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50 State Flyby: Week of July 15th

by Brent Mead / /

Minnesota is looking like they have a tentative deal on a budget solution. The compromise is essentially the budget deal Republicans offered Governor Dayton before the state shutdown for two weeks. Differences between the two sides will be covered by $700 million in defered K-12 payments and $700 million in state bonds using tobacco settlement funds. Additionally, the Governor called for halting a plan to cut the state workforce by 15%, stripping policy riders from the budget, and passage of a $500 million bonding bill.

Whether Dayton’s change in heart on soaking the rich comes from political pressure, or threat of bars going dry, the deal as it stands now does not contain any new taxes. 

California

Before heading out for a break, the California Assembly narrowly defeated ACA 6. Requiring a 2/3 majority for passage, it failed 50-23. The folks at Howard Jarvis Taxpayers Association have been on top of the attempt to radically rewrite the initiative process in California.

ACA 6 would prohibit any initiative from even being voted on if, in the opinion of either the Legislative Analyst or the Director of Finance, the measure did not “pay for itself.”

The most telling aspect of ACA 6 is that if it had been on the books in 1978, Prop 13 likely would never have gone to the voters.

Michigan

It is not a huge secret that pension reform looms large over many states. The Mackinac Center published a report this week detailing the billions in savings achieved in 1997 when the state moved from a defined benefit to defined contribution plan for most new hires. 

As states attempt to reform unfunded liabilities in public pensions they would do well to follow Michigan’s example.

California (Again)

Amazon.com decided to file a referendum to repeal the recently passed affiliate tax. While things are about to get litigious, affiliate taxes remain terrible policy.

As NTU’s press release earlier in the week states, companies such as Amazon have very little incentive to submit to such onerous requirements. It is far easier for the large online retailers to terminate their affiliate programs. Amazon's decision to cancel its 10,000 contracts falls in line with what happened in North Carolina, Rhode Island, New York, and elsewhere. Meanwhile, the state will not reap the predicted $150 million revenue windfall, and will likely cost itself a healthy portion of the current $125 million in existing taxes collected from affiliates.

NTU argues against these proposal because they attempt to impose a burden on businesses which do not have a physical presence in the state. Further, the big box stores, Best Buy, Wal-Mart, etc. account for a large percentage of online sales and are subject to a state's sales and use tax. Amazon taxes end up having the effect of punishing small affiliates for little, if any, gain to the state.

New York

Sports fans – Next time you have a chance to grab a part of history, remember the tax implications.