session.
  • Kansas: Lawmakers in Kansas continue to negotiate a budget and tax cuts in the final week of session, with the House reluctant to accept the Senate's proposals to cut taxes beyond what is needed to hold taxpayers harmless from recent federal tax changes.
  • Arkansas: “Hutchinson hails debate over Arkansas' grocery tax; challenger opposes talk of rise” – The possibility of increasing the state's sales tax on groceries has drawn opposition from Democratic gubernatorial candidate Jared Henderson, who said Tuesday that he would never go for such a change if elected. Henderson said in a written statement that Republican Gov. Asa Hutchinson, who wants to cut the state's top individual income tax rate, "stands silent as the General Assembly toys with the idea of making it more expensive for working families to buy groceries." Hutchinson countered that he has been a consistent supporter of eliminating the sales tax on groceries and his position hasn't changed. In a divided voice vote last week, the Arkansas Tax Reform and Relief Legislative Task Force opted to take a closer look this summer at the option of raising the sales tax on groceries and creating either a refundable earned income tax credit or an income tax credit for people with low to moderate incomes to offset the increase. The task force also decided that additional revenue raised by repealing any tax exemptions, as recommended by the task force, be used for future tax cuts.

Minnesota: “Who pays, who saves under the three tax plans being proposed at the Minnesota Legislature” – With only a few weeks left in the 2018 legislative session in Minnesota, the governor and the House and Senate have all finally unveiled their plans to tackle the issue of tax conformity this year. The final piece of the puzzle came Tuesday morning, with the rollout of the Senate tax proposal, and both chambers are expected to pass their tax bills off the floor by the end of the week. It’s taken months to get here. In December, Congress and President Donald Trump passed the biggest overhaul to the nation’s tax code since the 1980s, making major cuts to corporate tax rates while doubling the standard deduction for individuals and families and limiting personal and dependent exemptions. Unfortunately, those changes don’t line up neatly with Minnesota’s tax code, and the usually simple task of syncing the two has become one of the most complex tax conundrums state lawmakers have dealt with in years. There’s a lot at stake: If lawmakers don’t conform some of state and federal tax code provisions, Minnesotans will be faced with massively complicated tax forms next year. If they do conform all of the state and federal provisions, hundreds of thousands of Minnesotans will be faced with a substantial tax increase.

STATE NEWS

Connecticut: Bloomberg Government reports: Business Groups Raising Concerns About Mandate Bills – Connecticut's largest business organization and other groups are voicing concern about pending legislation it says will threaten the economy. The Connecticut Business and Industry Association has scheduled a news conference on Monday morning to discuss various proposed mandates and how they'll affect the state's business climate. Representatives from the Connecticut Restaurant Association, Connecticut Food Association and the National Federation of Independent Businesses will also be on hand. The groups are focusing on proposed mandates regarding paid family and medical leave, paid sick leave, sexual harassment prevention training and a $15 an hour minimum wage. Monday's news conference comes as a May 9 legislative adjournment deadline looms. The paid family and medical leave bill recently cleared a committee by one vote. Lawmakers are still working on the final details

LABOR

  • California: “LA May Day marchers demand labor and immigrant rights as nation, world unite for workers” – Thousands of union members, immigrant-rights advocates and community activists descended on downtown Los Angeles Tuesday for a flurry of May Day marches that coincided with similar rallies throughout Southern California and the world. Immigrant rights groups have joined in May Day activities for more than a decade, initially to push back against harsh legislative proposals and later to clamor for reform and legal status for immigrants in the country illegally who were brought to the U.S. as children or overstayed their visas. Now, they want to drive turnout in the midterm elections. Advocates hope voters target lawmakers who have pushed for measures that hurt immigrants and replace them with immigrant-friendly policymakers, said Angelica Salas, executive director of the Coalition for Humane Immigrant Rights in Los Angeles.
  • California: California Ruling to Give More Workers Benefits, Experts Say - In a big win for labor advocates, the California Supreme Court on Monday limited businesses from classifying workers as independent contractors who can't receive key employment protections. Experts expect the ruling to expand the number of workers eligible for minimum wage, rest breaks and other benefits under a state wage standard. The court unanimously adopted a broad definition for those who qualify as employees in a lawsuit that drivers brought against package delivery company Dynamex Operations West Inc. Attorneys involved in the case said the ruling will affect other workers listed as independent contractors in the so-called sharing economy, including drivers in ride-hailing companies like Uber and Lyft. An attorney for Dynamex, Robert Hulteng, declined to comment. Michael Rubin, who represented labor unions that argued on behalf of Dynamex drivers, said the court adopted "the most worker protective standard available." Massachusetts and New Jersey have similar standards, he said. "It makes it far more likely than before that in California, the Ubers and Lyfts will have to begin treating the workers as employees," Rubin said. But he cautioned that cases would have to be decided on an individual basis. To list workers as independent contractors, businesses have to show they don't control and direct the work, that the duties fall outside what the company normally does and the worker is "customarily engaged in an independently established trade, occupation or business," the California Supreme Court said. That independent trade also must encompass the same type of work performed for the business. The previous standard to determine whether workers were employees or independent contractors focused primarily on whether the business controlled how the work was performed.
  • Vermont: Paid family leave bill passes out of key Senate committee - A paid family leave bill could come to the floor of the Senate as the legislative session winds down. The Senate Committee on Economic Development approved H.196 on Thursday in a 4-1-0 vote. The panel amended the House version of the bill. The new draft expands the length of leave time, while decreasing the amount paid out to employees caring for family members by 10 percent. The program is funded through a 0.141 percent payroll tax. The draft legislation features a 12-week combined paid parental leave and six-week paid family care with 70 percent wage replacement. The House plan included an 80 percent wage replacement and a six-week paid leave, six-week unpaid parental leave plan. In addition, the committee’s draft of the bill expands eligibility to include anyone who has made more than $10,710 at a company in the 12 months prior to the leave. The votes were split along party lines. The committee’s one Republican member, Sen. David Soucy, R-Rutland, said he could not vote for the bill because it would increase taxes and fees, a hardline for Republicans this session set by the governor. Soucy was appointed by the governor earlier in the session to replace Kevin Mullin, who is now the director of the Green Mountain Care Board. The bill, which was a main priority for the House this biennium, is set to go before the Senate finance and appropriations committees before it will be taken up on the Senate floor.
  • Indiana: “Richmond, AFSCME have tentative deal that would end their labor fight” – City of Richmond officials and leaders of the city's largest employee union have reached a tentative agreement that, if approved by union membership, would bring an end to a labor fight that began in February. The proposed deal would be for two years and would include a 2-percent pay increase for each year, according to a union official. It also would incorporate two key recommendations from a fact-finding panel that was formed to help break the impasse between the two sides. Members of the local chapter of the American Federation of State, County and Municipal Employees would get the increase in their longevity pay that they had sought (0.25 percent of an employee's base pay for every year with the city instead of a flat $20 per year of service). The city, on the other hand, would get a change in the "me too" clause in the union's contract that would limit the clause to cover only increases in an employee's annual salary or base rate per hour and would set the floor at "no less than one-third of the highest percentage increase provided to the other Collective Bargaining Unit(s)."

Ohio: “Flexjet vote presents key test for labor movement” – U.S. commercial pilots are one of the few remaining strongholds of America's diminished labor movement, but Flexjet LLC of Cleveland is trying to upend that conventional wisdom. Anti-union advocates are watching as a battle between the Teamsters and the jet-leasing company plays out, with one nonprofit group representing Flexjet employees who are pushing to get the union out. Some 550 pilots will start voting Wednesday, May 2, on whether to embrace the company's entreaties to dump the Teamsters, which arrived at Flexjet just a few years ago. The government-supervised vote, which will be held electronically through May 30, comes two years after the pilots narrowly voted to join the union. Since then, the Teamsters have been unable to secure a contract deal with the company. The National Mediation Board, the federal agency responsible for airline labor relations, ordered the election after receiving a petition to oust the Teamsters signed by the majority of pilots at Flexjet and sister company Flight Options.

MINIMUM WAGE

  • Delaware: “Delaware Lawmakers Again Eye Increase in Minimum Wage” – State lawmakers are taking another look at raising the state's minimum wage after a bill hiking the wage by a dollar over two years was narrowly defeated in the Senate back in March. The failed legislation would have increased the current minimum wage of $8.25 an hour to $8.75 an hour on Oct. 1, and by another 50 cents next year to $9.25 an hour effective Oct. 1, 2019. A new bill to be considered by a Senate committee Wednesday keeps those proposals but also extends the proposed wage increases. The legislation calls for a minimum wage of no less than $9.75 per hour effective Oct 1. 2020, and no less than $10.25 per hour effective Oct. 1, 2021.
  • Florida: “Disney offers to pay union members at least $15 by 2021” – They've been negotiating for almost a year, but Disney and the unions that represent 38,000 of its workers could be making serious progress toward striking a deal on a wage increase. The unions have been demanding a minimum wage of $15 an hour, and Disney is now offering to meet that demand by 2021. But the unions said it's not a done deal yet, because Disney wants to re-negotiate other terms in their contract, such as overtime pay. Unionized Disney employees huddled around a table into the evening, discussing the latest offer Disney presented Tuesday. Disney confirmed that it offered to pay the employees at least $15 per hour by 2021 and said it wants to re-negotiate certain terms in the contract as part of that offer.
  • Michigan: “Restaurant workers concerned over new minimum wage initiative” – Michigan voters could be at the center of a decision in November about whether or not to raise minimum wage for all Michiganders, including those who earn tips. The ballot initiative is called One Fair Wage, and would require employers to eventually pay minimum wage employees at least 12 dollars an hour. "The evidence supports the fact that in 18 of 22 times, when the minimum wage has been increased, employment increases," said Alicia Farris, Chair of the One Fair Wage Spearing Committee. Farris says they're including tipped employees in this because they believe those who rely mainly on tips have financial instability. They believe everyone should make at least regular minimum wage. "Our goal is to completely eliminate the two tiered structure of wages." If the initiative were to become law, minimum wage would increase from the current $9.25 per hour, to $10.00 per hour by January 1, 2019; to $10.65 per hour in 2020; $11.25 in 2021; and $12.00 by 2022. This would increase the current $3.52 per hour minimum wage for tipped employees more gradually over time.

Connecticut: “Business Leaders Campaign Against Minimum Wage, FMLA, Sexual Harassment Training” – With the clock ticking toward the end of the General Assembly session, state business leaders Monday urged legislators not to act on a series of bills that they said would hurt Connecticut’s economy. The bills the business community opposed at a Legislative Office Building press conference included increasing the minimum wage, Paid Family Medical Leave, expansion of paid sick leave, and sex harassment training. “While well intended, these proposals are being considered at a time when Connecticut is still struggling to compete with other states for investment, economic growth, and job creation,” Connecticut Business & Industry Association President and CEO Joe Brennan said. “These mandates will add costs and administrative burdens on job creators when we should be unlocking — not restraining — the state’s economic potential,” Brennan said. The most controversial issue is raising the minimum wage. Sources say the Democrats don’t have the votes in either chamber at the moment to pass an increase in the minimum wage to $15 an hour. House Speaker Joe Aresimowicz, D-Berlin, said Monday when the Senate wanted to take the bill up first he stopped doing a “hard vote count” on it. However, it’s unclear whether the Senate has the votes to pass it because Sen. Joan Hartley, D-Waterbury, has said she would vote against raising it to $15 an hour. That means Democrats would need a Republican vote to pass it through the split chamber.

FOOD & BEVERAGE

Pennsylvania: “Bill seeks to kill Pa. communities' appetite for taxing food or beverages” – An Allegheny County lawmaker wants to take the fizz out of any effort by other Pennsylvania communities to follow Philadelphia's lead and impose a tax on soda and other sweetened beverages. While he is at it, he also wants to kill that tax in the City of Brotherly Love. Rep. Mark Mustio, a Republican, introduced a bill on Monday to preempt and invalidate any local taxation on beverages, food or containers. The bill has attracted bi-partisan support. "Working families across Pennsylvania deserve to know that their grocery bills won't rise on the whim of elected officials," Mustio said. "Pennsylvania businesses deserve to be protected from revenue grabs that threaten our economic competitiveness and cost jobs." Mustio said he is surprised at some of the groups who support the tax given its impact on poor families. He said there is nothing stopping municipalities from imposing a tax on the package meat comes in or on certain products people buy that are exempt from the state's 6 percent sales tax. "It's basically your hard-working families that it's impacting and we want to prevent this from moving elsewhere in the state," Mustio said. Philadelphia implemented a tax on distributors of sweetened beverages sold in the city's stores or restaurants for 16 months ago and it continues to be as controversial now as it was when it was first proposed.

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