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CA – Preserving UUT Revenues / SB 344 (McGuire)

SB 344 provides a one-year sunset extension for the point-of-sale collection mechanism for Utility User Taxes imposed on prepaid wireless service.  Currently,  104 local agencies (101 cities and 3 counties) participate in the program set up under AB 1717 (2014).  SB 344 will preserve the revenues.   READ MORE HERE.

“2019 Spring Recess Edition” Legislative Proposals Impacting Local Agency Revenue

This comprehensive edition covers selected active proposals impacting local agency revenue. The report highlights those critical issues our internal experts continue to review, track and advocate on. Many of the measures will be considered in the coming weeks and must meet legislative deadlines in order to continue through the legislative process. Please contact your Client Services Executive for local impact or a member of the Government Relations Team. Read More Here

Support for SB 658 (Bradford) Retail Business Emblem – Cannabis Track and Trace

Summary: MuniServices / Avenu supports legislation that gives local jurisdictions access to the state’s track and trace system and better support compliant retail operators through the establishment of a statewide cannabis retail emblem program.  Please contact Brad Rowe,  Cannabis Compliance Practice Leader, at Brad.Rowe@avenuinsights.com for further detail. Read More Here

Bucking the Revenue Trend in Vestavia Hills, Alabama

By Jeff Downes, City Manager, Vestavia Hills, Alabama

 

At 19 miles long and one mile wide, Vestavia Hills has a unique geography. Its perch at the top of Shades Mountain lies within parts of both Shelby and Jefferson counties in Alabama, which support the city with some operational functions. At the same time, the unusual shape of the borders presents challenges to managing revenue because so many goods and services are available just outside city limits.

Not being a commercial or industrial hub, the city had limited ways to increase its consistently flat revenue. The sales tax offered promise if the city could encourage residents to make more purchases from local businesses, but it needed a strategy to address that and prevent a negative impact on city services. And this is not limited to Vestavia Hills: Slowing revenue growth and increasing expenditures are a national trend, as noted in this National League of Cities report: revenues grew only 1.25 percent in FY2017, while costs went up 2.16 percent.

The city tapped the private sector and brought in Avenu Insights & Analytics, which collected and analyzed data on demographics, NAICS codes, tax payment histories of businesses and audit trails. It also reviewed the different trade areas within the city, and how the city collected and managed its revenue.

The findings were instructive: there were many businesses that should have paid sales tax to Vestavia Hills but didn’t. Often it was an honest mistake because the business paid the tax to one of the neighboring jurisdictions and didn’t know of the city tax. Fixing this sales tax leakage would improve the revenue forecasts, and help the city fund programs to encourage patronage of local businesses.

Through Avenu, Vestavia Hills identified 2,900 previously unregistered businesses that now pay the appropriate taxes and fees. The city also recovered nearly $1.67 million in lost revenue including sales taxes. City businesses have been supportive of the program because uniform enforcement of compliance ensures fairness to all taxpayers.

Another discovery from this research was that Vestavia Hills was paying more than necessary to process revenue. It accepted a high number of paper checks, conducted face-to-face transactions in the office, and had older systems requiring frequent maintenance — all of which added to costs. For a benchmark, the IRS reports that it costs them approximately $0.41 to collect just $100 in taxes, plus overhead expenses.

With this in mind, Vestavia Hills used Avenu to put in place an outsourced approach to revenue management with more cost-effective options for payment. In the process the city landed on several takeaways from the experience:

  • Don’t shortcut the process. Get the data to inform decisions instead of making an intuitive choice and then trying to justify it
  • Create a structured communications plan. Verify tax liability with taxpayers and encourage them to comply in a professional manner. Provide a toll-free hotline and post FAQs on the website. Many want to do the right thing and pay what they owe
  • Set up online filing and payment systems. Explore having a system with forms customized to the taxing jurisdiction. There are no cost and low-cost options available. Cross-train employees on all aspects of revenue collection
  • Maintain local control. The state wants to collect taxes and remit them back to jurisdictions, but that delays payments and is fraught with many potential conflicts. Establish a central point for filing before the state does and maintain your city’s local authority.

Well-run cities need sustainable revenue, and Avenu’s tools and expertise enable us to identify and take advantage of new revenue opportunities. This has led to improved operations and sound economic development decisions.

California Policy Update / Legislative Proposals

This comprehensive report covers legislation introduced to-date during the 2019 California legislative session.  To-date over 2,628 measures have been introduced and many impact local revenues and administration. Issues include, sales tax exemptions, Wayfair implementation, property tax/redevelopment, recording fees, cannabis/hemp, gambling, utility users tax, business license, consumer privacy, housing funding, water, contracting and other issues.

Court Rules Against Short-term Rental Companies

By Jonathan Gerth, Esq., Avenu Vice President of Tax and Audit Services

Last week a federal appeals court found that jurisdictions can require companies such as AirBnB and Homeaway (and their local hosts) to comply with local regulations regarding tax collection, licensing and zoning.

This is not the first time the U.S. District Court for the Northern District of California, whose ruling was upheld by the 9th Circuit Court of Appeals, sent a blow to short-term rental providers.

In 2016 the court upheld a nearly identical regulation imposed by the City of San Francisco. The companies’ basis for the challenge was primarily grounded in defenses under the Federal Communication Decency Act (CDA), the same maneuver attempted in last week’s case before the Appellate Court challenging the Santa Monica ordinance. Ultimately, the court was not persuaded by their arguments in either instance, and all courts ruled in favor of the local governments.

Paving the way for this form of regulation could avoid some concerns that are always at issue when local taxing authorities enter into Voluntary Collection Agreements (VCAs) with online hosting platform providers. First, providers’ VCAs prohibit them from disclosing the personally identifiable information of hosts that would allow a jurisdiction to identify and impose local regulations on hosts who may not be in compliance with licensing laws, zoning ordinances or other local regulations. This is usually a sticking point that can cause negotiations to break down since the providers always claim that they are prohibited from disclosing such information pursuant to the agreements they enter into with their hosts.

Avenu will continue to monitor short-term rental regulation and inform our jurisdictional customers about changes that can affect their revenue.

Here is a further summary of the Court of Appeals ruling covered in Route Fifty.

Smart Government Is Simple Government for County Clerks/Recorders

Saish Gadamsetty has been building systems for county clerks and recorders for nearly two decades. Here he discusses the changing nature of these professional roles, how today’s technology supports the shift, and how this leads to improved citizen engagement.

How has the profession changed for clerks and recorders?

There is a much greater volume of records that must be processed and maintained by clerks and recorders. Vital records and property deeds are mainstays, but depending on the jurisdiction there can be passport applications, business licenses and minutes of official meetings. Many records need to be certified so they have the same legal effect of an original document, which also adds to the pressure in counties that are often underfunded and understaffed.

How can technology provide a solution?

Much of a clerk’s time is spent searching for, printing, certifying and mailing documents. It takes a lot of time, and it costs a lot in terms of salary, paper and postage. Technology can simplify the process and lower the cost starting with self-service document discovery.

When developing Avenu’s SuperSearch tool, a critical parameter was simplicity. I didn’t want users to have anxiety about learning a new technology, so it integrates with any records management system that a government uses. I also wanted it to work like any web-based search engine they are familiar with, applying filters to find documents by property address, notary’s name, grantor/grantee name and other indexed criteria.

The ease-of-use attribute is part of the whole experience with searches using text or image. Documents can be added to the shopping cart, paid for with PayPal, and certified digitally by the clerk or recorder. In a repository of 14.5 million documents, the discovery-to-delivery time is just over eight minutes – and county recorders and clerks don’t have to be involved unless there is a case that is escalated.

What are the outcomes that county leadership wants to see?

First, leaders want to know that the office of the recorder or clerk is meeting their constituents needs. If citizens get the great experience they expect, whether it’s face to face or from technology, then the recorders are delivering a key outcome.

Second, cost control is always an issue. If recorders can prove they have reduced expenses while maintaining or increasing services, leaders are satisfied. Coupled with that is whether the office has added value in some way, such as having property fraud alerts in place for when documents don’t have the correct information. Then the leadership will have the outcomes they can promote.

How Governments Can Address the Document Deluge

Ann Kirkbride is Avenu’s senior product manager for the Digital Processing Group. For much of her career she has served state and local government by introducing  records management technologies such as OCR data extraction and intelligent automation for auto-indexing/redaction. Here she discusses the state of records management for governments and solutions to keep serving citizens in the decades ahead. 

What has changed of late with document management?

Just in the last few years there’s been an explosion of services and products available online. Food delivery, personal transportation, entertainment – almost anything can be obtained with an app. This has increased everyone’s expectations about services in general, including government. Citizens want to easily pay a traffic ticket or taxes online, for example, but most importantly they want to find what they need quickly.

For governments, that means digitizing their records so they can be found and accessed online. Everything from land to tax to historic public records needs to be searchable and discoverable.

Is there a compelling need to accelerate digitization?

Digitization is not new, and many governments have made progress in scanning their records. But there are many that have not, and there is a danger in complacency. Recall the wildfires in California, the hurricanes of recent years and any other disaster: if paper, microfilm or even a single point of electronic storage is in the path, the records will be gone. The best practice is for jurisdictions to scan records back to sovereignty when the city or county was founded.

What’s the right balance between the public’s need for access and the need for preservation?

What has happened over time is that documents have deteriorated, either from oxidation, temperature changes, or because of general use by the public. Users come into a county recorder’s office to view them and eventually pages get torn and faded.

We always recommend scanning and indexing paper documents, microfilm, microfiche or other formats into electronic files that are accessible online and via mobile devices. Then there can be redundant storage and simpler access, and the original ones can remain secure for historic purposes. Some original documents are so fragile that we use “white-glove” treatment in restoring them before scanning.

How big is the priority for digitization for jurisdictions?

It is becoming more so because so much information is being created every year and there has to be a strategy for intake, processing, retention, accessibility, and especially storage. It costs a lot to keep paper in boxes, and governments see reducing that as a way to show value.

It’s also a priority for governments to take steps and preserve certain historical documents. In some cases we see materials that were “preserved” decades ago with tape, so we apply technology that restores the documents to new condition with legible content. In other cases we transcribe documents as a way to preserve them because they were written in cursive, which is no longer widely taught in schools. Without transcription, the meaning of those documents would be lost for future generations.

Economic News and Trends

Get an updated snapshot of national economic data for multiple industries that can support your municipal and county planning.  This report includes holiday 2018 spending trends and 2019 economic forecasts.

California Policy Update / Legislative Proposals

This report reflects selected legislation introduced to-date impact local revenues and administration.   Issues include, sales tax exemptions, Wayfair implementation,   property tax/ redevelopment,  recording fees,  cannabis / hemp,  gambling,  utility users tax,  business license,  consumer privacy,   housing funding, water and other issues.