Kentucky Eyes Tax Expansion, CLA Hires Lobbyist

Kentucky Governor Matt Bevin’s tax reform plans include several critical components, not the least of which is planned sales tax expansion, which would require laundromat owners, among others, to collect sales tax.

All signs indicate that the governor’s tax reform plan will take shape quickly, ahead of the special session to be called this fall. According to the Coin Laundry Association and its legislative analyst MultiState Associates, that special session will only be long enough to accommodate the minimum number of legislative days to pass the proposal in its final form.

“Now is the time to weigh in and make our case for the preservation of the laundry exemption in Kentucky,” said CLA President and CEO Brian Wallace. “With this critical goal in mind, the CLA has engaged Karen Thomas Lentz at Commonwealth Alliances to lobby this issue on behalf of the industry in Kentucky. Karen has an excellent track record and has twice before been engaged by the CLA to handle this issue on behalf of the state’s laundry owners.

“My goal is to connect a select group of key laundry owners with Karen so that all might explore legislative contacts and the best tactics for making our voice heard now, while the full tax reform plan is taking shape. It will be very difficult to intercede on this issue if we wait until the special session – we must act now.”

The protection of the sales tax exemption for self-service laundries has long been the top legislative priority for the CLA. For more about this important issue for the vended laundry industry, visit: www.coinlaundry.org/advocacy/stop-laundry-tax. To support our efforts and help us with paying for lobbyists, please click the button below:

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Sales Tax Victory in Nebraska

During the first 10 days of the Nebraska legislative session, more than 650 proposals were filed during the general bill introduction period in Nebraska. Of these proposals, the Coin Laundry Association identified three bills that merited opposition.

These bills proposed to extend Nebraska and local sales taxes on the gross income received for laundry services, self-operated laundries, laundromats or coin-operated laundry machines. In addition, as the session progressed, there were three attempts to amend other legislative bills to include these sales tax provisions.

As a result, the CLA and its Nebraska lobbying team were extremely active in defending the laundry industry’s sales tax exemption throughout the 2017 session. And, they eventually were successful in containing these bills and amendments, both in committee and on the floor of the legislature, as none of the proposed new sales taxes were advanced or adopted.

Looking ahead to the 2018 session, all of the bills that were not disposed of during the previous session will be carried forward. In addition, with the current continuing revenue shortfall, coupled with constituent pressures for both income and property tax relief, it’s likely that new legislation will be introduced at the beginning of the 2018 session to include a broadening of the sales tax base to include more services.

House Speaker: Tax Reform Remains a Priority for 2017

House Speaker Paul Ryan has reaffirmed that tax reform is a 2017 priority. In recent remarks, Ryan promised that the tax code would be overhauled before the end of the year and argued that tax cuts need to be permanent to support business growth and stability, according to CBS report

“We are going to get this done in 2017,” Ryan said in a speech to the National Association of Manufacturers. “We have to get this done in 2017. We cannot let this once-in-a-generation moment slip by. Transformational tax reform can be done, and we are moving ahead – full speed ahead.”

Lawmakers have been arranging a strategy to push forward a tax package in the Senate with a simple majority to avoid stalling from opponents. But through this special budget process, the bills considered couldn’t raise the deficit beyond a window of time, which is typically 10 years, according to The Hill. This means that the tax legislation would be temporary, but for Ryan, the uphill battle for tax reform requires a permanent solution.

There are ways around this time restriction in the special process, like writing revenue-neutral tax reform that is permanent. Ryan and many leaders within the House Ways and Means Committee are exhausting measures to make sure that the tax solution isn’t temporary.

“Businesses need to have confidence that we won’t pull the rug out from under them,” Ryan said.

Vice President Mike Pence also assured those at the same event that Congress is going to “pass the largest tax cut since the days of Ronald Reagan” and that it will happen this year.

Survey: Small Businesses Face Major Workforce Issues

The National Small Business Association, in partnership with Cynthia Kay and Company Media Production, has released the 2017 Small Business Workforce and Labor Survey, which quantifies how workforce issues ranging from immigration to education to background checks impact our nation’s leading job creators.

“We found that more than one-in-three small employers hire some kind of immigrant worker,” said NSBA President and CEO Todd McCracken. “However, the current political climate has people worried about the viability of guest workers, with nearly one-in-five saying they are less likely to hire a guest worker in the coming year.”

Among the wide-ranging topics in the survey was a section related to so-called “ban the box” legislation, which found that 71 percent of small-business owners ask potential employees about any past criminal convictions at some point during the hiring process. The leading driver for these checks: liability concerns.

On the topic of employee eligibility, the majority of small firms support some level of mandated use of an improved E-Verify or similar system if it included a safe harbor clause for employers operating in good faith.

The 2017 Small Business Workforce and Labor Survey was conducted June 6-12.

Recapping State Budget Battles

May was a busy month for several state legislatures, as they struggled to finish budgets before the end of their sessions. Here’s a look at some of the states that have been on the radar of government affairs firm MultiState Associates:

Illinois:

Illinois has been at a budget impasse since 2015 as Governor Bruce Rauner and Speaker Michael Madigan have failed to find a compromise on the state’s fiscal direction. In the face of this logjam, the senate attempted to forge a bipartisan “grand bargain” that would cut through the bickering and result in a revenue package all factions could live with. Lawmakers took great pains to find a set of policies that could pass muster, which included the possibility of adding a new payroll tax, expanding the sales tax base, and eliminating a host of tax credits and exemptions. With time running out, the senate abandoned its drive for bipartisanship and passed SB 9 on May 23.

However, the governor opposed this bill for not including his budget priorities (property tax relief and workers’ compensation reform), the Republican caucus opposed it as a “punishing tax increase,” and the speaker gave it only a tepid reception, saying it would be “thoughtfully considered.”

This all but ensures that the budget impasse in this state will continue for the foreseeable future.

Louisiana:

Louisiana’s history of structural budget problems and tax debates returned in full force this year, as lawmakers struggled to cobble together a plan to close a potential $1 billion budget shortfall. Early in the session, Governor John Bel Edwards called to expand the sales tax base and impose a new gross receipts tax, but those efforts died. In addition, other efforts to raise new revenue have been met with defeat, leaving lawmakers at a loss on where to find the money to meet the state’s balanced budget requirement.

The spending side of the debate has been no less heated, as factions have moved to block the passage of any funding bills. A central conflict comes from a house proposal to hold back $206 million worth of government funds to create a buffer against any future revenue downgrades – a plan the senate opposes.

Minnesota:

Minnesota’s budget problems this year stemmed from the fact that the state was facing a $1.65 billion budget surplus, which set up a fight between lawmakers over what to do with the excess funds. The disagreement boiled down to Governor Mark Dayton wanting to put more money into social programs (including a notable boost to pre-K education funding), while the Republican-majority legislature pushed for $660 million worth of tax relief paired with some spending cuts.

Unable to reach a compromise, legislators went into overtime, working on revenue and spending packages, producing a revenue package they say represents the largest tax cut in state history – a $650 million reduction overall. The most notable aspect of this bill is that it includes tax breaks for Social Security recipients and Minnesotans with student loans. The bill also implements expanded sales tax nexus rules.

Oklahoma:

Coming into the session, Oklahoma faced a $878 million budget deficit, with elected leaders divided about how to close it. Governor Mary Fallin announced in February that she would not sign off on a budget that cut deeply into the state’s essential services. Instead, her preference was to expand the sales tax base to include new services, increase the cigarette tax, and eliminate the corporate income tax. The legislature never warmed to her ideas, with Republican lawmakers particularly criticizing her proposal to tax new services.

In mid-May, with the regular session drawing to a close, lawmakers still didn’t have a plan to close the fiscal gap, forcing them to move into special session. Finally, after several more days of negotiations, lawmakers cobbled together a slate of revenue proposals to balance the state’s books. This plan increases the tax on cigarettes, partially repeals a sales tax exemption for some car purchases, and hikes the production taxes on certain oil and gas wells. The final budget had enough votes to become law, but almost everyone agrees that it is lacking.

In addition, under the Oklahoma constitution, revenue bills may not be approved in the final five days of session, and they must receive a three-fourths majority vote, which these bills did not. This leaves the bills open for a legal challenge, should any taxpayer opt to file suit. Lawmakers have tried to defend their actions by saying that these bills don’t qualify because they don’t technically raise new revenue but rather eliminate exemptions.

Five States Pass Major Gas Tax Increases

Non-election years are a popular time to raise new revenue for transportation infrastructure investments. This year has continued that trend as five states so far – California, Indiana, Montana, Tennessee and South Carolina – have passed substantial road funding measures in 2017, according to a Multi-State Insider report.

The main component of all of the measures is a major increase in fuel taxes, ranging from 6 to 12 cents. The remarkable thing about this year’s crop of transportation funding measures is the similarity found in the legislative components. In addition to the hikes in fuel tax rates, each state included increases in vehicle registration fees and all but one implemented new annual fees for electric vehicles, ranging from $100 to $150 (the Montana legislature originally passed an electric vehicle fee, but the governor vetoed it).

In addition, Utah passed legislation this year to slightly modify the state’s variable-rate gas tax, which should raise an additional 0.6-cent per gallon in 2019 and 1.2-cent per gallon in 2020.

While the federal gas tax rate has languished at 18.4-cents per gallon since 1993, nearly half the states – 22 in total – have raised fuel tax rates since 2012.

Chicago Suburbs Opt Out of New Laws Governing Wage, Sick Leave

Last year, the Board of Commissioners for Cook County, which includes Chicago, adopted an ordinance that created the county minimum wage of $10 per hour, and promised to raise it an additional $1 per year until 2020, when it would reach $13 per hour. The board adopted another ordinance that required private employers in Cook County to provide a minimum of one hour of paid sick leave for every 40 hours worked, with potential to reach a maximum of 40 hours of paid leave for every 12-month period.

However, the Village Board of Trustees of Orland Park, a Chicago suburb, recently approved a pair of its own ordinances that declared the Cook County laws an “undue and unequal burden on employers within the village,” and subsequently nullified them both within the jurisdiction. According to the ordinance, as a home rule community, “Orland Park has the right to opt out of the county’s mandatory sick leave ordinance and continue to follow state requirements.”

By approving the ordinances, Orland Park has joined a list of 40 Cook County suburbs that have opted out of the new laws. The ordinances’ report pages also state that 19 additional municipalities are considering opting out of the Cook County minimum wage and paid sick leave laws.

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