September 17, 2007

Federal Update for period ending September 14, 2007

Dear Mayor:

Again, thanks to the great work of the federal relations staff at the National League of Cities, and with Congress back after the Summer Recess, here’s the latest from our Nation’s Capital.

Appropriations Bills Continue to Move, But Slowly
Efforts to pass all 12 Fiscal Year (FY) 2008 appropriations bills have slowed to a snail’s pace in the Senate. While the House has passed its versions of all 12 appropriations bills, the Senate has passed only four, including Transportation-HUD and Homeland Security, and differences between the House and Senate versions of those bills have not been resolved in conference. It now appears certain that none of the appropriations bills will be ready for the President to sign or veto prior to the September 30 deadline, and that a continuing resolution funding the government at FY 2007 levels will be necessary.

Senate Passes Transportation-HUD Appropriations Bill
On September 12, the Senate passed the Transportation-HUD appropriations bill (H.R.3074) by a veto-proof margin of 88-7. The bill, which totals $104.6 billion in overall spending for FY 2008, has drawn a veto threat from the President because the overall spending level exceeds his requested amount. In July, the President issued a veto threat against the House-passed $104.4 billion Transportation-HUD appropriations bill, calling the funding levels “irresponsible and excessive.” The Senate proposed funding for transportation programs in the bill includes: $40.2 billion for highways (an increase of $1.2 billion over FY 2007); $9.7 billion for mass transit (an increase of $700 million over FY 2007); $3.5 billion for the Airport Improvement Program (the same as FY 2007); and $1.4 billion for Amtrak (an increase of $100 million over FY 2007). Senate proposed funding for housing programs includes: $3.7 billion for Community Development Block Grants (the same as FY 2007); $16.6 billion for Section 8 Tenant-Based housing (700 million over FY 2007); $2 billion for HOME (the same as FY 2007); $100 million for HOPE VI (the same as FY 2007); $1.6 billion for Homeless Assistance Grants (200 million over FY 2007). The bill also includes $1 billion in grants for bridge repairs and sets aside $100 million in HOME funds for home foreclosure mitigation activities, not including direct payments to lenders or homeowners. Next up for the bill is a conference committee to reconcile differences with the House version.

Conference Committee Work Ahead for House and Senate Energy Bills
On August 4, the House passed a comprehensive energy package, H.R. 3221, The New Direction for Energy Independence, National Security, and Consumer Protection Act, aimed at moving the United States toward greater energy independence. Like the Senate version of a comprehensive package passed earlier this year, the House bill contains authorization for a new grant program to fund local government energy efficiency and environmental programs. A conference committee to reconcile differences between the two versions of this legislation is likely to be scheduled shortly.

Housing Bills Set to Receive Priority Consideration
Amidst the troubles on Wall Street precipitated by the defaults on the subprime market, congressional leaders, the President, and federal regulators spent the month of August urging action. The President announced steps the Administration will take to help homeowners avoid foreclosure and urged Congress to pass legislation to modernize the Federal Housing Administration (FHA), and suspend taxes on cancelled mortgage debt. Meanwhile, House Financial Services Committee Chairman Barney Frank (D-MA) and Senate Banking Committee Chair Chris Dodd (D-CT) urged the President to exercise his authority to enact certain provisions of a bill to overhaul the government-sponsored mortgage finance companies Fannie Mae and Freddie Mac. As a result, several bills are likely to receive priority consideration before the end of the year. H.R. 1852, the Expanding American Homeownership Act, would allow the FHA to insure a larger range of mortgages for low- and middle-income families. Specifically, the bill raises FHA loan limits, so that FHA can serve higher cost housing markets, gives HUD authority to require pre-purchase counseling for borrowers, requires a number of disclosures spelling out the costs and risks of zero down and lower down payment loans, and requires borrowers to receive notice of availability of counseling in the event they fall behind on their loan payments. S. 1988, the First-Time Homebuyers' Tax Credit Act, and H.R. 1876, the Mortgage Cancellation Relief Act, would suspend temporarily taxes owed on cancelled mortgage debt. H.R. 1427, the Federal Housing Finance Reform Act, would permit Fannie Mae and Freddie Mac to purchase higher-risk loans from borrowers with less than perfect credit and to purchase a larger overall number of loans from lenders to resell on the secondary mortgage market. The bill creates an off-budget and non-taxpayer financed Affordable Housing Fund, which will dedicate hundreds of millions of dollars to the construction, maintenance and preservation of affordable housing.

NLC Supports FHLB Legislation
NLC joined representatives of the housing, banking and finance industries in support of legislation allowing the Federal Home Loan Banks (FHLBanks) to issue standby letters of credit to community banks in support of tax-exempt bonds for community and economic development purposes. The bills (H.R. 2091/S. 1963), sponsored by Sander Levin (D-MI) and Phil English (R-PA) in the House and John Rockefeller (D-WV) and Mike Crapo (R-ID) in the Senate, would add the FHLBanks to the list of government-sponsored enterprises authorized to provide credit enhancement for tax-exempt bonds.

House Introduces Streamline Tax Proposal
Just before the August recess, Rep. William D. Delahunt (D-MA) introduced the Sales Tax Fairness and Simplification Act (H.R. 3396), a bill designed to simplify the administration and collection of state and local sales taxes. Rep. Spencer Bachus (R-AL) and Rep. Ray LaHood (R-IL) are the co-sponsors of the legislation. The bill would allow those states that have complied with the Streamlined Sales and Use Tax Agreement (SSUTA) the authority to require out-of-state sellers to collect sales tax on remote sales. Collection of sales and use taxes on catalog and Internet purchases could result in billions of additional dollars in sales tax revenue for states and local governments each year. H.R. 3396 is a companion to S. 34, which was introduced by Senator Michael Enzi (R-WY) on May 22, 2007, and has one co-sponsor, Senator Daniel K. Inouye (D-HI). NLC supports simplification of the sales and use tax system, but opposes language in the bill that mandates state administration and collection of local telecommunication taxes and fees. NLC continues to work with its national partners to form a strategic approach to opposing any preemption of local governments’ authority to administer and collect its own telecommunications revenues.

Community Broadband Legislation Introduced in House and Senate
Prior to the August recess, Senator Lautenberg (D-NJ) introduced the Community Broadband Act of 2007 (S. 1853). Co-sponsors include Senate Commerce Committee Chair Daniel K. Inouye (D-HI) and Ranking Member Sen. Ted Stevens (R-AK). S. 1853 is a companion bill to H.R. 3281, which Reps. Rick Boucher (D-VA) and Fred Upton (R-MI) introduced in July. The bills seek to encourage the deployment of high speed networks by preserving the ability of local governments to offer community broadband infrastructure and services. NLC supports the proposals and applauds the bills’ cosponsors for recognizing that that states should not be able to preempt municipal authority to make services available to their citizens, especially in areas where fully competitive and affordable high speed internet services do not otherwise exist. NLC is working to communicate its support of these bills to the sponsors.

NCLB Reauthorization Discussion Draft Released
In late August, the bi-partisan leadership of the House Committee on Education and Labor distributed a discussion draft of a bill that would reauthorize Title I of the Elementary and Secondary Education Act (ESEA) of 1965, also known as No Child Left Behind or NCLB. On Monday, August 10, the Committee held a hearing on the draft to get suggestions for improvement; over 30 witnesses testified. The draft, which addresses a wide range of concerns that the National League of Cities has raised over the past several years, focuses on low graduation rates, parental involvement, student and school performance, job skills-related benchmarks, and English language learners. During the hearing, most who testified supported the draft reauthorization and commended Chairman George Miller, Ranking Member Buck McKeon, and the Committee for identifying key problems with the current version of NCLB and proposing workable solutions. Draft language for additional titles of the bill was released late this week, and a mark-up of the bill may begin as early as September 24.

NLC Testifies at House Transportation Hearing
In a hearing before the House Transportation and Infrastructure Committee, Mayor Kathleen Novak, NLC Second Vice President and mayor of Northglenn, CO, testified that a proposal to fund a separate bridge program is a step in the right direction toward meeting our infrastructure investment needs and national goals, but a more comprehensive approach to infrastructure and bridge repair is critical for the long term. Chairman James Oberstar (D-MN) called the hearing to get feedback on his proposed National Highway System Bridge Reconstruction Initiative, which calls for a five cent per gallon increase in the gasoline tax to pay for repairs to the nation’s structurally deficient bridges.

Very truly yours,

William G. Dressel, Jr.
Executive Director