Federal Advocacy Update

In this issue:

Cities Commend House Transportation Committee on Markup of Highway Bill

Michael Wallace, 202.626.3025

The House Committee on Transportation and Infrastructure passed the Surface Transportation Reauthorization and Reform (STRR) Act of 2015 (H.R. 3763) this week, clearing the way for a vote on the six-year, $325 billion surface transportation reauthorization. The National League of Cities sent a letter to committee Chairman Rep. Bill Shuster (R-Pa.) and Ranking Member Peter DeFazio (D-Ore.), urging the committee to quickly advance the STRR Act to conference with the Senate, which passed the DRIVE Act in July.

"With funding for the Highway Trust Fund expiring in less than a week, it's time to finally pass a long-term surface transportation program that enables more local authority to choose the transportation projects that best suit the needs of individual communities," said National League of Cities President Ralph Becker, mayor, Salt Lake City. "As I told the House Committee on Transportation in March, continuously passing short term extensions to the highway bill is unacceptable; local governments need a long-term bill that restores certainty and stability to the transportation planning process at the local and regional level."
The STRR Act would advance several important local transportation priorities. Among them:

  • The bill would provide Incremental annual increases in direct funding to urbanized and local areas under the Surface Transportation Program (STP). The increases would make up for funding losses to local areas enacted under the previous transportation authorization, MAP-21. 
  • The bill would fund a new set-aside that preserves the core elements of the TAP program to support multi-modal systems including pedestrian and bike traffic. 
  • The bill would expand federal funding eligibility to all locally-owned bridges on the Federal-Aid-System. Under MAP-21, federal funding eligibility was restricted to the much smaller inventory of bridges on the National Highway System.
  • The bill would restore the Federal Transit Administration's bus discretionary grant program which was eliminated under MAP-21.
  • The bill makes changes to safety and design standards that would benefit cities that have adopted a "complete streets" transportation plan. 

Some areas of concern remain, however, and revenue is chief among them. Like the Senate DRIVE Act, the House STRR Act does not identify funding for all six years of the authorization. The STRR Act would authorize approximately $325 billion over six years but gas tax estimates only amount to only $245 billion during that period, meaning the burden of raising revenues for the final years of the bill would fall on a future Congress.

NLC has long advocated that the next long-term transportation bill needs to be future-oriented to meet the challenge of a rapidly changing transportation marketplace; flexible enough for cities and towns to choose the best mix of transportation options to fit regional needs; and fiscally responsible to local governments that collectively own and operate 78 percent of the nation's road miles, 43 percent of the nation's federal-aid highway miles, and 50 percent of the nation's bridge inventory.
The most current funding extension for the Highway Trust fund expires Oct. 29.

NLC Conference Delegates to Vote on Changes to NLC National Municipal Policy in Nashville

Carolyn Coleman, 202.626.3023

A robust line-up of speakers and sessions that feature inspiring keynote addresses, skill-building seminars, innovate learning approaches, mobile workshops, and great opportunities to network with colleagues from across the country are in store for the thousands of city leaders who will descend upon Nashville, Tennessee, on November 4 - 7 to attend NLC's Congress of Cities conference. In addition to those sessions, important governance activities that involve NLC members will also take place at the conference.

During the conference's Annual Business Meeting on November 7, 2015, the entire NLC membership, including the State Municipal Leagues, will consider changes to NLC's National Municipal Policy (NMP). The NMP is NLC's comprehensive policy platform on federal issues directly affecting or of concern to cities and towns. It serves as the foundation for NLC's federal advocacy efforts on behalf of the nation's cities and towns and is subject to an annual review by the NLC membership during the Congress of Cities. As the foundation for our advocacy efforts, a relevant and robust NMP is essential to our effectiveness on your behalf on Capitol Hill.

Over the course of this year, your colleagues who serve on NLC's Policy and Advocacy Steering Committees have been hard at work reviewing the NMP and developing recommendations for changes where needed. So that you have ample time in advance to review the proposed changes that will be considered in Nashville, you can view them now by clicking here.

Stand Up for Cities Before the Next Presidential Debate

Angelina Panettieri, 202.626.3196

There are only 7 days until the next Republican presidential debate, and only 24 days until the next Democratic debate. If you want the candidates running to be the next president to address the issues that matter most to the 80% of voters residing in cities, towns, and villages, stand with NLC and sign on to the Cities Lead 2016 initiative.

We're asking the presidential candidates to pay attention to three of the most pressing issues facing cities around America: the economy, investment in infrastructure, and public safety. We believe that a campaign focused on the bread-and-butter issues that affect Americans' daily lives will make for a better tomorrow, regardless of which candidate wins the White House.

Stand up for your hometown, and sign on to Cities Lead 2016 today.

House Legislation Would Include Municipal Securities As HQLA

Priya Ghosh Ahola, 202.626.3015

The House Financial Services Committee held a hearing earlier this week on legislation that would require regulators to classify all investment grade municipal securities - including municipal bonds- as High Quality Liquid Assets (HQLA), H.R. 2209, which NLC supports.

The legislation follows an agreement reached earlier this year by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to new liquidity standards designed to strengthen the banking system through clarifying credit and liquidity standards for banks' capital requirements. However, in the agreement, they failed to include a very strong and stable investment category with deep funding markets - municipal securities.

NLC has long argued that failure to classify municipal securities as High Quality Liquid Asset (HQLA) not only overlooks an investment category that contributes to greater market stability, but that this omission would have negative effects on the municipal securities market and communities across the country by significantly reducing the appeal of municipal securities, resulting in increased borrowing costs for state and local governments to finance desperately needed infrastructure projects.

In the hearing, witnesses testified in support of the bill, arguing that if municipal securities satisfy the same standards of liquidity, marketability and investment grade as other investment categories, federal banking agencies should also be required to classify them as high-quality level 2A liquid assets. The Committee is expected to include H.R. 2209 in their markup during the first week of November.

Senate Blocks Sanctuary City Legislation 

Yucel Ors, 202.626.3124

Earlier this week, the Senate blocked S. 2146, the Stop Sanctuary Policies and Protect Americans Act. This legislation, which NLC opposes, would withhold federal assistance, including Community Development Block Grants (CDBG), from local governments that have policies in place to protect local law enforcement officers from being co-opted as immigration enforcement agents by the federal government. The legislation was defeated when it failed to get the 60 votes needed for further consideration.

In its letter opposing the legislation, NLC voiced concerns that besides punishing cities and towns and withholding essential federal resources from them, the bill would most certainly harm low and moderate income residents in our communities who are the primary beneficiaries of the CDBG program.

NLC acknowledged in the letter that, while local law enforcement officers have a responsibility to cooperate with the federal government to apprehend specific persons identified as having committed a crime and violated U.S. immigration laws, this should not include responsibility for enforcing federal immigration laws or the ongoing detention of individuals merely suspected of violating those laws. Attempts like this by the federal government Congress to shift the federal responsibility of enforcing civil immigration law to local governments diverts critical resources from their law enforcement agencies, compromises public safety, and impedes local law enforcement's ability to work with immigrant communities in preventing and solving crimes.

Instead of punitive measures like S. 2146, NLC continues to call on Congress to fix the nation's broken immigration system by passing comprehensive immigration reform.

SLLC Files Ohio Supreme Court Amicus Brief Arguing Against Expansion of Quill

Carolyn Coleman, 202.626.3023

The State and Local Legal Center (SLLC) has filed an amicus brief in the Ohio Supreme Court urging it to rule that Ohio's commercial activity tax (CAT) applies to online vendors who sell in the state. The SLLC argues the holding of Quill Corp. v. North Dakota (1992), that states cannot require retailers with no in-state physical presence to collect use tax, should not be extended to a privilege-of-doing-business tax.

Ohio's CAT imposes a tax on gross receipts from any person having sales of over $150,000 in the State and a "substantial nexus" with the State, including having at least $500,000 of taxable gross receipts annually. The CAT is a privilege-of-doing-business tax charged directly to the retailer not a sales or use tax.

Mason, Newegg, and Crutchfield have over $500,000 of gross receipts annually from sales in Ohio exclusively online. They argue that Quill prohibits Ohio from making them pay the CAT because they have no physical presence in Ohio. Per Quill, out-of-state sellers must have a "substantial nexus" i.e. a physical presence in a state to be required to collect use tax. Mason, Newegg, and Crutchfield argue that Quill's physical presence requirement should apply to the CAT because it operates similar to a use tax.

The SLLC amicus brief argues that Quill is a bright-line rule that does not apply outside the sales and use tax context. The Ohio Supreme Court should not expand the reasoning of Quill to a privilege-of-doing-business tax because Quill has had "clear and deleterious effects on state treasuries and local economies."

While the SLLC usually only files amicus briefs in Supreme Court cases, it filed a brief in this case because limiting the reach of Quill is particularly important to SLLC members.
Eric Citron and Tom Goldstein wrote the SLLC brief which all of the Big Seven joined along with SLLC associate members the International Municipal Lawyers Association and Government Finance Officers Association.