​The upcoming week at the State House will be a week of votes, as both the House and Senate begin to pass duplicate bills.  Barring some breakdown in communication, this signals the opportunity for an early to mid-June passage of a budget. 
 
What is a “duplicate bill”?  It is common for bills to be introduced in both branches of the legislature.  For example, this week S.2763SubA (Sen. Picard) is scheduled for a vote in the House Corporations Committee Wednesday.  This bill allows those with a CDL license to submit the required medical certificate to the DMV by electronic means thus saving time and money.  This bill passed the Senate Special Legislation Committee in April; passed the Senate floor and has been waiting for action by the House Corporations Committee.  The same bill, H.7251SubA (Reps Phillips, Solomon, Casey, Morin and Corvese) was passed by the House Corporations Committee in April, followed by passage on the House floor and is now awaiting consideration in the Senate Special Legislation Committee.  H.7251SubA is scheduled for a vote Wednesday.
 
This Week At the State House
 
Tuesday will feature a Budget Status update in the House Finance Committee at the Rise.  
The Senate Judiciary Committee will meet at 3:00 pm to vote on S.2423 (Senators Metts, Quezada, Jabour, Goldin, and Goodwin) a bill that would double the administrative penalty levied against real estate brokers and salespersons for crimes such as misappropriation of escrow funds, from $1000 to $2000. 
 
Thursday, the Senate Finance Committee will take testimony on a number bills at the Rise.  S.2066 (Senators DiPalma, Pearson, Conley, Lynch Prata, Felag) lowers the non-resident seller withholding requirement from 9% to 7%.  When a company is sold, if real estate is involved, and the seller is not a resident of Rhode Island, the closing attorney (or the buyer) must withhold 9% of the net proceeds of the sale until the seller can show proof of payment of Rhode Island income tax owed at the end of the year.  If that person/corporate entity fails to pay taxes owed, the state can claim the amount owed from the funds that are being held.  The legislature lowered the corporate tax rate in 2015 from 9% to 7%, but no one thought to amend the real estate non-resident withholding percentage as well.  This bill corrects that error and allows seller to retain more of the net sale proceeds. 
 
Other bills to be heard in the Senate Finance Committee include:  S.2072 (Senators Satchell, Archambault, Calkin, Euer and Miller) which establishes a nineteen percent (19%) “carried interest fairness fee” for investment management services in order to tax the carried interest income of hedge fund and private equity investors as traditional ordinary earned income;  S.2219 (Senators Pearson, Gallo, Satchell, DiPalma and Seveney) states that payments by an employer, whether paid to an employee or lender, of principal and interest on a qualified education loan incurred by an employee would be subtracted from the calculation of federal adjusted gross income; and S.2389 (Senators Satchell, Conley, Calkin, Goldin and Euer) adds three new tax brackets to the RI personal income tax 7.99% for taxable income of $275k to $500k, 8.49% for taxable income of $500k to $1 million and 8.99% for taxable income over $1 million.
 
 
Interesting News from a Federal District Court – Wage Equity
 
The United States District Court for the Eastern District of Pennsylvania released an April 30th  decision in the case of The Chamber of Commerce for Greater Philadelphia v. City of Philadelphia
 
https://images.law.com/contrib/content/uploads/documents/402/18130/17-1548-FINAL-Opinion-on-MPI.pdf
 
The Court laid out the basic facts by stating the following: “Responding to the problem of wage inequality for women and minorities, the City of Philadelphia has enacted an ordinance amending Title 9 of The Philadelphia Code to include provisions on wage equity.  The ordinance has two parts.  First, it prohibits an employer from inquiring about a prospective employee’s wage history (“the Inquiry Provision”); and second, it makes it illegal for an employer to rely on wage history “at any stage in the employment process” to determine a salary for an employee (“the Reliance Provision”).
 
The Philadelphia Chamber (and certain businesses by name) challenged both provisions on the grounds that the sections violate the First Amendment of the Constitution.  The decision itself makes for interesting reading.  In the end, the Court concluded that “the Inquiry Provision violates the First Amendment’s free speech clause.”  The Court did uphold “the Reliance Provision” stating that a business could not ask for wage and salary history and then use that information to set the individual’s wage.
 
For those “legal junkies,” the Court determined that the protections afforded to wage and salary history inquiries fall under commercial related expression and is worthy of “intermediate scrutiny.”
 
The Court Case will likely be discussed as Rhode Island continues to consider pay equity legislation.  It is also unclear whether the City of Philadelphia will appeal the decision.
 
Political Update
 
As stated previously in UTD, anyone wishing to run for office must file a Declaration of Candidacy Form with the Local Board of Canvassers in the City or Town in which you reside.  Forms can be filed June 24th, 25th or 26th.   Rep. Jared Nunes – a good friend to the business community – has decided not to run for re-election in the district representing Coventry and West Warwick.
 
 
The following bills were filed last week:
 
Senate Bill No. 2895
BY  Miller
ENTITLED, AN ACT RELATING TO FOOD AND DRUGS -- ADULT USE OF CANNABIS ACT (Establishes a system for the regulation and taxation for adult use and cultivation of marijuana.)
 
Senate Bill No. 2905
BY  Fogarty, Miller, Goldin, Euer, Calkin
ENTITLED, AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT - ENERGY FACILITY SITING ACT (Makes changes to the membership of the energy facilities siting board by increasing the size of the board from three (3) to seven (7) members for certain application, and also imposes additional requirements on applicants for energy facilities.)
 
Senate Bill No. 2924
BY  Fogarty
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- WORKERS' COMPENSATION (Allows waiver of prior claimed common law rights by corp./LLC officers/Enlarges advisory council from 16 to 17 members/Imposes certain limitations on payments to injured employees/Authorizes uninsured protection fund to promulgate rules and regulations.)

​The Department of Labor and Training has released the final Paid Sick and Safety Leave (PSSL) regulations.  The trigger point for employers to be included under the law is still based on the number of employees the business had within the 2 highest reporting quarter in the previous year.  So if you maintained an average of 18 employees in the 2 highest employment quarters last year, you are required to provide PSSL benefits beginning July 1, 2018.  New employers (companies started after January 1 of the current year) are required to provide PSSL as soon as the 18th person is hired.
 
Starting July 1, 2018, covered employees are entitled to 24 hours of PSSL during the 2018 calendar year.  This wording suggests that if your company already provides paid leave and the employee has utilized a certain number of the hours prior to July 1st those hours would be included in the overall 24 hour count for 2018.  Covered employees are entitle to 32 hours PSSL during calendar year 2019; and 40 hours during calendar year 2020 and thereafter.
 
An employee is covered if he/she spends more time working in Rhode Island than in any other state.  Fifty percent (50%) is not a requirement for inclusion.  If an employee works in three states but splits it up so that he/she works in Rhode Island more any other states – that employee is covered and is entitled to PSSL.
 
If an employee knows PSSL will be needed 24 hours in advance of the leave time, the leave is considered “foreseeable” and that employee must provide reasonable notice to the employer.  If the employee discovers leave is needed less than 24 hours in advance, it is considered “unforeseeable” notice is required ONLY IF the employer has an adopted written policy that was provided to the employee prior to the leave request.  Otherwise, notice is not required.
 
Employers are permitted to require documentation of PSSL lasting more than 3 consecutive workdays.  HOWEVER, the employer must have a policy in place; and if the costs associated with obtaining that documentation (doctor visit, transportation cost, etc.) exceeds two times (2x) the employee’s hourly rate of pay, then the cost is considered unreasonable.  If the cost is unreasonable, then the employer cannot require the employee to provide the documentation, but can ask the employee to sign a paper stating that the leave was taken in accordance with the law.
 
These are just a few of the items found in the final adopted regulation.  The final regulation can be viewed at:  http://sos.ri.gov/documents/archives/regdocs/released/pdf/DLT/9466.pdf
 
If your business has 18 employees or more as outlined above, the Chamber strongly suggests you contact an employment attorney or human resource specialist ASAP and be sure that your policy manual is in compliance with this new law.  The new policy must be in the hands of your employees by July 1, 2018 or the notice provisions and other parts of the law will be unavailable to you as an employer.
 
 
Final 2018 Revenue Estimated Conference Looks Brighter
 
As a few people sat in the audience, 3 members of the Governor’s Revenue Department, 3 members of the House fiscal staff and 3 members of the Senate fiscal staff sat in a room for 5 ½ hours debating the appropriate number for each revenue line item in the current FY2018 budget and next year’s FY 2019 budget which starts July 1.  For the FY2019 budget, the group believes personal income tax collections will be about $24 million more next year for a total of $1.3 billion.  Lottery revenue will remain somewhat steady ($364 million).  Corporate tax revenue was set at $176 million – a number that was difficult for the group to determine due to all of the changes in federal corporate tax law.  Sales and Use Taxes are expected to increase in FY2019 by $30.5 million, with revenue from all state tax sources expected to rise $64.8 million.  Those are a lot of numbers to digest; but the bottom line is that the budget hole is far less than was predicted back in November, 2017. The FY2019 budget will still not be a cake walk, and some will argue that a few of the numbers may be a little optimistic, but the budget process of negotiations between the three sides has begun.
 
 
This Week At the State House
 
The House Finance Committee will take testimony on a proposed tax on carbon Tuesday in Room 35.  H.7400 (Reps. Regunberg, Handy, Keable, Carson, Tobon) creates the Energize Rhode Island Fund and deposits into it money collected through a carbon tax.  The tax is set at $15 per metric ton of carbon, charged at the first point of sale, and it increases by $5 per metric ton until it reaches $50 per metric ton.  This year’s bill has changed in that it requires two other states (Massachusetts and one other RGGI state) to pass a carbon tax before the Rhode Island tax would become effective; but the other states only have to pass a carbon tax of $5 per metric ton, not an equal tax.  The following chart shows the cent per gallon or dollar per gallon impact on prices:
 
Emission Factor kg CO2/unit
Tax Rate per metric ton
Gasoline
Diesel
LPG
Jet Fuel
Natural Gas

 
 
cents/gal
cents/gal
cents/gal
cents/gal
 Dollars/Mcf

First Year of Enactment
15
13.1
15.5
9.0
14.5
.8

Second Year of Enactment
20
17.5
20.7
12.0
19.3
1.1

Third Year of Enactment
25
21.9
25.8
15.0
24.2
1.4

Fourth Year of Enactment
30
26.2
31.0
18.0
29.0
1.7

Fifth Year of Enactment
35
30.6
36.2
21.0
33.8
1.9

Sixth Year of Enactment
40
35.0
41.3
24.0
38.7
2.2

Seventh Year of Enactment
45
39.4
46.5
27.0
43.5
2.5

Eighth Year of Enactment
50
43.7
51.7
30.0
48.3
2.8

 
International Carbon Bank & Exchange
http://www.icbe.com/carbondatabase/priceconverter.asp
 
In the first year of enactment alone, taxes assessed on gasoline, diesel and jet fuel could reach over $150 million.  The Chamber testified against the senate version (S.2188) and will testify against H.7400 as well.
 
The House Finance Committee will also hear testimony on H.7437 which would allow for internet lottery sales.  This initiative is particularly problematic for those businesses that sell lottery tickets as a part of their marketing strategy.  These business entities also ensure that age requirements are met for the legal purchase of tickets, and that the sales are remitted to the state.  The state of Georgia passed legislation allowing online lottery sales and found an off-shore company doing business under a name similar to its own state website.
 
On Thursday, the House Committee on Municipal Government will take testimony on H.8177 (Reps. Maldonado, McLaughlin, Barros, Tobon, and Edwards) in Room 205.  H.8177 was just introduced last week – the link can be found below in the new filed bills section of UTD.  H.8177 changes the definition of residential property under the City’s 3 class tier tax system.  The current definition includes all property fit for human habitation of 1 or more units.  The new proposed definition changes the qualifications to: “(A) Owner-occupied dwellings of no more than five (5) units; (B) Non owner-occupied dwellings of no more than five (5) units including properties for mixed use as residential and commercial properties; and (C) Units or dwellings with six (6) or more units.”
 
Political Update
 
As stated in last week’s UTD, anyone wishing to run for office must file a Declaration of Candidacy Form with the Local Board of Canvassers in the City or Town in which you reside.  Forms can be filed June 24th, 25th or 26th.   Rep. Hearn of Barrington does not plan to run for re-election.  Of course, Rep. Rugenberg from Providence will not be running for State Representative as he has declared for the Lt. Governor’s race so that seat will be open.  And Rep. Morgan’s seat in Coventry will be open as she runs for Governor.
 
 
The following bills were filed last week:
 
House Bill No. 8177
BY  Maldonado, McLaughlin, Barros, Tobon, Edwards
ENTITLED, AN ACT RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES--CITY OF CENTRAL FALLS (Authorizes Central Falls to adopt 3 separate tax classifications of residential property consisting of tax rates: owner-occupied property of 5 units or less/dwellings of 6 units or more/non owner-occupied property of 5 units or less, including mixed use.)
 
House Bill No. 8179
BY  McEntee, Craven
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND PARENTAL AND FAMILY MEDICAL LEAVE ACT (Allows employee granted unpaid family/parental leave to substitute any accrued vacation/sick/ other appropriate leave for any part of the unpaid leave.)
 
House Bill No. 8182
BY  Costantino, Lima, Hearn, Shekarchi, Winfield
ENTITLED, AN ACT RELATING TO PUBLIC UTILITIES AND CARRIERS -- TRANSPORTATION NETWORK COMPANY SERVICES (Limits the maximum charge imposed by the Rhode Island airport corporation to three dollars ($3.00) per trip for transportation network company services.)
 
 

An Update from the State House
 
Thursday is a key day and will set the tone for the remainder of the legislative session.  At 9:00 a.m. in Room 35 at the State House, the House, the Senate and the Governor will meet for the final Revenue Estimating Conference.  The three sides will come to an agreement as to how much the state will collect in revenue for FY2019.  This number affects decisions over funding programs, cutting suggestions and tax increase proposals in the upcoming budget. Stay tuned for more information.
 
Wednesday
 
S.2871 (Senators Cano, Goldin, Goodwin, Gallo and Conley) provides an opportunity for employees affected by plant closings or mass layoffs to furnish competitive bids to purchase businesses otherwise at risk of reducing workforce.  The bill states that whenever an employer is required by the Worker Adjustment and Retraining Notification Act, to provide advance notice of a plant closing or mass layoff, the director of the department of labor and training must provide to the affected employees (1) written notice of the employee’s right to bid to purchase the business, and (2) materials explaining how to conduct an election to determine whether to pursue the purchase.   Employees would have 30 days after the receipt of the notice to gather signatures from 50% of the business’s employees who are interested in purchasing the company.  S.2871 explicitly states that nothing requires the owner of the business to sell to the employees.  The bill will be heard by the Senate Labor Committee Wednesday at the Rise – approximately 4:30 p.m.
  
Thursday
 
H.8120 (Rep. Keable, Newberry, Price, Handy, Ruggiero) received a hearing in the House Committee on Environment and Energy last Thursday and will now get a committee vote this Thursday.  H.8120 increases the number of people on the Energy Facilities Siting Board from 3 to 9.  Under current law, the Director of the PUC, DEM and the Director of Administration for Planning are the members of the board.  This bill would add the Department of Health, Attorney General, 4 members of the public (2 of which must be residents of the proposed host community of a facility, 1 appointed by the Attorney General with specific qualifications, and 1 who is a member of the Rhode Island Bar Association with specific qualifications).  If H.8120 were to pass it would be very difficult to site any energy facility in the state.
 
Political Update
 
May and June are critical months for politics as some officials decide whether they will run for office again this fall.  Anyone wishing to run for office must file a Declaration of Candidacy Form with the Local Board of Canvassers in the City or Town in which you reside.  Forms can be filed June 24th, 25th or 26th.   So far, Rep. Jay O’Grady, Lincoln and Sen. Marc Cote, Woonsocket have publicly announced they will not seek re-election.
  
The following bills were filed last week:
 
House Bill No. 8149
BY  Morin, Phillips, Casey
ENTITLED, AN ACT RELATING TO MOTOR AND OTHER VEHICLES - REGISTRATION OF VEHICLES (Provides for a penalty of $500 for failure of RI residents to register their motor vehicle with the RI department of motor vehicles and establishes a hotline to report such violation.)
 
House Bill No. 8163
BY  Jacquard, Vella-Wilkinson, Messier, Morin
ENTITLED, AN ACT RELATING TO INSURANCE -- VOLUNTARY RESTRUCTURING OF SOLVENT INSURERS (Allows domestic insurance company to enter into a voluntary restructuring, including the use of a protected cell, with the approval of the commissioner.)
 
House Bill No. 8165
BY  Amore, Keable, Shekarchi, Maldonado, Fogarty
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- MECHANICAL TRADES (Adds thermal systems insulation to the regulation and licensing of mechanical trades.)
 
Senate Bill No. 2854
BY  Crowley
ENTITLED, AN ACT RELATING TO TAXATION -- LEVY AND ASSESSMENT OF LOCAL TAXES--CITY OF CENTRAL FALLS (Authorizes Central Falls to adopt 3 separate tax classifications of residential property consisting of tax rates: owner-occupied property of 5 units or less/dwellings of 6 units or more/non owner-occupied property of 5 units or less, including mixed use.)
 
Senate Bill No. 2871
BY  Cano, Goldin, Goodwin, Gallo, Conley
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- DEPARTMENT OF LABOR AND TRAINING (Provides an opportunity for employees affected by plant closings or mass layoffs to furnish competitive bids to purchase businesses otherwise at risk of reducing workforce.)