With just one week left to go within the Utah Legislative session, the tempo is quick and livid on Capitol Hill. All payments should clear the originating chamber by the top of flooring time on Monday, March sixth or they may die and fail to advance this session. This deadline offers nice inspiration to work shortly and for events to seek out compromise because the prospect of getting to attend till subsequent yr to advance a problem looms giant! Below are a number of of the problems I’m watching in the course of the penultimate week of the session.
HB153 Uninsured and Underinsured Motorist Coverage Amendments (Rep. Mike Kennedy).
The sponsor of this invoice is looking for to deal with a niche he believes exists in business vehicle insurance coverage protection. Under present law, house owners of economic car fleets have the choice to simply accept or reject uninsured and underinsured motorist protection (UM/UIM) on their insurance coverage insurance policies. This is the portion of auto insurance coverage protection that kicks in when the driving force of the insured car just isn’t at fault in an accident, however the driver who’s at fault has no insurance coverage or very low protection limits.
If an off-obligation worker just isn’t at fault in an accident whereas driving an organization automotive with one other car that doesn’t have insurance coverage or has low insurance coverage limits, the accident gained’t be coated by staff’ compensation protection. If UM/UIM protection was rejected by the employer it successfully leaves the car, and any injured passengers, with out insurance coverage protection. The invoice proposed requires that each one business auto insurance policies in Utah include UM/UIM protection. Amendments have carved out sole proprietorships, self-insured corporations, and native governments from the invoice’s necessities. The invoice faces opposition from the insurance coverage business and enterprise group who contend the proposal successfully removes decisions within the market and places a better burden on small companies that is perhaps rejecting UM/UIM protection at present for value causes.
SB110 Sales Tax Collection Amendments (Sen. Curt Bramble).
Revenue estimates for gross sales tax had been pretty flat this session, however a brand new 2017 settlement with Amazon to gather and remit gross sales tax on a portion of its Utah gross sales that they warehouse and ship (estimated to be 40% of Amazon’s complete Utah gross sales) boosted gross sales tax income projections by $13 million. Traditional gross sales tax assortment methods are falling behind the shift in retail purchases to on-line markets. Black Friday 2016 marked the primary time that the National Retail Federation reported that extra individuals shopped the vacation gross sales on-line than at brick and mortar shops. With Congress’ continued failure to facilitate gross sales tax collections for on-line purchases, many states are taking issues into their very own palms. Utah’s invoice redefines “nexus” as a sure degree of financial exercise carried out within the state by a retailer ($100,000 of Utah financial exercise). Once that threshold is reached, a web-based retailer can be required to gather and remit gross sales tax. This invoice follows the mannequin of South Dakota and Alabama, which have enacted comparable legal guidelines. Several different states have additionally proposed payments of their 2017 legislatives periods to cope with on-line gross sales tax assortment, together with: Georgia, Idaho, Maryland, Mississippi, New Mexico, North Carolina, North Dakota, South Carolina, Virginia, and Wyoming.
HB272 Regulatory Impact Amendments (Rep. Brad Wilson).
In Utah, each invoice is required to have a fiscal observe, an unbiased, non-partisan evaluation of the implementation prices to the state, native governments, and companies/people. In addition, legislative rule prohibits any invoice with a adverse fiscal word higher than $10,000 from advancing by means of each chambers till the Executive Appropriations Committee has funded the observe.
Rules promulgated by businesses can have vital impacts on native jurisdictions, companies, and people, however new or amended guidelines don’t bear any fiscal assessment. Rulemaking sometimes takes place in venues that aren’t fairly as clear to the general public because the Legislature, so these financially affected by the rule won’t concentrate on the potential value till it’s too late. This invoice creates a course of for company rulemaking just like the legislative fiscal notice.
We are nearing the midway mark of the Utah Legislative Session. From this level onward, the tempo will increase and extra time might be spent debating payments and fewer on evaluating the State price range. It is all the time a dash to the end with lengthy days on Capitol Hill. If you have got questions or considerations about payments or price range line gadgets, please be happy to e mail or use my cellular quantity (801-599-9017) for a quicker response.
Utah’s Budget:
The Legislature actually has two fundamental duties annually: passing legal guidelines and balancing the state finances. At simply over $16 billion, the administration of the State finances is a reasonably large process. While that greenback quantity might sound staggering, you’d be amazed at how shortly requests arrive to spend the funds! The finish of Week three marks the conclusion of the “base budget” course of. These are the constructing blocks of the finances that principally guarantee final yr’s degree of funding, plus progress and inflation prices. As a State with a rising inhabitants, we all know that the enrollment on the public faculties develop annually by about 10,000 youngsters which suggests the Public Education base price range has to maintain tempo to the tune of about $94 million in progress funding. Similar value will increase for development, labor, or utilization bills exist all through the State finances and the funds begin to shortly add up.
The bulk of the State price range is contained within the base budgets (one finances invoice for every sub-appropriations committee). After all the bottom budgets are settled, the state often has a small quantity of income progress and finances surplus from the earlier yr that can be utilized for brand spanking new buildings, packages, instructor or state worker raises, simply to call a number of. This yr that pool of surplus income is $285 million.
The wrangling over this remaining pool of income might be intense as a result of $550 million in spending requests have already been submitted, virtually double the quantity. Week four is when the ultimate finances estimates are acquired that would improve or lower the projected $285 million by a point, although big swings aren’t anticipated. This is usually the toughest a part of the budgeting course of as a result of it’s the final of the cash out there for a whole yr and everybody thinks their want or concept is the perfect and highest use of the cash.
Phase Out of the Residential Solar Tax Credit:
A drop in photo voltaic panel pricing and a residential photo voltaic tax credit score has pushed shopper demand for Utahns to put in photo voltaic panels in an enormous approach. In the primary half of 2016, 7,700 Utahns put in photo voltaic panels. The tax credit score value to the State totaled almost $42 million in 2016, and it’s projected to value almost $60 million in 2017. Under our State Constitution, funds for revenue tax credit are drawn from the Education Fund. The impression of the will increase in photo voltaic panel credit primarily pits photo voltaic customers towards the wants of Okay-12 college students.
HB23 Income Tax Credit Modifications has been proposed for the 2017 session to part out the residential photo voltaic tax credit score. After in depth negotiations between invoice sponsor Rep. Jeremy Peterson (R-Ogden) and the Utah Solar Energy Association, the invoice incorporates a 4-yr part out of the tax credit score from $2,000 in 2018 to $zero in 2020.
Growth of Local Food Movement & Regulatory Landscape:
The progress of the native and “slow” meals motion has created some fascinating challenges for native growers, producers, and shoppers. Some of who take part within the native meals scene consider the present degree of regulation required for inspections and labeling is value prohibitive for small-scale growers and producers and makes the meals gadgets they produce inaccessible. Others fear that if requirements are lowered for small producers, the integrity of the meals security system could possibly be compromised. Supporters of the regulation argue that meals-borne sickness outbreaks influence gross sales up and down the availability chain and requirements must be the identical regardless of the dimensions of the grower/producer or the meant shopper.
Competing payments have been launched from two legislators and a 3rd legislator is looking for to create an advisory council to assist navigate the way forward for meals produced in Utah.
HB58 Direct Food Sales Amendments, Rep. Scott Sandall (R-Tremonton)
This invoice modifies present cottage meals statutes. In some respects it makes the law extra liberal (inspections) and in others making it extra restrictive (labeling). The invoice supplies rulemaking authority to the Utah Department of Agriculture & Food.
HB 121 Local Food Advisory Council, Rep. Steve Handy (R-Layton)
This invoice creates a brand new native meals advisory board that may report back to the Natural Resources, Agriculture & Environment Interim Committee. The board can be a recommending board and could have extensive latitude to review points associated to the native meals financial system.
HB277 Direct to Consumer Food Sales Modifications, Rep. Marc Roberts (R-Salem)
Under this invoice, sure sorts of meals can be exempt from sure state, county, or metropolis laws relating to the preparation, serving, use/consumption, or storage of meals and meals merchandise. Those exempt meals embrace: 1) meals produced and bought inside the state; 2) meals bought on to an knowledgeable finish shopper; and three) meals grown for residence consumption.
Budget Update & New Revenue Numbers
Final income estimates are all the time launched within the final third of the Utah session as legislators work to complete balancing the state’s finances. The launch of the ultimate income estimates is a extremely anticipated occasion. Last week, I reported that after base budgets have been handed, the state had about $285 million in surplus and income progress out there for brand spanking new packages, instructor raises, and different spending priorities, however had acquired over $550 million requests for the cash. This week the brand new income numbers gave the proponents of these spending requests purpose to hope they could make the ultimate reduce, as they discovered there’s roughly $100 million in further income now out there.
The overwhelming majority of the brand new estimated funds will probably be allotted to the Education Fund, as a result of it’s derived from revenue tax which is constitutionally devoted to this fund. Of the $100 million in progress, $77 million will go towards schooling. The remaining $three million in progress will move to the General Fund and is essentially being attributed to the State’s new cope with Amazon to gather gross sales tax on the marketplace gadgets it sells to Utah shoppers.
Tax Reform Proposal
Year-over-yr progress in Utah continues to be constructive, with the General Fund tax revenues rising by four.6%, and the Education Fund tax revenues rising by 5.75%. However, rumors have been flying on the State Capitol for the previous week that an omnibus tax reform proposal may occur this yr. It is late within the session for a proposal of this measurement and nature, however it appears the Governor and management of the House and Senate are in settlement on key rules. If they’re able to come to full settlement, a number of tax payments shall be drafted and certain moved via the legislative course of shortly. The general objective of the reform proposed is to broaden the bottom and decrease the charges whereas additionally offering tax stability. The proposals embrace:
- Lower the state revenue tax and part out tax credit for federal exemptions at a decrease adjusted gross revenue degree than is presently allowed.
- Broaden the gross sales tax base by reinstituting the state portion of the gross sales tax on meals and in addition move on-line gross sales tax assortment reform payments. This would come with decreasing the general state gross sales tax fee so the proposal is income impartial.
- Increase the variety of industries that may make the most of single gross sales issue apportionment of enterprise revenue.
- Adjust the fuel tax set off threshold that’s tied to a wholesale rack index worth. With the dramatic and sustained drop in oil costs, the set off mechanism developed two years in the past to slowly increase the fuel tax by 5 cents, is now a few years from being reached.
- Property Tax Basic Levy Freeze: The statewide primary property tax levy is used for schooling funding. The proposal would add a flooring to the essential property tax levy so the tax price doesn’t lower as property values rise.
Education Update
Education is likely one of the coverage areas that all the time pursuits individuals. Here are a couple of funding updates on the Education finances which are recognized on this final third of the session. The Public Education Appropriations subcommittee is recommending a three% ($90 million) improve to the Okay-12 price range this yr. This is along with the $68 million that was additionally appropriated for scholar inhabitants progress.
My husband is a instructor so I’m very conscious that academics purchase classroom provides out of their private family budgets. I’m very completely happy to report that the subcommittee additionally beneficial shifting the instructor provide price range from one-time funding to ongoing funding on the $5 million degree. Hopefully over time this line merchandise will develop.
Finally, I do know that many college students, mother and father and academics are annoyed with SAGE testing. SB220 Student Assessment and School Accountability Amendments repeals the requirement for college kids in grades 10-12 to take the SAGE check and as an alternative replaces it with the ACT check.
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