Waiting … and Waiting on a Highway Funding Fix

30449450Federal highway funding is running low. Nothing new there. The Indiana Chamber, and many others, have called for long-term solutions from Washington instead of short-term fixes that simply extend the uncertainty.

How are states reacting to the current dilemma. According to the Kiplinger Letter:

  • Arkansas, Georgia, Wyoming and Tennessee have postponed 440 projects totaling more than $1.3 billion
  • Iowa, South Dakota and Utah have increased gas taxes. Others that may follow include Georgia, Idaho, Minnesota, Nebraska and South Carolina
  • Seeking funds from advertisers: Virginia sells space on highway rest stop signs to GEICO; Travelers Marketing sponsors highway patrols in Massachusetts
  • Partnering with private investors: Florida is seeking private funds to rebuild portions of Interstate 4; New Jersey, Pennsylvania and Virginia are seeking similar ventures

Kiplinger editors add:

But states can only do so much on their own. Ultimately, Congress must act. Odds favor another temporary fix this fall. A long-term solution will likely wait until 2017. Congress and a new president will have a fresh opportunity to tackle broad tax reform, including a possible hike in federal fuel taxes, which no longer approach what’s needed to pay for highway work.

Not what many want to hear in terms of the time frame.

It Was Big (Ten); It Can Be Bigger

In the college football world, a lot has happened since last Saturday’s Big Ten Championship game unfolded in Indianapolis for the second consecutive year. (More on that in a minute). Northern Illinois crashed the Bowl Championship Series party, creating a venom that is usually reserved for teams that are on the outside looking in when it comes to the NCAA basketball tournament.

The coach who won that Big Ten title game has bolted Wisconsin for Arkansas in an unexpected move. Notre Dame, Ball State and Purdue learned their bowl destinations, with the Boilermakers hiring a new coach — from that same no-respect Mid-American Conference as Northern Illinois and Ball State. (In case, you didn ‘t know I’m a Ball State grad and proud to be making the trip to Florida for the always popular Beef ‘O’ Brady’s Bowl).

But my focus is back to Indiana and the business of sports. Yes, the 41,000-plus in attendance at Lucas Oil Saturday night was a dramatic drop from more than 62,000 a year earlier. Yes, TV ratings were down (falling almost as fast as the Nebraska defenders as Wisconsin running backs piled up more than 500 yards in a 70-31 victory). Yes, there is concern despite Indy being in the middle of a five-year contract to serve as host. Many say the attendance problem would have been solved if undefeated Ohio State had not been on probation, but that falls into the category of things we can’t control.

I volunteered both Friday and Saturday at the Big Ten Fanfest at the Indiana Convention Center and attended the game. A few observations.

  • Wisconsin and Nebraska fans showed up and they liked what they saw. I talked with numerous parents and family members who, like so many before them, truly appreciated downtown Indianapolis and all its amenities. They enjoyed Georgia Street before the game and they, at least on the Wisconsin side, enjoyed a winning effort in Lucas Oil for the second straight year.
  • Yes, this is only anecdotal, but I witnessed far fewer fans from the Hoosier state taking part in either the Fanfest or the game. On a smaller scale, the Fanfest was similar to the NFL Experience that took place in conjunction with Super Bowl XLVI earlier this year. An opportunity seemed to be missed in not generating more interest and participation on a local or regional level.
  • These events, and many others, bring a true excitement and economic impact to downtown. The benefits both in the short term and in further establishing the Circle City as a destination spot are numerous.

Let’s allow the creative people who do such a good job bringing these sports championships here to work on ways to bring more fans into the fold. And if you’re looking for something else to do in late November/early December on a post-Thanksgiving weekend, give the Big Ten and its championship a good hard look in coming years.

Online vs. Main Street Tax Debate Continues

The dispute over collection of online sales taxes is not a new one. The Alliance for Main Street Fairness argues that online-only retailers have a distinct advantage, but the author offers that convenience (not avoiding sales taxes) drives the buying decisions for many. TechJournal South offers analysis:

Federal law currently requires retailers to collect sales taxes in states where they have a nexus (a physical presence such as a store, warehouse or other facilities). Since Internet-only retailers do not have a nexus in most states, they are not currently required to collect the taxes.

Other states wrestling with the problem include Arkansas, California, Florida, Illinois, Indiana, Minnesota, New Jersey, Pennsylvania, Tennessee and Texas. The National Conference of State Legislatures says states lost about $8.6 billion in 2010 in failing to collect sales tax from online and catalog sales. The number is projected to be approximately $37 billion from 2009 to 2012.

Personally, we can see how buying a big ticket item from an online retailer might save a significant pieces of change, but even there, we doubt that most people buy online just so they won’t have to pay sales taxes. We buy online because it is convenient. We can do our shopping from our desks, which has inherent advantages that will not disappear when online retailers collect sales taxes.

We shop online because we often find a much wider selection available at the lowest possible prices online, whether we are looking for a book, a camera, or a refrigerator. We save gas and wear and tear on our vehicles and ourselves. But we have never bought an item online to avoid paying a sales tax.

Sooner or later, we suspect, this problem will be resolved through legal means that require online retailers to collect state sales taxes. That’s fine with us, although we think states threatening to collect years of back taxes are certainly wrong-headed as well as on legally shaky ground.

In the meantime, the way states and the online retailers are going about dealing with the problem is just causing more problems: such as Amazon dismissing its associates in North Carolina and other states attempting to use their status to say the reatailer has the physical presence in the state to create a nexus.

That move causes grief for many online startup businesses. Some larger ones actually left North Carolina when Amazon fired its state associates, and others complain it makes it harder to get that early revenue necessary to achieve outside growth funding.

Amazon is not helping matters by negotiating not to pay sales taxes even in states such as Texas, Indiana, Nevada and Tennessee where they have distribution centers.

The whole mess will likely require action on the part of the US Congress.  “The Main Street Fairness Act,” H.R. 5660 was introduced in the US House in July 2010, and it would behoove Congress to vote on the bill.

Some States Trying to Move Back in 2012 Primary Schedule

Indiana avoided the national rush to move up the date of its 2008 presidential primaries. And national attention ended up being focused on the Hoosier state. Don’t expect any change from Indiana’s early May vote, and for a variety of reasons others are looking to fall back in the pack for 2012.

The modern presidential nominating process, in which candidates must compete in primaries throughout the country to have a chance to win, dates to 1972. After that, it only took a few election cycles for states to realize that the ones voting first had the biggest say in the nomination. By 1988, the push to “frontload” had begun in earnest.

Almost immediately, political scientists began complaining that the primary schedule was becoming perilously compressed. If too many states vote too early, they argued, only the best-funded candidates can compete. Candidates can effectively wrap up nominations in a matter of weeks, before the press and the public have time to scrutinize them. Then, states with primaries and caucuses later in the spring don’t matter. “A lot of states are not just less influential, but have no effective voice in the process,” says William Mayer, a Northeastern University political scientist who co-authored a book on frontloading.

Both the national Democratic and Republican parties have tried to impose some order on the process. But the parties don’t set the dates of primaries. State legislators do — because it’s the states who actually administer the elections, along with local governments.

Legislators’ foremost concern has been maximizing the influence of their own states. Even those who agree with the political scientists about the problems with a frontloaded calendar don’t want their own state to be the one left behind.

The results are dramatic. In 1976, on the Democratic side, the Iowa caucuses were in January and the New Hampshire primary was in February. Four more states voted in March and three more in April, with the other 20 primary states scattered later into the spring.

In 2008, six states voted in January. They included Florida and Michigan, which moved up their primaries in violation of Democratic Party rules. By the end of February, voters in nearly three dozen states had already cast their ballots in primaries or caucuses on both the Democratic and Republican side.

Take Me Home, Country Roads

According transportation officials, $600 billion is needed to bring America’s rural highways up to speed. The Idaho Statesman reports:

The U.S. must expand and improve rural highways because its inadequate system can’t support the trade and tourism that helps drive the nation’s economy, a group of state highway department directors said Monday.

The American Association of State Highway and Transportation Officials released a report in Little Rock and in Wichita, Kan., saying freight shipped by tractor-trailers is projected to grow rapidly in the coming couple of decades and much of that travel will be on rural roads…

When most people think about highway work, they think of urban congestion and orange barrels on the road, speakers at an association news conference said. But the 60 million people who live in rural America equal the population of the nation’s largest 100 cities.

"Too often what we found, the needs of rural America … are not understood," Horsley said.

Good roads serve industry and create jobs, just as good schools enhance a community’s vitality, Mississippi highways chief Larry "Butch" Brown said.

"It’s time to provide (rural motorists) with a better system," Brown said.

The South and West are expected to undergo the greatest population growth in the years ahead, and roads and transit systems need to be able to keep up. Brown noted that in Idaho, for instance, major highways are far apart.

"To give you some idea of the scale of these distances, for a farmer to move his grain harvest in Idaho, he would have to cross the width of the entire state of Massachusetts to get from one major highway to the other," Brown said.

In Mississippi, 42,000 farms rely on the state highway network, but at various times during the year, residents must share their roads with hurricane evacuees from Alabama and Florida.

"Most of these evacuees are moving to inland counties, creating traffic backups and long travel times," Brown said. "Narrow two-lane rural roads cannot support the demand of travel if not improved to meet the demand. This is a health and safety issue and must be addressed."

The report notes that 66 U.S. cities with a population of 50,000 or more do not have direct access to interstate highways. The list includes Jefferson City, Mo., which is a state capitol. In Arkansas, Hot Springs and Jonesboro are on the list, although the state has the 12th largest highway system in the U.S., Arkansas highways director Dan Flowers said.

More Campuses Just Saying No to Smokers

In 2007, about 60 colleges and universities had enacted a smoke-free policy. That number has grown to nearly 400.

There has been some external push. Clean air laws in Illinois, New Jersey and Wisconsin require smoke-free university housing. Smoking is prohibited on all public campuses in Arkansas and at every school (public and private) in Iowa. A couple of big players soon join the list, with no smoking at the University of Florida this fall or at any of the three University of Michigan campuses starting in 2011.

For those that still allow lighting up, more have policies that restrict the number of areas and move smokers away from building entrances. What have student reactions been? According to a CongressDaily story:

A Student Tobacco-Free Task Force was created when the University of Denver went smoke-free in January. Similar associations have been created at other colleges to help enforce the policy and support the change.

However, students who oppose the ban on smoking cigarettes outdoors have not remained silent. Groups of students held daily "smoke-ins" in protest when the University of Pennsylvania attempted to ban smoking at all 14 of its campuses in 2008.

The University of Denver found that about two-thirds of the student population was in favor of banning tobacco. "Interestingly, these divisions were not necessarily based on one’s personal use of tobacco," said Katie Dunker, the assistant director of health promotions at the school. "We had students who use tobacco who were for it and students who didn’t who were against it."

A list from the American Nonsmokers’ Rights Foundation puts campuses of 15 Indiana colleges and universities in the total smoke-free category. There are another nine Hoosier campuses rated smoke-free with the exception of some remote outdoor areas.

Wal-Mart Offers Employees Educational Assistance

A recent New York Times article reported that Wal-Mart will begin working with various educational institutions to help its associates earn college credit. The announcement was made in front of 4,000 invited employees last week at its on-campus arena on Wal-Mart’s Arkansas headquarters. Here are some key points:

  • The university will offer eligible employees 15 percent price reductions on tuition, and Wal-Mart will invest $50 million over three years in other tuition assistance for the employees who participate.
  • The partnership with American Public University, a for-profit school with about 70,000 online students, will allow some Wal-Mart and Sam’s Club employees to earn credits in areas like retail management and logistics for performing their regular jobs.
  • Wal-Mart estimates that about 50 percent of its employees in the United States have a high school diploma or the equivalent but have not earned a college degree. With the average full-time employee being paid $11.75 an hour, it was unclear how many of them will be able to take advantage of the new program.
  • The program will initially allow about 200,000 employees in positions like cashier, department manager and distribution center unloader to accrue credits for training they already receive in their jobs.
  • With the work credits and tuition discount, an associate’s degree for a Wal-Mart or Sam’s Club cashier would cost about $11,700 and a bachelor’s degree about $24,000.
  • Wal-Mart executives said it decided to work with an online university instead of a brick-and-mortar school after surveying more than 32,000 of its employees and learning that most of them wanted the scheduling flexibility afforded by online classes.

Specter to Become a Spectator?

While Congressional races in Indiana drew attention two weeks ago, a brighter national spotlight is shining on Senate primary votes Tuesday in Pennsylvania, Arkansas and Kentucky. Part of the intrigue is whether a couple of Democratic incumbents will become lame ducks.

The focus is on senators Blanche Lincoln of Arkansas (challenged by Lt. Gov. Bill Halter) and Arlen Specter of Pennsylvania (facing Rep. Joe Sestak).

Runoffs are possible for both parties in Arkansas as a third candidate could keep Lincoln or Halter from getting 50% of the vote. On the Republican side, Rep. John Boozman is the favorite but there are eight other candidates on the ballot and he was polling below the 50% mark.

Those polls place Boozman ahead of both Democrats in general election matchups, but Lincoln has a huge advantage in cash on hand.

Specter’s much-publicized departure from the GOP came, at least in part, because he believed he wouldn’t win a primary battle against former Rep. Pat Toomey. Now he is in a close battle against Sestak, who has successfully used the message that he is the real Democrat in the race. The two Democrats and Toomey also have substanial bankrolls for the fall.

Kentucky features a pair of close battles. Ophthalmologist Rand Paul, a Tea Party favorite, is leading Republican establisment favorite Trey Grayson (current secretary of state). On the Democrat side, two current top state officials — Attorney General Jack Conway and Lt. Gov. Daniel Mongiardo, are in a dead heat.

Two incumbent primary victims thus far have been Sen. Bob. Bennett (R-Utah) and Rep. Alan Mollohan (D-West Virginia). I’ll take a guess that Specter might just joing them. Either way, Tuesday will be another lesson about the anti-incumbent mood among voters.

Tax News: Good to Be Tied to Arkansas in This Case

Interesting numbers from the Tax Foundation, which is in the business of analyzing interesting (tax) numbers. Its annual review of what states did with their tax policies included some strong praise for Indiana. A few excerpts from the release and a link to the full study, which takes some to task for targeted tax hikes and accounting gimmicks (instead of reducing spending).

Nine states increased individual income tax rates (five states reduced their rates), six states raised general sales tax rates, 17 states increased excise taxes on cigarettes and five states increased rates of alcohol excise taxes.
“Two states – Arkansas and Indiana – managed to roll back spending growth commitments and take actions to limit spending, but other states have either kicked the budget can down the road or increased taxes,” said Tax Foundation Director of State Projects Joseph Henchman, who authored Tax Foundation Fiscal Fact No. 204, “A Review of Significant State Tax Changes During 2009.”  

“With state revenues declining due to the tough economic situation, most state leaders in 2009 have tapped high-income earners, smokers, out-of-state business transactions, or other targeted groups, those being the only people that politicians feel safe raising taxes on,” Henchman notes. 

California, Connecticut, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon and Wisconsin increased individual income tax rates. States that increased sales taxes include California, Massachusetts, Minnesota, Nevada, North Carolina and the District of Columbia.
Other miscellaneous tax changes in 2009 include obesity and soda taxes, excise taxes on plastic bags (often mischaracterized as “fees”) and “Amazon” taxes, which force out-of-state retailers to collect sales taxes from customers if the companies have affiliate and advertising relationships with in-state businesses.

Chamber Members Work Together to End Hunger (You Can Get Involved, Too)

Indiana Chamber members Tyson Foods and MediaSauce (Carmel) are working on a "big idea" project that will transform one of the world’s hippest music festivals into a venue to provide charity of the utmost importance. In an effort to combat childhood hunger, the companies (along with several others) are acquiring pledges from people to donate, volunteer in their own community or share the message — and Tyson will donate 35 lbs. of food product (the equivalent of 140 servings) for each pledge. And ultimately, if the goal of 1,000 people taking the online pledge is reached, a semi-trailer filled with 140,000 meals will arrive at the Capital Area Food Bank of Texas in Austin during the South by Southwest Interactive Festival (March 13-22).

The Pledge’s web site explains a record 30 million Americans are on food stamps, and food banks face unprecedented demand. Additionally, more than 12.4 million children are going hungry right here in the United States. (That’s 1 in 6.)

Another goal of the venture is to display how technology can be effectively used to galvanize people behind worthy causes. A press release notes:

“We want to show how simple it is to bring people together to help solve a complex problem,” said Scott Henderson, Cause Marketing Director at MediaSauce.  “With just one click, a person can feed 140 children. When you make it easy to share your message and support your cause, it is amazing how much more willing corporations and individuals are to do something to make a difference.” 

The campaign web site challenges visitors to help spread the word about childhood hunger in America, find ways to get involved with a food bank in their area and donate money to Share Our Strength.  The site encourages a deeper dialogue about the issue with a blog focused on this initiative and ways to collaboratively solve the roots of this problem. 

To learn more about the program or to make a pledge, visit the web site. We offer some due propers to Tyson Foods, MediaSauce and the other companies involved for tackling this project.