2024 Tax and Policy Update

In this podcast Walt Zerbe, Sr. Director of Technology and Standards at CEDIA and Host of the CEDIA podcast talks with Morgan Scarboro, Vice President of MultiState and Darren Reaman, Director of Government Affairs at CEDIA about how the latest legislative sessions have affected Tax and business policies that may affect you.  We also talk about other issues that CEDIA's state wide advocacy work is concerned with.  Interestingly, AI is top of mind of many of these legislators as well as data and digital taxes!

Podcast Transcript

Morgan Scarboro  0:01  
I am CEDIA, I am CEDIA, I am CEDIA, this is the CDM CDM podcast. This year alone, we tracked 581. State level bills related to AI so really just exploded in popularity, a lot of that was focused on more niche or specific issues deep fakes was a really popular issue for legislators to try to tackle. But a few years, a few states this year did consider comprehensive AI bills. California, Connecticut, Colorado, and Utah, all considered pretty comprehensive legislation trying to regulate AI in some way, this year, Utah was really the only one to do so so far. And theirs was a little bit smaller in scope than some of these other states. But I think that this was definitely sort of the place to be if you're talking about state legislators this year, and it's certainly not going to get quiet or moving forward. So that's a huge issue area, I think, for everybody who listen to this podcast for CDL members to sort of keep an eye on because even if it's not directly related to you, some of the ways that they're doing these comprehensive bills are pretty broad, and I think could pull in more, more folks than you might expect.

Walt Zerbe  1:08  
Hello, and welcome to another CD, a podcast. I'm Walt Zerby, Senior Director of Technology and Standards, and your host for the CD podcast. And today, we are going to be talking about things with your business, things that are related to your business, things that are related to your world, and not technical things. But the very important business side of things, we'll be talking about taxes and policy, and all kinds of stuff. So and to help me do that I have to find guests. And we have done this podcast a couple of times before. And we try to do this every year because things change from year to year. And there's always something new to learn and be aware of. And it's a never ending sea of change, I think in the business world. So fortunately, we have two great people that can help us stay up to date with what's happening. The first is Morgan Scarborough, and she is vice president at multistate. And I also noticed, Morgan that you are co chair of state relations of the state relations Task Force for women in government relations. Yeah, yes, that's correct. A great group. Yeah. Okay. Good for you. Do you want to quickly tell me what that what that is? Yeah, absolutely. So it's really a group of women who are in all sorts of levels of government relations. Sometimes it can be a space where there are not a ton of women in the room. So it's a great place to give women the opportunity to get together, talk about policy updates, professional development, networking, the whole nine yards. So really wonderful group, there's a lot of opportunities, whether you're located in DC or sort of all around the country. So I would really recommend folks look into that if they're interested. Okay. Thank you very much. And then we have a CD as own Darren Riemann. He is the director of government affairs at CEDIA. And Darren, how are you? Great. Thanks for having hosting us. Well. Yeah, absolutely. And I also want to point out, since you know, we always usually try to get into a little bit of technology here. I just learned when we were doing a little mic check with Morgan. She's like, well, you know, this mic I'm using is kind of sensitive, and and it might be picking up some white noise. And it turns out your office pumps in white noise in the office, is that in everybody's room? Or how do they do that? Yeah, it's sort of a demeanor where we have cubicles and then you can hear it in the offices as well. It's it's really nice when you're working in terms of sort of cutting down on distractions. But then I'm like here on a really sensitive mic and like, wow, that sounds really loud. It does not sound this loud in person. I'm from it. It's it's actually pretty cool. I've actually gotten into that myself, although it's brown noise. And that's when sleeping. So I'm thinking we might need to have a con a podcast on all the different types of noises so that people can know what's the difference between what but anyway, I digress. Let's go first and find out so your was multi state and CD has a relationship with multi state. So I thought I would hand it over to Darren to talk about that relationship between CEDIA and multistate. So Darren, you want to fill us in on that? Sure, absolutely.

Darren Reaman  4:09  
multi state has been a partner of CDs for over 20 years, supporting our mission and air of you know, supporting our members in advocacy work and Government Affairs worked, designed to support our members, our members businesses, and ensure that they can continue in business. multistate is a multi service state and local government relations company. And how we work with multi state is first of all, there are tracking companies. So we receive daily reports, issues and keyword search terms based on that on legislation and regulations that we monitor, track and potentially lobby on for the benefit of our members to ensure again, that our members can stay in business. And then so tracking is one component and others

Darren Reaman  5:00  
Part of that is kind of as the legislative sessions come to a close in the summer.

Darren Reaman  5:06  
For those that are full full year, we do a review of what changes have been made to licensing. And we update our CDL licensing database with the team at multistate to make sure our members have the most current information on what licenses they may need in throughout the United States and in Canada, for the different licenses and integrator may need also multistate has a compliance team and they work with us then when we do have to lobby or register as a lobbyist handle those registrations for CEDIA as the entity and myself as, as an in house lobbyist. And then the reporting requirements that that go with that whether that's monthly quarterly, or it depends on state by state what those are. But there's a compliance team we were in are engaged with him on that. And in the past, multistate, has helped us identify if we need to hire a lobbyist identify lobbyists on the ground lobbyist in different states. And then

Darren Reaman  6:08  
they've also helped us in years past with some legislative strategy as well. So and then also how this would also engage with our members is when something come up, we may send out through our digital advocacy tool or civic quick, asking them to engage or reach out to their legislator, or there may be some type of call to action, whether that's submitting a letter are reaching out, again to their legislator, or the regulatory body, etc. And we have that relationship of civic click, click, again, through multi state. So multi state has been a partner of CDs for over 20 years, and they kind of touch on different areas to help us have an advocacy program that supports our members and our members businesses. Jeez, sounds like we need multistate a lot does, do you rattle off a whole bunch of stuff right there? I'm gonna clip that for a commercial for us. I can provide that to you, Morgan. Well, well, then let's kick into some of the items that we had. We had previously we did get together and do do few email exchanges, just to talk about what kind of things we would want to cover today. So

Walt Zerbe  7:15  
let me see. So

Walt Zerbe  7:18  
what is so Morgan says to you, what's the current economic state of the states? In your opinion? And I know this changes probably daily or weekly, but can you? Can you somehow sum it up? Yeah, this is a really good question, because it really informs what states are doing not just on tax, but on other things, too. So if you have an issue, where you're looking for an appropriation from the state, you maybe want some sort of grant, you want what some sort of workforce development program, anything like that, making sure that you understand the state revenue situation is really important. It's not just for US tax nerds, who should follow that it's really anybody who's in the government relations or policy space, I think should be really well informed on what's going on. So if we think back, and I hate to, like, bring us back to 2020, because that was a dark time. But if you think back to 2020,

Morgan Scarboro  8:06  
everyone, of course, was sort of going through their own thing. And if you were not a fiscal nerd, what you might not have realized was that state revenues were really in jeopardy at that time, fiscal analysts were coming out of states and saying we're going to lose 40 to 50% of our state revenue. And states have balanced budget requirements. So for state legislators, it was a really overwhelming task to think through, how do we lose 50% of our revenue, and provide the services that we want to provide in this state, even for some of the most conservative legislators who, you know, always campaigned on cutting spending or shrinking the budget, that was still a really scary thought to lose 50% of your revenue? You fast forward to now, of course, we know that that's not what happened. In fact, states had more revenue than ever before. And when I talk about that, I think some people are quick to jump to, yes, there were a lot of federal transfers to states that enabled them to have these sort of record breaking revenue levels. And that's true, there was unprecedented amounts of transfers from the Federal to state and local governments. But what we also saw was the state owned source revenue grew dramatically. So we thought we were going to be in this big loss situation. But we actually saw States taking in more revenue than ever before, both from their own tax sources and also from the federal government. So if we look at where we're at now, what we're starting to see is revenue is normalizing. So anybody who has been watching revenue over the last couple of years has been saying, This is not sustainable. It's not sustainable to have your revenue grow by 20%. Every year, this cannot keep happening and we're going to see it sort of come back down to earth. So we are starting to see that a lot of states are starting to sort of level off, but I would say they're still in really strong fiscal conditions. So is the 20%. Just for those that aren't aware, is that bad that they're having is

Walt Zerbe  10:00  
So high revenue right now. And what will happen, in your opinion when that goes down to normal? And what is normal like 5%? Or 10%? Probably not flat, right? Yeah, it's not bad. It just legislators really. And for the most part, they did a good job of setting this up so that they were using this temporary or one time money for one time projects. What would be bad is if you saw this big revenue influx that you knew was temporary. And you said, Okay, well, we're going to fund a 20 year program with this money that we know is not going to was not going to stay. Really what you see for states most years is I would say, probably between like two to 4%, revenue growth year over year. So we're in a place where it's much more normal states are still in good condition. There are, of course, a couple of exceptions. And this is when it gets tough to talk about because I can tell you 45 states are in really good fiscal positions. But if you're looking at California, there's a problem is that potentially New York has a problem, New Jersey might be in trouble, Massachusetts, it's watching things. So when you start talking about those really large states that a lot of business folks have a pretty big footprint in. If I tell you that, you know, a dozen tiny states that you don't even do any business in are in a good revenue position, that doesn't really make you feel better when your top five might be sort of in trouble. So yeah, I think California is a great example here that's just sort of illustrates what's going on in some of those states. So in January, Governor Newsom put out his budget estimate, and he said, I think California and his budget, basically, he predicted a $38 billion deficit. But his budget out a month later, the fiscal analysts in California come out and say, very politely, they call that a plausible but optimistic estimate for the deficit. And that actually, they think it's going to be closer to $73 billion. So almost doubling, we're waiting on the May revise in California. So we should find out within a week or so here, what that numbers actually add, but that's a good example of a state that is certainly outside of the norm in terms of revenue problems right now, okay, am I to assume that if a state is as flat or positive, so right now we're saying or maybe 20%, over, which will be positive, that that translates to less money in a business owners pocket because they're getting their money from, from, you know, the businesses and from individuals, and that as they go more normalized or more flat, then people will have more money in their pocket? But if they go negative, like if California ends up having a big deficit problem, that would that will go the opposite direction? Is that a fair assessment? Or is that too generalized? I would say not necessarily. Because in order to pay more in tax, you have to be making more, right. So just because revenue collections are up, that could be because people are experiencing higher capital gains levels, or businesses have higher levels of income. So it's pretty proportional. I think the challenge really comes in there is that when you're in a negative revenue situation, when your state is struggling fiscally, the odds of having a new tax or a tax increase are much, much higher. So that's actually the real risk. To me. That's the real impact, not the sort of proportion like what are you giving under these normal rates? Yeah, that's what I'd be worried about. You also introduced a couple of new terms. You said fiscal nerd, and tax nerd, which would be added to our tech nerd and experiential nerd vocabulary. So perfect. We're always good company that Yeah. All right, Darren, let's go to you. And I want to talk about members and staying informed and why they should be involved in all this stuff that we're doing with multistate and that CD is involved with, and of course, I'm just gonna throw out the two words member benefit. So you want to get an absolutely so CBS government affairs program, as I said earlier, or advocacy is the voice for our industry for our members, working daily. Through those resources that I mentioned earlier, to our tracking system and licensing database, all of that information, a member can go out to the CD, a website and click on the advocacy link, and view the legislative and regulatory what we're tracking for them. Every state we're tracking something for you. No, we are tracking, monitoring, and in a few cases we've lobbied on this year. So I think it's important for our members to kind of see what types of issues like licensing issues, connected devices and different things that we're tracking on their behalf. So stay informed in your state, and also as

Darren Reaman  14:37  
as the legislative sessions and continue to use the CDL licensing database as a resource when they're working on a project not only in their state, but in other states as well. And know what you know, for example, what edition of the National Electrical Code is adopted when you're working on a project? Whether you need an electrical license eliminated

Darren Reaman  15:00  
The Energy license if there's a limited energy exemption, or home improvement contractor or security alarm licensed, so those are the types of summaries that we have that multi States provided us. And I think it's important for our members to know not only what licensing landscape is they're currently working under, but but through the legislative tracking what potential changes are being made, that could impact their business and how they do business in their states as well. And by staying informed and involved, as I talked about earlier, as we work through the tracking system, with multi state the daily reports, you know, will we use the Civic click digital advocacy tool to engage and inform our members with a call to action, whether that's contact a legislator or attend a meeting or a committee hearing, it's important that our members take that step and stay informed and did involve as small as most of our members, and we're talking about small business tax today. Our most of our members are small businesses. And that's an important, you know, as we lobby and advocate for our small business members, and all our members, the importance of fair regulation, and making sure that our members can not only do the work today, but five and 10 years down the, in the future as well. All right. Question for you. Darren, where does Where does somebody find this information? And within CEDIA? Yeah, so you go to, to cbn.org, click on advocacy, and then under government affairs, the you can click on the legislative and regulatory tracking. And then there's also

Darren Reaman  16:40  
there's also the CD licensing database. And you can click on that by and that's broken out by by state, and also our provinces in Canada. And so that's kind of your go to base is within the advocacy length of the CD and.org. Okay. And again, just not to not to keep plugging, but this stuff takes a lot of time. And it takes a lot of effort and money. So this is a great member benefit that CD spends a lot of time on, to try to collate all this information and stick it into one place. And as you said, it's it's crucial to someone's business, if all of a sudden they make a change, it's going to affect you, and you're not aware of it, I guess you could get in trouble, right, if you continue to do business and weren't aware that there was a licensing change or a new requirement. Right. Right. But that's also why, you know, we need our members to be involved stay informed and involved in the processes.

Darren Reaman  17:33  
Because as small businesses, they have a strong perspective that they can bring to legislators explaining what these changes would do and how that impacts their small businesses. So when the call to action goes out through civic click or other methods or through a CBS state captain, etc, you know, take the time to get engaged in the process along with with your association CEDIA because we're not we're not talking maybe you're very busy today. But it's about your future work and who can do that work. And the conversations take place throughout throughout the set legislative sessions throughout the country. And so stay informed and take the time to get engaged and involved. All right. And we have one last question before you before going to throw one back to Morgan and that is

Walt Zerbe  18:18  
when you say licensing for the state, is it truly the entire state or do other jurisdictions within the state they can have variants on that licensing and more and you can chime in on that too, because obviously you're you're discovering this. So licensing, I mean,

Darren Reaman  18:34  
can oftentimes be at the state level, whether that's an electrical license, a limited energy license, a security license, but also that you can have variations, and we encourage our members to always check the municipality, the county and the state to make sure that when they're beginning to project that whether there's a license requirement or a permit requirement or an inspection requirement, they kind of check both local, county and state level requirements. Okay. All right, Morgan, I would love to get from you trends related to small businesses and small business taxes from the 2024 legislative session. Could you give us a fill in on that? Yeah, absolutely. For the first one, I'm going to speak a little bit outside of my wheelhouse, but I thought that talking about AI was really important, both for this audience and because it was genuinely just one of the biggest trends that we saw this year, across sort of any issue type. So I work primarily in tax, as I mentioned, but we have some really smart folks here who work on AI and technology issues. So I sort of chatted with them to get the lay of the land. Because even as a tax person, I heard about AI so much this year, just following state legislative session. So I think certainly, the focus and the sort of new legislative focus on AI was the story of

Morgan Scarboro  20:00  
A year and a lot of capitals. So this year alone, we tracked 581. State level bills related to AI. So really just exploded in popularity, a lot of that was focused on more niche or specific issues. Deep fakes was a really probably issue for legislators to try to tackle. But a few years, a few states this year did consider comprehensive AI bills. So California, Connecticut, Colorado, and Utah, all considered pretty comprehensive legislation trying to regulate AI in some way, this year, Utah was really the only one to do so so far. And theirs was a little bit smaller in scope than some of these other states. But I think that this was definitely sort of the place to be if you're talking about state legislators this year, and it's certainly not going to get quiet or moving forward. So that's a huge issue area, I think, for everybody who listen to this podcast for CEDIA members to sort of keep an eye on because even if it's not directly related to some of the ways that they're doing these comprehensive bills are pretty broad, and I think could pull in more, more folks than you might expect. Yeah. What about in general terms in your in your bailiwick of taxes? What are the some of the trends we're seeing for in 24, that have changed with the legislative session? Yeah, absolutely. So this year, we actually saw a number of legislators and state legislatures being a little bit hesitant to act. But this isn't really surprising. So my colleague Ryan has done some research on this before. And he found that in an election year, tax legislation, whether it's cuts or increases, drops, by about three, I was gonna ask you, the live selection year had a big, yeah, that makes sense. It has a pretty significant impact. So we always expect a little bit of a quieter year on the tax front and a large election year. But I think in terms of what we saw in tax this year, you could sort of group it into three categories. So number one, is a positive development, but not a super interesting one, we saw a lot of continued rate reduction. So over the last six years, 14 states have reduced their corporate income tax rates, and several of those have done so more than once. Even more than that have reduced their individual income tax rate. But for sort of the purpose of this conversation, we can focus on corporate, and this year, Georgia, Idaho and Utah cut their corporate rates. So that's a continuing trend that we've really seen sort of go strong over the last couple of years, that we saw more movement on this year. And then we also saw a lot of conversation on the property tax side, this is probably not surprising to anybody who listens to this, who owns property, who has seen their valuation skyrocket over the last couple years, constituents are going to legislators and saying, my property tax bill is crazy, you have to do something about this. And property taxes are one of generally the most hated tax types. Because you could probably tell me to the penny, what you paid in property taxes last year, and you probably couldn't tell me the same for what you paid in income taxes or sales taxes, writing that check really sticks with people often demand that their legislators angry. So we saw that, you know, I think about states like Nebraska and Colorado who had a real focus on that this year. But those are really targeted for the most part toward residential property owners, not necessarily as much commercial property. Okay. So the third bucket is the one that I think is the most interesting, and it's the one that sort of keeps me up at night, which is this idea of legislators introducing these new novel unique tax ideas. And I think actually, we've talked about it on this podcast before. But it's important enough that I've been on my soapbox about it for a number of years. So there is a real interest among legislators in taxing digital advertising or taxing data, right, so brought that up on their last cast. It's really important because that trend has only continued you only see more legislators talking about this. So currently, Maryland is still the only state in the country, which has passed attacks on digital advertising and their revenue that you derive from digital advertising. Um, it has a pretty high threshold to it in terms of who would be subject to that tax, but it is currently in litigation and has been in litigation for years, seems to be a pretty lengthy court process that they're going through. So that has slowed some other states and following in Maryland's footsteps waiting to see what the outcome of this litigation is. But what we see on the flip side, is an interest in taxing data collection. So somebody who collects data on consumers who derives revenue from collecting data on consumers, legislators increasingly want to figure out how to tax the value of that data collection. And as you might expect, I like see some smirks here. Everybody listening can't see it, but I see some smokes. It's very difficult to figure out how to do that for a couple of reasons. First, how do you sources information second, how do you value data? Right my data alone the fact that I like watch Bravo and like to online shop that's not that's

Morgan Scarboro  25:00  
not valuable on its own. If you're talking about the data of

Morgan Scarboro  25:04  
100,000 people who are my age, that then becomes very valuable data, right. But how do you tax data on an individual basis is sort of a tougher question. And how do you tax that? How do you tax the value? Right? If I'm on a social media platform, for example, what's the value that I'm getting out of that? Right? Like, what's the value of me exchanging my data with them? So it's a really tricky question. And the drafts of language that we have seen on this issue are extremely broad, extremely broad. So often, when I talk about this, people immediately start thinking about big technology companies. But that should not be your response. The way that these have been written so far, are so broad that it would capture a very, very large number of companies, I It's difficult for me to think of anybody who is not collecting consumer data in some way. This sounds like a hot mess. It absolutely a hot mess is exactly the technical term I would use for this, it is kind of a disaster.

Morgan Scarboro  26:05  
This year, California right now is seriously considering this tax. They're calling it a data extraction mitigation fee, it's really focused more, or the calculation of it comes from your value of digital advertising. So it's kind of a hybrid between this digital advertising and idea of taxes on data. But we've also seen similar proposals in states like Nebraska, Tennessee, Connecticut, Illinois, Massachusetts, they're getting increasingly popular. So that's a really big one to keep an eye on. And then the other one, which I think is a little bit more of an immediate concern, probably, although it's not as unique, or novel is this is this idea of taxing digital goods and services. So there has been a real movement to expand the sales tax to more digital goods and digital services, I think probably that would impact a lot of your members. So for example, Virginia passed a budget this year, that would tax computer related services, web hosting, and design data storage, streaming services, and software application services. The most important thing to know about the budget Virginia past it's there, they're coming back to start fresh and sort of redo this budget because the governor and the legislature didn't see eye to eye. But the most important piece is that they did not include a business input exemption for the software application services piece. I think that's critical for CEDIA and members to focus on. When you do this expansion or when alleged I want to say does this expansion to digital goods and services, it's crucial that there is an exemption for business inputs. If you're a business, selling software application services to another business, sales tax should not be charged on that transaction. So it gets a little bit more on the technical side of tax things. But the fiscal impact could be really, really, really large if these things are taxed with no business input exemption, cheese.

Morgan Scarboro  28:02  
I should I wish I brought some more good news, the I should have ended on the rate cuts. But you know what, though, I expect this because I don't know, they're always looking for different ways to get revenue. Right? I remember when Maryland had a rain tax, I don't know if you remember that. But it was tax for every square foot or whatever, whatever of nonpermeable ground. And that ended up being recalled, but they put it in effect.

Morgan Scarboro  28:26  
We've seen some really unique tax IDs. And anytime somebody says I have a brand new tax ID and nobody's ever tried, I like break out in hives.

Walt Zerbe  28:36  
You know, data is the new oil, right? And so we are the data. So I would love to know when we are going to get compensated for our data because there's a flipside of that everyone's taking, right. So the government may take for the data, the companies that use data to as their one of their sole, advertising revenue models like Google. And then there's us who was giving the data.

Morgan Scarboro  28:59  
So it's actually really interesting that you say that you see eye to eye then with Governor Newsom of California when he started talking about this idea, this was a number of years ago, probably three or four years ago at this point. He said he wanted to tax data collection, and then he wanted to do like a permanent fund similar to what Alaska does. So when Alaska collects taxes on oil, they distributed check to everyone who lives in Alaska that's sort of somewhat corresponds to the revenue level of the oil taxes that they got that year. So he basically wanted to create a fund taxes data collection and then pay it out in dividends to the people of California. The problem is you still have all the same administrative challenges that we talked about earlier of how do you actually practically do this in a way that businesses can actually comply with and that is not unconstitutional? And I don't know that we've quite worked that out. Yeah, we're gonna is gonna get bigger and it's gonna get more complicated. Yeah, our lives. Oh, wow. Okay, good stuff to think about. Thanks for Thanks for bringing that up, though. Darren, I want to move back to you when you last

Walt Zerbe  30:00  
Doct you mentioned a state cap and program. What is that? Yeah, the Sidious state Captain program is a volunteer program for our members, where it's like we have one key member per state that we can reach out to, should something come up that would impact our members in that state. And that state Captain then would help with a keep being the key point contact help with analyzing the change how it impacts their business, their small business, the work they do, and also reaching out to other local members and people in the industry to get them involved. In the process. We talked about the importance of staying engaged and involved in the process. So that's the importance of the state captain is a key person should something come up through our tracking system, or or that to get get our perspective and participation

Darren Reaman  30:54  
through the legislative process or regulatory process to a to a hearing, to a legislative meeting, and to be able to make sure our voice in we can positively influence that and support that for our members. Okay, very cool. Are you Are there states that don't have captains that you're looking for quite a few. So if anyone on this cast is interested, please feel free to reach out to me happy to set up one on one meetings to talk more about the volunteer opportunity and look forward to you know, making sure that we can be represented as many states as possible, because like I said earlier, we're tracking legislation regulations in all 50 states. So we'd like to match that up and make sure that we have that state Captain opportunity filled for all 50 states. So you know, encourage people to reach out to me and happy to, to meet with a more and more one on one on the opportunity. All right, and Darren, what what kind of a lift? Is that our burden, I should say? I don't use the word burden. So it's not a burden, getting a volunteering always gives back in dividends. But Sure. So I mean, and that's while we may have state captains in some states, we may not have an active issue in that state in the current session. So but if but if something would come up, it would, you know, I've worked with alongside them to, you know, attend those hearings, and do Abell analysis and continue to, it's really important. One of the key parts of this state captain is it's allows a member to talk to a member. And you know, a member can talk to a member and say, Hey, this is how it's going to impact our business. And we I need you to get involved. So that's one of the key parts of a state captain is it's allowing a member to talk to a member or other industry stakeholders and collectively through CEDIA and through our, through our members and industry partners that we work together to support our industry through the through the legislative or regulatory process. Okay. And I would also think as a side benefit, that stay captain would have more visibility, their business would have more visibility, because they would be meeting people that they would not have met, like on the legislative side. That could also be beneficial for them just because they're they're involved. Is that fair fragment? Correct? Yes. Okay, cool. So we just wrapped up the 2024 legislative sessions, right? So what did we learn from those that we that we can apply to our small business owners? And this is to both? Yes. So I see Morgan, you're jumping at the bit, you're ready to go?

Morgan Scarboro  33:30  
Well, I was gonna say, I don't want to piggyback off of the conversation here. But engagement is so important. And I swear while and Darren did not ask me or pay me to say this. But my biggest piece of advice moving forward is utilizing your advocacy team at CEDIA any advocacy resources you have at your disposal, it's really important. I saw so many technical tax bills this year, that were really improved or otherwise shaped by folks who went in and spoke to their legislators and said, This is difficult to comply with because of xy and z. If you make these even just administrative changes, it will cost me so much less money to comply with this tax. I think that there is sort of this conception that folks are always going in saying, hey, I want you to reduce my corporate income tax. Right? I want you to do this, this and this. And yes, of course, folks would like to see those come down. But really, for most people, there is a huge issue when there is some new big tax that is introduced or expanded or changed in some way that you're now subject to and you don't know how to actually comply and collect and remit that tax. So talking to legislators, via your resources and with your own voice is super important. Legislators on both sides of the aisle really want to hear from businesses, they want to hear from all different industries when they're doing so that they would that would impact them. And so staying plugged into these things, I think is really critical. Yeah. Okay. And I've, I've had the same experience, they actually do want to hear from you and they're just going to make this

Walt Zerbe  35:00  
Just out of ignorance if they don't hear from you. So there's, there's nothing, there's nothing to lose by making sure don't don't listen. So yeah, absolutely. And I think there's sort of, again, a misconception a lot of state legislators do not have legislative staff. So it's impossible to be an expert on every single issue, it's just literally not possible. So there is a reliance on on teaching on outside information just to even help get their like, head around or give them some background into an issue or how something works. I think we probably saw a lot of that in the AI and technology space, there's a lot of learning there, that has to happen. And that's not a dig on any legislators, you just can't be an expert on everything. So wending your voice in those conversations is really valuable. Okay, cool, Darren, and then I would add, for US industry things that trends that, you know, this, some of these sessions are still not complete. So what we're active in Oklahoma, A, which concludes at the end of May, and Rhode Island, which concludes at the end of June this year, but at pole time, electrical licensing issues, and

Darren Reaman  36:07  
I would say for our industry, the importance of lighting, for our industry and the electrical trades so that that'll continue to drive legislative activity for us. And also, what we spend a lot of time is you and I talked about earlier, knowing what version of the National Electrical Code is adopted, but the upcoming editions of the National Electrical Code, and I know, we've had previously podcasts on this topic, but knowing you know, what, if the 2023 edition had major changes for our industry for limited energy work, and the 2026 and 2029, in the future, we'll have additional issues. And then class for wiring lining, those are all trends, big trends, that will drive the conversation of licensing and who can do what work. And that ties back to the importance of staying informed and engaged in your state. So Should those issues come up within your industry, you know, within your state, affecting who can do what work, you know, importance to stay engaged. And as Morgan said, you know, a lot of these states have have small staff, if no staff, so it's just important to, you know, be a voice and be be part of the process. And they'll listen and be be a resource throughout the legislative process. And that's one thing we spend a lot of time I can recall the legislative sessions two things, the introductory season and the amendment season. And when, when, so you can catch things as introduced. But you also need to, you know, as amendments come through, making sure that you're not affected also in the amendment processes as well. So at any fate phase of that, it's always important that our CDN members, you know, step up, get involved and know that a member as a member benefit or advocacy program is working for them daily, year round. Yeah, I would, I bet you guys are busier than ever, because there has never been more limited power applications than now. We've got so many and new categories. It used to be there for a while just networking, and POV. But now it's a whole lot more. Right. And that and that's what you have to watch, as Morgan talked about on the tech side, on the licensing side, potentially, you have to see how stuff is written. And sometimes very broad terms can mean can mean a lot of different things. So then you need to work with amendments or, or things like that, to clarify that or, and that's kind of what how you read and analyze a bill is how and that's why it's important then, that our members get involved because they can say this could potentially mean this to our business, you know, and so that's, that's part of the that's part of the legislative and regulatory process. So when the, when the legislative session is over, they've presumably made some decisions about things. But then they can go and amend those decisions. And that's your amendment session is that so it's constantly changing? Like, can you explain a little bit Morgan and Darren like, is there any close you're like, Okay, this is the way things are going to be for six months or 12 months, and then they could change? Well, it's, I mean, it's upon semi die. But I what I'm saying is the bill can be introduced, and then through the process through the committee process. And through the proper steps of the legislative process, any bill can be amended. And so you need to watch for substitutes and amendments through that process. And so while it's while it may mean one thing at the introduction, the amendments can change that through the process that can limit the scope or broaden the scope or add terms. And so you just need to kind of be able to watch it not only as things are introduced at the beginning of the session, but as it works through the committee process and other steps in the legislative process, making sure that piece of legislation still stays relevant or there's no changes that impact a CDM member or any other industry. Yeah, Morgan, I'm going to direct this to you but also to Darren, one of my

Walt Zerbe  40:00  
One of the things that drives me nuts is the term porque. You know, when when there's a bill and then they throw a whole bunch of other things in there like, you know, we're gonna do a bill about limited energy, but we also want to give free oranges to everybody, because that's buried somewhere in the bill. Do you find that on issues in our that we care about for CEDIA, that that happens or is like the bill name actually what we need to be concerned about? Or do you guys find out about a bill name that's maybe not so interesting, but then you found you find buried in there is something that we are interested in?

Morgan Scarboro  40:33  
Yeah, I think that that happens a little bit more at the federal level that we do at the state level. So the federal, the federal government, part of the issue there is they just pass it, especially over the last couple years, they just pass way less legislation. So if you want something in, there's going to be some like horse trading on the back to try to get your thing. And because there's only a limited number of opportunities to pass legislation, because everybody's fighting all the time. That's a good point to an agreement on anything. States are passing a lot of legislation on average every year. So they they are able to keep it generally more topics specific in their bills. And when you'll always get a budget bill or an omnibus bill that could have a bunch of different stuff in it. But for the most part, they're more issue specific. I think it's like sort of related to what Darren was saying the really important thing is reading the definitions, which is the most boring part of reading any Val But reading the definition. So find it kind of as like a silly example, if you had a state legislature that said, I'm going to impose this 30% tax on CEDIA for some reason, right, and then I go in and I read the definitions and the way that they've defined, CEDIA is the association, but also anybody who's ever worked with the association. So now that impacts me, right. Even though when I'm reading this bill, I think that this is some 30% tax on CEDIA for some terrible reason, right? So like reading those definitions and understanding exactly what's included in what's excluded, is the most important nuanced part. But that is how you can get in trouble is if you're not paying attention to those parts of the bill, and you assume it applies to someone else to some other service, and then come to find out after it's already been enacted, it actually applies to you, too. Okay. Darren, do you want to chime in on that, too? Oh, I just wanted to say yeah, definitions are key, because that sets up who who's impacted. But also, you know, I have many examples through my years, you know, of one or two words making a huge difference. We just had, you know, an example of this last year in Oklahoma, with one word make potentially changing an exemption and how it's applied. So, you know, that's, you know, while you always kind of categorize and tag something by, by topic, it's, it's important to know all the details. One year in Texas, we worked on a bill, and the whole time it was fighting over changing an ad to an oar. And so, so, you know, it's like those examples where one word can can make make makes a huge difference. And that's why a tie back to we're working daily, staying on top of the legislation, the regulations, and then also, you know,

Darren Reaman  43:10  
when, when a call to action goes out, we need our members to step up. So but I just didn't know that, you know, through the resources of wealthy state through our tracking system and everything. We receive daily reports, and those, you know, our every day we on the West Coast, we get stuff on Saturday morning, so Oh, wow. You know, yeah.

Walt Zerbe  43:33  
And I bet you guys just really have to scrutinize everything I remember. Well, there's a famous case where somebody lost millions of dollars because of a misplaced Oxford comma, or a comma was in there. So yeah. Funny. So is there anything else that stuck out to you that applies to our our members here from the current 2024 legislation session? That you want to point out?

Walt Zerbe  43:59  
Particularly for me, I think we've covered Okay, well, then, let's move to 2025. So what should we be looking for, as we move forward ahead to 2025? Do you have any insight of how that might go? I mean, I guess the election will be over. So I imagine you might see some changes happening.

Morgan Scarboro  44:22  
So I'm gonna punt here for a good reason, though. And that is because it is such a big election year. It's hard to sort of make any predictions. So I'm not sure if anybody's heard. But there's some presidential election this year that of course, nobody's talking about very quiet little run of the mill election that we're having this year, but it's a really significant year for states as well. So 11 states have gubernatorial elections. But what's really interesting is that eight of those are actually open races where there's no incumbent. So we're looking at brand new leadership in Washington State, North Dakota, Missouri, Indiana, West Virginia, North Carolina, Delaware, New Hampshire, and possibly Vermont. So

Morgan Scarboro  45:00  
pretty diverse cross section of the country where you could see significant new executive leadership. And then on top of that 86 legislative chambers and 44 states are up for election. Wow. So a huge number of legislative elections. The caveat there is that only a few of these really stand to change the partisan makeup. So don't be overwhelmed by the 86. Number, really, what you need to do is you should keep a close eye on Minnesota, Pennsylvania, Michigan, Arizona, and Wisconsin. Those are the states that there's actually a chance to change the partisan makeup in a way that could drastically impact policymaking in the next legislative session. So really, for me, for 2025. The only constant here is that there will be changed, right? I think that some of the tax ideas that we've talked about today, I would note are bipartisan ideas, or they sort of happen to find some strange bedfellows. So you'll probably still see those continue, despite who wins the elections. But I think it will be really fascinating to see what the political landscape looks like in May of 2025. Yeah. Darren, any thoughts on that? No, I appreciate that perspective. And like Morgan said, I mean, it's that the importance of the federal level that trickles down to the state level. And so we you know, and then, you know, that kind of how our work, once the elections begin, you kind of see, are there any shifts? What are the changes in the committee structure, important committee structures for our industry and start doing that analysis? And the preparation then begins for 2025? Okay, can you guys just do me a favor between the two of you, maybe somebody is aware of a license or two that, that they're bound by in their particular state, but they might not be aware of licenses and other states that maybe could have the probability of showing up in their state. So could you just rattle off a few of these license types, and so people can listen to the cask and be aware of sounds like there's a lot of different licenses, I'm just curious if we could just list some of them.

Darren Reaman  47:02  
So you've got what we focus on is like an electrical license, then the limited what we call unlimited energy, or low voltage licensed security license, sometimes, depending on the work of CD a member does.

Darren Reaman  47:20  
Then you've also got your traditional security alarm licensed, but they also may need to do have a home improvement contractors license. So those are the broad, those are the, you know, any CD, a member may have all any or all of those. And the challenges is, you know, as we do more, as an integrator does more and more work potentially crossing across many different trades. So those all my trades be applicable. And one thing is, you know, many states have reciprocity with other states. So, you know, you may have a state or may have a license in one state, and but you might have be able to do work in other states, if other states recognize that that license,

Darren Reaman  48:02  
you know, through reciprocity, so, and that's a good thing you just said, I know a fair amount of integrators that do work in other states and lots of other states. So CD will be a good resource to for them to decide, hey, I'm thinking about doing work in this state. Yeah, so what kind of licenses might I need to all of a sudden care about? So that's, you know, and as Morgan's and we have that information, as we talked about earlier on the website,

Darren Reaman  48:30  
through under the advocacy section, you can go out and look at a summary of what those licenses are each some each state and provincial summary covers electrical licensing, limited energy, or low voltage licensed security license, if there's a low voltage or limited energy exemption from the electrical act, and also, if we would need to have a home improvement contractor. So I really encourage our members, you know, as they do projects, many of them are probably aware of what the states are that they within their state. But also, as you do other projects, and other states, please allow yourself enough time to go through that process of going through, usually a state electrical board to get applied for the license, whether there's testing exam or both. And then,

Darren Reaman  49:23  
you know, also, like we said earlier in the cast, you know, make sure that wherever you're doing that project, make sure you're looking at there's a municipal requirement, if there's a county requirement, and if there's a state requirement, because any of those three could could be required and in addition to a license requirement, make sure you're also aware of any permits that you need to apply for in and working with inspectors and stuff like that through that process. So but but again, if any of our members have any questions about that, we're willing to you know, please reach out to me and and

Darren Reaman  50:00  
Happy to help you but wanting to make sure that you're set up for success with your project and part of that is making sure you have those proper licenses in advance. Okay. Well, I think we pretty much covered this topic today. Is there anything that we missed Morgan's anything or Darren that you wanted to mention? That's beyond what we just talked about.

Darren Reaman  50:22  
We seem to have run the gamut. I feel pretty good. Yeah. I Darren, were you gonna say something I was just gonna say I hope you know, our members understand how we work for them daily but then also how CEDIA partners with with multistate in many areas of our advocacy program to benefit the work of CEDIA and support are the businesses of our members. Yeah, I can just just looking at where we went today, there's no way so you can do this on their own. So I can see the needing that multistate involved. So Morgan, I want to thank you very much for assisting CEDIA and assisting and, and helping us with this extremely important area, you know, if, if our members can't work or have worked, that they do all of a sudden taken away? That's a big problem. So I think this is this is really critical. A lot of people don't think about this. This is also a particular area. I don't follow myself daily, because I've got my head and technology and other types of things. So without you guys, I wouldn't even know what's going on. So I want to really thank you, Morgan and Darrin for given us a fill in and an update. When do you think the next good time would be to touch base on this? Would you wait to the next legislative session next year? Or would you wait? I guess we could always do it. If some amendment pops up that's like, oh, fire alarm bells going off. Right. So any opinion on that might be interesting to have this in early December, early December, when, as Morgan talked about, we kind of then know how the

Walt Zerbe  52:03  
how the states will be set for the next legislative session and the preparations we're doing in what trends that will be based on the elections in November as we're getting ready for 2025 That sounds good. All right, maybe we'll do that. So once again, thanks again Morgan and Darren for giving us time today and educating us and and for all you do to keep us informed and aware. And that's a super important for the business. So thank you very much for being on today. Thank you for having me. All right, thanks everybody for listening to the podcast. Again, important stuff CEDIA and multistate help CEDIA get all this information together super critical for your business. Get involved, become a state captain, go to the CEDIA area on the Sidious site and find out what's happening in your state. If you're a business owner. I think it's 100% mandatory it's not unless you follow this stuff yourself. But we can do that for you. So again, thanks for listening. And as always, I'll ask you to please keep an open mind.

Unknown Speaker  53:06  
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