Whether it’s tax reform, repeal-and-replace the Affordable Care Act, or awaiting the introduction and application of the proposed infrastructure plan, so much of what will happen in the 46 state legislatures that convene in 2018 depends on what happens in Washington, D.C., in December and January.
And so much of what happens in Washington, D.C., as well as in state capitals across the country during 2018 state legislative sessions, will depend on how elected officials want to be perceived by voters in next November’s elections.
For most states, the second year of biennium sessions are dedicated to fiscal and budgetary issues. Of the 46 legislatures that will meet in 2018 — Texas, South Dakota, Montana and Nevada legislatures do not convene in even years — 38 will begin sessions in January, six in February, Louisiana in March and North Carolina on April 23.
At least 14 states have been accepting pre-filed bills since 2017 sessions adjourned. The pre-filing period for 2018 legislative sessions in nine states kicked off in November and nine more will begin accepting prefiled bills in December. Hawaii’s pre-filing period begins in January.
Four states do not allow bill prefiling and not all states that accept prefiled bills post them for public review. Some wait until the first day the legislature meets to post them. In some states, prefiled bills are submitted to committees which post them at their discretion.
By sifting through early samples of prefiled bills — the biggest wave still yet to come — while gleaning through gubernatorial legislative agendas, priority wish lists from professional and municipal associations, and comments from lawmakers, these 11 issues will be among key topics state legislatures across the nation will be focused on in 2018.
1. HEALTH CARE
Congressional Uncertainty Compels States To Take Action
Maine became the 32nd state to expand access to Medicaid under the Affordable Care Act when 60 percent of voters approved a November ballot measure to extend Medicaid health benefits to all low-income adults in the state. The vote is regarded as a significant precursor to how healthcare will be a top priority for state legislatures nationwide in 2018, as well as a key campaign issue in state and mid-term Congressional elections come November.
State lawmakers will be forced to address Medicaid-related uncertainty because of the Trump Administration’s campaign mandate to repeal and replace the ACA, or Obamacare. In May, the House passed The American Health Care Act (AHCA), which would slash subsidies and repeal other policies that help make health coverage affordable. The Senate has rejected the AHCA because it would foster widespread premium hikes in 2018 and severe premium increases for older Americans by 2026, but it has not adopted its own repeal-and-replace legislation.
With straight-forward efforts to adopt an ACA replacement bill stalled, the Senate’s proposed tax reform bill could essentially dismantle Obamacare by eliminating its individual mandate — the requirement that most people “buy into” the health insurance market or face tax penalties.
As the successful Maine ballot initiative indicates, however, there is growing ground-level support for retaining the ACA or, at least, many of its significant components. As a result, state legislators nationwide will be confronted with responding to whatever Congress does by filling gaps in healthcare coverage to residents.
Under the ACA, between 2014 and 2016, Medicaid expansion was funded 100 percent — dollar for dollar — by the federal government. Beginning in 2017, states began to pick up some costs, but the federal match is still 90 percent through 2020. Maine was one of 19 “hold out” states that chose to opt out of the ACA following the 2012 Supreme Court ruling that mandatory participation was unconstitutional.
With the Trump Administration and Congress apparently determined to do away with the ACA and its generous match funding for expanding Medicaid, what Maine voters essentially approved was a mandate to state legislators to “opt into” Obamacare while it is still possible to get federal subsidies for doing so. Similar voter-initiated petition drives are underway in “red state” Idaho and Utah to get a Medicaid expansion question on their November 2018 ballots.
The political ramifications of the Maine vote and growing support for Medicaid expansion under the ACA are also becoming evident. In November’s smattering of local and state elections nationwide, voters cited healthcare as their primary concern. In Virginia, voters turned out in record numbers to support ACA-supporter Democrat Ralph Northam over Obamacare opponent Republican Ed Gillespie. According to exit polls, 78 percent of those who chose Northam said they did so because he supports expanding Medicaid.
In this fluid and uncertain scenario, here is a roundup of some 2018 healthcare priorities and prefiled bills being circulated in state capitals:
Alabama: Legislators fear if Congress cuts Children Health Insurance Program (CHIP) funding, the state would be faced with another fiscal emergency. More than 40 percent of Alabama children receive health insurance through CHIP. While it is unlikely that all these children would lose their insurance, it is possible the state could pass along more costs to families in higher premiums, copays and deductibles.
Arizona: A 2017 bill would pull Arizona out of the Children Health Insurance Program (CHIP), or KidsCare, if the federal government reduces its contribution. KidsCare covers children in families with incomes too high for Medicaid, up to $49,000 for a family of four. Congress has not as yet renewed the CHIP program so legislators may vote drop the program in 2018, leaving about 20,000 children without insurance.
California: SB 562, which calls for the state to establish single-payer healthcare, passed the Senate in June but was held in the House by Assembly Speaker Anthony Rendon, who said the bill lacks specifics, including a revenue source to fund it. Rendon has since set hearings to study universal healthcare coverage.
Iowa: Sen. Mark Chelgren (R-Ottumwa) will submit bill to tweak 2017 legislation that could leave up to 40,000 state residents without Medicaid coverage. A bipartisan group of legislators has called for a review of a law that went into effect on Nov. 1 that was included in a massive budget bill adopted quickly during the last week of 2017’s session. The primary source of angst is a “retroactive eligibility” process for Medicaid recipients, which provides payment to healthcare providers for services performed during the 90 days prior to when a patient is formally declared Medicaid-eligible. The bill eliminates that 90-day retroactive eligibility period, which was projected to save the state an estimated $9.7 million. However, an estimated 40,000 Iowans could be left without coverage during this 90-day span. Chelgren’s proposal would not restore the full 90-day “lookback” process, but includes a plan to ensure children through age 18 are exempt from the new law change.
Kansas: Lieutenant Gov. Jeff Coyler will succeed fellow Republican Sam Brownback when he is confirmed as U.S. Ambassador-At-Large for International Religious Freedom. That means proposals to expand KanCare, the state’s Medicaid program, will likely be enacted in 2018. Brownback vetoed KanCare expansion, approved 81-44 in the House and 25-14 in the Senate, in 2017. However, with polls confirming more than 75 percent of Kansas voters support expanding KanCare, it is politically astute for Coyler and other legislators seeking reelection in 2018 to do so. According to supporters, expanding KanCare would “return” $2.2 billion “of our own federal tax money” — $1.9 million a day — to Kansas to create jobs, protect hospitals and local communities and expand insurance coverage to more than 150,000 people.
Massachusetts: There is continuing concern over the financial health of community hospitals. A commission is looking at variations in prices charged by hospitals as part of Medicaid experiment with an accountable care payment model. Results are due by the end of 2017. Although 2 million Massachusetts residents are enrolled in Medicaid, a significant portion of the state’s population remains uninsured with rising premiums and access, including to oral care, issues for many.
Mississippi: Republican Gov. Phil Bryant will ask the 2018 legislature to move authority for determining eligibility for Medicaid benefits from the Division of Medicaid to the Department of Human Services (DHS), which already determines eligibility for other federal programs, such as Temporary Aid for Needy Families and the Food Stamp program. All but four states determine Medicaid eligibility through similar departments of human services or through departments of health. in December 2016, there were 711,197 Medicaid recipients in Mississippi with 56 percent being children.
Nebraska: Sen. Adam Morfeld (D-Lincoln) plans to propose a ballot measure asking state voters if they want to expand access to Medicaid. He proposed a similar bill in 2017 but legislators did not act. Morfeld said his new proposal, like 2017’s failed LB 441, would expand Medicaid coverage to about 90,000 more Nebraskans. An analysis by the state’s Legislative Fiscal Office concluded that LB 441 would have cost Nebraska more than $79 million over its first four years while bringing in $1.72 billion in federal funds. Nebraska’s GOP governors have staunchly opposed Medicaid expansion approved by legislators for five years straight.
North Carolina: Democrat Gov. Roy Cooper’s 77-page Medicaid reform plan will be submitted to legislators in 2018. In a nutshell, it seeks to expand the state Medicaid and N.C. Health Choice programs to more than 500,000 state residents by 2019 while generating about $400 million in savings in the first five years of implementation. In 2015, legislators approved shifting Medicaid from a fee-for-service structure to a managed-care structure. A key component of Cooper’s proposal is addressing requirements for managed care organizations (MCOs). The N.C. Department of Health and Human Services (DHHS) is soliciting proposals for potential prepaid health plans and plans to select up to five statewide groups, and up to 10 provider-led entities, by fall 2018.
Oregon: Voters will be presented with Measure 1 during a Jan. 23 special election that will ask them to affirm or reject taxes on health insurance and hospital services approved by legislators in 2017 to generate $550 million needed to stabilize the individual insurance market and balance the Oregon Health Plan, which is the state’s Medicaid budget. If voters reject the plan, the 2018 Legislature will be confronted with a $210 million hole in the state’s current two-year budget.
2. TAX REFORM
States Bracing For 2018 Impact In Wake Of Anticipated Late-2017 Adoption Of Federal Tax Bills
State legislatures are braced for the fallout from federal tax reform bills that call for eliminating state and local tax (SALT) deductions, lowering corporate tax rates, doing away with estate taxes and dissolving the tax-free status of municipal bonds. President Donald Trump has submitted a series of tax-reform proposals, and the House and Senate are pondering their own tax bills, which are expected to be adopted, in one form or another, as early as December.
The bottom line is no matter what versions of these bills are adopted, state and local governments will likely be dealing with potential hits to their revenue collection capacities, further aggravating budgets already stressed by the Trump Administration’s campaign to repeal-and-replace the Affordable Care Act that is manifesting in House and Senate bills that would leave states solely responsible for subsidizing Medicaid costs for millions of state residents.
* SALT: State and local taxes have been deductible since the inception of the federal income tax in 1913. Eliminating the SALT deduction would generate an estimated $1.3 trillion in revenue over 10 years for the federal government but, many fear, would put state and local governments in some of the nation’s most populous states in a difficult financial — and political — position.
By offsetting some of the burden of state taxes, the SALT deduction is an indirect federal subsidy to state and local governments. For example, a $100 increase in state income taxes costs a taxpayer in the 35-percent federal income tax bracket $65 — essentially, the $100 increase minus $35 saved in federal taxes. Many legislators and local government officials fear that if voters believe state taxes are too high without the SALT deduction, it could force them to make further cuts in already stressed budgets.
Eliminating the SALT deduction would affect taxpayers in high-income and high-tax states more than other states. Taxpayers in seven states — California, New York, New Jersey, Illinois, Texas, Pennsylvania and Florida — claim more than half of the national value of the deduction. These are also the six most populous states with New Jersey the 11th most populous.
* Lowering the corporate tax rate: Forty-four states levy a corporate income tax, but they do not generate a significant contribution to state budgets. While lowering the corporate tax rate would not directly affect states, a proposed territorial tax system under which U.S. multinational corporations would pay no U.S. taxes on their foreign income, has many state officials alarmed because they fear it would encourage companies to ship jobs, capital, and profits overseas.
* Eliminating the federal estate tax: Fourteen states and the District of Columbia have an estate tax, although Delaware and New Jersey will repeal their estate taxes in 2018. If the federal estate tax is repealed, estates will no longer be able claim a federal deduction for state estate taxes.
* Restructuring municipal bonds: Among local and state governments most valuable tools for financing improvements is the tax-exempt municipal bond. The Houser bill’s elimination of the tax-free status of the Build America Bonds (BABs) program could increase borrowing costs for state and local governments by as much as 35 percent without tax-exempt bonds, making it more expensive to build schools, repave roads or clean waterways. BABs were created under an economic stimulus law that allowed municipal issuers to sell for a limited time taxable debt with the federal government contributing 35 percent of interest costs. Between April 2009 and the end of 2010, $181.5 billion of BABs were sold in 2,351 issues, according to the Congressional Budget Office., Congress could protect the subsidy if it exempts the deficit it generates — the CBO estimates it would be $1.5 trillion over the next 10 years — from sequestration. Without the subsidy, the subsequent increase in the federal standard deduction could cause immediate revenue problems for eight states — Colorado, Idaho, Minnesota, Missouri, North Dakota, South Carolina, Utah, Vermont — because they tie their deduction standard to the federal standard, meaning a federal increase would automatically trigger an increase the state deduction.
Revenue Collections Fell Below Projections In 33 States in 2017
Forty-six states begin their fiscal year (FY) on July 1. New York’s fiscal year begins on April 1, Texas begins its fiscal year on Sept. 1 and Alabama and Michigan begin on Oct. 1. In November, Connecticut became the last state to formally adopt a FY 2018 budget, more than four months after its fiscal year began.
Even for states that adopt biennium budgets, federal tax reform proposals and efforts to repeal-and-replace the Affordable Care Act could present dramatic challenges for state lawmakers in FY 2019. The fallout from these Congressional actions could force revisions of existing budgets and difficult choices for legislators in 2018 sessions.
The National Association of State Budget Officers (NASBC) calculates that revenue collections fell below forecasts in 33 states in fiscal 2017 and projects state general-fund revenues will grow by 3.1 percent in fiscal year 2018. The NASBC estimates that general-fund spending on Medicaid will increase by 4.3 percent — a percentage that will grow considerably if the ACA is replaced with current proposals in the House.
Among states that will confront pressing budget issues in 2018:
Connecticut: In November, legislators finally adopted a $41.3-billion state budget for 2018 knowing one of their first orders of business in 2018 will be dealing with a projected $178-million shortfall in revenues. This will be the third consecutive year of below-expected tax collections, a revenue gap that is aggravated by a $5 billion deficit that delayed adopting a 2018 budget for more than four months into the 2018 fiscal year.
Arizona: State legislators in 2018 will contend with an anticipated $104 million budget shortfall as revenue reductions from corporate tax cuts exceed increases in sales tax, insurance premiums and personal income tax collections. Phased-in corporate tax cuts have cut $600 million in yearly revenue since they were adopted in 2014. Some Republican lawmakers say they may revisit those cuts in 2018.
Alabama: A federal court case alleging that Alabama underfunds its prisons could cost the state another $20 to $30 million a year. To actually fully staff the prison with the proper number of guards could cost the state another $80 to $100 million a year.
Minnesota: The state is facing a potential $66 million revenue shortfall in 2018 because a decrease in sales and individual taxes and other cash sources. It is uncertain how legislators will respond when they meet in February with so many federal tax and healthcare reforms still undetermined. the state’s Department of Human Services has been warned to brace for cuts.
Nebraska: Low commodity prices are partially to blame for Nebraska’s projected $195 million revenue shortfall in 2018. In 2017, state lawmakers debated lowering Nebraska’s top personal and corporate income tax brackets, adjusting the way agricultural land is valued for tax purposes, capping statewide property tax growth and expanding the earned income tax credit for low-income residents. The Nebraska Chamber of Commerce and Industry will advocate for income tax cuts, but a spokesman said they’re more likely to score victories on job training legislation.
4. THE OPIOID CRISIS
States Will Continue To Focus On Opioid-Related Regulation In 2018
According to CQ State Track, state legislators have adopted more than 1,300 bills related to opioid regulation and overdose prevention since 2015. Nearly 200 of about 700 proposed bills were adopted in 2017.
State lawmakers are expected to see more bills in 2018 related to Prescription Drug Monitoring Programs (PDMP), Naloxone — a “rescue drug” that reverses overdoses — guidelines to prescribing limits, training, education, pain clinic regulations, non-opioid directives for patients, taxes on opioids, abuse-deterrent formulations of opioids, and drug “take-back” programs or days to collect unused pills.
Among opioid-related trends surfacing in some prefiled bills:
Colorado: Lawmakers have prefiled at least six bills addressing opioid addiction treatment and prevention that have been cleared by a bipartisan Opioid and Other Substance Use Disorders Interim Study Committee. One would create programs to train health professionals, law enforcement officers, and others methods for safe prescribing and opioid prevention. Another would limit opioid prescriptions to seven-day supplies and require prescribers to check-in with the state’s PDMP before refilling prescriptions. Another would create a pilot project for a supervised injection site in Denver. One would expand a Colorado Health Service Corps program that helps reimburse people working as medical professionals for schooling in substance abuse. Another would tighten regulations on state prior-authorization standards to ensure those abusing opioids don’t relapse while awaiting treatment. Opioid overdose deaths fell in 2016 to their lowest levels in Colorado in six years, but heroin overdoses rose by 23 percent from the year before. Heroin overdoses have jumped by more than 750 percent in Colorado over the past decade-plus.
Indiana: Republican Gov. Eric Holcomb has told state lawmakers to adopt legislation that lifts a cap on the number of drug rehab facilities that offer medication-based treatments to help addicts cope with withdrawal. There are 13 such clinics in state, but Holcomb wants to number expanded so that no one would face more than an hour’s drive. Holcomb also wants a bill that authorizes county coroners to conduct more in-depth testing to determine the specific causes of overdose deaths as way to “capture the data” necessary to unlock additional federal funding.
Maine: There are at least five carry-over bills from the 2017 session that could be presented in 2018. They are: LD 105, which would create an office within the Department of Health and Human Services to coordinate efforts in the State to combat addiction to opiates; LD 411, which would add addiction to, or dependency on, opiates or prescription drugs to the list of qualifying conditions for medical marijuana; LD 453, which would require the state’s Superintendent of Insurance to convene interested parties to evaluate commercial insurance coverage for addiction treatment and recovery alternative therapies and report findings and recommendations to the Joint Standing Committee on Insurance and Financial Services in 2018; LD 565, which is a concept draft that addresses issues related to the opiate addiction crisis; and LD 605, which would fund primary care patient-centered medical homes and behavioral health providers that provide evidence-based, integrated medication-assisted treatment to uninsured patients with opioid use disorder to cover costs of intensive, intermediate and long-term treatment.
Michigan: The Michigan State Medical Society (MSMS) is opposing two proposed bills that could be adopted during the still-ongoing 2017 Legislative session or in 2018. SB 66 would require a physician conduct a Michigan Automated Prescription System (MAPS) query prior to the prescribing of any controlled substance. MSMS maintains this requirement is overly broad and would create hardships for prescribers. SB 274 would place limits on the duration of prescriptions physicians can prescribe for acute pain. MSMS says the bill could potentially reduce excess supply of opioids in medicine cabinets but is likely to create unintended consequences for patients because there is no possible exception for a doctor prescribing medications to a patient even if the drug were lost or stolen.
Alabama: Gov. Kay Ivey has created the Alabama Opioid Overdose and Addiction Council to address opioid abuse. According to the Centers for Disease Control and Prevention, of 736 reported drug overdose deaths in 2015 in Alabama, 282 were caused by opioids. The CDC reports Alabama doctors in 2012 wrote 1.43 prescriptions for opioid pain relievers per person — a rate higher than any other state.
Delaware: The Delaware Department of Justice in November retained a law firm to explore the possibility of litigation against companies deemed to have contributed to the state’s opioid epidemic. The state has hired Fields, a Washington, D.C.-based firm that is suing opioid manufacturers and distributors on behalf of the Cherokee Nation. According to state officials, Delaware’s overall overdose deaths spiked by 38 percent from 228 in 2015 — then the 12th highest in the nation — to 308 in 2016. Many of those deaths, officials say, are linked to increasing use of fentanyl, a synthetic opioid.
Maine: State lawmakers will consider at least five opioid bills carried over from the 2017 session. They include: LD 105, which would establish an office within the state’s Department of Health and Human Services, to coordinate efforts to combat addiction to opiates; LD 411, which would add addiction to, or dependency on, opiates or prescription drugs to the list of qualifying conditions for medical marijuana; LD 453, which would require the state’s Superintendent of Insurance to evaluate insurance coverage for addiction treatment and recovery alternative therapies; LD 565, which would “conceptually” address issues related to opiate addiction; LD 605, which would provide funding for primary care patient-centered medical homes and behavioral health providers that provide evidence-based, integrated medication-assisted treatment to uninsured patients with opioid use disorder.
Florida: Republican Gov. Rick Scott in September announced he will propose $50 million in initiatives in 2018 to combat opioid abuse.
Scott’s proposed legislation will include: Placing a three-day limit on prescribed opioids, unless strict conditions are met for a seven-day supply; requiring all healthcare professionals that prescribe or dispense medication to participate in the Florida Prescription Drug Monitoring Program, a statewide database that monitors controlled substance prescriptions; and additional reforms to fight unlicensed pain management clinics, require continuing education courses on responsibly prescribing opioids, and create new opportunities for federal grant funding.
Georgia: Sen. Renee Unterman (R-Buford), the Senate’s Health and Human Services Committee chairwoman, said legislators will be presented with an array of proposals to address the state’s opioid crisis in 2018. According to state officials, 1,426 Georgia residents died from drug overdoses in 2016. Georgia had the largest year-over-year percentage increases for overdose-related in-patient services from 2009 to 2014.
Hawaii: In September, Hawaii joined a coalition of 41 states seeking documents and information from opioid manufacturers and distributors of prescription opioids to determine if they engaged in unlawful practices in the marketing, sale, and distribution of opioids. According to the Centers for Disease Control and Prevention, opioids were involved in 33,091 deaths in 2015, including 169 in Hawaii.
Idaho: The Idaho Office of Drug Policy and the Idaho Department of Health and Welfare’s Division of Public Health convened a strategic planning team in April that is expected to present state legislators with proposals to consider in 2018.
Illinois: Gov. Bruce Rauner in September unveiled a 53-page “opioid action plan” that focuses on prevention, treatment and rapid response to an epidemic of heroin and prescription-drug abuse that aims to reduce overdose-related deaths in Illinois by one-third in three years. Opioid overdoses claimed the lives of nearly 1,900 state residents in 2016, is on pace to kill more than 2,700 in 2020, state officials say. Rauner’s plan includes the creation of an Opioid Prevention and Intervention Task Force, which will carry out the plan.
Five States Vying To Become First To Legalize Recreational Marijuana By Legislative Act
There is a good chance that sometime in 2018, recreational marijuana will be legalized by state lawmakers through legislative action rather than via a voter-initiated ballot measure. The only question is which state will be the first to do so. Among the candidates: Vermont, Rhode Island, New Jersey, Delaware or even Illinois.
Technically, Vermont achieved that distinction in 2017 when the state legislature passed a legalization measure that was vetoed by Democratic Gov. Phil Scott because he wanted to further study the effects recreational marijuana use could have on public safety and state tax revenue. Scott accompanied his veto by vowing he would sign a tweaked bill into law if presented one in 2018 and, apparently, state legislators are amenable to doing just that.
At least two states — Michigan and North Dakota — are expected to present voters with ballot measures to legalize marijuana in November 2018. There is an outside chance Ohio voters could also see a legalization ballot proposal. Kentucky legislators will consider legalizing medicinal marijuana while Utah voters are expected to see a November ballot measure seeking to make medicinal marijuana available.
Right now, recreational marijuana is legal in Colorado, Washington, California, Nevada, Maine, Massachusetts, Alaska, Oregon and the District of Columbia while 29 states have legalized medicinal marijuana.
Below is a round-up of some proposed legislative actions in some state legislatures expected in 2018:
Delaware: HB 110, which would regulate and tax marijuana in a similar way to alcohol, was green-lighted by the legislature’s Revenue and Finance Committee and will be considered by lawmakers in 2018. If adopted, it old make Delaware the first state in the country to legalize recreational marijuana without a ballot initiative. A 2016 poll conducted by the University of Delaware found that 61 percent of state residents support legalization.
New Jersey: With Democrat Phil Murphy’s victory in New Jersey’s gubernatorial election, marijuana legalization could happen very quickly — perhaps by April 2018. Murphy made cannabis legalization a key part of his campaign platform. Sen. Nicholas Scutari has proposed a 2017 bill that can carry-over to 2018 to legalize cannabis. If passed, New Jersey would be the ninth state to legalize the recreational use of marijuana, and the first to do so through legislation instead of a ballot initiative. Even if a New Jersey marijuana legalization bill is signed into law by April 2018, it would still take months of not a year for it to go into effect.
Kentucky: Rep. John Sims, Jr. (D-Fleming County) has prefiled a bill to legalize medical marijuana in 2018. Meanwhile, Kentucky Secretary of State Alison Lundergan Grimes wants to create a task force to study how to regulate legalized medical marijuana. The task force would include doctors, nurses, medical administrators, members of law enforcement, state agencies and veterans.
Rhode Island: A six-person Cannabis Advisory Board established during the 2017 legislative session to study how to create a recreational marijuana market will make its recommendations by January 2018. Proposals to make Rhode Island the first state to legalize marijuana have stalled in committee the last two years. Regardless of the legislative board’s findings, Sen. Joshua Miller (D-Cranston) and Rep. Scott Slater (D-Providence) will propose 2018 bills seeking to legalize possession of marijuana because marijuana will be legally retailed in neighboring Massachusetts beginning in July 2018.
New Hampshire: A House committee has voted against legalizing marijuana but a special commission will continue to explore the idea, weighing various aspects of legalization through December 2018, when it presents a final report. The state decriminalized marijuana possession up to three quarters of an ounce in September 2017. A University of New Hampshire poll found 68 percent of residents support legalizing marijuana for recreational use.
Maine: There are at least 11 marijuana-related bills carried over from the 2017 session that could be presented in 2018. They include: LD 238: An Act To Amend the Maine Medical Use of Marijuana Act, which proposes to amend the Maine Medical Use of Marijuana Act; LD 627, which would establish a program in the state Department of Health and Human Service, and Center for Disease Control and Prevention, to monitor the effect on the state from legalization and regulation of retail marijuana; LD 667, which would repeal the Marijuana Legalization Act voters approved a November 2018 referendum to repeal the Maine Marijuana Legalization Initiative approved by voters in a November 2016 ballot initiative; LD 734, would extend the time period, from 14 business days to 60 business days, within which a municipality is required to either approve or deny an application for a marijuana business; LD 762 proposes to dedicate a percentage of the funds derived from the Medical Use of Marijuana Fund to a medical marijuana research fund; LD 806, which would allow qualified patients to deduct from income the costs of medical marijuana; LD 855 would prohibit the manufacture, distribution and sale of edible retail marijuana products in packaging or shapes that appeal to children; LD 938 would require registered dispensaries and registered caregivers in the Maine medical use of marijuana program comply with the testing requirements that apply to adult recreational sales of marijuana.
Massachusetts: State voters agreed to make recreational marijuana legal in November 2016 but in late December, the Legislature rushed a bill to Gov. Baker’s desk pushing back retail marijuana implementation dates by six months. Nevertheless, Massachusetts will begin selling recreational pot in July 2018. Legislators are expected to finally get around to regulating tax rates, startup costs, edible marijuana products, marketing and advertising tactics in 2018.
Indiana: Republican Gov. Eric Holcomb shot down a proposal to legalize medical marijuana that was backed by Republican Rep. Jim Lucas and some military veterans. “I’m trying to get drugs off the street, not add more,” Holcomb said.
North Dakota: Voters in 2018 could decide if North Dakota becomes the first state in the Midwest to legalize recreational marijuana if supporters gather enough signatures to get in on November’s ballot. Initiative supporters say they are also proposing a Recreational Marijuana/Expungement Bill that, they say, has the support of 30 legislators. In November 2016, North Dakota voters approved a medicinal marijuana ballot measure by a near two-thirds vote.
Virginia: The Virginia Municipal League supports changing state law to make anyone in possession of no more than a half-ounce of marijuana be subject to a civil rather than a criminal penalty and supports medical use of marijuana in certain instances.
Illinois: Carryover 2017 bills, SB 316 and HB 2353, are expected to be presented to legislators in 2018. Both would allow adults of legal drinking age in the state to possess, cultivate and purchase limited amounts of pot. If these bills pass, marijuana sales could add to state coffers an estimated $566 million in excise tax revenue per year and as much as $133 million in sales tax revenue annually.
Michigan: An initiative spearheaded by The Coalition To Regulate Marijuana Like Alcohol is expected to be presented to voters in a state ballot in November 2018. The proposal is to legalize recreational marijuana use and levy a 10 percent excise tax for retail sales, as well as a 6 percent sales tax, to generate an estimated $100 million annually with 35 percent going to K-12 education, 35 percent to roads, 15 percent to communities that allow marijuana businesses and 15 percent to counties where marijuana business are located. The coalition hopes to raise $8 million for the upcoming campaign. Voters in Michigan legalized medical marijuana for a range of conditions in 2008, also through a ballot initiative.
Ohio: There could be another attempt to legalize recreational use as early as 2018 but more likely no sooner than 2019. A 2015 ballot measure to legalize recreational marijuana faltered not necessarily because of an aversion to legalizing marijuana but from concerns about that the ballot initiative would have created an oligopoly, limiting pot profits to just a handful of companies sponsoring the legislation. Even the Marijuana Policy Project did not endorse the bill.
Connecticut: The state’s medical marijuana program, in effect since June 2012, was strengthened in 2016 and Democratic lawmakers included a plan to tax and regulate marijuana in their 2017 budget proposal. Virtually every other New England state has already approving recreational marijuana or considering doing so.
Utah: The Utah Patients Coalition is gathering the 113,143 signatures required to get a medical marijuana initiative before voters in November 2018. The coalition must meet the standard before state legislators convene in January.
6. EDUCATION FUNDING
With Tax Reform, Healthcare Rattling Budgets, Finding Money For Education Will Be A 2018 Challenge
States are struggling to balance budgets even without the additional burdens lawmakers may be presented with once federal tax reform bills are adopted and, if Congressional Republicans and the Trump Administration have their way, the Affordable Care Act is repealed and replaced.
Among states’ biggest expenses and, therefore, most likely targets for budget-cutting are their school systems, which many legislatures already have difficulty adequately funding. Below are just a smattering of prefiled bills and legislative priorities related to education funding being discussed in some state capitals:
Arizona: There is momentum to repeal SB 1431, a 2017 bill that expanded the state’s empowerment scholarship account (ESA) program, which makes all K-12 students eligible to receive vouchers equaling 90 percent of the money the state pays for a student to attend public school. That money can be used to pay tuition at a private or religious school or for home-schooling. A voter-initiated veto referendum has garnered enough votes to be presented on a statewide ballot in November. Repealing SB 1431, which was only passed by one vote, would take the measure off the ballot and allow lawmakers to pass another bill with similar expansions.
Idaho: Legislators are expected to be presented with proposed bills changing the way Idaho finances its schools during the 2018 session. Districts’ allocations are determined by attendance — how many students attend school on an average day — but the Legislature’s Public Schools Funding Formula Committee has recommended an enrollment-based model that would finance district budgets on the number of kids who use school services, not the amount of time they spend on school grounds. Idaho education officials estimate this financing system would cost the state $50 to $60 million more than the current system.
Kansas: In the wake of the Kansas Supreme Court’s ruling that the state’s K-12 public school funding system is unconstitutional because poorer school districts do not receive the same funding as those in more affluent areas, legislators in several key committees have agreed to meet through the end of 2017 to address the issue, if possible, before the 2018 legislature convenes.
Maryland: School funding is expected to be discussed during the 2018 with one school district, the Washington County Board of Education, supporting a proposal to base funding models on the consumer price index rather than by attendance.
Nebraska: Educate Nebraska and Americans for Prosperity will lobby legislators for several school choice bills in 2018: LB 608 is a voucher bill that would allow any student zoned to a failing school to take a portion of their per pupil funding to an accredited, private school of their family’s choice; LB 295 is a tax-credit scholarship bill that would provide low- and middle-income families access to scholarships through a state-approved scholarship organization.
Washington: Legislators are faced with a September 2018 deadline to fully fund the K-12 school system after the Washington State Supreme Court in a 46-page order refused to accept a “part compliance for full compliance” plan to meet conditions imposed in its 2012 McCleary K-12 school-funding ruling that found Washington was violating the constitutional rights of its 1 million school children by failing to amply fund a basic education for them. In 2017, legislators added $7 billion over the next four years to state’s education budget by raising the state property tax, but would not meet conditions of the ruling by the 2018 deadline. The state asked for a waiver but justices refused, noting legislators had years to address the shortfall but didn’t take action until 2017. The court will continue to impose $100,000-per-day fines. The state must report back to the court in April 2018. One way lawmakers may address the shortfall is by withdrawing about $1 billion in the state’s cash reserves to meet the September 2018 deadline.
Wyoming: Even after cutting $55 million from school funding in 2017, legislators will be faced with a projected $430 million shortfall in the state’s education budget in 2018 because of reduced production and prices for coal, oil and natural gas. The shortfall is about $250 million in annual operations, plus about $170 million for school facilities. The Legislature’s School Finance “Recalibration” Committee has been meeting through the summer to weigh options. None look good. Speaker of the House Rep. Steve Harshman (R-Casper) said closing small schools in the far-flung state would “shut down small-town Wyoming.”
7. PENSION PLANS
Keeping Promises To Retiring Workers While Recruiting Replacements Proving A Challenge
Legislators in many states are being confronted with funding pension plans guaranteed to state workers that are running out of money while also trying to offer competitive salaries and benefits to ensure state agencies have qualified employees. Among initiatives and bills that have been filled for 2018:
Alabama: Rep. Tommy Hanes (R-Scottsboro) has prefiled a bill seeking to bring back the Deferred Retirement Option Plan (DROP) program that allowed state workers and teachers to collect retirement benefits while still employed by the state. The Republican-controlled majority ended the benefit as a cost-saving measure. Sen. Shay Shelnutti (R-Trussville) is carrying the Senate version of the effort to revive the DROP program for Tier I and II employees.
Colorado: Gov. John Hickenlooper’s proposed $28.7 billion 2018-19 budget includes requiring state and school-system workers to contribute another 2 percent of their salaries to help close a $32 billion unfunded liability in the Public Employees’ Retirement Association (PERA). Republican leaders say the state should considered moving from a defined-benefit plan to a defined-contribution system, a “401K-style” plan, as other states have done.
Kentucky: The Kentucky League of Cities Board of Directors has passed a resolution asking legislators to separate the County Employees Retirement System (CERS) from the Kentucky Retirement Systems (KRS). The League of Cities resolution is in accordance with a request by the Kentucky Chamber of Commerce to the state to reform its pension system as the “No. 1 threat” to the state’s stability. Legislators are looking to reform the state’s pension systems during a special session in late 2017 in which Gov. Matt Bevin and lawmakers were expected to release a plan for pension reform before the General Assembly tackles the budget in its 2018 session.
South Carolina: The state will not be able to fill more than 6,000 vacant positions or replace nearly 10,500 workers expected to retire within the next five years unless it offers better salaries and retirement benefits. State agencies — excluding local government, schools and higher education — employ 37,642 full-time workers. Of those, 10,441 are at or within five years of retirement age. Right now, 6,536 full-time jobs in state government are vacant. While lawmakers recognize the state’s need to offer competitive salaries and benefits, finding the money to do so has been difficult. In 2017, legislators adopted legislation that requires more than 190,000 state workers to pay more into the state retirement system because the existing pension system was underfunded by about $20 billion. Most public-sector workers now give 9 percent of their paychecks to the retirement system.
Wave Of Gun-Control Bills Has Not Materialized — Yet
More than 1,600 firearms-related bills were filed in state legislatures across the nation in 2017. Following mass-shootings in Las Vegas, Texas and California, a wave of gun-control legislation is expected to be introduced in 2018. However, most prefiled bills generally seek to expand gun-owners’ rights. Below is a smattering of early submissions:
Alabama: Sen. Gerald Allen (R-Tuscaloosa) has introduced SB 3, which would make Alabama a “Constitutional Carry” state. A similar bill proposed by Allen in 2017 passed the Senate but never made it onto the floor of the House.
Florida: Sen. Greg Steube (R-Sarasota) has prefiled SB 148, which would reduce penalties for people who have concealed-weapons licenses and openly carry guns. The bill would retain the second-degree misdemeanor penalty for people who do not have concealed-weapons licenses and openly carry guns but would reduce penalties for those with concealed carry licenses and openly carry. Another prefiled bill, SB 274, would allow people with concealed-weapons licenses to carry guns while at private schools on the grounds of religious institutions.
Indiana: Sen. Jim Lucas (R-Seymour) plans to file a bill to remove a requirement for gun owners to receive a concealed carry permit.
Iowa: Rep. Art Staed (D-Cedar Rapids) said he will propose a bill to ban bump stocks if federal legislation to do so remains stalled. Rep. Matt Windschitl (R-Missouri Valley), whose family owns a gun shop and sponsored a 2016 bill to legalize gun suppressors, anticipates having conversations about outlawing bump stocks in 2018 and wouldn’t immediately rule out supporting such a ban. The proposal, however, will be opposed by the Iowa Firearms Coalition, which issued a succinct action alert. “We do not and will not support any gun control legislation,” it reads. Iowa Gun Owners Executive Director Aaron Dorr wrote in an Oct. 10 blog post that a potential bump stock ban will be used “as kind of a toe in the door of the gun control push in D.C.”
South Carolina: Rep. Alan Clemmons (R-Myrtle Beach) has prefiled a bill to create a concealed weapons permit that removes all liability from churches or religious sanctuaries. It is legal in South Carolina for a person to bring a gun to church, if given permission by church officials. Clemmons’ prefiled bill would simply say if a permit holder is allowed to bring the firearm, then the church, synagogue or other religious organization is not civilly or criminally liable.
States Increasingly Likely To Pass Gas Sales Tax Hikes To Help Pay For Road Projects
The fact that seven states — Florida, Georgia, Indiana, Michigan, Nebraska, North Carolina and Pennsylvania — increased their gas sales taxes in 2017 to help fund road maintenance and transportation improvement initiatives is an indication that infrastructure spending will be a continual priority in 2018 and beyond for state legislators nationwide.
But with President Donald Trump’s $1 trillion infrastructure plan, which leverages private and public capital to upgrade roads, bridges, airports, tunnels and other infrastructure nationwide, stalled, many state legislatures are in a wait-and-see mode, delaying committed to large projects until they determine the best way to merge state and federal revenues to get the most bang for the buck.
Below are several prefiled bills and proposed initiatives that will be discussed in 2018 in state capitals:
Alabama: The Business Council of Alabama has been lobbying the last two years for a gas tax increase to pay for a billion-dollar bond issue for road projects. There could be an effort to resurrect some form of that proposal; but passing any tax increase in a Republican-controlled legislature during an election year seems unlikely.
Colorado: The Colorado Transportation Commission will present a list of priority projects to begin work on in 2018. An estimated $380 million in highway expansions and $120 million in deferred maintenance have already been identified. In 2017, legislators approved $1.9 billion to go to transportation as part of Senate Bill 267. However, some Republican lawmakers are questioning why Gov. John Hickenlooper did not include any money for transportation improvements in his $11.5 billion general fund 2018-19 budget.
Florida: Prefiled SB 572 would oversee aspects of high-speed rail.
Hawaii: Affordable housing will again be a topic for legislators in 2018. Among requests will be Kauai County’s request for $1.5 million in state funding for the pre-development and infrastructure costs related to a proposed 1.4-acre affordable housing project.
Washington DC/Maryland/Virginia: Metro, which administers mass transit and transportation for the District of Columbia as well as in suburban Virginia and Maryland, needs $500 million per year in dedicated funding to take out bonds to pay for needed capital improvements along “The Corridor Cities Transitway.” While Washington, D.C., has proposed an increase in its sales tax to provide dedicated funding for Metro, Maryland Gov. Larry Hogan and Virginia Gov. Terry McAuliffe have not agreed to match that commitment through a dedicated sales tax. In September, Hogan proposed providing Metro with an extra $500 million from the state’s transportation trust fund over four years if Virginia, D.C. and the federal government do the same.
Minnesota: The 2018 legislative session is Minnesota’s bonding year so large infrastructure projects specific to a particular community are more likely to be approved. Among them is Hennepin County’s proposal for a $26.2 million regional medical examiner’s lab at the Hennepin County Medical Center.
Missouri: Missouri’s 21st Century Transportation System task force will submit its recommendations to the Legislature by Jan. 1. One expected recommendation is to get a gasoline tax increase on the 2018 statewide ballot. Missouri ranks 47th in the nation in revenue per mile. The state’s fuel tax hasn’t been increased since 1996. The Missouri Department of Transportation (MoDOT) says Missouri has the seventh-largest state highway system, with 33,884 miles of roadway.
Mississippi: Second-term Republican Gov. Phil Bryant wants the 2018 Legislature to place two proposals on a November ballot for state voters to decide: Whether to raise taxes, presumably on gasoline, to raise revenue for transportation needs. Sen. Dean Kirby (R-Pearl) said he will file a 2018 bill to authorize Bryant’s ballot measure.
Iowa: Lt. Gov. Kim Reynolds, who will succeed Gov. Terry Branstad when he assumes his post as U.S. ambassador to China, said establishing a reliable and dedicated source of funding for water-quality infrastructure “remains of utmost importance” and something she will push to address in 2018. A proposed Senate plan would appropriate $744 million for specific purposes including agriculture infrastructure program, demonstration projects and research. A House plan calls for $513 million, but includes provisions to allow the Iowa Finance Authority sell bonds to finance more.
Vermont: Sen. Christopher Bray (D-Addison) will submit a 2018 bill that would assess every property parcel in the state $1 a month to raise $4.5 million a year for water-quality projects.
Will Alabama And Mississippi Finally OK lotteries? Don’t Bet On It
Casino development, gaming expansion, online gaming — or iGaming — daily fantasy sports and lottery reform were all hot topics in 2016 and 2017. Coming 2018 legislative sessions should prove no different. Among early prefiled bills and initiatives:
Alabama: Gambling expansion appears to be another dead-on-arrival proposal in 2018. A paper lottery could have passed during Gov. Robert Bentley’s special session on gaming but Democrats did not support it. Republicans won’t pass a lottery bill that would legalize electronic bingo and Democrats won’t pass one that doesn’t benefit existing bingo parlors to benefit. A sizable portion of legislators are opposed to any gaming expansion at all.
Mississippi: Many believe the creation of a lottery appears inevitable in 2018 or 2019. A special lottery study committee met on Nov. 16 to present pros and cons and research about state lotteries to the Legislature, not make a recommendation one way or another. One finding is that Arkansas netted $71.9 million in fiscal 2015 and $85.4 million in fiscal 2016 after adopting a lottery. Recent polls show 60-plus percent approval among state residents as well as bipartisan support among lawmakers and statewide elected officials. Proponents say Mississippi needs an infusion of revenue and since the GOP-controlled legislature won’t pass a fuel tax increase a lottery could help. Mississippi and Alabama are two of only six states that don’t have one. Mississippi has had legalized casino gambling for 25 years now.
Florida: Voters In Charge Committee, the sponsors of a Voter Control of Gambling Amendment announced in October it had gathered nearly 200,000 petitions while raising $1.55 million from contributions by Walt Disney World and the Seminole Tribe of Florida. The proposed amendment needs 766,200 signatures; it has 391,783 verified signers so far.
Georgia: A number of larger municipalities will again push for a voter referendum to allow legal casino gambling in the state. HB 158, proposed in 2017 but not passed, would have allowed larger municipalities to qualify for a casino.
Illinois: HB 479, which would legalize and regulate online poker, casino games and daily fantasy sports (DFS), ended the 2017 session in the House Rules Committee and could be quickly adopted in 2018. The DFS industry, spearheaded by DraftKings and FanDuel, is expected to sustain its lobbying effort. Pennsylvania became the fourth state to legalize online gambling in 2017. A similar proposal in New Hampshire also ended the year in committee and may be submitted for a vote in 2018.
Massachusetts: Lawmakers may consider moving the state’s Lottery online after state Treasurer Deborah Goldberg testified that 2018 Lottery profits are projected to fall by $3 million to $965 million. Scratch ticket sales are down 3 percent and Keno numbers are stagnant. Gambling-related tax revenues are expected to increase when MGM Springfield opens its casino in 2018 and Wynn Resorts opens 2019, but paper lottery revenues are expected to continue to decline or stagnate unless the lottery can be played online.
At Least Three Proposed Bans On ‘Sanctuary Cities’ Already Proposed
The Presidential election of immigration hardliner Donald Trump and 33 Republican Governors. combined with GOP control of 33 both legislative chambers in 32 states, induced a wave of immigration-related laws and regulations in 2017. Expect the trend to continue in 2018. Among early prefiled bills and initiatives:
Arizona: A 2017 proposal to ban “sanctuary cities” failed but is expected to be reintroduced again. Among other potential bills: Make it a state crime to be undocumented; make it a crime to be in any public place in Arizona if a person is in violation of a federal or state law; prohibit any refugees being resettled in Arizona; legislation requiring any organization housing refugees to be liable for any crimes they commit within the next five years and to have insurance against such crimes.
Florida: House Speaker Richard Corcoran is expected to propose a bill opposing ‘sanctuary cities.’
South Carolina: At least seven representatives say they will prefile a 2018 bill supported by Republican Gov. Henry McMaster that would deny any state funds to municipalities that would designate themselves to be sanctuaries to undocumented immigrants. There are no sanctuary cities in South Carolina.
State Lobbyists Talk Trends From The 2017 State Legislature Sessions
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