Regulations - Tax & Finance

The U.S. Department of the Treasury (Treasury), the U.S. Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), and the Municipal Securities Rulemaking Board (MSRB) are responsible for implementing federal policy on issues related to revenue, taxes, securities, and municipal bonds. Following are links to recent agency regulatory activities that may impact cities and towns.

SEC Proposed Rule to Adopt a Floating NAV for Municipal Money Market Funds

NLC has submitted comments to the Security and Exchange Commission (SEC) in opposition to their proposal to change Rule 2a-7, S7-03-13 to move money market funds from a stable $1.00 price per share to a floating net asset value (NAV) or subject them to redemption restrictions in the form of fees or gates. NLC understands the SEC’s goal to protect investors by strengthening financial regulation, but imposing a floating NAV or redemption restrictions on money market funds is not in the best interests of investors or issuers. A floating NAV or redemption restrictions on municipal money market funds would cause local governments to pay more to borrow money to finance the construction of basic infrastructure such as schools, roads, bridges, sewers and hospitals. Tax-exempt money market funds play a crucial role in public finance, as they currently hold almost three-fourths of the short-term securities issued by state and local governments.

SEC Proposed Registration Rule

In late December 2010, the U.S. Securities and Exchange Commission (SEC) proposed a 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 submitted comments 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 believes that the rule is duplicative since most boards are already subject to local rules regarding conflicts of interest and public sunshine laws.