eNews Sept 16 2016Friday, September 16, 2016 - 01:15pm
Congress weighs short-term and long-term continuing resolutions for next year’s budget
Despite a promise to bring the unwieldy federal budget process to heel, congressional leadership finds itself yet again scrambling to put together a budget extension plan for either three-months or six-months in either a single omnibus bill or a series of “mini-bus” packages. As Congress ponders what to do, the new federal fiscal year is a flickering two weeks away, raising the possibility of another government shutdown, if decisions are not made soon.
The politics of passing the federal budget seem less driven by revenues and spending than by ideology. The House Freedom Caucus wants a long-term spending bill that continues current spending levels into Spring 2017. But, Democrats along with a number of Republicans favor a shorter stopgap measure that runs to mid-December, meaning a lame duck Congress would decide the remainder of the fiscal year and perhaps cut a longer term fiscal deal. The question for Speaker Paul Ryan is if he has enough votes within his own caucus to develop a budget position that will win Senate and the Obama Administration’s support or will he have to rely on the Democrats to push him over the goal line.
Mixed into this swirl is another impending round of federal sequestration. Conservatives want to expand the curtailment while defense hawks want to boost defense spending and liberals seek to eliminate sequestration. There are consequences for Virginia in how this debate is resolved.
Funding to control the Zika virus, to respond to the nation’s opioid addiction, and to provide safe drinking water are all wrapped up in the budget grind.
Also, Gov. Terry McAuliffe warned members of the House Appropriations, House Finance and Senate Finance Committees in August that another bout of sequestration (slated to begin in October) would only exacerbate Virginia’s slow-moving economic recovery and weak state revenue collections.
If Washington decision makers are to resolve the annual budget follies, the timing dictates that the next two weeks are critical. Stay tuned.
Virginia Congressman releases a new discussion draft concerning online sales taxes
House Judiciary Chairman Bob Goodlatte released in late August a new discussion draft to simplify the collection, remitting and reporting of remote sales taxes on products and services.
Under the draft proposal, states may impose or require collection of sales taxes by a seller if three conditions are met: 1) the state is the origin state for the remote sale; 2) the tax is applied using the origin state’s tax base applicable to non-remote sales; and 3) the state participates in a state tax clearinghouse.
The tax imposed on a remote sale is applied at the rate of the destination state, if the destination state participates in a state tax clearinghouse. Each state participating in the clearinghouse would establish a single statewide rate to be applied by a remote seller for purchases sent to that state.
To determine a seller’s place of origin, Goodlatte defines origin state as the state in which the remote seller has a physical presence and has employed the greatest average number of employees in the U.S.A. on business days during the preceding calendar year. A remote sale is defined as a sale made to a purchases in a state in which the seller has no physical presence.
The clearinghouse would be established by states voluntarily participating to distribute taxes on remote sales. States not participating in the clearinghouse would not receive distributions of sales tax money from the clearinghouse.
Under the proposal, sellers in states that do not impose sales taxes or choose not to participate in the clearinghouse would report the buyer’s name, address and the amount of sale for each remote sale to the clearinghouse. In addition, the remote seller must determine the applicable tax on each remote sale using an alternate base and destination rate for each state that participates in the clearinghouse, and remit such tax to the clearinghouse with sufficient information to identify the destination state.
Goodlatte’s proposal runs counter to Virginia’s sales tax philosophy and practices, and would complicate the Virginia Department of Taxation’s operations. It is also unclear how or even if the regional sales taxes approved for Northern Virginia and Hampton Roads would be recognized in a single statewide tax rate.
Of course this proposal and other like it could become moot if the state tax laws passed by Alabama and South Dakota to challenge the U.S. Supreme Court’s decision on Quill are favorably received.
VDOT pushes ahead on developing state of good repair program for locally owned bridges
The State of Good Repair (SGR) program provides dedicated funding to address deficient bridges and payments, regardless of whether or not the physical asset is owned by the state or by localities. The bridges and pavement projects are selected by formula.
Although VDOT recently hosted a webinar for localities on the SGR prioritization process, the agency is planning in mid-September additional local program workshop presentations. In fact, outreach and training for local governments will continue through October into the beginning of November.
In November, information from localities will be due on the SGR Deficient Bridge Information Update Form. VDOT’s “finalized” prioritized list of locally owned bridges is tentatively scheduled shortly before the Thanksgiving holiday with a draft funding distribution to localities and members of the Commonwealth Transportation Board due by early December.
The general prioritization formula takes into consideration several weighted variables, including the relative importance of the transportation asset to the state’s roadway network (30%); the asset’s physical condition (25%); the asset’s risk to fail (15%); structural capacity (10%); and cost effectiveness (20%) in terms of measuring the asset’s repair cost to the structure’s replacement cost.
VDOT estimates that total replacement costs for bridges at age 70 over the next 35 years will be $44.0 billion. Available resources are estimated at $7.0 billion.
Feds approve take off for small commercial drones
U.S. Transportation Secretary Anthony Foxx and the Federal Aviation Administration announced late in August the first operational rules for routine non-hobbyist use of small unmanned aircraft systems (UAS or drones). The regulations, first proposed in June, are now in effect.
According to Secretary Foxx, the new rules are the latest step toward transforming aviation and society with this technology in very profound ways.
The unmanned aircraft and any payload or cargo must weigh less than 55 pounds. Visual line-of-sight must be maintained, and, at this time, the rules only permit daylight-only operations.
By the year 2020, according to some estimates, business and state and local government uses of drones are projected to attract millions of new operators across the country. It’s envisioned that drones will be used for inspecting buildings and bridges to spraying crops to searching for downed power lines.
The role that federal government assigns to states and local governments for policy development, enforcement priorities and regulations remains unknown.
Strong August tax collections won’t reverse impending state budget cuts
Total general fund revenue collections in August jumped 12.0 percent, courtesy of two additional deposit days for individual income tax withholdings and recordation taxes. On a fiscal year-to-date basis, total revenue collections are 8.1 percent, well ahead of the downward revised 1.7 percent growth.
However, in his memorandum to Gov. Terry McAuliffe, Secretary of Finance Ric Brown noted that August is not a significant month for revenue collections with collections mainly from withholding, sales taxes, and other sources that have regular monthly payments.
September collections will complete the first quarter of FY 2017 and provide a clearer assessment of revenue growth. The first estimated payments from individuals, corporations, and insurance companies are due in September.
In the meantime, state agencies are busy preparing spending reduction plans to be submitted to the state budget office by September 20. The impact of the cuts on local government budgets have already been felt regarding the freeze of state salary support for teachers and constitutional officers. The “other shoe” of state support for other state-mandated and state-high priority services could be felt sometime in October.
Go Green deadline of Sept. 23 is fast approaching
Property owner grant program available
It’s not too late to register and compete in the 2016 Go Green Virginia challenge, but time is running short. Completed applications are due Sept. 23. The challenge is a friendly competition designed to encourage implementation of environmental policies and practical actions that reduce the carbon emissions generated by the local government and the broader community. Additional information is available at www.gogreenva.org.
Work group tackles historic district disclosures
The Historic District Disclosures Sub-Work Group met on Tuesday to discuss how home buyers can be better informed on the ramifications of moving into an historic district. Some historic districts are created by Code and not subject to a homeowners or property owner’s association. This results in buyers not being informed during the purchase of a home regarding what type of materials must be used in the historic district. For example, slate roofs, which are expensive, may be required in the district. This group is working on improving the disclosure required in the Virginia Code Section 55-519.
If your locality has had an issue regarding historic districts, please contact VML’s Michelle Gowdy, firstname.lastname@example.org.
Virginia Conflict of Interest and Ethics Advisory Council
Last reminder for comments
In a meeting this week with VML staff, the COIA staff reiterated that they are seeking local officials’ comments. The COIA council will receive written comments on the various draft statements until September 18. They ask that you put “Comments” in the subject line. http://ethics.dls.virginia.gov/meetings.asp.
Please make sure that elected officials and staff review the draft forms that apply to them, and please place “Comments” in the subject line and forward any copies to email@example.com. It will be very helpful if you also copy VML’s Michelle Gowdy (firstname.lastname@example.org).
As a quick reminder, under the COIA revisions adopted this session, the forms that were previously laid out in statute are removed, and the COIA council was given the charge of developing new forms. The bill adopted in the 2016 session also changes the number of submissions to be filed with the Council, requiring the forms to be submitted annually rather than biannually. The new forms and filing submissions will be effective for the January 2017 filing.
The forms that will be submitted in January will be for the year of 2016 despite the fact that there were mid-year filings.
VML contact: Michelle Gowdy, email@example.com
Update on training for FOIA officers
The Freedom of Information Advisory Council plans to make on-line training information for FOIA officers available by Oct. 18, 2016, according to the council’s website. The Council notes that details will be posted here.