An Update from the State House 3.1.2019

Senate and House Finance Committees Hear Sales Tax Issues and Association Dues
Both Finance Committees heard testimony on Article 5, Section 9 of the Governor’s budget and members of both committees asked pointed questions as to how certain items were singled out for taxation expansion. This is the Article that expands the 7% sales tax to the following items:
    -  Digital  Downloads ($2.6 million) such as Audio Works like Netflix, on-demand movies, games, movie streaming; Digital Audio Works such as audio book downloads; Ringtones; Digital books
    -  Hunting, Trapping and Shooting Services ($.6 million)
    -  Lobbying Services ($.9 million)
    -  Interior Design Services ($.5 million)
    -  Commercial Buildings Services ($6.2 million) which specifically includes extermination services, commercial cleaning services, landscaping and maintenance services, carpet and upholstery clearing services and janitorial services.  These services, if performed in a private residence with a home office, are not taxable.
Please take to the time to share any concerns you might have about the commercial building services sales tax with your state representative and state senator.  Now is the time to speak up!
Questions have been raised about the Governor’s proposal to tax organization dues.  The way the budget is drafted, an argument could easily be made that any organization that covers an entity subject to a sales tax could suddenly find its dues also subject to a 7% sales tax.  For example, taxi services are subject to sales tax.  If the taxi drivers have an association to which they pay dues, then the association dues could be subject to sales tax.  That said, the Department of Revenue stated that this is not the intent.  The intent of the association dues wording is meant to attach only to rod and gun clubs.  The reason given for this particular item is based on a concern that gun clubs would include ammunition as part of its membership benefit paid by dues, thus allowing club members to skirt paying the 7% sales tax on ammunition which the budget wishes to impose.  The budget language does require re-drafting if such a proposal is to move forward.  The Department said there is no intent to tax golf club memberships, fraternal organization dues or other dues at this time. 
The Department of Revenue also suggested exempting 501(c)(3) organizations from paying sales tax on lobbyist fees.  The Chamber is not a 501(c)(3) and thus would still be subject to the tax, as would most trade associations.
 
Senate Labor To Address Misclassification of Employees
On Wednesday, March 6^th at approximately 4:30 p.m. in the Senate Lounge, the Senate Labor Committee will be taking testimony on S.370, An Act Relating to Labor and Labor Relations.  S.370 increases the maximum weekly unemployment benefit rate to the higher of 57.5% of the average weekly wages paid to workers in the prior calendar year or $636 per week.  S.510, An Act Relating to Labor and Labor Relations will also be heard.  S.510 increases the penalties for misclassifying an employee to $2000 for the first offense, with each misclassified employee being a separate offense.  Any employer found to violate the law on three separate judgments on three separate dates within a 2 year period, will be subject to the loss of its licenses to operate the business in the state.  The suspension of licenses will continue for at least 3 years and until all proper wages are paid.
 
What’s in the Governor’s Budget
 
Article 15 – Children and Families

• The budget requires a mandatory school breakfast program for any public school where 70% of the students are eligible for free or reduced price meals in the prior school year.  The breakfast must be offered after the instructional day has officially begun and can be consumed in the classroom.
• Children detained in the Slater Training School are considered residents of the municipality where they lived prior to arrival at the training school.  The home municipality will be responsible for payment of the community’s per pupil special education cost to DCYF for the delivery of education services to the child while detained in the Training School.
• The Department of Health will be responsible for conducting inspections of foster homes
• RI Works Program changes include an elimination of the Department of Labor and Training oversight of individuals’ work plans.  The budget does set a lifetime limit on the adult collection of cash assistance to 48 months (children in a family or unit are not subject to the 48 month restriction). 
• Under current law child care is to be provided to every assistance receiving participant “who requires child care…in order to meet work requirements.”  The budget changes the language to provide child care assistance for every “child who is eligible for cash assistance” to ensure the adults they are living with are able to either obtain or maintain employment or meet their individual employment plans.  Starting July 1, 2019, child care services are also provided to families at 180% of federal poverty level or below to allow adults to pursue an educational degree, vocational, technical, or professional certification.