Federal Advocacy Update

In this issue:

Rep. Chaffetz Introduces E-Fairness Legislation in the House

Priya Ghosh Ahola, 202.626.3015

Earlier this week, with the support of NLC, Rep. Jason Chaffetz, R-Utah, introduced the Remote Transactions Parity Act (H.R. 2775). Said NLC President Ralph Becker, mayor, Salt Lake City, upon learning of the bill's introduction, "We applaud and support the legislation introduced today by Representative Chaffetz that will level the playing field between brick and mortar retailers and their online counterparts. It's about fairness. The bill doesn't raise any new taxes - it simply enables cities to collect sales taxes that are already owed. We call on the House to move swiftly and pass the bill this year because our cities and local businesses can't afford to wait."

If enacted, the RTPA will give states and local governments the flexibility to require remote online retailers to collect the sales taxes that are already owed on remote purchases. Closing this online sales tax loophole would not only level the playing field between online sellers and Main Street brick and mortar ones who are required to collect the tax, it would also mean resources for local governments to fund much needed local services like infrastructure and public safety. It is estimated that this loophole costs states and local governments $23 billion annually.

So far, a bipartisan group of 19 House members are co-sponsoring the bill. More are needed to build momentum for resolving this issue once and for all. If you haven't already, please contact your House members and thank them for their support if they are already a co-sponsor, or urge them to cosponsor the bill if they have not.

NLC Board and Policy and Advocacy Steering Committee Members Convene in Utah

Angelina Panettieri, 202.626.3196

A slideshow presentation highlighting many of the week's events is featured below.

Hosted by NLC President Ralph Becker, mayor, Salt Lake City, more than 200 local leaders from all across the country convened in the city last week for the National League of Cities (NLC) summer board of directors meeting and policy forum. In addition to a business meeting for NLC's board of directors, the convening provided a platform for members of the seven policy and advocacy steering committees to discuss the organization's federal action priorities and policy positions.

In addition to approving the organization's FY 2016 budget, the Board also heard updates on several strategic initiatives, including the Race, Equity, and Leadership initiative (REAL), the 2016 presidential election task force, and NLC's office relocation in 2016.

In a day and a half of meetings that followed the Board meeting, committee members focused their time in the city on the organization's National Municipal Policy, the status of NLC's 2015 federal action agenda, and innovative local practices. Representatives from the Salt Lake City business community, Mayor's Office, federal agencies, and the White House participated as guest speakers in the meetings.

In addition to reviewing and considering amendments to policy, committee members also learned about how innovative practices and intergovernmental partnerships are boosting infrastructure, sustainability, and community and economic development within Salt Lake City through projects including Salt Lake City's "Housing First" approach to ending homelessness, sustainability and resilience programs, a new Google Fiber initiative, and future-focused regional transportation planning.

Committee members also toured innovative projects in Salt Lake City, gaining insight into the city's transportation infrastructure, urban redevelopment districts, and education reform initiatives.
Rohan Patel, Special Assistant to the President and Deputy Director of White House Intergovernmental Affairs, was the featured speaker at a joint session of the groups in Salt Lake City. In his remarks, Rohan applauded NLC and city leaders for the strong partnerships with the Administration, including the newest one, the Startup in a Day initiative, NLC's partnership with the White House and U.S. Small Business Administration to help cities create an online tool to allow entrepreneurs and other businesses to discover and apply for all licenses and permits needed to start a business.

Proposed amendments to NLC's National Municipal Policy by the Committees will be voted upon by the full membership during the Congress of Cities in Nashville this November.

House Committee Passes Bills That Interfere with Local Taxing Authority

Julia Pulidindi, 202.626.3176 and Priya Ghosh Ahola, 202.626.3015

Earlier this week, the House Judiciary Committee passed two bills that NLC opposes because they would interfere with local taxing authority, H.R. 1643, The Digital Goods and Services Tax Fairness Act of 2015 (Digital Goods), and H.R. 2584, the Business Activity Tax Simplification Act of 2015 (BATSA).

The Digital Goods legislation calls for the preemption of local authority to tax digital goods such as downloaded music, movies and online services. Besides interfering with local taxing authority, the bill also redefines digital service in such a way as to exclude them from counting towards local cable franchise fee revenues generated from on-demand and pay-per-view services. With the increasing popularity of these services, local governments would lose millions of dollars in revenues that are currently being used to fund the delivery of essential local services such as public safety and infrastructure.

BATSA would mandate the use of a physical presence standard for determining whether a state or local government could assess a tax on a company.

In a letter for the hearing record, NLC told the Committee we opposed both bills and urged them to spend time instead resolving the remote sales tax collection issue. In his remarks during the Committee hearing, Ranking Member John Conyers (D-MI) raised also concerns with the legislation specifically citing to our comments. 

Permanent Tax Ban Passes the House

Julia Pulidindi, 202.626.3176

Despite our opposition, the House passed H.R. 235, the Permanent Internet Tax Freedom Act (PITFA) in a voice vote on June 9. This measure, which NLC has long opposed, will prohibit state and local governments from taxing Internet access, including those that were grandfathered in (Hawaii, New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Texas, Washington, and Wisconsin) when the Internet Tax Freedom Act was first passed.

With the House action behind us, NLC will now focus on mobilizing opposition to the companion bill pending in the Senate, S. 431. That bill is currently pending in the Senate Finance Committee.

NLC Seeks Member Feedback on "Waters of the U.S." Rule

Carolyn Berndt, 202.626.3101

With the release of the final "waters of the U.S." rule by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) last month, NLC seeks feedback from members and state leagues on the implications of the rule for your communities.

Based on our preliminary analysis, NLC continues to have concerns about the practical and financial implications of the final rule. Specifically, the broad definitions in the rule could lead to an expansion of federal jurisdiction and continued confusion for communities over what is and is not a "waters of the U.S." and that the exclusions will not provide complete coverage for communities. Your feedback will be invaluable to informing our understanding and on-going dialogue with the EPA and the Corps.

This chart and presentation can serve as a guide to communities to evaluate individual impacts. Specifically, NLC seeks feedback pertaining to the following questions (slide 4 of presentation):

  • Do the stormwater control features in your community meet this exclusion? Would it be easy for you to prove they were constructed in dry land?
  • Do the ditches in your community meet this exclusion?
  • Based on the definition of a "waters of the U.S.," are there any waterbodies in your community that you are uncertain if they would fall under federal jurisdiction? Are there any waters in your community that would be newly regulated?
  • Any specifics questions for EPA/Army Corps about the final rule or the impacts to your community?
  • What are cities willing to accept regarding environmental benefit vs. costs?

The "waters of the U.S." rule will be effective 60 days after publication in the Federal Register.

With regard to legislation related to the Rule, the Federal Water Quality Protection Act (S. 1140) that directs the agencies to issue a revised rule passed the Senate Environment and Public Works Committee last week.

HUD Secretary Castro and NLC Leaders Mark HUD's 50th Anniversary

Mike Wallace, 202.626.3025 and Jordan Wilson, 202.626.3029

NLC President Ralph Becker and Mayor Freeman Wilson speak with HUD Secretary Castro

Last Monday, NLC President Ralph Becker, Mayor, Salt Lake City and NLC Public Safety Committee Chair Karen Freeman Wilson, Mayor, Gary, Ind., were featured panelists, along with U.S. Department of Housing and Urban Development Secretary Julián Castro, for an event hosted by the Urban Institute to mark HUD's 50th anniversary. The discussion was an opportunity for panelists to reflect on the history of HUD and its impact on cities; to discuss the current state of opportunity in American cities; and to look ahead to the challenges urban communities will face in the next 50 years.

Among the many programs discussed, Mayors Becker and Freeman Wilson were able to highlight the positive impact of the Community Development Block Grant program in their communities. Mayor Becker also discussed his concern over a widening opportunity gap for cites across the nation, saying, "we need to figure out- in which neighborhoods and with what programs - can we make the most difference". Mayor Freeman Wilson touted her city's strong partnerships with HUD, saying, "HUD programs like Strong Cities/Strong Communities let Gary plan for future, and not just focus on daily crises".

As the former Mayor of San Antonio - one of fastest growing places in America - Secretary Castro noted that "America is falling in love again with cities". Secretary Castro also reaffirmed his commitment to HUD's legacy as an agency committed to equal access to affordable, quality housing, stating, "Our nation is at best when everyone has a seat at the table".

The webcast of the discussion is viewable at the Urban Institute website.

Major Differences Emerge Between House and Senate FY2016 Appropriations Bills

Underfunded Transportation-Housing Appropriations Bill Passes House
Mike Wallace, 202.626.3025

Last week, the House approved their version of a FY 2016 appropriations bill for the U.S. Departments of Transportation and HUD. As required by the Budget Control Act, overall funding for the bill adheres to the lower sequestration spending caps, thereby reducing overall federal investments in cities and town. At the Department of Housing and Urban Development, the burden of sequestration has largely fallen on families in need of rental assistance through the Section 8 program. According to the Center on Budget and Policy Priorities, 85,000 fewer families were able to use federal housing vouchers in December 2014 than two years earlier, due largely to sequestration. The FY2016 bill attempts to alter course by providing a modest increase for housing vouchers, but many in the housing community believe even that modest increase will be insufficient to keep all existing vouchers fully funded for another year. The bill maintains level funding for CDBG at $3 billion and HOME at $900 million. This is good news on both fronts; however, maintaining level funding for home comes at a steep price for housing advocates as funding from the National Housing Trust Fund would be diverted to the HOME program, which would leave the Housing Trust Fund largely useless.

At the Department of Transportation, programs funded through the appropriations process would be subject to another small reduction, resulting in the lowest overall level of funding for these programs in 14 years, adjusted for inflation. Among city priorities, the popular TIGER grant program would be reduced from $500 million to $100 million. Other rail programs including Amtrak funding and Capital Investment Grants for Mass Transit would also receive reduced funding.

The Senate is expected to introduce its version of the FY2016 DOT-HUD Appropriations bill as early as next week, but the outcome of the overall spending debate is far from settled. President Obama is urging Congress to increase spending overall beyond the caps and has stated his intention to veto any bill that reaches him with the current sequestration caps in place.

Senate Appropriators Provide Funding for COPS Hiring Grants
Yucel Ors, 202.626.3124

On Thursday, June 11, 2015, the Senate Committee on Appropriations approved the FY2016 Commerce, Justice and Science (CJS) Appropriations Bill, which provides funding for the U.S. Department of Commerce, U.S. Department of Justice, the National Aeronautics and Space Administration, the National Science Foundation, the National Oceanic and Atmospheric Administration and other related agencies. The bill funds the Department of Justice (DOJ) at $27.8 billion, an increase of $798 million above the FY2015 enacted level. The bill allocates $2.3 billion in funding for state and local law enforcement and crime prevention grant programs, an increase of $214 million above FY2015 enacted level.

Unlike the CJS Appropriations Bill that passed the House earlier this month, the Senate bill provides $187 million for COPS Hiring grants to help State, local, or tribal law enforcement agencies to create and preserve police officer positions and to increase community policing capacity and crime prevention efforts. The Senate bill also provides $65.5 million for Juvenile Justice State Formula grants and $40 million for Juvenile Delinquency Prevention Programs, which were zeroed out in the House bill.

NLC will continue to urge Senate and House lawmakers to ensure that these and other essential state and local law enforcement grant programs continue to be adequately funded.

Supreme Court Decides Significant Government Speech Case

Carolyn Coleman, 202.626.3023

In Walker v. Sons of Confederate Veterans the Supreme Court held 5-4 that Texas may deny a proposed specialty license plate design featuring the Confederate flag because specialty license plate designs are government speech. The Court relied heavily on Pleasant Grove City, Utah v. Summum, where the Court held that monuments in a public park are government speech and that a city may accept some privately donated monuments and reject others. First, just as governments have a long history of using monuments to speak to the public, states have a long history of using license plates to communicate messages. Second, just as observers of monuments associate the monument's message with the land owner, observers identify license plate designs with the state because the name of the state appears on the plate, the state requires license plates, etc. Third, per state law, Texas maintains control over messages conveyed on specialty plates and has rejected at least a dozen designs, just as the city in Summum maintained control monument selection.

Supreme Court's Sign Case May Require Altering Sign Codes Nationwide

Carolyn Coleman, 202.626.3023

In Reed v. Town of Gilbert the Supreme Court held unanimously that Gilbert's Sign Code, which treats various categories of signs differently based on the information they convey, violates the First Amendment. Gilbert's Sign Code treats temporary directional signs less favorably (in terms of size, location, duration, etc.) than political signs and ideological signs. Content-based laws are only constitutional if they pass strict scrutiny-that is, if they are narrowly tailored to serve a compelling government interest. The Court concluded that the sign categories in this case are based on content because they draw distinctions based on the message a speaker conveys. Gilbert's Sign Code failed strict scrutiny because its two asserted compelling interests-preserving aesthetic and traffic safety-were "hopelessly underinclusive." Temporary directional signs are "no greater an eyesore" and pose no greater threat to public safety than ideological or political signs.