President Trump’s Budget Proposal Carries Big MD Effects

President Trump’s proposed federal budget has triggered a wide range of reactions, including some local concerns about effects on the Maryland workforce, environment, and numerous other areas. While federal actions are far from certain, this debate does carry over into the state political arena in several ways.

A Baltimore Sun article covers the story, with significant focus on federal funds for the Chesapeake Bay cleanup efforts, but touches on the wider picture as well:

In Maryland, a state where the economy is closely tied to federal spending, the $1.15 trillion budget could put thousands of civilian government employees out of work but also boost defense activity in the state. Urban development and road projects in Baltimore could be put on hold while additional money may be set aside for addiction treatment.

The proposal, which faces opposition in Congress, underscores the administration’s desire to limit the federal government’s reach into housing, the environment and safety-net programs, while vastly increasing investments in the military and homeland security — all of which reflect promises Trump made during his campaign.

The federal budget process is dramatically different than that in Maryland State government. While the state and many larger counties use what is often referenced as an “Executive Budget” system, where the General Assembly may cut but not add funding, the federal government’s budget process is more legislatively-driven. The President’s proposals represent the Administration’s priorities, but are not materially binding on the Congress. Debate on the budget plan, and the multiple appropriations bills that represent the federal budget, will extend for months.

Wide coverage of multiple news sources discussing the Maryland and political effects of the proposed budget can be found on the Maryland Reporter site, which offers a daily harvest of Maryland news and political coverage.

Congressional Committee Chair Plans Broad Agenda Affecting Federal Workers

Rep. Jason Chaffetz (R-Utah), chairman of the House Oversight and Government Reform Committee, plans a broad and far-reaching committee agenda that includes measures to fire feds faster, pay some feds more and change the retirement system for new hires, of whom there would be fewer.

Maryland is home to some 300,000 federal workers and several agencies. That’s why it’s concerning to hear that Rep. Chaffetz wants agencies to consider locating more government operations outside the nation’s capital in an effort he dubbed “Divest DC,” a move that could be consequential for Maryland and its economy.

The Washington Post summarized some of Rep. Chaffetz’ plans in a recent article.

According to The Washington Post,

Federal employee retirement: Chaffetz wants retirement plans for new federal employees to move away from pensions, or “defined benefit” programs that rely on employer contributions, and lean more on employee funding through a system in which the government would make a “defined contribution.” Uncle Sam could even chip in more than he does to the 401 (k)-like personal investment program for federal staffers. Utah adopted this, he said, saving “billions and billions of dollars.” That may be good for Uncle Sam’s bottom line, but it probably means that individual workers would pay more out of pocket.

Hiring freeze: “We have good-quality federal workers,” [Chaffetz] said, “but we have too many of them.” Compared with the nation’s population, however, the size of the workforce has declined significantly since the 1960s. Chaffetz is considering legislation that would allow agencies to hire only one employee for every two or three who leave. But he said some agencies, such as the Secret Service, are understaffed.

Federal pay: This is one item of good news for a limited segment of federal employees. “There are some areas where we are probably going to have to pay people more money,” [Chaffetz] said, citing in-demand workers such as cyber experts in a very competitive market. Last year, Congress approved his legislation to provide back pay for previously uncompensated Secret Service overtime.

Divest D.C.: Chaffetz suggested that Congress could easily pass a measure pushing agencies to do a cost-benefit analysis comparing the costs of placing operations in the District with other locations. This, he added, could lead to a “more reflective government” and save money because the District is expensive, while helping local economies elsewhere.

“Everything in the federal government doesn’t need to reside in Washington, D.C.,” he said. Everything isn’t. About 85 percent of federal employees are outside the greater Washington area.

Read the full article for more information.

Federal Tax Changes Could Carry State Ripple Effects

jackson-tax-photo-300x201An article in the online source CFO discusses the potential state implications of possible reforms in federal tax systems – particularly relating to corporate income taxation.

From the article:

Nearly every state that imposes a corporate income tax conforms in some way to the federal internal revenue code. In large part, states begin the computation of state corporate taxable income with federal taxable income. Therefore, they allow many federal deductions for state tax purposes.

However, states do not generally conform to various federal tax credits, such as those given for using alternative energy sources. Thus, while changes to the federal tax base may well have an impact on state taxes, changes to federal credits and federal rates are unlikely to have a direct impact on state taxes.

The article also cites a timing issue that affects Maryland, with its legislative session due to conclude well before any realistic timetable for federal action this year:

A major challenge to states will be the timing of federal tax reform. If the federal government actually passes tax reform, when will it become effective? It seems quite likely that if federal reform is passed in 2017, it will be after most state legislatures have adjourned. If so, that means the opportunity for states to respond until 2018 will be limited.

Federal “Waters of the US” Rule Sent Back To EPA Drawing Board

Today, President Trump issued an executive order, shelving the controversial “Waters of the United States” rule, which had been pending from the Environmental Protection Agency and on hold amidst legal challenges. The executive order directs the US EPA and the Army Corps of Engineers to re-work the matter before proposing a subsequent recommendation.

From NACo coverage:

Surrounded by county leaders from across the country, President Donald Trump today signed an executive order to revamp the Obama administration’s controversial “Waters of the U.S.” rule under the Clean Water Act and directed the Environmental Protection Agency and the U.S. Army Corps of Engineers to come up with a new definition.

Under the order, the EPA and the Corps are to restart and rewrite the rule to enable more common-sense local implementation. Since the rule was originally proposed, NACo consistently requested the agencies withdraw and revise the rule to include state and local government concerns.

“We are encouraged by the president’s action and look forward to a renewed dialogue with the EPA and the Corps to develop more workable rules at the local level,” said NACo President Bryan Desloge. “Since counties play a critical role in implementing and enforcing federal water policies, it is crucial that the agencies work with us to develop rules and regulations that work at the local level.

 

For prior coverage of this long-running issue, see:

Supreme Court Will Take Up Waters of the US

Federal Court Suspends WOTUS Implementation

WOTUS Attracts Strong Reactions

Dial-In Meeting: Northeast Regional Counties Conference Call

NACo Northeast Regional Conference Call

Wednesday, February 22, 2017

8:00AM EST

Dial-In:1-719-359-9722

Dial-In(toll free): 1-888-757-2790

Guest Passcode:299194

Conference Call Objectives

  • Regular update from your NACo Regional Representative
  • NACo Staff update on critical issues legislatively and organizationally
  • Address issues of concern to you

General Legislative/NACo Update

  • HADI SEDIGH – NACo Associate Legislative Director – Justice & Public Safety
    • Executive Orders on Immigration and Sanctuary Cities and the possible impact on counties
    • Opioid Town Hall Update
    • Justice and Public Safety sessions at the Legislative

Counties Nationwide Fight For A Local Infrastructure Fast Track

A Local Infrastructure Fast Track not only matters to Maryland counties, but to counties nationwide. Yesterday, the National Association of Counties (NACo) testified before the U.S. Senate Environment and Public Works Committee on modernizing the nation’s infrastructure system. NACo Representative Cindy Bobbitt, chair of the Grant County, Okla. Board of Commissioners, emphasized counties’ vast transportation infrastructure responsibilities. Counties own and maintain 45 percent of public road miles and nearly 40 percent of bridges, and are involved in a third of the nation’s public transportation systems and airports.

In Maryland, counties own and maintain 74 percent of the public roads. Local governments own and maintain 83 percent of our transportation network.

NACo reports:

[Bobbitt] noted that county infrastructure plays a critical role in moving freight and other goods to market, while modernizing industries, higher crop yields and new methods of energy extraction create immense stress on rural roads.

Additionally, Bobbitt underscored that the federal-state-local partnership on infrastructure, informed by county input, is crucial for economic competitiveness.

“Counties stand ready to work with our federal partners to achieve our shared goals — improving transportation, increasing public safety and boosting our economy,” she said.

Watch the testimony here:

Ruppersberger Again Leading Defense of Muni Bonds

Maryland Congressman Dutch Ruppersberger is helping lead the efforts on protecting tax-exempt municipal bonds in any future tax reform or infrastructure measures. He, along with Rep. Randy Hultgren, urge you to take action and sign the Municipal Bond Dear Colleague Letter.

Background from NACo:

As tax reform and infrastructure discussions advance on Capitol Hill, proposals that would cap certain tax benefits, including the exemption for municipal bond interest, continue to be offered as a way to help address the federal debt and deficit. The House Ways and Means Committee continues to work on a tax reform package and could finalize details in the weeks and months ahead.

Tax-exempt municipal bonds have been a fundamental feature of the U.S. tax code since 1913. They remain the primary method used by states and local governments to finance public capital improvements and public infrastructure projects that are essential to creating jobs, sustaining economic growth and improving the quality of life for Americans in every corner of this country.

Between 2003 and 2012, counties, states and other localities invested $3.2 trillion in infrastructure through long-term tax-exempt municipal bonds, 2.5 times more than the federal investment. During that decade, $514 billion of primary and secondary schools were built with financing from tax exempt bonds; nearly $288 billion of financing went to general acute-care hospitals; nearly $258 billion to water and sewer facilities; nearly $178 billion to roads, highways, and streets; nearly $147 billion to public power projects; and $105.6 billion to mass transit.

How to Sign the Letter:

Call and email your House members today and urge them to sign on to the municipal bond dear colleague letter. The current cosigners include: Reps. Hultgren (R-Ill.), Ruppersberger (D-Md.), Napolitano (D-Calif.), Messer (R-Ind.), Brooks (R-Ala.) and Capuano (D-Mass.).
Visit NACo’s County Explorer to download your state municipal bond profile and share this with your members of Congress and their staff.

Supreme Court Will Take Up “Waters of the US”

The US Supreme Court will resolve a jurisdictional issue over the controversial “Waters of the United States” issue, a pending EPA rule determining the authority of the federal agency to oversee and regulate bodies of water.

From the NACo website:

The Supreme Court has now agreed to review the appeal of the 6th Circuit’s ruling, but its review will be limited to the question of which court has the authority to decide the case, and will not assess the substance of the new rule. The Supreme Court’s ruling will determine, however, which courts are authorized to hear challenges to the substance of the new WOTUS definition.

NACo has expressed multiple concerns on the new WOTUS definition and its impact on county-owned and maintained roadside ditches, bridges, flood control channels, drainage conveyances and wastewater and stormwater systems, and will continue to monitor developments in the courts on this issue. NACo does not have a position on which courts should hear challenges to the new WOTUS definition.

 

New Federal Administration May Propose Sharp Cutbacks

The incoming Trump Administration apparently is developing a range of policy proposals to curtail federal spending and agencies – some of which may have effects both on stat and local governments directly, and on the federal and federal-dependent workforce. Both areas of consequence could be substantial for Maryland and its economy.

From reporting in The Hill:

Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned.

The changes they propose are dramatic.

The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations.

. . .

The preliminary proposals from the White House budget office will be shared with federal departments and agencies soon after Trump takes the oath of office Friday, and could provoke an angry backlash.

Trump’s Cabinet picks have yet to be apprised of the reforms, which would reduce resources within their agencies.

The budget offices of the various departments will have the chance to review the proposals, offer feedback and appeal for changes before the president’s budget goes to Congress.

It’s not clear whether Trump’s first budget will include reforms to Social Security or Medicare, two major drivers of the federal deficit.

Read the 2016 Heritage Foundation report, referenced as a source for many of the current proposals in development, online at the Heritage website.

Tensions High As Howard Debates “Sanctuary” Law

Hundreds of residents turned out for a passionate and emotional public hearing on Tuesday night, as the Howard County Council weighed a pending “Sanctuary” bill, framing the county and law enforcement posture regarding undocumented residents.

From coverage in the Baltimore Sun’s “Howard County Times” section:

County Council Chairman Jon Weinstein frequently interrupted testimony to call on the audience to refrain from applause, laughter and overall discord. Back and forth between two council members prompted Weinstein to call for a 10-minute recess in the more than seven-hour-long meeting.

The debate veered between two extremes: opponents said the bill invites undocumented residents to Howard County at the expense of possibly stripping federal funding, while supporters said the bill was a principled stand on behalf of undocumented immigrants in a county that champions and celebrated diversity.

The bill is set for a vote in early February, but faces opposition from the County Executive:

Howard County Executive Allan Kittleman pledged to veto the measure if it crosses his desk, citing the bill as political grandstanding that threatens critical federal funding and provides a false sense of security to undocumented residents.