Federal Advocacy Update: Week of July 30, 2019

American flag outside the U.S. Capitol Building
American flag outside the U.S. Capitol Building

In this issue:

  1. Senate Drops $287B Transportation Reauthorization Proposal Before Recess
  2. Join the White House Opportunity and Revitalization Council’s Call on Opportunity Zones
  3. Final Approval Expected for Bipartisan 2-year Federal Budget Agreement
  4. House Champions Introduce Bill on BQD
  5. Three Cities Awarded INFRA Grants in USDOT $856 Million Announcement
  6. House Passes “Cadillac” Tax Repeal Bill
  7. EPA Seeking Input on Discharge Standards for Commercial Vessels
  8. House Introduces Legislation to Restore ACIR
  9. NLC Asks FCC for Technical Improvements to Anticipated Cable Franchise Order

Senate Drops $287B Transportation Reauthorization Proposal Before Recess

Brittney Kohler, 202.626.3164

On July 29, the Senate Environment and Public Works Committee (EPW) led by Chairman Barrasso (R-WY) and Ranking Member Carper (D-DE) released their draft $287 billion five-year, surface transportation bill, America’s Transportation Infrastructure Act of 2019, kicking off the multi-step legislative process to reauthorize surface transportation funding. With a 27 percent increase over the FAST Act, the bipartisan bill is expected to move through EPW in less than 24 hours on July 30, barely before the Senate’s August recess. Staff indicated they released the bill quickly to provide a fix for looming recessions to the Highway Trust Fund, which will begin for the states in July 2020. 

For cities, the Highway Trust Fund suballocation that provides for regional transportation priorities remains at 55 percent. Unlike the prior FAST Act, however, it will not rise over the life of the bill. Nonetheless, this $57 billion per year transportation bill has a few new distinct additions that cities will recognize from our Rebuild With Us advocacy and benefit from:

  • Safety: In addition to increases to the existing Highway Safety Improvement Program, $500 million per year in new supplemental safety funding will be available, and there will be a 65 percent suballocation for urbanized areas that could boost safety projects through a city’s Vision Zero plan to address the uptick in deaths on the nation’s roads. To incentivize joint regional and state planning, the bill includes a $100 million bonus "race to the top" funding that will baseline against the prior three years of fatalities and reward strides toward safer streets. 
  • Bridges: Bridges receive additional attention with $6 billion over 5 years, including $3.3 billion from the Highway Trust Fund. Cities and their Metropolitan Planning Organizations (MPO) can both apply for new competitive bridge grants to fund repair of existing bridges, which is based on the Bridge Investment Act from Senators Whitehouse (D-RI), Brown (D-OH) and Wyden (D-OR), which NLC supported. In a nod to large bridge projects that are difficult for any one entity to finance, no less than 50 percent of the program will support bridges with a total project cost larger than $100 million.
  • Resilience: A new resiliency program will see $4.9 billion over 5 years to protect roads and bridges from natural disasters such as wildfires, hurricanes, flooding, and mudslides. The new program will include both $800 million dispersed by formula and $200 million dispersed by discretionary grants named Promoting Resilient Operations for Transformative, Efficient, and Cost-saving Transportation (PROTECT) grants. These grants will have flexibility for coastal and natural environmental work as well as evacuation route improvement, and there will be an amount set aside for rural areas. 
  • Multimodal: The includes tenants of the Transportation Alternatives Program (TAP) Enhancements Act (S. 1098), a bipartisan bill from Senators Wicker (R-MS) and Cardin (D-MD). TAP funding is increased by 40 percent to $1.2 billion and indexed to inflation; additionally, the suballocation increases from 50 percent to 57.5 percent with policy changes that will improve the program’s outcomes. 
  • Climate: A $10 billion climate title that has a 65 percent suballocation to localities and includes $1 billion for grants for electric vehicle charging infrastructure, which NLC supported under Senator Carper's (D-MD) bill, S. 674. It includes an incentive program for carbon reduction as well as a “race to the top” $100 million program annually to show declines in CO2 emissions.
  • Targeted pilots: New pilot programs also move forward including one for Urban Congestion at $40 million per year at 80 percent federal and 20 percent local cost share and a Port Electrification program at $60 million in the first year and up to $90 million by the fifth year. Also, a $250 million wildlife-collision program over five years would increase both structural work and detection systems to decrease these crashes.
  • Federal coordination: Aligned with the administration’s federal “One Federal Decision” policy, the bill codifies this theme for highway projects. Notably, this includes a 2-year goal for completion of environmental reviews, a 90-day timeline for related project authorizations, a single environmental document and record of decision to be signed by all participating agencies and an accountability and tracking system managed by the Secretary of Transportation.

NLC is glad to see the Senate start the reauthorization process and to see many of our infrastructure priorities reflected in the bill. We look forward to these productive negotiations and to work with the Commerce, Banking and Finance committees to ensure that a bill is prioritized in the Senate. 

If you would like to express your support for NLC’s transportation priorities, take a moment to retweet our president’s, Mayor Karen-Freeman Wilson, statement in support of the bill here. If you would like to be more engaged in NLC’s effort or have tips to share, email NLC’s transportation lead, Brittney Kohler, at kohler@nlc.org

Join the White House Opportunity and Revitalization Council’s Call on Opportunity Zones

Brian Egan, 202.626.3107

On August 2, the White House Office of Intergovernmental Affairs, in conjunction with the White House Opportunity and Revitalization Council and in partnership with the National League of Cities and the U.S. Conference of Mayors, is hosting an Opportunity Zone briefing and discussion call with senior administration officials, including Scott Turner (Executive Director, White House Opportunity and Revitalization Council). The purpose of the call is to provide local leaders with an update on the White House Opportunity & Revitalization Council’s ongoing work, highlight and share best practices and success stories from communities across the country and answer pertinent questions. Among other topics, the call will include discussion about recent regulatory and implementation developments, such as the continued efforts to streamline, coordinate, and target existing federal grant programs as well as other topics related to Opportunity Zones. If you would like to participate, please register here. Please feel free to share with your colleagues.
Opportunity Zone Conference Call

  • Date: August 2, 2019
  • Time: 2:00PM EDT
  • Call-In Information: RSVP Here
  • Media: This call is not intended for press purposes.

Visit nlc.org/OZ for more information on NLC’s continued work on Opportunity Zones.

Final Approval Expected for Bipartisan Two-Year Federal Budget Agreement

Michael Wallace, 202.626.3025

Last week, congressional leaders and the White House agreed to a two-year budget deal that will raise overall spending caps for defense and non-defense discretionary programs by $321 billion for FY20 and FY21. Funding for domestic programs will increase by 4.5%, or $27 billion, over the FY19 level. The increased funding will allow Congress to largely avoid cuts to existing programs for the next two years, but it is not likely to result in a meaningful increase of funding for programs important to local governments. Following the agreement, the House passed the FY20-21 budget deal (H.R. 3877) on July 25 by a vote of 284-149. The Senate is expected to pass the budget this week. 

The budget deal, which NLC supports, will significantly lower the possibility of another federal government shutdown before the next presidential election. The risk of a shutdown is not entirely eliminated, however, because Congress must still pass the 12 annual appropriations bills before the next fiscal year begins on October 1. And the budget deal sends any current appropriations bills back to the drawing board because the funding in the agreement, while greater than current levels, is less than the amount assumed by the House earlier this year.

The 2-year budget deal will also bring the 10-year sequestration threat to an end. Budget sequestration was enacted under the Budget Control Act of 2011 to compel Congress to reach bipartisan spending deals by threatening severe automatic spending cuts for defense and non-defense discretionary programs if a deal failed to materialize.

Lastly, the budget deal raises the federal debt ceiling until July 31, 2021, eliminating the possibility of a federal government default on debt payments over that period.

House Champions Introduce Bill on BQD

Brian Egan, 202.626.3107

On July 25, Congresswoman Terri Sewell (D-AL-7) and Congressman Tom Reed (R-NY-23) introduced the Municipal Bond Market Support Act of 2019 (H.R. 3967). The bill would raise the threshold for bank qualified debt (BDQ) issuers from $10 million to $30 million and would index the threshold to rise with inflation. 

Federal tax law typically prohibits commercial banks from deducting the interest costs incurred from holding municipal bonds in their portfolios. As a result, commercial banks traditionally do not purchase a large amount of municipal debt. The tax code does provide an exception to the rule. If an issuer (in this case a municipal government) reasonably expects to issue less than $10 million of debt in a year, it can elect to issue BQD, which banks can hold and still write off most of the carrying costs.  

BQD is a useful tool for small communities who benefit from bypassing the traditional municipal bond underwriting process to sell their bonds directly to local banks. BQD issuers typically reduce their borrowing costs by an estimated 25-40 basis points. Unfortunately, the $10 million threshold was set in 1986 and has failed to keep pace with inflation. Raising the threshold from $10 million to $30 million would restore BQD eligibility to many issuers who lost their status as a result of inflation. It would also help small and rural communities finance infrastructure projects they otherwise would not have been able to finance. 

If your community utilizes BQD, or has lost BQD status, please feel free to reach out to Brian Egan (egan@nlc.org) to learn how you can help advocate for a fix. 

Three Cities Awarded INFRA Grants in USDOT $856 Million Announcement

Brittney Kohler, 202.626.3164

On July 25, the U.S. Department of Transportation (USDOT) announced the next round of awards for the Infrastructure for Rebuilding America (INFRA) discretionary grant program, which includes the cities of Temecula, California; Tuscaloosa, Alabama; and Union Gap, Washington. The City of Temecula, California, will be awarded $50 million to construct a two-lane northbound collector/distributor system along I-15. The City of Tuscaloosa, Alabama, will be awarded $6.87 million to replace their University Boulevard/US82 Overpass Bridge, and the City of Union Gap, Washington, will be awarded $6.66 million to construct the Regional Beltway connecting SR-97 to Longfibre Road. INFRA discretionary grants were created in the last federal transportation reauthorization and support our nation’s infrastructure by creating opportunities for all levels of government and the private sector to innovate and deliver infrastructure upgrades. Find out more about applying to the INFRA program here

House Passes “Cadillac” Tax Repeal Bill

Brian Egan, 202.626.3107

On July 17, the House passed the Middle Class Health Benefits Tax Repeal Act (H.R. 748) with a large bipartisan majority. The bill would repeal the 40 percent excise tax on high cost employer-sponsored health insurance plans that was included as a part of the Affordable Care Act (ACA). The tax was originally set to take effect in 2018, but previous Congresses have twice punted the implementation date—most recently to 2022. At that time, plans exceeding set price thresholds would be subject to the tax. These thresholds have been indexed to a rate of inflation that is far below the actual rate at which health care premiums have increased in recent years. Opponents, including the National League of Cities (NLC), have argued that over time a growing number of plans, including those offered by municipal governments to their staff, will be subject to the tax and therefore higher healthcare costs.

Municipal governments are already doing more with less. Adding a 40 percent tax on healthcare costs would just force our communities to shoulder more of a financial burden. NLC welcomes House passage of H.R. 748, and we are proud to be a part of the Alliance to Fight the 40, a broad group of organizations fighting to have the tax permanently eliminated. We now urge the Senate to act and remove this burden on communities. Contact Brian Egan (egan@nlc.org) to get involved with our advocacy efforts to keep healthcare for municipal staff affordable. 

EPA Seeking Input on Discharge Standards for Commercial Vessels

Carolyn Berndt, 202.626.3101

On July 9, the U.S. Environmental Protection Agency (EPA) held a Federal Consultation briefing for state and local government organizations on a forthcoming rulemaking to develop national discharge standards for vessels, as required by the Vessel Incidental Discharge Act of 2018 (VIDA). VIDA, which passed Congress last year as part of the Coast Guard Authorization Act, aimed to streamline the patchwork of federal, state and local requirements for commercial vessels.  

VIDA requires EPA and the U.S. Coast Guard (USCG) to develop two federal rules to address commercial vessel discharges:

  1. EPA to develop regulations establishing national discharge standards of performance within two years of enactment of VIDA; and 
  2. USCG to develop corresponding implementing, monitoring and enforcement regulations two years thereafter. 

The new standards will apply to waters of the U.S. and waters of the contiguous zone, with specific requirements for certain waters, like the Great Lakes. EPA estimates that 95 percent of the vessels regulated under the new standards will be commercial vessels greater than 79 feet in length. 

EPA intends to propose regulations establishing national discharge standards for vessels in January 2020 and to finalize these regulations by December 4, 2020. 

Ultimately, state and local government regulations will be preempted. VIDA limits the extent to which states and local governments may enforce more stringent requirements once the new USCG implementing regulations are final. Specifically, beginning on the effective date of the implementation rule, neither a state nor a political subdivision may adopt or enforce any statute or regulation with respect to the discharge, design, construction, installation, or use of any marine pollution control device required to control discharges from a vessel regulated under VIDA.

NLC is seeking information on local laws that would be preempted under these forthcoming regulations. If your city, town or village has any information to share on a current law or regulation that would be preempted, please contact Carolyn Berndt at Berndt@nlc.org

EPA is accepting comments during the Federalism Consultation period until September 9. Comments can be submitted to Weiler.katherine@epa.gov and hanson.andrew@epa.gov, with a copy to Berndt@nlc.org

House Introduces Legislation to Restore ACIR

Brian Egan, 202.626.3107

On July 23, Representatives Connolly (D-VA-11) and Bishop (R-UT-1) introduced the Restore the Partnership Act (H.R. 3883), which would restore and reform the Advisory Commission on Intergovernmental Relations (ACIR). Originally formed in 1959, the ACIR convened a group of federal, state and local policy makers to discuss and make recommendations on how to improve the federal government’s relationship with other levels of government. However, ACIR was disbanded in 1996. NLC has advocated for ACIR’s reinstatement to examine intergovernmental relations in the U.S., particularly in light of the number of changes to government relations in the past two decades. NLC joined our Big 7 partner organizations in welcoming the introduction of H.R. 3883. Last week, Matt Chase, Executive Director for the National Association of Counties (NACo), testified on behalf of the Big 7 before the House Subcommittee on Government Operations to offer support for the formation of a new Commission and the passage of the H.R. 3883. 

NLC Asks FCC for Technical Improvements to Anticipated Cable Franchise Order

Angelina Panettieri, 202.626.3196

In anticipation of an expected final order vote during the Federal Communications Commission’s (FCC) August 1 Open Meeting, NLC and other local government advocates met with commissioners to push for limits to a proposed cable franchise reform order. The order would allow cable providers to make substantial deductions from franchise payments for the value of “in-kind” franchise obligations (such as free or discounted service to government buildings), and would also preempt state and local governments from regulating non-cable services or infrastructure on cable networks (such as broadband).

NLC, numerous local governments and PEG broadcasters, and more than a dozen Senators voiced opposition to this proposal after it was introduced. However, the order is likely to pass by a majority vote during the August meeting. In addition to joining comments outlining several legal concerns with the order, NLC met with FCC commissioners’ offices to request technical changes to the order that would limit the harm to local governments, including an extension of the order’s effective date and protection for existing settlement agreements.

If the order is finalized without extension, it would go into effect 30 days after publication in the Federal Register. Local governments are expected to mount a legal challenge if the order passes. You can watch the August FCC meeting online at 10:30AM EDT on Thursday, August 1.

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