Chamber Connections BLOG
Chamber Connections BLOG
At the State House
At the time this edition is being written, only one hearing has been scheduled for this week. The House Finance Committee will be receiving an update on the budget situation at the Eleanor Slater Hospital Tuesday at 4:30 p.m.
Last week, the House Finance Committee met to take testimony surrounding the Governor’s request to amend Article 8 (Tax Article of the budget). As was stated in last week’s edition of Under the Dome, the amendment seeks to decouple Rhode Island tax law from the federal excess loss deduction found in 26 U.S.C. section 461(1)(1)(B) in tax years 2018-2020.
As background, prior to 2017, individual taxpayer’s excess business losses (pass-through entities) could deduct the total amount of loss in the year the loss was incurred, regardless of the amount of loss. In December of 2017, Congress passed the Tax Cut and Jobs Act which changed the federal tax code to only allow deductions for excess loss up to $250,000 for an individual/$500,000 for joint filers. Any losses incurred over and above that amount could be included in future tax filings as a loss. When Congress passed the CARESAct this year, it suspended the cap on excess business losses for pass through entities, for the years 2018, 2019 and 2020. This was a retroactive change to the federal tax code. Some businesses may have filed amended returns already to take advantage of the federal change.
During the Rhode Island May Revenue Estimating Conference, this issue was raised, but the Department of Revenue (DOR) was unable, at that time, to predict the State’s revenue implications as a result of the federal change. Rhode Island is one of the states that – for the most part – piggy backs state taxes on federal income calculations. So, any change in federal income tax law, affects state tax collections. Since May, DOR has been working to determine the impacts of the CARESAct change. DOR believes 692 tax returns would be impacted should Rhode Island decouple and push off the retroactive tax change to future years. Four hundred eighty-one (481) of those returns come from individuals with more than $1 million in federal adjusted gross income. One hundred two (102) returns come from individuals with AGI of $250,000 to $1 million; and 109 returns have AGI of under $250,000. While a majority of the returns are tied to non-residents, 80% of the refunds would go to Rhode Island residents because out of state filers must pay their own state income tax first then pay the remaining amount owed (according to Rhode Island law) to the state of Rhode Island.
DOR believes that if the Governor’s amendment is not passed, then the State will experience an $18.8 million decrease in state revenue in FY2020 and $10.3 million in FY2021. If the amendment is passed, then the impact to State revenue would be $0 in FY2020, $0 in FY2021 and a reduction of $5.8 million a year from FY2022-FY2026.
One alternative discussed was the possibility of decoupling the excess loss provision in the current fiscal year instead of going retroactive to 2018 like the CARESAct. The Division of Taxation asked for some time to consider that possibility from a technical capability view.
If this proposed amendment would affect you, please let the Chamber know.
The following new bills have been filed:
House Bill No. 8130 Mattiello, Hawkins, Carson, Caldwell, Marszalkowski, AN ACT RELATING TO ALCOHOLIC BEVERAGES - RETAIL LICENSES (Authorizes a holder of a Class B license to sell alcoholic beverages with take-out food orders and would sunset on December 31, 2021.)
House Bill No. 8132 Williams, AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- PROMPT PAYMENT BY DEPARTMENT OF ADMINISTRATION--SUBCONTRACTOR PAYMENTS (Expedites payments on state contracts for subcontractors.)
House Bill No. 8136 Williams, AN ACT RELATING TO HOLIDAYS AND DAYS OF SPECIAL OBSERVANCE -- HOLIDAYS (Eliminates the state holiday of Victory Day and insert in place thereof the state holiday of Emancipation Day to be held on August 1.)
On behalf of Governor Gina Raimondo, we are pleased to offer PPE to our RI Small Businesses. This program will help supply procedural masks and disinfectant to area small businesses under 50 employees. The methodology of distribution is as follows:
• 5 cloth masks – 5/employee
• 1-gallon of disinfectant for businesses under 25 employees, and two, 1-gallon containers for businesses 25-50 employees.
We ask that you complete the below form for our records. Finally, please note that the company must complete the COVID Control Plan found at www.reopeningri.com confirming the business’ acknowledgement of their role in fighting the COVID-19 pandemic.
COVID Control Plan in English: https://www.reopeningri.com/resource_pdfs/COVID-19-Control-Template-Final-5.6.20.pdf
COVID Control Plan in Spanish: https://www.reopeningri.com/resource_pdfs/SPANISH-Business-Guidance-COVID-19-Control-Plan-Template-%20Spanish.pdf
Company Name _____________________________________________________________________
Point of Contact/Name, email and telephone number ______________________________________ ___________________________________________________________________________________
Business Type _______________________________________________________________________
Number of employees _______________
☐ Confirm your company has completed the “COVID-19” Control Plan found at reopeningri.com.
PLEASE CALL THE CHAMBER OFFICE FOR PICK UP TIMES 401-245-0750
At the State House
As was stated last week, it seems the budget will be the focus of attention for the next month and a half followed by voting on the budget in November.
This week, the House Finance Committee will meet Wednesday, 4:00 p.m. to take testimony surrounding the Governor’s request to amend Article 8 (Tax Article of the budget). The amendment seeks to decouple Rhode Island tax law from the federal excess loss deduction found in 26 U.S.C. section 461(1)(1)(B) in tax years 2018-2020. While disallowing a deduction in FY20 and FY21, the amendment would allow for 20% of the “disallowed” deduction to be taken each year in 2021-2025. If this change is not included in the FY2021 budget, the federal allowance is estimated to cost the state $18.78 million in FY20 and $10.3 million in FY21. The change would delay the financial hit to the state to $5.8 million in FY22 through FY26. The meeting will be live streamed at http://ritv.devosvideo.com/show?video=cd679c40105a . No in-person testimony will be taken at the hearing. If you wish to testify, you can send written testimony to firstname.lastname@example.org or request to be heard verbally by sending an email to the same address – include the bill number (Article 8 Amendment), your name, For/Against, phone number to be reached for providing testimony and affiliation (if any).
Carbon Pricing Study Update
Last Friday, two consultants provided an update on the carbon pricing study that is being undertaken as a result of legislation passed in 2019. Three agencies – RI Department of Environmental Management, RI Department of Transportation and RI Office of Energy Resources - are working together on this project. The consultants announced that they will be modeling six different scenarios under the study that take into account different carbon pricing points, the inclusion of varying level of incentives to the public and governments to use certain technologies, and varying levels of rebates (direct checks to individuals and/or businesses).
Program Incentives would include items like: purchase of electric vehicles, free RIPTA fares, electric RIPTA bus purchases, electric vehicle changing station installations, air and ground source heating pump installations in buildings, and bike infrastructure creation.
The modelling will include a low price of $9 per metric ton by 2030 (which would likely bring RI to 45% below 1990 emission levels), to a high price starting at $88 per metric ton (likely bring RI to 71% below 1990 by 2030). The high price point came from the federal American Opportunity Carbon Fee Act, a US legislative proposal touted by RI US Senator Sheldon Whitehouse. The lowest model would start at $9 per metric ton in 2030 and go to $25 per metric ton by 2050. The highest model (AOCFA) would start at $88 per metric ton in 2030 and go to $282 per metric ton in 2050.
What was very clear is that electric vehicles and electric heating of buildings are key to the models achieving the targets set in state statute, keeping in mind that the targets are “goals” and are not hard requirements enforceable by the courts.
The Consultants – Synapse and CADMUS – hope to have the final report completed November. They have yet to add economic and health issues to the models. They acknowledged that the modelling will assume a regional approach with neighboring states on board. Without the regional approach, it is difficult to predict the health effects because migration of GHG would still exist, and economic predictions become more difficult as businesses and individuals can move across borders.
At the State House
No hearings have been scheduled for this week. The staff at the State House is reportedly returning to the building this week.
Today is Primary Day in Rhode Island! If you have not voted yet, please take the time to visit your polling place today.
RI Mobility Innovation Working Group
The EC4 Committee established a working group to develop ideas of how to decarbonize the transportation sector in the State of Rhode Island. This group held a two-hour zoom meeting last week. Dan Sperling, from the Institute of Transportation Studies in California led the meeting with a presentation which can be summed up in his vision of “Heaven” and “Hell.” Heaven would have 100% electric vehicle use, a clean energy mix for transportation, public transit, shared intelligent vehicles and better livability for people. Hell would have increased congestion, electricity produced with coal, increased travel demand, a more car dependent society, and a decreased role for mass transit. Sperling reported that California is about to adopt legislation requiring Uber/Lyft vehicles to be electric only and to provide more pooling services.
The second presentation came from Dream Corp – Green For All, a Rhode Island organization that looks at demographic information and how it relates to green energy. According to Green For All, people of color have longer commute times and they tend to own no vehicles; and that dynamic is coupled with a lack of diversity and good jobs in the clean transportation workforce. The organization states that 8% of white families do not own a vehicle, 18% of families of color do not own a vehicle and 20% of Latino families do not own vehicles. Green For All believes that “Equality” is achieved when everyone gets something; “Equity” is achieved when everyone gets what they need. The organization is pushing Rhode Island to achieve Equity.
Terry Gray, Deputy Director for Environmental Protection (DEM), provided an update on TCI – the cap and trade program for gasoline, diesel and heating oil. Due to COVID-19, the timetable has changed slightly. The Governors of 12-13 states hope to sign a Memorandum of Understanding (MOU) late fall, followed by the adoption of a model rule for how the states would implement the program - including how to track compliance and run the auctions for credits. The participating states hope to have the program details worked out in 2021, and to hold the first auction in 2022. The TCI program is expected to raise millions of dollars from the fuel position holders (owners of fuel at the distribution point in each state), which in turn would raise the price of fuel and act as an incentive for individuals and businesses to switch to renewable fuel sources for transportation and heating purposes.
The meeting ended with the statement that “Rhode Island is positioned to be a leader in transportation transformation.”