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Familiar bills live, die at committee deadline

February 6th, 2013 1 comment

The legislation that would have stopped the requirement that certain small businesses pay two months’ worth of sales and use taxes right before the end of the fiscal year is dead.

Tuesday was the first major deadline for bills to either make it out of the committees to which they were first assigned, or wait until next session.

The accelerated tax payment system requires that taxpayers that collect sales and use taxes and have an average monthly tax liability of at least $20,000 – which encompasses a lot of small businesses – pay June taxes by June 25, a week before a new fiscal year starts. Normally, those taxes are paid the following month. (For example, April taxes are paid on May 20.)

The Mississippi National Federation of Independent Businesses had supported raising that $20,000 threshold to at least $50,000, something that was supposed to happen due to legislation passed a few years ago, but has been delayed. Four bills that would have done that were filed; none made it past the committee deadline.

Several pieces of legislation that have died the last few sessions met the same fate this year  — among them, bills to require nursing homes to carry liability insurance and shifting the burden of proof from claimants to insurance companies in claims arising under all-perils policies.

Other bills that have gotten the attention of the business community fared better. Legislation to expand financial literacy classes to all high school grades made it. That legislation is one Treasurer Lynn Fitch’s priorities.

Secretary of State Delbert Hosemann’s collection of tax credit bills are still alive, though they face a later deadline because they’re revenue bills.  The same goes for bills that clarify how tax assessors calculate the tax liability for Section 42, or affordable rental, housing developments.

The first deadline for those bills is Feb. 27, when they must be passed out of their chamber, or die.

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Kemper rate mitigation bill similar to 2009 Georgia law

January 31st, 2013 No comments

Kemper-Update-Logo_rgb-300x244Four years ago, lawmakers in Georgia’s General Assembly approved a bill designed to lessen the rate shock for Georgia Power Co. customers related to the utility’s construction of nuclear power units.

Mississippi lawmakers are considering a similar bill for Mississippi Power Co.’s Kemper County coal plant.

The Georgia legislation, which former Gov. Sonny Perdue signed in 2009, allowed Georgia Power  – which, like Mississippi Power, is a subsidiary of Southern Co. – to pass to ratepayers financing costs incurred to build two additional nuclear units at an existing generation plant in the southeastern part of the state.

Starting in January 2011, the law gave Georgia Power five years after the Georgia Public Service Commission approved the project to recover the costs. The law established the financing recovery schedule  separately from the rate base that collected construction work in progress funds. In Georgia, the recovery of CWIP is mandatory.

Georgia Co. officials said while the bill made its way through the statehouse in 2009 that paying financing costs for the $14 billion project as they were accrued would save customers in the long run. The two new units are scheduled to begin producing electricity by 2017, according to recent company projections.

A couple things separate the Georgia law and the proposed legislation here. Georgia’s rate mitigation statute established a five-year recovery window. The Mississippi plan creates a 10-year window, and prohibits the utility from filing to activate the plan until 12 months prior to the calendar year in which the qualifying facility is scheduled to begin operation.

The Kemper plant is supposed to come online in May 2014. That means Mississippi Power can request the plan if and when the law clears the Capitol and is signed by Gov. Phil Bryant.

The Georgia law established a rate schedule specifically for the recovery of financing costs, since the recovery of CWIP was already mandated. The legislation that has cleared the Mississippi Senate’s Energy and Finance committees does not restrict CWIP or financing costs from being included.

The hard cap on the Kemper costs Mississippi Power can recover through ratemaking proceedings at the Mississippi Public Service Commmission was lowered last week from $2.88 billion to $2.4 billion, as part of a rate settlement between commissioners and the utility. A bill that would permit Mississippi Power to issue bonds for overruns – up to $1 billion – sits in the Senate Energy and Finance committees.

Data: Raising accelerated tax threshold would have little financial impact on state

January 29th, 2013 No comments

The latest issue of the Mississippi Business Journal has a story about the push to raise the liability threshold that requires small businesses to participate in the accelerated tax payment system.

Simply put, small businesses with a monthly average of at least $20,000 in tax liability have to pay a portion of June sales and use taxes no later than June 25.

Normally, those tax payments are due on the 20th of the next month. For example, April taxes are due no later than May 20. The accelerated system forces small businesses that qualify to pay two months’ (May and June) worth of taxes on one day.

Ron Aldridge of the Mississippi NFIB, which is advocating the proposal to raise the threshold from $20,000 to $50,000, provided some data from the Department of Revenue that sheds light on how many small businesses are triggered by the $20,000 threshold, and how many would be triggered by the $50,000 threshold. The data arrived after the MBJ’s press deadline last week, and did not make the print version.

As of Oct. 26 2012, 2,623 businesses qualified under the $20,000 threshold, and paid $157.9 million in sales and use taxes. Of those businesses, 853 would still have to pay accelerated sales and use taxes if the threshold increased to $50,000. Of the $157.9 million total, those businesses paid $123.1 million, about 67 percent of the total.

The NFIB, in a press release that accompanied the data, said the state having to wait a month for $34.8 million is not enough to justify keeping the threshold at $20,000.

Four bills that address the issue have been filed and sit either in the House Ways and Means Committee or in the Senate Finance Committee. Gov. Phil Bryant made raising the threshold part of his executive budget recommendation late last year, so it’s likely at least one will be sent to the floor for debate before the first committee deadline Feb. 5.

Whether CWIP constitutes a tax takes up most of Kemper hearing

January 28th, 2013 No comments

Most of Monday’s hour-long Kemper coal plant hearing at the Mississippi Supreme Court centered on two questions:

If the Mississippi Public Service Commission allows Mississippi Power Co. to charge its ratepayers for the facility’s construction, will it constitute a tax, or will it simply be a rate assessment?

If it is a tax, does it render the Baseload Act unconstitutional?

Mike Adelman, an attorney who represents Thomas Blanton, says the Baseload Act – a 2008 law that authorized utilities, with PSC permission, to collect construction-work-in-progress funds from ratepayers – is unconstitutional because it violates the Constitution’s 14th Amendment, which prevents confiscatory taking of property without due process.

“It’s a tax on electricity that has not yet been provided,” said Adelman, whose client is a Hattiesburg resident and one of Mississippi Power’s roughly 186,000 ratepayers.

Blanton’s claim was originally part of the rate dispute between commissioners and Mississippi Power. The dispute arose over the summer when commissioners denied a 13 percent rate increase that would have generated about $58 million to put toward the coal plant’s construction. Commissioners said then they would not entertain anymore rate increase requests related to the plant until the Mississippi Supreme Court had ruled on litigation brought against the plant by the Mississippi Sierra Club. That litigation is separate from Monday’s proceedings.

The PSC’s stance changed last week, when commissioners and Mississippi Power Co. agreed to a settlement whose terms will allow the utility to ask for CWIP recovery in exchange for the hard cap on the project being lowered from $2.88 billion to $2.4 billion, and ratepayers being granted an ownership share in the plant’s TRIG technology.

Adelman, in his argument against the Baseload Act, equated CWIP with a tax, something he said the PSC does not have authority to levy. Even if lawmakers intended to convey that authority in the Baseload Act, Adelman said, the language in the law does not do that.

The law essentially forces Mississippi Power customers to become investors in the project, Adelman said.

“There is a recognized constitutional right – a right that is recognized by this court – that rates cannot be assessed for power that is not being delivered,” Adelman told the seven justices. Chief Justice Bill Waller Jr. and Associate Justice Leslie King were not in attendance.

Mississippi Power attorney Ricky Cox said that law allows for utilities to increase rates for “used and useful” services. “And CWIP is a used and useful service,” he told the court.

“These facilities (which are eligible for CWIP funds) have unique characteristics,” Cox said. “They run 24 hours a day and provide dependable power. That’s the benefit customers are getting.”

Blanton’s argument that the Baseload Act is unconstitutional is moot and should be dismissed, Cox said, because the Baseload Act has not been applied.

Justin Matheny, representing the PSC, echoed Cox’s assertion that ratepayers do receive a tangible benefit in exchange for paying CWIP.

“In this case, they’re helping to build a new plant and helping to continue to provide electricity into the future.”

The small amount of back and forth between justices and lawyers related to the original rate dispute centered on whether the settlement was final, and rendered the case closed.

Presiding Justice Jess Dickinson during the hearing expressed skepticism that it was, since the settlement kicked proceedings back to the PSC. Any dispute arising out of the new proceedings, Dickenson said , would likely land back before the high court.

Justices will issue a written decision, something Dickinson told lawyers he hoped would happen soon.

Rate case settlement lowers Kemper cost cap (Updated with rate info)

January 24th, 2013 No comments

Mississippi Power Co. and the Mississippi Public Service Commission have come to an agreement that allows the utility to ask for construction-work-in-progress funds for the Kemper County Coal plant.

MPC had appealed to the Mississippi Supreme Court over the summer after commissioners denied a request for a 13 percent rate increase that would have generated about $58 million in CWIP money. Commissioners said then they would not entertain anymore rate increases related to the plant until the state’s high court had ruled on the litigation surrounding the project.

In the settlement, commissioners made no promise that they would approve CWIP. Settlement terms also lowered the hard cap of the plant from $2.88 billion to $2.4 billion and provided ratepayers a 10 percent royalty share in the plant’s TRIG technology. It also stipulated that, in the event commissioners grant CWIP, that money would essentially be held in escrow, and would only flow to the company if the supreme court clears the way for the project to proceed. If that court strikes down the plant, the CWIP money would return to MPC’s 186,000 ratepayers.

Mississippi Power has 30 days to ask for revenue recovery, the amount of which cannot exceed $172 million.

Southern District Commissioner Leonard Bentz and Central District Commissioner Lynn Posey voted to approve the settlement. Northern District Commissioner Brandon Presley voted against it.

“I’ve stuck to my guns on $2.4 billion from the very beginning,” said Bentz, whose district includes the vast majority of MPC ratepayers. “Short of the sky falling, they won’t get one penny over $2.4 billion.”

Presley expressed concern that the settlement would still force ratepayers to pay for the plant before it was operational. MPC expects the plant to start generation in May 2014.

“It’s the same scenario I’ve had concerns over,” he said. “Ratepayers shouldn’t have to pay for something until it’s useful to them.”

Supreme court justices had scheduled for Monday afternoon a hearing on the dispute between MCP and the PSC. Even though Thursday’s settlement technically ends any disagreement between the two, justices could still decide to move forward with Monday’s oral argument. It was unclear if Thomas Blanton, a MPC ratepayer from Hattiesburg who has challenged the constitutionality of the 2008 law that authorized CWIP, would still get to argue that point Monday.

The head of the Mississippi Sierra Club, which has long opposed the plant and still has active litigation against it, said Thursday afternoon that the settlement does nothing to protect ratepayers.

“If the TRIG technology turns out to be useless, that’s not much of a deal,” said Louie Miller, referring to the ratepayers receiving 10 percent of TIRG royalties over 30 years. “Even Mississippi Power has said they’re not 100 percent certain that the plant’s technology will work on the first day of operation.”

Bentz said Thursday’s settlement could potentially lower the rate impact of the plant. He has said through the process that he expects rate increases to peak between 20 and 28 percent before falling.

“I think this will at least put rate increases at the lower end of that, possibly even lower,” Bentz said.

Mississippi Power filed documents with the PSC in 2009 that said rate impacts would peak at 45 percent. The PSC order granting the plant’s certificate of public convenience and necessity said rate increases would peak at a touch over 30 percent before falling.

Mississippi Power’s most recent rate impact estimates have fallen below that, with the company saying sales of the plant’s by-products have come in higher than originally thought. [Editor's note: Southern Co. officials said on an analyst call Friday morning that if the PSC grants the full $172 million in CWIP funds, it would raise MPC customer rates 21 percent.]

The settlement includes a phased-in rate plan that would run the first seven years the plant was in operation.  Common methods of rate recovery allow utilities to recover the bulk of costs up front. Spreading that out over seven years, Bentz said, would minimize the impact to ratepayers.

There was some question Thursday whether current statute allowed a phased-in rate plan, or if legislation would be required to authorize it.

The utility can opt out of the settlement if it is determined the PSC does not have the legal authority to implement a phased-in rate plan. If it’s determined there is a need for legislation to establish that authority, and the legislation fails to become law, the utility can opt out of the settlement.

The company can also opt out if it is unable to secure alternative financing for any project costs not otherwise recoverable by ratemaking proceedings.

MPC CEO Ed Day said in a press release that the settlement was “a win for both this state and our customers.”

BIPEC rankings released, contain few surprises

January 23rd, 2013 No comments

The Business and Industry Political Education Committee’s annual Jobs Report Card for lawmakers, released Wednesday, contains few surprises.

For the most part, Republicans did better than Democrats. On the A-F grading scale, only two members of the GOP – Rep. Mark Baker from Brandon, and Sen. Briggs Hopson from Vicksburg – scored lower than an ‘A.’ Baker got a ‘C,’ and Hopson was given a ‘B.’

A handful of Democrats scored either ‘A’ or ‘B.’ Most, though, scored ‘C’ or worse. Baker getting a ‘C,’ which denotes average business support, could be an issue in determining if he runs against Attorney General Jim Hood in 2015. Baker, chairman of the House Judiciary A Committee, hasn’t confirmed or denied that he’ll seek the AG’s post in two years, but is one of perhaps a half-dozen Republicans considered likely challengers.

BIPEC graded lawmakers according to their votes on nine bills, all of which passed and were signed by Gov. Phil Bryant, during the 2012 legislative session. The selected legislation dealt with workers’ compensation reform, tax and insurance issues, establishing medical zones and the like.

To see the list of bills and how each lawmaker scored, click here.

Categories: BIPEC, Mississippi Legislature Tags:

Initiative seeks to aid veterans in finding jobs

January 16th, 2013 No comments

Gov. Phil Bryant proclaimed on Wednesday that 2013 was the year Mississippi employers should do everything they can to hire veterans.

As part of the announcement at the Capitol, Bryant and officials from the Mississippi Department of Employment Security said they would back legislation that seeks to make it easier for veterans and their spouses to get jobs.

The bill, which will be filed by Rep. Wanda Jennings, R-Southaven, would require state agencies to grant temporary occupational licenses to qualified veterans and their spouses. For example, if someone is transferred to Naval Air Station Meridian, and their spouse is a nurse licensed in another state, the bill would expedite the process of getting a license to practice nursing in Mississippi.

It would also expedite the licensing process for veterans whose civilian career will mirror their jobs in the military.

The initiative will include three job fairs, the first of which is in March at the Mississippi Agriculture and Forestry Museum in Jackson.

MDES executive director Mark Henry said Mississippi will have in the next five years 28,000 veterans who have served in Iraq and/or Afghanistan since Sept. 11, 2001. The unemployment rate for veterans in the state, Henry said, is 10.8 percent, higher than the 7.8 percent overall rate.

On Wednesday, representatives from Ingalls Shipbuilding, Entergy Mississippi and Brown Bottling signed a pledge to hire Mississippi veterans. A similar movement is going on nationally, led by Walmart’s promise this week to hire 100,000 veterans in the next five years.

The job fairs associated with the Mississippi initiative are March 8 at the Ag Museum, April 9 at the Biloxi Civic Center and June 27 at Itawamba Community College’s Belden Center in Belden.

Video of Wednesday’s press conference, courtesy of the MBJ‘s Stephen McDill, is here.

Council eases path to operation for Hattiesburg breweries

January 14th, 2013 No comments

The Hattiesburg City Council removed late last week one of the last major hurdles two breweries had to clear before they could get their product on shelves.

The council altered the city’s land use code to allow breweries in Hattiesburg’s downtown district. The old code would have allowed breweries, but would have also mandated they provide things such as parking areas similar in size to other downtown retailers.

John Neal, owner of Southern Prohibition Brewery, said the altered land code “just makes thing a lot easier on us.”

“Now we don’t have to have a whole bunch of parking that would be expensive to build and that we just wouldn’t have needed,” he said Monday morning. “We’ll have people come and tour the brewery, but nothing that would have justified having 50 parking spaces.”

Neal said he hopes to have Southern Prohibition beer on retail shelves by April. His 20-barrel brewery will sit in a renovated furniture warehouse. Gordon Creek Brewery, which will be right down the street from Southern Prohibition, is scheduled to start brewing next month, according to the Hattiesburg American newspaper.

Neal, who also owns craft beer bar the Keg and Barrel, said his operation will be a little different from the handful of breweries that have sprang up since July 1, when state law changed to allow the maximum alcohol content in beer made and sold in Mississippi to rise from 5 percent by volume to 8 percent by volume.

“We’re going to can our beers, which is kind of a new thing for the craft beer industry,” Neal said. “It protects the beer from light, gets it colder, and is generally just easier for the consumer to handle.”

Neal said business at Keg and Barrel is up 30 percent since July 1. He’s added 45 parking spaces and built an outdoor bar since then, he said. “I fought hard for the ABV law, but I had no idea it would have this dramatic of an effect on not just us, but everybody connected to craft beer.”

Fitch: Audit finds problems with MPACT’s pricing structure

January 11th, 2013 No comments

The firm state Treasurer Lynn Fitch hired to audit the Mississippi Prepaid Affordable College Tuition Program, or MPACT, identified 12 areas of concern, nine of which were related to the program’s pricing structure.

Fitch announced last fall that was suspending the state-backed college savings program, due to concerns she had over its financial condition. She hired Michigan-based Gabriel Roeder Smith and Co. shortly thereafter to audit it.

Fitch released the results, which she said made up Phase I, Friday morning, to go with her legislative agenda.

The first-term treasurer said GRS & Co. found the plan had a 43 percent of chance of reaching its 7.8 percent target rate or return. For fiscal year 2012, the rate of return was 1.10 percent. The estimated rate for fiscal year 2013, according to Fitch, is 4.98 percent. The plan, which has 22,000 enrollees and $274 million in trust, is currently is 76 percent funded. The last time it was 100 percent funded was 2000.

Auditors said that lowering the plan’s expected rate of return would drop the funding level into the low 70s, and increase the plan’s unfunded liability to more than $100 million.

Some of the preliminary recommendations auditors made were:

  • Incorporate bias load into the pricing structure. For example, some participants pay a price based on average annual tuition at one institution, then attend an institution whose tuition is markedly higher, leaving a difference between what the participant paid in and what they received.
  • Changing the way administrative expenses are paid in the pricing. Currently, administrative fees are captured by lowering the plan’s interest rate, which has contributed heavily, Fitch and auditors said, to its low rate of return.
  • Allowing the plan to recover losses when the average price of tuition rises. Currently, there is no way to do that when tuition increases are higher than assumed over periods that are hover close to the participation period.

Fitch said the next phase of the audit would be completed within 90-120 days. “This will not be a quick turn. It will take some patience.” She said those already participating in the plan would receive their designated benefits.

Ten states have already permanently closed similar programs, something Fitch said “would be an option” for MPACT. “This is the fault of no one, “she said. “It’s strictly an economic issue.”

The highlight of Fitch’s legislative agenda was the implementation of a statewide financial literacy program, which would require high school sophomores, juniors and seniors to take a one-semester course that taught the particulars of using credit, budgeting, managing money and making wise financial decisions. The cost in the first year of the program, Fitch said, would be about $5 million. That would likely decrease over time, she said.

Gulf of America legislation will not return, Holland says

January 9th, 2013 No comments

Rep. Steve Holland, D-Plantersville, filed during the 2012 legislative session a bill that would have renamed the Gulf of Mexico the Gulf of America.

Holland said then that he did it to highlight what he felt was the absurdity of the agenda being pushed by the new Republican majority.

Holland took no small amount of flak for the bill, which died in the Universities and Colleges Committee. The GOP accused him of failing to concentrate on serious issues. Whatever the reason Holland had for filing the legislation, its idea became a popular notion. Gulf of America twitter accounts appeared. Holland was a guest on a Houston, Texas, radio show, though it was a short and fairly tense interview that ended when Holland hung up on the host.

The movement that sprang up around the bill will not return this session. Holland said Wednesday morning that he will not re-file the bill.

“The stupid people up here totally misunderstood it,” he said in a phone interview.

Holland said his 2013 legislative agenda would be narrowly focused, and consist of “three or four local bills” geared toward his district in Northeast Mississippi. That’s a sharp contrast to prior sessions, when his list of bills has been robust.

“I’ve been down here for 30 years fighting for things that actually mean something for Mississippians,” Holland said. “Now the only thing that gets any attention is mediocre (expletive).”