NACo and Federal Issues

Delmarva Farmer Editorial: Goodbye to Waters of the US Rule Change

Les Knapp Agriculture, Environment, NACo and Federal Issues

A Delmarva Farmer editorial (2017-10-06) recounted the history of the controversial change in the definition of “Waters of the United States” (WOTUS) for purposes of implementing the federal Clean Water Act, noted its demise under United States President Donald Trump, and expressed optimism that farmers will have a voice in changing the rule going forward.

As previously reported on Conduit Street, the United States Environmental Protection Agency (EPA) and United States Army  Corps of Engineers proposed and adopted a rule that would expand the WOTUS definition to include streams, wetlands, and intermittent water flows – making them subject to Clean Water Act permitting and mitigation requirements. MACo joined with the National Association of Counties (NACo) in expressing concern that the proposed definition included stormwater drain pipes and roadside drainage ditches. However, the new definition never took effect as the rule change spawned significant litigation and a federal court froze the rule’s implementation. Subsequently, President Donald Trump signed an executive order that reverted the WOTUS definition to the version that existed before the proposed changed.

From the editorial:

In response to Trump’s executive order in February, the EPA announced that it would formally repeal the WOTUS rule and the work was slated to begin on writing a new rule which would provide farmers with clarity and certainty, reduce red tape, and not discourage farming practices that improve water quality.

It now seems reasonably certain that WOTUS, in its original concept, will end up in the federal waste basket and that the nation’s farmers will have a say in what will replace it.

Useful Links

Conduit Street Article on Trump WOTUS Executive Order

Prior Conduit Street Coverage of Waters of the US

NACo WOTUS Resource Page

Conduit Street Podcast, Episode #2 – How Would Federal Tax Reform Affect Maryland?

Kevin Kinnally County Budgets, County News, Intergovernmental Relations, NACo and Federal Issues, News You Can Use, State Budget and Fiscal Issues, Taxes and Revenues

Federal tax reform is a hot topic in Washington, and two potential changes could wreak havoc on county finances. Congress is considering eliminating both the deductibility of state and local taxes (SALT) and the tax exemption for municipal bonds to pay for other priorities.

On the latest episode of the Conduit Street Podcast, Kevin Kinnally and Michael Sanderson discuss how the latest tax reform proposal would affect Maryland.

MACo has made the podcast is available through iTunes by searching Conduit Street Podcast. You can also listen on our Conduit Street blog with a recap and link to the podcast.

Listen here:

Sign up for Creative Counties Placemaking Challenge #NACo

Nicolette Querry County News, NACo and Federal Issues

NACo installed a new program Creative Counties Placemaking Challenge.

NACo said about the program:

The National Association of Counties – in partnership with Americans for the Arts – has launched the Creative Counties Placemaking Challenge to train local leaders from rural and mid-sized counties on how to advance arts-based economic and community development to address local challenges. Counties with populations of less than 250,000 are encouraged to apply today at www.naco.org/creativecounties! Selected teams will have the opportunity to attend a 2 ½ day training in Des Moines, Polk County, Iowa and will receive technical assistance and mentoring. Applications are due October 13th.

NACo has established this program with grant money from the National Endowment for the Arts.

 

What’s Going On With Tax Reform? Part 3

Barbara Zektick Employee Benefits and Relations, Finance and Procurement, NACo and Federal Issues, Taxes and Revenues

Yesterday, Steven M. Rosenthal of the Tax Policy Center opined on a potential element of tax reform that understandably has received less attention from local government advocates than elimination of the deductibility of state and local taxes (SALT) and the tax exemption for municipal bonds. Yet, White House National Economic Council Director Gary Cohn has argued that this element of tax reform will most benefit “the policemen … the firemen and the teachers.”

What is it? Is this true? And as employers of the policemen, the firemen and the teachers, should local governments care?

Cohn was referring to potential tax relief to U.S. corporations for reincorporating their off-shore earnings into the U.S. tax system. This provision would allow corporations holding off-shore profits to repatriate previously untaxed foreign earnings with a U.S.-based parent firm at a special low rate. Cohn argued that this tax relief would benefit the “biggest owners of equities in the world,” the “biggest public pension funds” – and, therefore, the beneficiaries of those pension funds, like public safety officers and teachers.

But, Rosenthal says this isn’t actually the case:

Now for some pension background: There are two basic forms of retirement plans—defined benefit (DB) plans which are typically thought of as traditional pensions and defined contribution (DC) plans, which include 401(k) plans and IRAs.  Defined benefit plans pay annuities to retired workers but these payments are promised by employers and based on years of work and earnings – they do not depend on the returns on assets held by the plan or by the employer directly.  (However, the windfall from a reduced tax rate on accumulated offshore earnings might increase the likelihood that employers meet their promised retirement obligations to their employees). By contrast, the returns on assets held in DC plans and IRAs flow directly to the beneficiaries.

At one time, private and public employers mostly provided defined benefit plans, but now most DB plans are provided by public employers for public servants, like those police officers, fire fighters, and teachers.  ….

A retroactive tax cut for U.S. corporations goes solely to existing shareholders. The Tax Policy Center estimates that 76 percent of the benefits, including the benefits through retirement plans, of a retroactive cut in corporate taxes would go to people in the top fifth of the income distribution (those with annual incomes above $150,000) and 40 percent to the top 1 percent (above $725,000).

Cohn is correct when he says retirement plans would benefit from a lower tax rate applied to accumulated foreign earnings, since they hold a large share of stock in US corporations. But, the DB plans do not pass additional returns through to police officers, fire fighters, and teachers. Only DC plans pass additional returns through to beneficiaries.

Bottom line: this tax break could potentially help counties meet their retirement obligations. But, according to Rosenthal, our retired police officers, firefighters and teachers with traditional pensions shouldn’t start spending all their nest eggs quite yet.

What’s Going On With Tax Reform? Part 2

Barbara Zektick NACo and Federal Issues, Taxes and Revenues

Last week, in the blog post, What’s Going On With Tax Reform? Part 1, I mentioned that the U.S. House of Representatives could potentially see draft tax reform legislation as early as this week. One of two potential changes under consideration could mean serious consequences for Marylanders and their counties: elimination of the deductibility of state and local taxes (SALT) from individual federal income tax payments.

What Is SALT? 

The state and local tax deduction allows taxpayers to deduct state and local taxes paid from their federally taxable income. Deductibility of these taxes prevents double taxation, since state and local taxes are mandatory payments.

In 2015, at least 95.8 percent of all itemizers took the SALT deduction. That tax year, over 36 million individuals and families making less than $200,000 claimed the deduction.

The SALT deduction has existed since 1913, when the original federal tax code came to be, with its grand total of three pages.

This one-pager sums it up well.

Americans Against Double Taxation

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The National Association of Counties (NACo) has joined 20 other organizations, including the National Governors Association, National League of Cities, U.S. Conference of Mayors, Government Finance Officers Association (GFOA), and a wide range of other trade associations representing realtors, firefighters, government employees, educational institutions and more to fight against elimination of the SALT deduction. They call their coalition the Americans Against Double Taxation.

From their Coalition Announcement Letter:

We, the undersigned organizations, urge you to maintain the deductibility of state and local taxes in any comprehensive tax reform legislation. …

Eliminating or capping federal deductibility for state and local property, sales and income taxes would represent double taxation on local residents … Elimination would effectively increase marginal tax rates for certain taxpayers, shrink disposable income and harm housing markets, damaging the U.S. and local economies. Finally, any alterations to the deduction would upset the carefully balanced fiscal federalism that has existed since the permanent creation of the federal income tax over 100 years ago.

Discussing the potential for release of more details on potential tax reform this Wednesday, Treasury Secretary Steven Mnuchin told CNN last Sunday:

We’re getting rid of lots of deductions. We’re trying to get rid of state and local deductions to get the federal government out of subsidizing it and yes I can tell you the current plan, for many, many people — it will not reduce taxes on the high end.

Americans Against Double Taxation responded:

Secretary Mnuchin’s comments on the state and local tax deduction (SALT) today are 100% wrong and backwards. SALT protects state and local governments and 44 million taxpayers from exactly the kind of federal money grab the Administration  appears to be proposing. Indeed, SALT was incorporated in the emergency Civil War tax in 1862 and was one of only six deductions in the first federal income tax in 1913, where it has remained ever since, in order to guard against what Hamilton warned in the Federalist Papers could be a ‘federal monopoly, to the entire exclusion and destruction of the State governments.’

What SALT Means In Maryland

Elimination of the SALT deduction would impact Marylanders more than the residents in any other state, according to the GFOA in The Impact of Eliminating the State and Local Tax Deduction Report.  According to the report, 45 percent of taxpayers in Maryland currently benefit from the deduction, more than any other state. The average SALT deduction in Maryland is $5,604. Read more in the post, Local Tax Deduction Elimination: “SALT” In Maryland’s Wounds.

Find data on the SALT deduction for your county here.

This is part of a blog series on federal tax reform. Read on: Part 3. Here’s Part 1.

 

Would State Block Grants Deliver Health Insurance Reform?

Michael Sanderson Employee Benefits and Relations, Health and Human Services, NACo and Federal Issues

With the US Senate again considering a fast-track vote on legislation to repeal the Affordable Care Act (ACA), much national attention has focused on a key notion in the proposed Graham-Cassidy Amendment: offering states “block grants” to offset health care costs, but without the prescriptive elements of the ACA.

Don Kettl, Professor at University of Maryland’s School of Public Policy, offers his take on this matter in an article on the Route Fifty website:

There’s a basic assumption in the Graham-Cassidy health care bill. It would slash federal cash for the states that didn’t expand their Medicaid programs under Obamacare by $180 billion, or 11 percent, by the year 2026. It assumes that new block grants for the states would allow them to find enough efficiencies to make up the difference.

That is a very, very tall order. What’s the evidence that the states would prove more efficient managers of health care funding than the feds?

…

Two things seem certain. One is that it’s going to be impossible for the states to make up the shortfall with greater efficiencies. The other is that we’ll end up with greater disparities in the health coverage that citizens get, as different states go down different roads to cope with the cuts.

Those favoring repeal-and-replace are deep in a corner from which there are few escape routes. But before pursuing the block grant strategy, which would load all the tough decisions onto the states, it’s worth looking carefully ahead at where this road would lead.

Looking specifically at the effect on Maryland, a state that expanded Medicaid eligibility based on the strong federal funding provided through the ACA to do so, Governor Hogan has opposed the current proposal in the Senate. From the Baltimore Sun coverage:

The governor released a statement emphasizing that the current law needs to be fixed, but he rejected the repeal measure sponsored by Republican Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana.

“Unfortunately, the Graham-Cassidy bill is not a solution that works for Maryland. It will cost our state over $2 billion annually while directly jeopardizing the health care of our citizens,” Hogan said. “We need common sense, bipartisan solutions that will stabilize markets and actually expand affordable coverage.”

This high-profile issue is pressing in several ways. Sources differ on the likelihood of a Senate floor vote being called next week, and the prognosis for the proposal’s passage remain very unclear. After the end of September (and the close of the federal fiscal year), the process of budget “reconciliation” closes, and a full 60-vote margin (to overcome an expected filibuster by opponents) would be practically required to enact any changes to federal health care law.

Will Criminal Justice Reform Reappear on Congressional Agenda?

Michael Sanderson NACo and Federal Issues, Public Safety and Corrections

In 2016, advocates of major reforms in criminal sentencing thought a rare bipartisan deal might bring dramatic reforms to light. That possibility fizzled out, but may be put back into play this year by two US Senate sponsors.

The changed landscape with a new Executive Administration, and a new tone from the US Department of Justice, has left reform supporters unclear of the next steps for the issue.

According to Reason, a libertarian-leaning news and information site, the bill’s two sponsors intend to reintroduce it this year:

The Sentencing Reform and Corrections Act, originally introduced by Sens. Chuck Grassley (R-Ia.) and Dick Durbin (D-Il.) in 2015, would reduce the mandatory-minimum sentencing guidelines for repeat drug offenders without serious violent felonies and would broaden the “safety valve” exception to federal mandatory minimum sentences. It would also add new mandatory minimum sentences for interstate domestic abuse and for providing support for terrorists, while strengthening penalties for certain other crimes.

Grassley and Durbin say they will reintroduce the bill this year, although they did not say when.

“While the political landscape in Washington has changed, the same problems presented by the current sentencing regime remain,” Grassley said in a statement, “and we will continue to work with colleagues in Congress and the administration, as well as advocates and members of the law enforcement community, to find a comprehensive solution to ensure justice for both the victims and the accused, and support law enforcement in their mission to keep our communities safe.”

Read more on the Reason blog.

What’s Going On With Federal Tax Reform? Part 1

Barbara Zektick NACo and Federal Issues, Taxes and Revenues

The U.S. House of Representatives could potentially review draft tax reform legislation as early as next week, and two potential changes could wreak havoc on county finances. Lawmakers and the Administration are still considering eliminating both the deductibility of state and local taxes (SALT) and the tax exemption for municipal bonds to pay for other priorities.

MACo representatives participated in a conference call hosted by tax experts at the National Association of Counties (NACo) to learn more about these potentially very expensive changes.

Where Are We Now?

Earlier this month, President Trump met with the “Big Six” about tax reform: House Speaker Paul Ryan (R-Wis.), House Ways and Means Chairman Kevin Brady (R-Texas), Leader McConnell, Senate Finance Committee Chairman Orrin Hatch (R-Utah), Treasury Secretary Steven Mnuchin and National Economic Council Chairman Gary Cohn.

In order for Congressional leadership to move forward with tax reform in the Senate without Democratic support but with a simple majority vote, the Senate Budget Committee must first pass a budget resolution unlocking the budget reconciliation process.

Note that the Senate Budget Committee Chair is not one of those aforementioned “Big Six.” NACo reported a few weeks ago:

Lawmakers are growing increasingly anxious to see specific details of a tax reform plan. Republicans on the Senate Budget Committee, tasked with crafting the budget resolution that would allow Republicans to pass a tax overhaul without the required 60 votes in the Senate, have grown frustrated about the lack of details as they work on their FY 2018 budget.

Yesterday, U.S. Senators Bob Corker (R-Tenn.) and Pat Toomey (R-Pa.), members of the Senate Budget Committee, announced that a deal had been reached to aim towards a $1.5 trillion tax cut over a period of 10 years. The Hill reports:

Corker said a deal was in the works on the committee to write a significant amount of tax breaks into the reconciliation instructions, in order to increase lawmakers’ flexibility in the legislative process. To take advantage of reconciliation, the Senate will have to both stick to the instructions written by the budget committee and follow other strict rules pertaining to deficits. …

“The only thing it really does is begin the tax reform discussion,” he said.

The instructions, he continued, would use “current law” as the baseline for determining the deficit implications, rejecting a scheme to use “current policy” — an alternative measure that would allow extra deficit spending into the bill.

With a budget resolution in the works, the door is opened for the House Ways and Means Committee and Senate Finance Committee to start working on the meat and potatoes of the tax reform package. Whether that means steak fries, or Big Mac and fries, remains to be seen.

This is part one in a three part series. Read on: Part 2.

Gov’s Grants Conference

Michael Sanderson Intergovernmental Relations, NACo and Federal Issues

Join Maryland State, local governments, and nonprofits for the Governor’s Grants Conference on Monday, November 13, 2017. Experts will convene to discuss grant opportunities, the federal grants landscape, how to manage your grants properly and prepare for a clean audit (Uniform Guidance!)

Hear from federal and private funders and meet the State Grants Team at the Roundtable Session. Network with other organizations to collaborate on projects for a better chance at winning competitive grants. A special EARLY BIRD PRICE is available until midnight, September 21. Register a.s.a.p. as this event sells out early every year!

More Information | Register Today

Free Wednesday Webinar on Cannabis Regulation

Michael Sanderson Business Affairs, Health and Human Services, NACo and Federal Issues, Public Safety and Corrections

Webinar: Regulating Marijuana – Emerging Challenges, Best Practices and Technology Solutions

The new regulatory processes being launched across the country require input from many local departments (licensing, permitting, environmental health, public safety, etc.) and close coordination amongst counties, cities and states. Local government staff are being tasked with delivering new systems under tight deadlines and with high stakes for accuracy and compliance.

Wednesday, September 20
11 a.m. PDT | 2 p.m. EDT

In this webinar, we will discuss:

• Emerging best practices and current challenges for local marijuana regulatory programs
• The key role robust, integrated technology systems play in successfully regulating marijuana
• How pioneers like the City and County of Denver, CO addressed the challenges and opportunities presented by marijuana legalization

The webinar is sponsored by Accela, and follows up on a presentation delivered at the NACo Annual Conference in July of this year.

Register here for the free webinar.