E-fairness bill on deck in U.S. Senate this week

Over the past couple of years, several versions of e-fairness legislation have been considered by Congress. E-fairness legislation would eliminate the discrepancy between hometown brick and mortar businesses and out-of-state online retailers in collecting sales taxes at the point of purchase.

Currently on-line retailers with no physical presence in a state are not required to collect sales tax. Customers are responsible for paying the sales tax when the file their tax return. This outdated law puts our brick and mortar retailers at a significant competitive disadvantage.

A 2012 study showed South Carolina alone stands to lose $250 million in uncollected sales taxes. 

Some of the debate on Capitol Hill has been related to attaching this e-fairness legislation to another bill called the Permanent Internet Tax Fairness Act that would eliminate local governments’ ability to tax Internet services. Until now, any conversations on Capitol Hill regarding the PIFTA have been balanced with e-fairness legislation.

Last week, the U.S. House of Representatives dropped the PIFTA legislation into the customs reauthorization conference report. This addition to the customs reauthorization report raises concerns for two reasons. First, PIFTA has nothing to do with trade policy. Second, this proposed extension of the Internet Tax Freedom Act should not move forward without consideration of e-fairness legislation at the same time.

A vote in the U.S. Senate is expected on Tuesday, December 15. Contact Senator Graham's office and let him know South Carolina cities and towns need e-fairness legislation to level the playing field between hometown brick-and-mortar businesses and online out-of-state retailers. 

Specifically ask Senator Graham to support removing the PITFA provision from the customs reauthorization report and get e-fairness paired with the PIFTA debate.

Read more about the implications of this vote on local governments in this blog post from the Center for Budget and Policy Priorities.

Body camera guidelines released

By Tigerron Wells, Government Affairs Liaison

It’s always nice to hear when South Carolina is first at something good. Back in June, South Carolina became the first state in the nation to pass legislation requiring state and local law enforcement officers to wear body worn cameras while performing their duties.

The legislation, conceived and introduced by Senator Gerald Malloy and championed by Senator Marlon Kimpson, initially struggled to pass a Senate Judiciary subcommittee until the tragic death of motorist Walter Scott at the hands of a North Charleston policeman drew the nation’s attention and galvanized the legislature. 

This new law required the state’s Law Enforcement Training Council to create, within 180 days of the legislation’s effective date, guidelines for the use of body worn cameras. These guidelines would then be used by state and local law enforcement agencies to create their own body camera policies.

All agencies must develop guidelines regardless of when they plan to roll out body cameras. The mandate for agencies to supply officers with cameras doesn’t apply until the state provides full funding.

On December 7, 2015, the Training Council officially adopted its statewide guidelines. The guidelines address which officers must wear body cameras, when they must be worn and activated, when officers are restricted from recording, and when officers may deactivate their cameras.

The guidelines also make it clear that officers are not required to seek permission from the party being recorded, and lay out in greater detail the circumstances under which video created by the body camera may be released to the public or reviewed by the officer. Video created by the cameras is exempt from FOIA.

State and local law enforcement agencies now have until March 7, 2015, to submit their policies to the South Carolina Criminal Justice Academy for approval. All policies should be forwarded to James Fennel, general counsel of the South Carolina Criminal Justice Academy, at jfennell@sccja.sc.gov.

Agencies that have already rolled out body cameras must also institute policies based on these guidelines or make any necessary changes to existing policies so their policies are consistent with the new guidelines.

Once an agency’s body camera policy is approved by the Academy, the agency can apply to the Department of Public Safety’s Public Safety Coordinating Council for funds to cover the costs of the rollout. The fund was established by the General Assembly to cover the initial cost of equipment, replacement, maintenance and data storage related to the body cameras. It also covers reimbursement for agencies that have already started using cameras.

Agencies should take into consideration projected costs over at least several years when applying for funds since it is unlikely, without an increase in state funds allocated, that grantees will receive funding on an annual basis.  

Guidelines
Letter of explanation
Application

New FOIA handbook now online

For many years, the Municipal Association has worked closely with the SC Press Association on many issues related to the Freedom of Information Act because both organizations share an interest in good government and open government.

Most recently, the Associations worked together during the 2015 session on legislation regarding amending meeting agendas to ensure a process that allows the most sunshine as possible on public body meetings. After the bill became law, the two associations created a flowchart that illustrates the somewhat complex process governments must use to amend an agenda after the meeting has started.

The Press Association’s “Public Official’s Handbook for Freedom of Information Act Compliance” has just been updated to reflect this change in state law regarding agendas. It’s on page 12 in Section 30-4-80 of the handbook.

Also in the updated handbook is a new section about disclosure of autopsy records resulting from a 2014 SC Supreme Court ruling. It’s on page 8 in Section 30-4-40.

Many city halls keep copies of this handbook handy in council chambers, so this updated version should replace any previous versions. The handbook is linked from the Municipal Association’s publications inventory on its website. Hard copies are available from the Press Association.

New financial reporting requirements on economic development incentives

A room of close to 100 accountants, attorneys, economic development professionals, city and county staff, and state officials spent a day in Columbia this week learning about the many aspects of a recent change in how governments report economic development tax abatements on their financial statements.

The Government Accounting Standards Board recently released a new regulation, GASB 77, effective for reporting periods beginning after December 15, 2015. This new rule requires state and local governments to disclose on their financial statements any economic development incentives that would affect the entity’s ability to raise revenue.

According to GASB, the goal of this reporting requirement is to increase transparency of state and local governments to show how these incentives affect the entities’ overall fiscal and economic picture.

The morning session at the conference sponsored with the SC Economic Developers Association featured Edward Kluiters (left), an attorney with Haynsworth Sinkler Boyd P.A., and Larry Finney, CPA, an accountant with Green, Finney and Horton, discussing the technical aspects of implementing this new standard. Read their presentations to get detailed information about the financial and legal implications of GASB 77. (Finney additional handout)

A panel discussion composed of government officials focused on the policy and practical implications of GASB 77. One common theme among the panel members was the importance of communication related to several aspects of meeting this new reporting requirement. 

State Comptroller General Richard Eckstrom, who is responsible for preparing the state’s audited financial statements, said the new reporting standard is a positive in that it increases transparency. However, he acknowledged that it will result in additional administrative and reporting efforts. 

Eckstrom emphasized that when talking about this new standard, it’s important to talk not only about the cost but also about the public benefit the government entity expects to receive in exchange for the abatement. There are many more advantages than disadvantages from these incentives, and being able to explain that aspect of using tax abatements as an economic development tool is important.

Ann Harty, chief financial officer in Rock Hill, noted that on the accounting and auditing side, communication among all of the government entities involved with an abatement is important since the reporting entity must get the required information from the entity providing the tax abatement. She noted that Rock Hill is already collecting this information in preparation for this reporting.

Kevin Yokum, finance director in Florence County, explained communication between economic developers who are making the deals and financial staff who would be implementing the abatements is key.

Disclosure doesn’t have to include only the dollars that will be “lost” with the abatement, stressed Mark Farris, president and CEO of the Greenville Development Corporation. He said, it’s important to also include in the notes to the financial statements how the incentive would benefit the community in the long run.

The day concluded with a presentation by Mark Simmons (left), a site selection expert and partner with Parker Poe Consulting. He stressed that his firm’s clients are interested in doing “fair” deals regarding incentives. While incentives help reduce both up-front and recurring costs, most of his clients recognize that local governments need to show a “return on their investment” and, thus, justification for their incentive deals.

He noted that these disclosures do not seem to require any additional information that would not already be considered public information and subject to disclosure through FOIA. Plus the requirements are universal and prospects will face the same rules in every state.

Simmons’ bottom line was that GASB 77 likely won’t adversely affect site selection activities in the state. Plus, as Eckstrom pointed out, these new reporting requirements are the rule of the land, and, despite the somewhat sensitive nature of the reporting, these disclosures give governments the chance to show the benefits of good economic development deals that benefit all.

Another good resource on the economic development implications of GASB 77 is this briefing paper from the Urban Institute.