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March 2, 2011

Federal Update for the period ending February 25, 2011

I. Government Shutdown a Possibility
II. House Committee Announces Hearing on HUD Programs, CDBG
III. NLC Opposes SEC Proposed Registration Rule
IV. NLC Opposes Pension Legislation
V. EPA Accepting Applications for Smart Growth Awards

Dear Mayor:

The past two weeks in Washington have been busy with issues affecting municipalities. Here’s a rundown based on reports provided by our eyes and ears in the District of Columbia – the Federal Relations Staff of the National League of Cities (NLC).

I.          Government Shutdown a Possibility

In the wee hours of Saturday morning (February 19) and as both chambers headed into a weeklong recess, the House approved H.R. 1, a continuing resolution (CR) that would fund federal government programs for the remainder of fiscal year 2011. The bill calls for $61 billion in cuts to federal programs, including a $2.5 billion (or 62.5 percent) cut to the Community Development Block Grant program. The CR is necessary because Congress failed to reach agreement on FY 2011 spending levels before adjourning last year. The current CR or stop gap spending measure expires on March 4.

The President has already warned that he would veto H.R. 1 in its current form if it reached his desk, and Senate leadership has also indicated they will not accept the House package. The Senate is working on this issue this week.

If Congress fails to reach an agreement on a stopgap spending measure before the current funding law expires on March 4, the federal government could be headed for the 16th closure since Jimmy Carter's presidency.

II. House Committee Announces Hearing on HUD Programs, CDBG

Scheduled for yesterday, the House Financial Services Committee will hold a hearing on the U.S. Department of Housing and Urban Development's (HUD) proposed Fiscal Year 2012 budget.  HUD Secretary Shaun Donovan will serve as the hearing's only witness.  

During the hearing, Chairman Spencer Bachus (R-AL) is expected to question the justification for increases in the HUD budget, which includes the Community Development Block Grant program.  In a statement announcing the hearing, Committee Chair Spencer Bachus (R-AL) said, "Our committee will closely scrutinize HUD programs with the goal of identifying needed spending cuts and eliminating inefficient and duplicative programs."

While the House and Senate continue to debate fiscal year 2011 funding levels and in anticipation of next week’s hearing, we are asking city officials to contact their congressional delegations and urge their support for the CDBG program, a proven and effective investment that creates jobs.  New Jersey Congressman Scott Garrett serves as a member of this Committee.

To assist municipal leaders in their outreach efforts to their congressional delegations, NLC has developed an online CDBG resource packet, which includes an action checklist, a one-page issue brief, a one-page fact sheet, and a sample letter to your Representative or Senator, as well as a sample media advisory and press release. Find these materials at:

III. In Comments, NLC Opposes SEC Proposed Registration Rule

Last Tuesday, NLC submitted comments to the Security and Exchange Commission’s (SEC) proposed rule requiring the registration of volunteer board members of bond issuing municipal and regional organizations and authorities as financial advisors. 

Considering that the SEC’s rationale for extending the registration requirement, which currently applies to for-profit advisors, is unclear, NLC writes that such a requirement would have a chilling effect on local governments’ ability to recruit high quality volunteers to serve these roles in their communities.  In addition, NLC’s position is that the rule is duplicative since most boards are already subject to local rules regarding conflicts of interest and public sunshine laws. 
Your New Jersey League of Municipalities has also lodged its objection to the proposal with the SEC.

IV. NLC Opposes Pension Legislation

Last week, NLC and other national organizations representing state and local governments and public retirement systems sent letters to every member of Congress opposing the Public Employee Pension Transparency Act (H.R. 567, S. 347).  If passed, the legislation would amend the Internal Revenue Code to require all states and localities to follow a federally-mandated pension reporting system.      

Specifically, the House and Senate bills would require public pension plans to file an annual report with the Treasury Department that states the funding status of the plan using a rate of return that is substantially lower than plan’s real rate of return.  Failure to comply with the reporting requirement would jeopardize the state’s or locality’s ability to issue tax exempt bonds thereby undermining their ability to fund long-term capital projects. 

While the bill sponsors may be well-intentioned with respect to public statements about the stability of a plan, the unintended consequences of both bills would cause harm to states and local governments in several ways.  First, they would cause the actual plan values to be understated when considered against historical returns and create the appearance of substantial underfunding, even for the most buoyant and fiscally sound pension systems.  Second, such a report would unnecessarily call into question the fiscal viability of the plan sponsor.

In the letters, NLC and its colleagues argue that “this legislation would establish a dangerous precedent with regard to federal taxation and regulation of state and local governments and represents a fundamental lack of understanding regarding the operations and funding of public pensions and the strong accounting rules and strict legal constraints already in place requiring open and transparent governmental financial reporting and processes.” 

V. EPA Accepting Applications for Smart Growth Award

The U.S. Environmental Protection Agency (EPA) is accepting applications for the 10th annual National Award for Smart Growth Achievement. Through this award, EPA will recognize communities that have successfully used smart growth principles to improve environmentally, socially, and economically. Winners will be recognized at a ceremony in Washington in December 2011. The entry deadline is April 6.

Awards will be given for the following four categories:

  • Programs, Policies, and Regulations: Recognizing regulatory and policy initiatives that remove barriers to or provide incentives for smart growth.           
  • Smart Growth and Green Building: Recognizing development that integrate building design and materials are with land use and location efficiency. Projects may be single or multiple buildings.
  • Civic Places:  Recognizing well-designed, vibrant projects in the public realm that improve a community’s sense of place while adding environmental and economic benefits.
  • Rural Smart Growth:  Recognizing communities that preserve and encourage rural economies and character, improve transportation choices and housing options, and support the economic viability of working lands.

Applicants may be public or private sector entities, but all applications must include a public-sector partner. Applications for public-nonprofit activities are welcome but must be submitted by the public sector participant.

Good luck to all New Jersey applicants

Very truly yours,

William G. Dressel, Jr.
Executive Director



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