Legislative Corner: Kentucky, Minnesota, New York & Pennsylvania

Summer brings more proposals around taxes, electric vehicles, lottery payments, and transportation funding.
Electric vehicle charging sign

NATIONAL REPORT — Convenience stores face legislative and regulatory challenges from all levels of government on a daily basis. Convenience Store News canvasses local trade associations and news sources to cover the latest issues affecting the channel locally.

This month, local regulatory action revolved around a proposed soda tax in Kentucky, a new push to get automakers to sell more electric-powered vehicles in Minnesota, shortened payment cycles by the New York Lottery, and single-use plastic bans and transportation funding by taxing business deliveries in Pennsylvania.


Interim Session Talking Various Tax Options

The Kentucky General Assembly is in interim session, but various groups are already jockeying to promote taxes they would like to see in legislation.

The Dental Technical Advisory Committee (DTAC) has proposed supporting legislation to require Kentuckians pay a tax on soda to discourage consumers from drinking it. The DTAC is taking the issue to the Kentucky Dental Association for discussion and asking it to proactively push a soda tax in the 2022 legislative session.

At the most recent Medicaid Advisory Council meeting, the Physician Technical Advisory Committee voted to support a soda tax as well. The Kentucky Medical Association has not taken an official position on the matter, but this could change as the conversation continues, according to the Kentucky Retail Federation. It will continue to monitor the issue and work with other interested parties to educate legislators.

Vaccine Record Legislation

Two bills have been pre-filed that would prohibit employers and businesses from inquiring about vaccination status.

Rep. Brandon Reed (R-Hodgenville) filed BR 65, which would prohibit businesses from requiring proof of vaccination prior to entrance, while Rep. Savannah Maddox (R-Dry Ridge) filed BR 106, which would prohibit any employer from requiring employees or applicants to disclose their immunization status and prohibit businesses from requiring customers to disclose immunization status as a condition for service or entry upon the premises. 


New Emissions Standard Pushes EVs

Minnesota is the latest state — and the first in the Midwest — to adopt California's stricter tailpipe emissions standards and mandate for automakers to get more zero-emission vehicles onto sales lots, according to the Star-Tribune.

The rules don't take effect until Jan. 1, 2024, for 2025 models, but the passage of the new rule sends a clear signal, the news outlet reported, and electric vehicle selection is expected to expand in the next 18 months.

Gov. Tim Walz pushed hard for the clean car standards against stiff opposition from automobile dealers and Senate Republicans, who threatened to withhold state environmental funding in their unsuccessful effort to block the new standards. The Minnesota Automobile Dealers Association, which unsuccessfully sued over the proposed rules, has not decided on future legal options but told the news outlet that "everything is still on the table."

Senate Majority Leader Paul Gazelka issued a statement accusing Walz of being on an "ego trip" by both issuing mandates and evoking emergency powers during the COVID-19 pandemic. "Forcing electric vehicles onto car lots before consumers are demanding them will mean everyone pays more for their car — gas, electric or hybrid," hesaid.

Rep. Josh Heintzeman echoed Gazelka in a statement saying the new standard "requires dealerships to stock electric vehicles, even if there is zero consumer demand."

More than a dozen states have adopted California's standards under the Clean Air Act. The Trump administration took action to undo those standards, but federal agencies under the Biden administration are expected to reinstate them.


Shorter Lottery Payment Cycle

New York Lottery notified retailers that it is postponing until Oct. 3 the shortened payment cycle for instant tickets that was supposed to begin July 1. No reason was given. Also delayed until Oct. 3 was the new "Settled Confirmed" policy that would automatically settle any books that had been in confirmed status for more than 60 days.

The New York Association of Convenience Stores (NYACS) argued against the shorter payment cycle because it would squeeze the cash flow of lottery retailers, hindering their recovery from the pandemic, it said. 

In response, New York Lottery modified its original plan to reduce everyone's payment cycle for instant tickets from 45 days to 28 days. It decided on a two-tier structure under which lower-volume stores would be reduced to 42 days and higher-volume outlets 28 days. NYACS continues to oppose any shortening of the payment cycle.

Hero Act Plan Adoption Deadline

The state Department of Labor published standards and templates for employers to use in adopting plans for preventing the spread of infectious airborne diseases as required by the NY Hero Act enacted by the state legislature last spring. It requires employers of all sizes to adopt, by Aug. 5, a written plan of action to be activated if and when an airborne infectious disease is designated by the state Commissioner of Health as a "highly contagious communicable disease that presents a serious risk of harm to the public health." No such designation is in effect right now.

Employers have 30 days after adoption to communicate the plan to their employees. The deadline is Sept. 4.

Proposed Cigar Tax Relief

Assembly Member Carrie Woerner and Senator Jessica Ramos introduced legislation that would cap the state excise tax on cigars at 50 cents per stick. Currently the tax is 75 percent of wholesale value, as the state eliminated the lower 28.5 percent rate for most cigars last year. The new bill would reset the rate at either 75 percent of wholesale value or 50 cents per item, whichever is less.

"Recent tax increases on cigars and premium cigars in New York has driven the sale of these products to neighboring states where tax rates are much lower," the sponsors said in a memo accompanying the bill. "Capping the premium cigar tax rate at 50 cents per item would discourage buyers from buying online as well as strengthen sales within the state."

The bill can't be acted on until the Legislature returns to session in January 2022.


Plastics Ordinances Preemption Expires

Following the June expiration of the state's preemption on municipal single-use plastics ordinances, the way has opened for local jurisdictions across Pennsylvania to proceed with either new or previously passed ordinances regulating single-use plastics such as bags and straws.

The ending of the state's emergency declaration means preemption is set to officially expire on Dec. 8. A lawsuit filed against the state by the city of Philadelphia and other jurisdictions for its preemption is making its way through the courts and may have an impact on this timeline. However, ordinances in Philadelphia, West Chester and Narberth are in place and may come into effect upon the date of expiration. Pittsburgh and several other smaller municipalities in Pennsylvania are reportedly considering passing single-use plastics ordinances as well.

Philadelphia has released a detailed timeline for the implementation of its ban. There will be a considerable education and warning period before full enforcement begins in order to provide businesses with ample time to prepare and comply with the law. Full enforcement will not begin until April 2, 2022.

The Pennsylvania Food Merchants Association (PFMA) stated that it supported the state's preemption of local single-use plastic bans and believes increased recycling programs, consumer education and sustainability programs are the best ways to help address this issue.

Transportation Funding

Early in 2021, Gov. Tom Wolf established a Transportation Revenue Options Commission to review, assess and recommend ways to fund transportation in Pennsylvania. One possible recommendation from the commission is a package delivery fee to be charged on every delivery made in the state, from Amazon, UPS and FedEx to grocery and restaurant businesses.

A goal of the commission is to fund transportation in a way that eliminates the state gas tax, which currently provides nearly 80 percent of the revenue that goes to transportation in Pennsylvania. The tax, which has remained flat over the past several years due to a combination of factors, including the COVID-19 pandemic and increased hybrid and electric vehicle usage, is not projected to be sufficient for the state's funding needs going forward.

Package delivery fees have yet to be implemented anywhere in the country. New York City is considering a $3 fee to fund its Metropolitan Transportation Authority and Colorado has proposed a 25-cent fee to fund about 30 percent of a $53 billion road initiative. Pennsylvania's fee could range from $0.25 to $1.00 per package.

Other revenue options expected to be recommended include a per-trip fee for transportation network providers such as Uber and Lyft, a mileage tax for vehicles driving in the state and a pilot mileage-based user fee for electric vehicles.

The commission is expected to make its final recommendations for revenue sources by early August. PFMA is monitoring the situation closely and assessing the potential impacts to members.

Convenience Store News encourages local trade associations and business groups to contribute to this column. To spotlight a local or state issue, please email Editorial Director Don Longo at [email protected]