October 1, 2008

Federal Update for period ending September 30, 2008

Dear Mayor:

Here is the latest bi-weekly update on activity in our Nation’s Capital from the federal relations staff of the National League of Cities (NLC).

Congress Sends Stop Gap Spending Package to the President
Over the weekend, Congress cleared a year-end appropriations package that will keep the government funded into early March 2009 and leave final decisions on spending for domestic programs and agencies for the next Congress and president. The package leaves most programs funded at 2008 levels but calls for an increase in funding for military construction and the departments of Defense, Homeland Security, and Veterans Affairs. The package includes an extension of the National Flood Insurance Program and the Pre-Disaster Mitigation Grant Program, both of which were scheduled to expire on Sep. 30. The legislation also includes $22.9 billion for disaster relief and $2.5 billion for low-income home energy assistance. It also effectively ends a moratorium on offshore oil and gas drilling for the time being. On Tuesday, September 30, President Bush signed into law H.R. 2638, the "Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009."  

Economic Stabilization Plan Fails in the House
After a week of round-the-clock negotiations, Congressional leaders and the White House reached agreement on a $700 billion proposal to stabilize the financial markets and ease the credit crunch. Under the proposal, the U.S. Secretary of the Treasury would be given the authority to purchase distressed assets from financial firms, which would, in theory, reduce market risk and restore investor confidence in the U.S. financial markets. Other elements of the deal include parceling out the money in installments, limits on executive compensation, a government insurance plan (paid for by financial institutions), profit sharing warrants, foreclosure forbearance, and an oversight commission. On September 29, the House rejected the legislation, 205-228. Bloomberg News reports that the Senate will vote tonight on a modified $700 billion financial-rescue plan, tying it to a temporary increase in bank-deposit-insurance limits (to $250,000 from $100,000) and a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade. These two proposals will be tied to the bailout, in order to win support from House Republicans.  Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben Bernanke have warned that without federal intervention, Americans and Wall Street could go into a financial panic, resulting in more banks failures, reductions and complete losses of retirement savings, further drops in home equity and “dramatic” rises in foreclosure, and increased unemployment due to loans and other financing becoming unavailable to small business and farms. Such consequences would further compound fiscal conditions for cities reported previously in the National League of Cities report, City Fiscal Conditions in 2008. The report showed a distressing downturn in income tax, property tax, and sales tax revenues at a time of rapidly increasing demand on services. To access the report, go to http://66.218.181.91/ASSETS/A49C86122F0D4DBD812B91DD5777F04D/CityFiscal_Brief_08-FINAL.pdf

HUD Announces Details on Neighborhood Stabilization Program
Last Friday, HUD Secretary Steve Preston announced funding allocations for the Neighborhood Stabilization Program (NSP), a new $3.9 billion federal program to help state and local governments respond to the effects of rising foreclosures. State and local governments can use these funds to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities. To view more information about the program and the allocations, click here. HUD will host a national housing summit in Washington, D.C. on Oct. 7 and 8, as well as a series of regional conferences throughout the month of October, to explain the details of the program to governors, mayors, council members and other state and local housing leaders. To register for the HUD housing summit, and for more information on the program agenda and hotels, go to
http://www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/.

Amtrak Reauthorization Bill Awaits Senate Debate
Last Wednesday, the House passed H.R. 2095, an Amtrak reauthorization bill which includes $13 billion for the national passenger rail program and several other rail proposals, and sent the package to the Senate. The legislation would provide $12.9 billion for 5 years for passenger rail, almost double the current rate of spending, and would be the first time Congress adopted an Amtrak authorization bill in 11 years. The five-year authorization includes funding for state intercity passenger rail grants and high-speed rail corridor grants. It also includes changes to Amtrak’s financial accounting system and a five-year financing plan to improve accountability. NLC strongly supports Amtrak reauthorization. The major controversy delaying agreement between the House and Senate has been a House-approved proposal to allow the U.S. Department of Transportation to accept bids for private construction of a high speed rail line along the Northeast Corridor. The House bill also includes a rail safety provision to help equip trains with a technology, known as Positive Train Control (PTC), which could have prevented the deadly crash in California earlier this month. The Senate is expected to vote on the reauthorization bill before the end of this session.

Additional Funding for Bridge Repair and Inspection Sent to Senate
A bill approved by the House and headed for the Senate floor would provide additional funding for states’ bridges in dire condition. The National Highway Bridge Reconstruction and Inspection Act of 2008, H.R. 3999, would authorize $1 billion for bridge repairs and inspections. The bill, sponsored by House Transportation Committee Chairman Jim Oberstar (D-MN) following the Minnesota bridge collapse last summer, would restructure how the federal government keeps track of bridge conditions and sets national standards to reduce the number of deficient bridges.

NLC Testifies at House Hearing on Cell Phone Tax Moratorium
On Sep. 18, NLC provided testimony before the U.S. House of Representatives Subcommittee on Commercial and Administrative Law against H.R. 5793, the Cell Tax Fairness Act of 2008. The legislation calls for a five-year moratorium on state and local governments’ authority to levy new taxes on wireless service and providers at rates greater than other businesses. Witnesses in support of the legislation argued that state and local taxes unfairly single out low-income users, claiming that state and local wireless taxes are inherently regressive and limit access to those who cannot afford the taxes. NLC opposes the bill because it interferes with local governments’ taxing authority. To read NLC’s testimony, go to
]http://nlc.staging.10floor.com/ASSETS/A7D294B4788341C0892754E899FC1B92/Cell_Tax_Moritorium_Testimony%209-30.pdf. No further legislative action on this bill is expected this year.

NLC Submits Comments on Proposed Changes in Overtime Rules
Last week, NLC, the International Municipal Lawyers Association (IMLA), and the International Public Management Association for Human Resources (IPMAHR) submitted joint comments to the U.S. Department of Labor in response to the Notice of Proposed Rulemaking on the Fair Labor Standards Act (FLSA). The proposed rule updates two provisions important to public sector employers: (1) Part 553.210, relating to the partial overtime exemption as applied to employees engaged in fire protection activities and (2) Part 553.25, relating to the use of compensatory time. The Labor Department will compile and review all comments received and is expected to issue final regulations within the next 45 days. To view NLC’s comments, go to http://nlc.staging.10floor.com/ASSETS/40B0EFF0AA8C4A62924DE1E561CA588F/Final%20FLSA%20Comments%209-30.pdf.

NLC Files Comments Opposing FCC Preemption
Yesterday, NLC, USCM, NATOA, and NACo filed joint comments in opposition to CTIA’s petition asking the Federal Communications Commission to preempt local zoning authority involving the siting of cell towers. To view a copy of the comments, go to http://nlc.staging.10floor.com/ASSETS/66C88DEC5FBB4B5B8CECFC74CE3CB8C5/CTIA%20Comments%209-30.pdf. As a next step in the proceeding, NLC is preparing to file reply comments on Oct. 15 and will begin scheduling meetings with FCC Commissioners to advocate for our position. Thanks to all the cities and towns who joined us in filing comments opposing CTIA’s request.

If you have any questions about any of these issues, or our federal relations work in general, please call Jon Moran at 609-695-3481, ext. 121.

Very truly yours,