Federal Advocacy Update

In this issue:

New Long-Term Transportation Bill Set to Become Law

Matt Colvin, 202.626.3176

After more than 35 short-term extensions and over a decade since Congress passed the last long-term transportation bill, the Fixing America's Surface Transportation (FAST) Act passed in the House and Senate this week, and is now headed for the President's desk for a signature.

The bill, a top legislative priority for NLC, will fund our federal highway, transit, freight, safety, and rail programs for five years at a topline figure of $281 billion from the Highway Trust Fund, and an additional $24.5 billion from the general fund, which is subject to the annual appropriations process. It will take some time to fully review the 1300+ page bill, but there are a number of initial takeaways that are very promising for cities:

  • The former Surface Transportation Program, now the Surface Transportation Block Grant Program, will increase funding that is allocated to local decision makers from 50 percent to 55 percent over the life of the bill and gives local leaders greater flexibility over how those dollars are spent. This will help undo some of the negative changes made under the prior two-year transportation bill, MAP-21, which reduced local control over the STP program.
  • The Transportation Alternatives Program (TAP), which helps to fund walking and bicycling infrastructure, will be rolled into the Surface Transportation Block Grant Program, and funding will be increased from $835 million to $850 million.
  • The bill includes Complete Streets language, which will encourage states to adopt standards for the safe and adequate accommodation of all users, motorized and non-motorized, in all phases of planning, development and operation of transportation facilities.
  • Transit Oriented Development projects are now eligible under the Transportation Infrastructure Finance and Innovation Act (TIFIA), with a much lower threshold of only $10 million as a minimum project size, thus greatly expanding access for smaller projects to the popular federal financing and loan guarantee program.
  • Municipalities will no longer be barred from using tax exempt municipal bonds in Water Infrastructure Finance and Innovation Act (WIFIA) projects. This has been a major criticism of the WIFIA program since its 2014 inception.
  • The bill greatly expands the federal freight program, and establishes a new competitive grant program, the Nationally Significant Freight and Highways Projects (NSFHP) program, which will provide some eligibility for intermodal and freight rail projects.
  • In addition to the federal gas tax, which was preserved at current levels, the bill will be financed by a mixture of pay-fors, including tapping the Federal Reserve surplus account, a move that has been controversial among some members, selling a portion of the Strategic Petroleum Reserve, and cutting the dividend that the Federal Reserve pays to some member banks.

While the FAST Act may not tick every box on everybody's wish list, it will give local leaders the long-term certainty they desperately need and deserve to plan and implement projects, and far greater control over how our nation's federal transportation dollars are spent in their own communities.

House Committee Agrees - Muni Bonds Are High Quality

Priya Ghosh Ahola, 202.626.3015

In 2014, over NLC's opposition, federal regulators issued a new rule that established a minimum liquidity requirement for large banking organizations and identified acceptable investments - deemed High Quality Liquid Assets (HQLAs) to meet this requirement. (2014 Liquidity Coverage Ratio: Liquidity Risk Measurement Standards; Final Rule - 79 Fed. Reg. 61439.) Unfortunately, the regulators failed to include municipal securities in any of the acceptable investment categories. In doing so, regulators overlooked core features of these securities that are consistent with all of the criteria proposed by regulators to be characterized as HQLA, including limited price volatility, high trading volumes and deep and stable funding markets.

Not classifying municipal securities as HQLA will increase borrowing costs for state and local governments to finance public infrastructure projects, as banks will likely demand higher interest rates on yields on the purchase of municipal bonds during times of national economic stress, or even forgo the purchase of municipal securities. The resulting cost impacts for state and local governments could be significant, with bank holdings of municipal securities and loans having increased by 86 percent since 2009.

Since the rule was issued, NLC has been pursuing a legislative fix, and we're making progress. Last month, the House Financial Services Committee passed a bill, HR 2209, that requires federal regulators to classify all investment grade municipal securities as High Quality Liquid Assets (HQLA). NLC is now urging leadership to support the measure and to schedule it for a vote on the House floor.

Presidential Election Update: Cities Lead 2016

Angelina Panettieri, 202.626.3196

With the presidential campaign season now in full swing, city leaders are increasingly turning their attention to the issues being debated by the candidates in both parties. Hundreds of city leaders around the country have already signed on in support of NLC's Cities Lead 2016 platform, encouraging presidential candidates to prioritize investment in infrastructure, public safety, and the economy in their policies.

Last month, Wisconsin mayors had questions for the Republican candidates visiting their state for a Milwaukee debate. They called on the candidates to explain their plans to support ongoing economic recovery in cities and expand business growth and entrepreneurship in their communities. And earlier this fall, 46 mayors around the country told reporters they wanted to see more substantive debate around domestic issues like jobs, housing, and violence prevention.

While most city leaders believe that the election so far is still too focused on personal squabbles and issues that don't resonate in their communities, the tide just might be turning. During a recent Republican debate in Boulder, Co., Carly Fiorina was asked about e-fairness - an issue critical to cities. This week, Hillary Clinton announced a large-scale plan for infrastructure investment, and Bernie Sanders has also unveiled a major infrastructure plan.

The campaign rhetoric will only heat up as the 2016 primaries approach. If you'd like to help NLC and city leaders shift the focus of the debate to the issues that impact your community, sign on to the Cities Lead 2016 initiative today.

Watch Online: Metropolitan Broadband Discussion with Brookings Institution

Angelina Panettieri, 202.626.3196

Join NLC and the Brookings Institution's Metropolitan Policy Program online December 10 for a discussion of how local leaders can partner with state and federal governments to improve access to high-speed Internet in their communities.

While a high-speed Internet connection is already a necessary ingredient for economic prosperity, service quality and adoption remain uneven across the country. Pricing and speeds vary between and within cities and metropolitan areas, limiting growth opportunities for businesses and digital entrepreneurs. There are also significant gaps in broadband adoption rates between high- and low-income households, and many at-risk populations don't have the kind of Internet access necessary to fully engage in the digital economy.

Local leaders will need an array of policy interventions to create ubiquitous network coverage and promote service adoption in their communities. Yet these places cannot go it alone-they need strong supporting policies from their state and federal partners. The Metropolitan Policy Program, in collaboration with the National League of Cities, will examine how a new federalist framework can promote a network build-out that supports local independence while meeting national objectives around economic opportunity. Senator Cory Booker (D-N.J.) will provide a federal perspective and will be followed by a panel of metropolitan and industry leaders. Follow the conversation on Twitter using #MetroBroadband, and register to watch the event live online.

January 12: Will Public Sector Collective Bargaining Survive this Supreme Court Term?

Carolyn Coleman, 202.626.3023

We won't know for sure until the end of June when the Supreme Court will most likely issue its opinion in Friedrichs v. California Teachers Association. But we may have a better idea after the Court hears oral argument on January 11.

Discuss the legal issues in this case and what's at stake for state and local governments if the Supreme Court rules that public-sector "agency shop" arrangements are unconstitutional with Michael Carvin, Jones Day, who will argue this case on behalf of the teachers objecting to fair share.

SLLC Public Sector Collective Bargaining Webinar
Tuesday, January 12, 1:00PM - 2:30PM EDT
Register Now