Transportation

GARVEE funding, which in past sessions was quite difficult to work through the process, was the easiest part of transportation funding this year. H. 657 was signed into law to fund GARVEE projects at $134 million without too many challenges, however, coming up with a package to cover the transportation budget shortfall proved to be much more difficult. Intense discussions took place between leadership in both the House and Senate and the Governor’s office, alongside state agencies and other interested organizations, but all to no avail. Several bills were introduced, including new registration fees (H. 631, H. 632, H. 633, H. 677, H. 678, H. 689), rental fees (H. 641), sales tax dedicated from transportation related supplies (H. 639) and increases in fuel taxes (H. 676), but all failed to make it into a package that could be agreed upon by all parties. They did pass legislation to conduct a formal audit of the Transportation Department in HCR 50, and it looks like this will come back as a major issue in the 2009 session pending what the Office of Performance Evaluations finds at the ITD.

The local option tax, which also would have been useful to fund transportation projects and transit development went through quite a process as well. The House created HJR 4, which was a constitutional amendment that outlined the process for creating a local option tax. The Chamber Alliance opposed the amendment on the House side, but it was clear the House Leadership would not pass a local option bill without a constitutional amendment. Near the end of the session, enabling legislation was presented in H. 688, which would have given local option taxes for anything approved by voters, not strictly transportation, and the Alliance supported that legislation on both sides while remaining neutral on HJR 4 on the Senate side. However, the enabling legislation got caught up in negotiations between the House and Senate, and the bill was killed in the Senate Local Government Committee, essentially killing the amendment as well.

Toward the end of the session we saw a change to last years STARS legislation, which originally allowed retail complexes sales tax exemptions for a set time period if they invested and made highway improvements. H. 655 clarified the definition of “highway improvements”, to allow a broader definition and not require roads to be connected to an interchange. The legislation was amended in the House, however, when the legislation made it to the Senate side, some problems were seen in the terminology, and eventually the bill was held on the Senate calendar in the amending order.

Urban Renewal

Several bills came forward again this year dealing with urban renewal and related issues, such as community infrastructure districts and local improvement districts. First in the series was H. 470, which would prohibit an established urban renewal district from receiving the revenue generated from a newly authorized bond or levy in the revenue allocation area. This was agreed upon by cities and counties, and initially was the only piece of urban renewal legislation expected, and seemed to be a reasonable compromise for URD’s to do their work and alleviate the challenges that have been brought in past legislative sessions. However, certain groups did have problems with this legislation, believing it would hinder the abilities of URD’s to change boundaries, and was essentially an effort to prevent URD’s from operating. Eventually H. 470 was able to pass with Senate Amendments (clarifying school levy application), but because of the struggles we saw more URD legislation introduced. The Alliance supported this legislation as an effort to show good faith in the operation of URD’s and in the hope to curb further legislation, however we continued to work through the session on these measures.

H. 568 would have limited an amended URD to the original timeline, the value a URD is able to capture and “shoestringing”. This legislation was held in House Rev & Tax, in large part due to Chamber Alliance opposition to both the limited timeline and shoestring provisions. H. 616 was a revamp of H. 568, which did little to clarify the problems with points made in opposition, but tried to address committee concerns. It was sent directly to the 2nd reading calendar on the House floor, but failed on a very close vote, in large part due to Alliance efforts.

The Chamber Alliance supported H. 470 after much discussion, but opposed all other URD legislation. The issue will be brought back in future sessions, and appears to be one in which the Alliance can take a lead role in helping re-shape Urban Renewal District legislation so as not to hinder the abilities of a URD, but to prevent the abuses legislators assert they have seen in particular areas which give them cause for concern.

H. 518 and H. 535 both dealt with the creation or re-issuance of local improvement districts, and both failed to leave the House Rev & Tax Committee. H. 577 was a revamp of H. 535, which made it through the House but failed to make it out of the Senate Local Government Committee. H. 617 dealt with the formation of Local Improvement Districts, but in the last days of the session did not get a hearing. H. 578 dealt with Community Infrastructure Districts, allowing the formation and usage for certain areas to help growth pay for necessary infrastructure development. This was sent to the House floor, but eventually returned to committee for another re-vamp, coming back as H. 680, which passed both houses.

Ordinary and Necessary

It was in the last weeks of the Legislative Session that the ordinary and necessary legislation came forward, due in part to the difficulty in shaping the language, and getting all interested parties together, discussing with legislators the details of what this would do, and trying to reach a middle ground with opposition. Two pieces of legislation were introduced, one regarding hospital concerns, and one encompassing all public indebtedness. After two days of testimony and explanation to the Senate State Affairs Committee, SJR 107 and SJR 105 (hospitals), were both sent to the floor with do pass recommendations and SJR 107 was sent to the House. However, this legislation did get caught up in last minute negotiations between the House and the Senate, and was not received quite as well in the House State Affairs Committee.

After testimony from several individuals and organizations, both for and against the amendment, the House Committee voted to send it to the floor do pass, on a 10-7 vote. There were several more questions about the scope of the amendment, but SJR 107 failed to receive the 2/3 vote of the House. The coalition then worked quickly with House members to put something together in the last hours of the session that would at minimum help entities such as power cities and hospitals negotiate contracts, which became HJR 5. Despite the work of many parties, including the support of the Chamber Alliance, the House amendment failed to pass the Senate floor with a 2/3rds vote, so we have seen no progress in the area of public indebtedness.

Workforce Development

We saw the Small Business Incentive Act get changed to help more businesses qualify for the incentive. H. 431 changed the calculation of how employees and wages count in terms of the qualifications, and many businesses who have inquired about the incentive will now likely qualify. There were presentations given in House Rev & Tax Committee regarding affordable workforce housing, and several RS’s from Representative Jaquet that would have helped deal with this, but only one was introduced by the Rev. & Tax Committee, which Rep. Jaquet asked to be held in committee given several of those that were not printed worked together. She will likely be working on these in the interim, and we may see more workforce housing legislation next session.

H. 550 made it through both Houses and to the Governor’s desk fairly easily, despite some initial concerns about the scope of the bill. This would allow county commissioners the ability to grant property tax exemptions to new manufacturing facilities construction and development in designated rural development areas in the state. Another two bills combined in a package to help allow further investment. The “Areva” bills, H. 561 which allowed an exemption for processing materials used in the production of energy and H. 562, which allowed property tax exemptions for large investments within a single county, despite being a bit controversial, made it through both houses without too many challenges and were signed by the Governor.

Elimination of the Personal Property Tax

The personal property tax elimination (H. 599) was a hotly debated issue again this year. While many groups, including the Chamber Alliance, worked to create momentum behind this legislation, it was introduced late in the session, in order that the grocery tax (H. 588) and other pieces of legislation would not be tied to it, as happened last year. That also gave supporters time to work with legislators on creating legislation that would be useful, and have support in both the House and Senate.

The same arguments were brought up this year in favor and opposed to this legislation, including the implementation and replacement dollars to counties issue, and the administration challenges with personal property. The House passed the legislation with amendments increasing a trigger and returning value for school bonding among others, but when it got to the Senate the bill was amended yet again. These amendments were passed by the Senate, but rejected when the bill returned to the House. While all of this was happening in the last hours of the session, the pressure to do something with this legislation that had been in progress all session was enough that legislators called a conference committee with three legislators from both houses.

The conference committee discussed the issues from both the House and Senate perspective, and what they could agree upon. Eventually they agreed to change the reimbursed assessed value to $100,000, provide a trigger at 5% growth of state budget each year and grant the exemption by tax payer by county. These amendments were made, despite objection from the supporters of the original bill (IACI) that determined these amendments watered the bill down so much as to render it ineffective to accomplish the original intent. However, in the last hours of the last day of the session, both the House and the Senate agreed and passed the amended legislation.

Healthcare

Very little of note took place in health care this year, as the department is still adjusting to major changes in structure, as well as changes in programs and policies that have been implemented over the past few years. However, despite reductions in budget projections, the Joint Finance and Appropriations Committee re-opened it’s budget in the last weeks of the session and approved $1 million for the Health Center Grant Program that will assist community health centers for health care equipment (S. 1519).

Streamlined Sales Tax

The streamlined sales tax idea was introduced early in the session, but died a quick and quiet death, not even getting printed in the House Revenue & Taxation Committee. Despite discussion of the merits of the legislation by committee members, which noted the concerns of Chambers about being on an unequal playing field, the bill (RS 17395) was returned to the sponsor on a 10-8 vote. This legislation may not come back in future sessions until there is a different makeup of the Legislature that could change the direction it has gone for the past several years.

However, Senator Little did help usher in useful legislation with a “retailer nexus” bill in H. 360. This would require any retailer with a substantial nexus within the state to collect sales tax from internet and catalog sales as well as storefront. This should be at least moderately helpful to those main street businesses trying to compete in the growing marketplace.