Federal Advocacy Update: Week Ending February 27, 2015

In this issue:

  • Mark Your Calendar with These Conference Highlights 
  • FCC Decides on Municipal Broadband Petitions and Net Neutrality 
  • NLC Advocacy Priority Issue Updates
    • Issue Update: E-fairness
    • Issue Update: Investing in Local Transportation Priorities
    • Issue Update: Protecting Municipal Bonds
  • HUD Accepting Comments on CDBG Section 108 Loan Program
  • Rescheduled: NLC's 2015 Legislative Agenda Webinar

Mark Your Calendar with These Conference Highlights

Angelina Panettieri, 202.626.3196

If you're planning to attend NLC's Congressional City Conference in March, be sure to mark these activities on your calendars:

  • Conference General Sessions - With speakers ranging from Meet the Press moderator Chuck Todd to US Department of Homeland Security Secretary Jeh Johnson and the bipartisan political commentator duo Ed Gillespie and Donna Brazile, the conference general sessions will be full of political insight.
  • Cities, Towns, and Common Ground for a Long Term Federal Transportation Bill - Join NLC on Capitol Hill for this special briefing on transportation and the release of NLC's new report, "Cities, Towns, and Common Ground for a Long Term Federal Transportation Bill", that demonstrates why cities and towns are the best partners for enacting a long term federal transportation bill. A strong showing of local officials will help drive that message home for Members of Congress and their staff. 
  • Advocacy Central - Before or after your workshops, visit the Advocacy Central booth to get the latest advocacy materials, join the new NLC Advocacy Network, or get answers to your advocacy questions.

Visit the Congressional City Conference website to get the latest updates on conference programming, speakers, and schedules.

FCC Decides on Municipal Broadband Petitions and Net Neutrality

Julia Pulidindi, 202.626.3176

This week, the FCC voted this week on two widely-publicized proceedings: petitions by Chattanooga EPB and the City of Wilson to overcome state barriers to expanding municipal broadband networks, and the issue of net neutrality. In two 3-2 votes, the FCC supported the Chattanooga and Wilson petitions to preempt state laws restricting municipal broadband networks and adopted a new Open Internet Order which reclassifies broadband Internet access as a telecommunications service under Title II of the Communications Act.

Municipal Broadband

A Memorandum Opinion and Order adopted by the FCC today found that provisions of the laws in North Carolina and Tennessee are barriers to broadband deployment, investment and competition, and conflict with the FCC's mandate to promote these goals. The FCC voted to allow Chattanooga and Wilson to expand broadband service outside their current footprints in response to numerous requests from neighboring unserved and underserved communities. Chairman WheelerCommissioner Clyburn, and Commissioner Rosenworcel voted in favor of the petitions and in their statements underscored the importance of broadband as a necessity for local growth and opportunity and highlighted the value of municipal broadband in meeting these goals, particularly in areas where service was not provided by industry.

NLC CEO & Executive Director Clarence Anthony said in response to the decision, "Today's vote underscores the critical role of local governments in providing broadband services that are integral to a strong, 21st century economy that benefits residents and strengthens communities. Chattanooga, Tenn. and Wilson, N.C. are examples of the successful role local governments can play to ensure that high-speed, affordable broadband is available to our cities' residents. While their petitions to the FCC only apply to their individual municipal broadband initiatives, today's ruling sets a precedent that acknowledges the need for local flexibility to meet individual community needs. Each community is different, and local governments must have the flexibility and authority to make the best choices for their residents."

Open Internet/Net Neutrality

In the second proceeding, the FCC voted to regulate Internet service under Title II of the Telecommunications Act, which would treat it as a public utility. The new rules approved by the FCC prohibit blocking content or dividing the Internet into "fast lanes" for companies who pay for prioritization and "slow lanes" for others. This concept is also known as net neutrality. More information about the ruling is available in the FCC's press release.

NLC's Information Technology and Communications Policy and Advocacy Committee will hear a presentation on the implications of this decision for local governments on Sunday, March 8, at 1:00 PM during NLC's Congressional City Conference. All are welcome to attend.

NLC Advocacy Priority Issue Updates

To help you prepare for advocacy in Washington this March and throughout the year, we've provided a series of updates below on the status of some of our key legislative priorities. 

Issue Update: E-fairness

Priya Ghosh Ahola, 202.626.3015

For the past 23 years, the brick-and-mortar businesses in our communities have been at a disadvantage. While they are required to collect sales tax at the time purchase, online retailers cannot be compelled to do so. This puts our main street retailers - responsible for strengthening our local economies, providing needed jobs, and giving character to our streets - at a five to ten percent competitive disadvantage to online sellers.

As more and more shoppers are turning to the internet for all their purchasing needs, it's not only brick-and-mortar merchants that suffer. Local governments are also forgoing an estimated $23 billion in uncollected sales tax revenue every year. This is a tax that is already owed and could be used to provide cities with more funding for basic services, such as roads and police officers, and fair competition for all businesses.

While Congress can fix this unfairness by enacting e-fairness legislation closing the online sales tax loophole, a solution must be workable and practical. There is currently discussion in Congress around legislative solutions to this unfairness using a hybrid origin-sourcing approach. This approach uses the taxing jurisdiction of the seller to determine the sales tax rate. In turn, a mechanism would be established to return the revenue to the taxing jurisdiction of the buyer. Under this complex system, tax would be collected and then redistributed. Due to difficulties in implementing this system and the customer confusion that would invariably ensue, this solution is ostensibly unworkable and impractical.

NLC continues to call on Congress to pass e-fairness legislation using a destination based sourcing approach, like the Marketplace Fairness Act. Aside from ease of implementation, the buyer would be tasked with only knowing their own tax rate versus that of all other states and jurisdiction. Legislation based on this approach is workable and practical, as well as fair to brick-and-mortar businesses, the customer and local governments.

For more information and downloadable talking points, visit www.nlc.org/efairness.

Issue Update: Investing in Local Transportation Priorities

Mike Wallace, 202.626.3025

Federal funding for state and local surface transportation projects is at risk. On the revenue side, there is a risk that Congress will be unable to agree on a fix for the Highway Trust Fund. According to the U.S. DOT, if Congress does not approve a source of additional revenue, the Highway Trust Fund could fall below sustainable levels by June of this year and force the Administration to withhold funds authorized for state and local governments. On the spending side, there is a risk that Congress will be unable to craft a bill reauthorizing surface transportation programs with broad enough appeal to achieve majority support. The current authorization for surface transportation programs, commonly called the Highway Bill, expires on May 31, 2015 and without Congressional action, funding will grind to a halt.

And there is one more risk. Although local governments 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, they directly receive less than 15 percent of current federal transportation funding. If Congress concludes there is no way forward on increasing revenue for the Highway Trust Fund, funding for state and local governments in the transportation reauthorization bill will necessarily fall, and it may not fall equally. One short-sighted proposal put forward by members of Congress ideologically opposed to any increase in revenue is to eliminate public transit funding entirely from the Highway Trust Fund, which would lower the local share of federal transportation funding even further.

Despite the uncertainty, there are signs of progress and bipartisanship. The House Transportation and Infrastructure Committee is working with stakeholders, including NLC, to draft a long-term funding reauthorization for surface transportation programs. The Administration is preparing to release an update of their "Grow America Act" that would significantly increase long term funding for surface transportation programs by using taxes on repatriated corporate earnings accumulated overseas to replenish the Highway Trust Fund. Other proposals ranging from increasing the gas tax to starting over with an infrastructure bank system are also gaining support.

In the short-term, Congress Is unlikely to take up legislation to fix the trust fund or reauthorize transportation programs before they expire and at least one more short-term extension for both will be necessary. NLC is asking local officials to help put cities at the center of national transportation policy by urging Congress to authorize a new, long-term federal surface transportation bill that:

  • Authorizes at least six years of transportation programs and funding,
  • Enables more local control,
  • Supports innovative programs and finance, and
  • Helps fix the Highway Trust Fund.

For more information and downloadable talking points, visit www.nlc.org/transportation.

Issue Update: Protecting Municipal Bonds

Priya Ghosh Ahola, 202.626.3015

The traditional tax exempt status of municipal bonds is now regularly under threat whether it be as a part of a deficit reduction plan, a push for comprehensive tax reform or as an offset for new spending. Municipal bonds are the primary way state and local governments finance the public infrastructure that supports everyday life. Bonds finance construction of schools, hospitals, bridges, water treatment facilities, libraries, and many other public projects. As investors are willing to accept lower interest rates on tax-exempt bonds, local governments are able to significantly reduce the cost to the taxpayer on infrastructure projects. The elimination of the traditional tax exemption, public infrastructure projects will come at a higher cost to states and localities ultimately increasing the burden on community residents through higher fees and taxes.

Despite the enormous benefits of this highly productive infrastructure development driver, several federal proposals have emerged over the last few years, including the President's FY'16 budget proposal, that would modify the tax exemption or eliminate it entirely. Congressman Randy Hultgren (R-14th-IL) and Congressman C.A. Dutch Ruppersberger (D-2nd-MD) are currently circulating a bipartisan Dear Colleague Letter urging House leadership to support the preservation of the tax exemption on municipal bond interest. We urge you to reach out to your representative and confirm that they have signed on to this important letter.

As the 114th Congress and the Administration look for ways to reduce the federal deficit and still fund programs, it is imperative that we remind Washington that limits placed on or the outright elimination of this important financing tool will mean less infrastructure investment, fewer jobs, and a greater burden on local residents forced to pay higher taxes and fees.

For more information and downloadable talking points, visit www.nlc.org/munibonds.

HUD Accepting Comments on CDBG Section 108 Loan Program

Mike Wallace, 202.626.3025

Last year, in an effort to safeguard the CDBG Section 108 Loan Program against federal budget cuts, Congress required HUD to begin charging fees for Section 108 loans. Under the Section 108 program, local governments can transform a small portion of their CDBG funds into federally guaranteed loans to create additional financing for large-scale physical and economic revitalization projects. The program often supports first stage projects in communities where private development is persistently challenging. Local governments borrowing funds guaranteed by HUD through the Section 108 program must pledge their current and future CDBG allocations as security for the loan.

HUD is now accepting comments on their proposed rule for collecting Section 108 loan fees. The rule is generally favorable to cities. Among other things, the rule provides local budget flexibility by allowing cities to draw on CDBG funds and Section 108 loan proceeds to pay the new fees. HUD wants to hear from grantees, and cities that use the Section 108 loan program can review the proposed rule and submit comments through the Federal Register.

Rescheduled: NLC's 2015 Legislative Agenda Webinar

Angelina Panettieri, 202.626.3196

Our planned webinar, "NLC's New Advocacy Agenda and the Federal Budget," has been postponed to Thursday, March 5 at 2:00PM EST. That means there's still time to register to participate! Get ready for the Congressional City Conference and a year full of advocacy with this discussion on NLC's top legislative priorities for 2015 and how you can support NLC's advocacy strategy. You'll get the latest update on the status of our biggest issues and what the ongoing budget debate means for cities.

Register now to be a part of this webinar. You must register in advance to participate, and space is limited.

NLC's New Advocacy Agenda and the Federal Budget
Thursday, March 5
2:00-3:00PM EST
Register Now

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