Blog

Long-Term FAA Reauthorization Bill Introduced in House

Last Friday, the House Transportation and Infrastructure Committee introduced the Federal Aviation Administration (FAA) Reauthorization Act of 2018, which would reauthorize FAA through FY 2023. Attached to the bill are provisions of the bipartisan Disaster Recovery Reform Act previously passed by the House that makes changes to Federal Emergency Management Agency (FEMA) policy. The FAA bill does not include FAA air traffic control spinoff provisions. As of yesterday, 40 amendments had been filed. The House is expected to vote on the bill next week. The current reauthorization deadline is September 30, 2018.

THUD Appropriations Member Day

The Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations subcommittee had its FY 2019 Member Day yesterday. Several members applauded FY 2018 increases and urged the panel to protect infrastructure and housing programs and increase funding for FY 2019. Members also asked for support in their districts on specific issues, such as housing displacement from Louisiana floods and building Interstate 11 to link Las Vegas and Phoenix. Subcommittee Chairman Mario Diaz-Balart (R-FL) said he is very happy with the 2018 omnibus and that it will be a firm starting point for 2019.

Washington Metro May Finally Fix its 40-Year-Old Funding Problem

Since it was founded in 1976, the Washington Metro in the D.C. area has had trouble finding a dedicated funding stream that it could rely on for long-term planning. The organization said that it needs another $500 million of reliable funding per year to fix its aging and failing infrastructure. It appears that lawmakers from D.C., Maryland, and Virginia have come closer to earmarking dedicated funds for the transit agency, with each setting their own funding goals and deciding how their jurisdiction would meet it. Within the last few weeks, Virginia lawmakers approved $154 million per year for Metro, Maryland lawmakers set the goal of $167 million per year, and D.C. lawmakers proposed $178.5 million per year.

At Long Last, Congress and the President Fund FY 2018

After months of wrangling, five continuing resolutions, two short-term government shutdowns, and much argument over what funding levels and policy riders should make the final cut, Congress voted and the president signed an omnibus appropriations bill that will keep the federal government funded through the end of the current fiscal year on September 30, 2018.

The $1.3 billion appropriation represents a significant success for our members! Many of NARC’s 2018 legislative and funding priorities received substantially more funding than the president requested and more than was appropriated in fiscal year 2017. Areas that saw significant funding increases include:

  • Transportation and infrastructure, including TIGER Grants, AMTRAK funding, and autonomous vehicles;
  • Community Development Block Grant (CDBG);
  • Workforce Innovation and Opportunity Act (WIOA) state workforce formula grants;
  • Economic Development Administration (EDA);
  • Census Bureau;
  • Opioid crisis relief, including funding for prevention, treatment, and law enforcement;
  • Rural water and broadband programs;
  • Clean Water and Drinking Water State Revolving Funds;
  • Aging programs;
  • Low Income and Home Energy Assistance Program (LIHEAP);
  • HOME Investment Partnerships Program and other housing assistance programs; and
  • Homelessness assistance.

Several policy riders and authorizations were also adopted as part of the omnibus, including:

  • Reauthorization of the EPA Brownfields Program, including NARC supported language;
  • Reauthorization of the Federal Aviation Administration is now extended through September; and
  • Short-term reauthorization of the National Flood Insurance Program (NFIP) is extended through the end of July.

For more information, check out our new blog post on the FY 2018 omnibus appropriations bill.

2018 Omnibus Appropriations Bill Bolsters Many State and Local Programs

Following the release of the $1.3 trillion fiscal year 2018 omnibus appropriations bill on March 21, NARC staff has been combing through the 2,232 page document to learn how localities will be impacted by these federal program funding levels. Much of it is great news for regions! The bill proposes additional funding for so many of the priorities we have advocated for over the last year.

Here are a few highlights:

Transportation

TIGER Grants: The TIGER program increased to $1.5 billion, tripling FY 2017’s funding level of $500 million. It provides some planning money for the first time in many years, allowing for up to $15 million in planning grants. A minimum of 30 percent of the funds are reserved for rural areas, an increase from the current 20 percent requirement.

STBGP: FAST Act highway programs are fully funded, and the bill also includes a one-time increase of $198 billion for the Surface Transportation Block Grant Program (STBGP). The increase will be distributed as it is through the FAST Act, meaning that funds will be suballocated to local areas. The funds are only eligible for road, bridge, and tunnel projects, and the STBGP set-aside (TAP) is waived. The bill includes an additional amount for public/Indian lands and territories ($320 million), and a new competitive bridge program in states with densities of less than 100 persons per square mile ($225 million).

New Life for New Starts: While the administration proposed narrowing the Capital Investment Grants Program (New Starts) funding to only cover projects already underway, the omnibus agreement provides nearly $400 million for new projects. This is an overall increase of $232 million.

Transit: Transit receives full FAST Act funding with an additional $834 million in general fund appropriations, which includes funding for state of good repair grants, buses, and bus facilities.

Rail: The bill includes large increases for several Federal Railroad Administration programs, including Amtrak which will receive $1.9 billion (an increase of $447 million) with $650 million allocated for capital projects along the Northeast Corridor (an increase of $322 million). The bill also includes funding for three FAST Act rail programs that previously received far less than their authorized amounts: the consolidated grant program to support PTC installation ($593 million), the federal-state partnership state of good repair program ($250 million), and restoration and enhancement grants ($20 million).\

Extends FAA: The Federal Aviation Administration reauthorization is now extended through September.

Automated Vehicle Research: The bill repurposes funds to create a $100 million pot for study grants and implementation of an overall study program.

No Rescissions: The previous version of House and Senate bills would have rescinded contract authority, and an amendment by Representative Rob Woodall (R-GA) to the House bill would have made suballocated STBGP subject to rescission. Since this bill ditches the rescission, there is no need for the amendment.

Clearview Font: The bill temporarily prohibits the use of funds to enforce the termination of an Interim Approval to use the Clearview Font on highway signs and requires FHWA to conduct a “comprehensive review” of the research and report back to the House and Senate Appropriations Committees.

Aging Programs

ACL: The Administration for Community Living is funded at $2.171 billion, a $178 million increase from fiscal year 2017.

Senior Workforce: The Senior Workforce Development Program remains level at $400 million, rejecting the Trump administration’s proposal to eliminate the program and the House’s proposal to cut the program funding by 100 million.

OAA, Title III: The Older Americans Act (OAA) Title III programs received significant increases:

  • $35 million increase to OAA Title III B Home and Community-Based Supportive Services
  • $59 million increase to Title III C Nutrition Services
  • $5 million increase to Title III D Preventative Health
  • $30 increase to Title III E Family Caregiver Support

Census Bureau

Boost to Census Funding: The Census Bureau is funded at $2.8 billion, an increase of more than $1.344 billion from fiscal year 2017. Over $2.5 billion of that amount will be going to periodic censuses and programs, including efforts to continue preparations for the 2020 Census Survey.

Community and Economic Development

CDBG and HOME: The Community Development Block Grant Program (CDBG) is funded at $3.3 billion – the amount NARC and the CDBG Coalition requested. The HOME Investment Partnerships Program is funded at $1.362 billion, an increase of $412 million. The Trump administration proposed to eliminate funding for both programs in fiscal years 2018 and 2019.

SSBG & CSBG: The Social Services Block Grant (SSBG) and the Community Services Block Grant (CSBG) received level funding at $1.7 billion and $715 million, respectively.

State Workforce Formula Grants: Increased grants under Title I of the Workforce Innovation and Opportunity Act (WIOA) by a combined $80 million, including:

  • $30 million increase to WIOA Adult program
  • $30 million increase to WIOA Youth programs
  • $20 million increase to WIOA Dislocated Worker state grants

EDA: The Economic Development Administration (EDA) received a $25.5 million increase. This allocation ignores the Trump administration’s recommendation to eliminate funding for the agency.

Environment

Brownfields Authorization Language: The omnibus package contains the brownfields reauthorization language NARC has pushed for, including:

  • Allowing local governments to acquire abandoned or tax delinquent property that is contaminated and to clean up the property without fear of liability
  • Funding for brownfields cleanup grants
  • Creating a multipurpose brownfields grant
  • Allowing for the recovery of limited administrative costs

Urban and Community Forestry Program: The Urban and Community Forestry Program is funded at $28.5 million, an increase from fiscal year 2017. The omnibus package also includes a comprehensive fix for wildfire funding.

Energy

Energy Efficiency and Renewable Energy Program: The U.S. Department of Energy’s Energy Efficiency and Renewable Energy (EERE) Program is funded at $2.32 billion, a significant increase of $290 million. Rather than follow the Trump’s recommendations to cut the program by three-fourths, Congress chose to increase EERE’s funding by 14 percent.

LIHEAP: The Low-Income Home Energy Assistance Program is funded at $3.64 billion, a $250 million increase. This program has been slated for elimination by the Trump administration for fiscal years 2018 and 2019.

Flood Insurance

NFIP: The National Flood Insurance Program (NFIP) is giving a short-term reauthorization through the end of July, incentivizing Congress to complete a full reauthorization before the August recess.

Rural Development

New Broadband Loan and Grant Program: The U.S. Department of Agriculture (USDA) Rural Utilities Service received $600 million for a new broadband loan and grant pilot program.

Rural Development Programs: Rural development programs receive $3 billion, an increase of $63.7 million from fiscal year 2017. This includes decreases to the Rural Housing Service and Rural Utilities Service programs, which are funded at $1.99 billion and $661.4 billion respectively.

Substance Abuse Crisis

Opioid Crisis Relief: Includes a $3.2 billion increase for programs responding to the opioid crisis, including funding for prevention, treatment, law enforcement, and other purposes.

Water

Coastal Zone Management Funding: The Coastal Zone Management Program is funded at $75 million, a $5 million increase from the previous fiscal year.

USDA Water/Wastewater Loans: USDA’s Rural Water and Wastewater Program would allow more than $3 billion in loans, $1.8 billion more than the previous fiscal year.

Water State Revolving Funds: The omnibus package provides $2.89 billion in funding to Clean Water State Revolving Funds and Safe Drinking Water State Revolving Funds, an increase of $300 million for each program. The WIFIA loan program also saw an increase in funding this year, currently standing at $63 million.

What Happens Next?

The bill quickly passed through the House and the Senate, leaving one last hurdle: getting the president’s signature. Trump tweeted this morning that he is considering a veto because of two factors:

  • The bill presents no action on the Deferred Action for Childhood Arrivals (DACA)
  • The bill does not provide the full $25 billion the president requested to build a US-Mexico border wall.

On Thursday, March 22 White House Budget Director Mick Mulvaney told reporters that the president would sign the bill. The president has until midnight tonight to sign the bill to avoid a federal government shutdown. If he vetoes the bill and it goes back to Congress, a short-term continuing resolution might be employed to avert a shutdown and buy more time to discuss next steps.

UPDATE, March 23 at 1:30 PM ET:

In a White House press conference, President Trump signed the fiscal year 2018 omnibus appropriations package, making it public law. The legislation provides funding for the federal government through September 30, the end of fiscal year 2018. Although the president said, “there are a lot of things I’m unhappy about with this bill,” he approved the bill for national security reasons and because it authorizes a major increase in military spending. He criticized the rushed process Congress took to pass this bill, saying he would “never sign another bill like this again.”

The National Association of Regional Councils’ 2017 Wrap-Up

Former NARC Executive Director William Dodge once said, “Regions are the new communities of the 21st century. They have emerged just as villages, towns, cities, and counties did before them… And now they determine our fates.”

This quote could not be timelier. As we take time to reflect on the past year and look ahead to 2018, one question has emerged more than any other: What is the role of a 21st century regional council?

Highlighting the innovative initiatives that regional councils are carrying out today and exploring where they can be leaders in their communities drove many of NARC’s activities in 2017.

A Summary of Some of NARC’s Successes Over the Last Year (2017)
  • Trees and Stormwater Website Launch: NARC (along with Ohio-Kentucky-Indiana Regional Council of Governments, the U.S. Forest Service, Davey Resource Group, and Centerline Strategies, LLC) launched a Trees and Stormwater website to provide local decision-makers with tools to integrate trees into stormwater management design and policy.
  • Fleets for the Future: Our S. Department of Energy-funded grant program is continuing to change the face of aggregate procurement methods for alternative fuel vehicles (AFVs), employing a more regional approach that regional councils can replicate.
  • MPO Coordination Rulemaking Reversal: One of NARC’s biggest advocacy victories of 2017 was bipartisan legislation to reverse the Obama administration’s MPO Coordination rulemaking, which was passed unanimously by Congress and signed into law by President Trump.
  • Advocacy on the Hill: NARC continues to make the case for regions to congressional staff and administration officials through face-to-face visits and co-produced letters. More and more, the regional perspective is becoming an essential part of federal legislation and priorities.
  • Major Metros Roundtable: NARC formulated the Regional Major Metro Roundtable to give regional members in major metropolitan areas more opportunities to come together to discuss their greatest challenges, innovations, and ideas.
  • Strengthening Ties with National Advocacy Groups and Coalitions: NARC cultivated relationships with organizations and coalitions to find opportunities for collaboration and joint advocacy. The National League of Cities; National Association of Counties; U.S. Conference of Mayors; National Association of Development Organizations; Campaign to Invest in America’s Workforce; Community Development Block Grant Coalition; Economic Development Coalition; and Campaign for Renewed Rural Development were all significant partners of ours in 2017.
  • Sharing Regional Best Practices: Our member regions’ best innovations were shared during our three annual conferences, our “regional spotlight” in eRegions and Transportation Thursdays, and our new document that compiles new projects and initiatives that regional leaders presented during Rapid-Fire Innovation Sessions at our 2014-2016 Executive Directors Conferences.

We look forward to working with our members and national partners in 2018. Our members do groundbreaking work, and we aim to support them in any way we can!

Will Electric Vehicles Have Their Year in 2018?

Alternative fuel vehicles (AFVs) became mainstays in the news in 2017, with several big stories focusing predominantly on electric vehicles (EVs). This, combined with several other factors, could mean a big year in 2018 for EVs and a real shift towards an electric, autonomous, and connected vehicle future.

Electric Vehicle Tax Credit

The electric vehicle tax credit ranges from $2,500 to $7,500 for new EVs purchased depending on the size of the vehicle. This tax credit is available until 200,000 qualified vehicles have been sold in the U.S. by each vehicle manufacturer. As a side note, this threshold has yet to be met by any manufacturer.

The threat of elimination of the electric vehicle tax credit in the federal tax overhaul was one of the biggest EV news stories in 2017. The House version of the bill originally eliminated the $7,500 EV tax credit, while the Senate version did not.

Once the EV tax credit was up for elimination, support came rolling in to save it. Even local leaders jumped into the fray, producing a letter signed by 22 mayors that urged Congress to preserve the EV tax credit. The letter cited jobs created in the U.S. automobile industry and the financial savings afforded to American families through owning an EV as direct benefits of this tax credit.

The House and the Senate were ultimately able to reach a deal on the EV tax credit, protecting it from elimination in the final version of the tax bill. While it is not clear what pushed Congress to save the credit, there is little doubt that it will help the EV market grow beyond 2018.

Transportation as a U.S. Greenhouse Gas Pollutant

Another overarching factor contributing to a potential EV boom in 2018 is the designation of transportation as the biggest source of U.S. greenhouse gas pollution. This is the first time in 40 years that power plants have not been recognized as the largest polluters.

While electricity use has not declined, its production has become much cleaner compared to the transportation sector. Wind, solar, and natural gas have replaced a sizable portion of coal-produced electricity, reversing negative trends of power plant emissions. This shift may help make the case for implementing policies or other mechanisms to increase EV adoption in states and localities.

EV Volkswagen Settlement Funds

The release of Volkswagen (VW) settlement funds will be another big variable for the 2018 EV market. As a part of the VW emissions settlement, $4.7 billion will be used for zero emission vehicle (ZEV) investments and Environmental Mitigation Trust funds for states.

The $2 billion ZEV investment will install more than 2,500 EV chargers during the first national ZEV investment cycle, according to Electrify America, with more plans to come.

The plans for the $2.7 billion for Environmental Mitigation Trust funds vary from state to state, but a portion can be invested directly in EV infrastructure. Vermont, for example, plans to spend 15% of its $18.7 million settlement on electric vehicle charging infrastructure. The state is polling the public on how the rest should be spent. Other states are following suit to build up their EV infrastructure as well.

While beneficiaries have several years to implement plans, the initial investments may push consumers to consider buying an electric vehicle as early as this year.

Improvement of EV Options

The surge in affordable and reliable electric vehicle options in the market may also lead to increased adoption in 2018. The three options below show that EVs are beginning to achieve long-range trips at an affordable price – two of the biggest concerns with EV technology:

  • Chevrolet Bolt EV:
    • 2018 will be the first full year this very popular vehicle is available.
    • Range: 238 miles
    • Price: Starts at $37,495
  • Tesla Model 3:
    • The Tesla Model 3 may become more widely available in 2018 following production challenges in 2017.
    • Range: 220 miles
    • Price: Starts at $35,000
  • Nissan LEAF:
    • Range: 107 miles
    • Price: Starts at $30,680

How Regions Can Participate in the 2018 EV Opportunity

The convening of these factors in 2018 marks an exciting year for AFVs. As EVs become more affordable and can travel longer distances, we are likely to see a growing shift in their use.

To help make these options available to public fleets, NARC’s Fleets for the Future project has been working to consolidate bulk purchases for public fleets nationwide. The project team is also closely following the tides of AFV procurement, looking for ways regions can capitalize on the EV movement. For example, many regions will be looking to invest in many emission-reducing vehicles, ranging from EV sedans to propane school buses over the next year. Fleets for the Future will play an important role in reducing costs on these vehicles to help more public agencies transition to AFVs in 2018.

How Does This Impact Regional Planning?

The need for planning for charging stations and AFV corridors will certainly create demand for metropolitan planning organizations (MPOs), regional councils, and their members. This shift will impact gas tax revenues for states and will also increase the need for pilot programs on user fees and vehicle miles traveled (VMT) tax to help solve funding issues at the regional, state, and federal levels.

These regional impacts may also depend on the Trump administration’s infrastructure plan. While there are not many details available, the package may change the market and could have specific provisions that dictate how much the EV market expands.

NARC and its Fleets for the Future project team will keep you updated on these factors converging in the new year. We will be watching with anticipation to see if 2018 is the year of the EV.

Concerns Grow Over the Impacts of House and Senate Tax Bills

Congress is back from Thanksgiving break and confronted with some significant choices, including passage of a tax bill that substantially reduces the corporate tax rate and eliminates some common individual tax deductions, like the property tax and the inheritance tax.

From the outset, the goal has been to pass a tax cut bill – good or bad — before Congress breaks for the Christmas holiday. To do this House and Senate Republicans are moving at breakneck speed to get the bill to the president for his signature.

This week the Senate will begin considering its version of the tax reform bill, which is wildly unpopular with the general public. The House passed its version two weeks ago, and if Senate Republican leaders have their way, their version will pass in the next week. This leaves just enough time to conference the two bills and create a single version that can be adopted by both chambers and get it to the president’s desk before the Christmas recess.

Join the National Association of Regional Councils (NARC),
National Association of Counties, and National League of Cities
in opposing the specific changes to tax deductibility and municipal bonds proposed by the House and Senate.
Local Consequence
State And Local Tax

The House and Senate bills would substantially reduce the value of the state and local tax (SALT) deduction on personal taxes or eliminate it entirely, and this would have a negative impact on localities. Though it would generate $1.1 trillion in new revenue for the federal government, it would place substantial pressure on states and localities to reduce their taxes, which in turn would shut off one of the most important revenue sources available to states, counties, and municipalities.

If the SALT deduction is substantially reduced or eliminated, Congress and the president will have demonstrated their complete lack of understanding of the federal partnership that makes infrastructure development in this country possible.

Nearly three-fourths of all infrastructure development is funded by states, counties, and cities. Reducing revenues and other funding sources for infrastructure development is likely to substantially exacerbate an already dire situation in which 56,000 bridges are structurally deficient, upwards of 70 percent of roads in some states are in mediocre to poor condition, and schools, hospitals, airports and other public facilities are in need of repair.

Municipal Bonds

Consider the National Association of Counties’ (NACo) commentary on the House bill and its impact on counties and, by implication, cities.

The House bill would limit what types of municipal bonds are tax-exempt. Bonds used for professional sports stadiums would not be tax-exempt, even though some counties own and maintain professional sports stadiums. According to NACo, “narrowing the scope of tax-exempt municipal bonds would open the door to future changes that would further restrict which types of projects can be supported by municipal bonds.” The cost of borrowing would also increase considerably because bonds that are not tax-exempt would need to have higher interest rates to attract investors.

The House bill would also eliminate the tax-exempt status of advance refunding bonds, which are most often used by governments to refinance their debt at lower interest rates so that the overall cost of a city or county project is less. While most municipal bonds would retain their tax-exempt status, this type of municipal bond would no longer be tax-exempt, again requiring states and localities to forgo a procedure that often substantially reduces the cost of borrowing by counties.

Finally, the House bill would require that interest generated from private activity bonds (PABs) be taxed. PAB financing generally benefits private developers who benefit from lower financing costs when developing projects that have a clear public purpose (e.g. hospitals, airports, affordable housing, seaports, water and sewer systems).

If PABs were no longer tax-exempt, organizations like the California Hospital Association estimate the change could add billions of dollars in added interest costs for hospital construction. And the California Housing Consortium said the change could cut the number of affordable housing units built in the state by two-thirds each year.

National Consequence: The Nation’s Debt

Opposition to either bill is growing – not only because of the harm it would do to the SALT deduction or the use of municipal bonds – but because it would increase the national debt by $1.5 trillion over ten years. According to the Congressional Budget Office (CBO), the Senate bill would have a significant negative impact on families with household incomes of less than $30,000 per year almost immediately. And this opposition is coming from organizations that generally would support new tax policy if it was paid for and would contribute to economic growth.

Among the most vocal groups are the nonpartisan Committee for a Responsible Federal Budget (CRFB) and the nonpartisan Tax Policy Center, each of which has published reports and issued press releases that call into question many of the assumptions in both versions. CRFB has repeatedly criticized both the House and Senate tax cut proposals because they would substantially add to the nation’s debt.

The Senate Bill

Regarding the Senate version, CRFB wrote that:

  • There is no theoretical basis to suggest tax cuts could be self-financing. To do that, the economy would need to grow by $5 to $6 for every $1 of tax cuts.
  • There is broad consensus among economic models that future tax cuts won’t pay for themselves. Some models find tax cuts would be partially self-financing, while others find the economic feedback would actually increase the deficit effect of tax cuts.
  • Past tax cuts in 1981 and the early 2000s have led to widening budget deficits and lower revenue, not the reverse as some claim.
 The House Bill

Even with the use of dynamic scoring, the Tax Policy Center found that economic growth would be about .03 percent more than it would be without the tax cuts. Thus, it would have a much smaller impact on the gross domestic product (GDP) than has been claimed by Congress and the administration. Notwithstanding economic growth, this legislation would contribute about $1.4 trillion to the national debt and improve the overall economy by only a few tenths of a point. (Dynamic scoring attempts to predict the impact of federal policy changes on households and businesses and how that will contribute to economic growth.)

Reduced Revenues Will Mean Less Money for Programs

Moreover, we must not forget that we face efforts to significantly reduce non-defense discretionary (NDD) programs. Transportation, workforce training, public health, economic development, and other NDD programs are being threatened with further cuts that would irreparably harm these federally-sponsored programs. At the same time, defense discretionary spending is targeted for substantial increases in funding. The loss of $1.5 trillion in federal revenues over ten years could only serve to exacerbate this push to reduce non-defense discretionary spending, which in turn would directly impact the people you represent and serve.

Take Action

If we want to protect the interests of cities, counties, and regions, it is imperative that we influence Congress to maintain the SALT deduction, remove limitations on the tax-exempt status of municipal bonds, and restore the tax-exempt status of PABs. Failure to do so would substantially impact the ability of localities to meet their mandates and provide the services we all have come to expect.

If we want to prevent unnecessary increases to the national debt (~ $1.5 trillion) and the potential for even more cuts to NDD programs, than we must convince Congress and the president that neither the House nor Senate bills are the right vehicle to address perceived problems with the tax code.

Join NARC, NACo, and the National League of Cities (NLC) in opposing the specific changes to tax deductibility and municipal bonds that the House and Senate have proposed.

 

Why the SALT Deduction Matters. Why You Should Save It.

Now is the time to let your senators and representatives know that you oppose elimination of the SALT deduction and that they should vote against any tax proposal that would do this.

Over the next weeks and months, Congress will be debating legislation to “reform” the nation’s tax system. That debate will focus on many things, including corporate taxes, inheritance tax, individual tax brackets, and charitable tax deductions, among others. But none of the debates may prove as important to states, counties, cities, and towns as the state and local tax (SALT) deduction, which allows individuals and households to deduct what they pay to states and localities in the form of income, property, and sales taxes from their federal returns. Both the House and Senate are prepared to eliminate some or all of the SALT deduction to make up for revenue losses resulting from proposed cuts to the corporate and individual tax rates.

Why does this matter? 

The Tax Policy Center estimates that 30 percent of taxpaying households – about 39 million — take the SALT deduction each year. 

These taxes are equally important to the states and localities that collect them. With these funds states and local governments can pay for the services we want and demand, and often take for granted.

These taxes are important to the federal government.

Four hundred twenty-five billion dollars of the $2.3 trillion that is collected by states and localities each year from taxpayers and the federal government is spent on infrastructure – roads, bridges, water treatment plants, and critical buildings like schools and hospitals, to name just a few.[1]

These investments by state and local governments are so significant that overall, the federal government contributes only 23 percent of all the funds spent on infrastructure. Without these state and local funds, the cost to the federal government of building and maintaining our infrastructure would be considerably greater.

According to the National Association of Counties (NACo), state and local governments deploy revenues from state and local property, income, and sales taxes to finance . . . local law enforcement, emergency services, education, and many other services[2] in addition to those used for infrastructure.

Without these funds millions of miles of roads and bridges, mass transit systems, schools, libraries, hospitals, and nursing homes would not be built. Residents might not have access to the goods and services that they currently do, because the resources needed to pay for these services might not exist.

The deduction also reflects the historic belief that individuals should not be taxed twice – at the state and local level and again at the federal level. Moreover, it would shift the intergovernmental balance of taxation and limit state and local control of our tax system, according to NACo.

But now that deduction is under attack. House and Senate Republicans have incorporated into their budget blueprints a plan to eliminate some or all of the SALT deduction, something that could have devastating impacts on states, counties, cities, and the residents who live there.

Eliminating the state and local tax deduction would subject a larger share of taxpayers’ itemized income to federal taxation by adding back in the local taxes already paid as taxable income. It would also put acute pressure on state and local governments to reduce their taxes dramatically. New York Governor Andrew Cuomo said that if the SALT deduction is eliminated New York State “will be destroyed” because of that pressure on the state and local governments to reduce or eliminate some taxes. Other high tax states like California and New Jersey will feel the same pressure to reduce taxes from their state and local taxpayers, potentially cutting off major sources of revenue.

Here are the facts[3]

SALT benefits the middle class.

Nearly 87 percent of taxpayers who claim the SALT deduction have an adjusted gross income (AGI) under $200,000.

Taxpayers in all 50 states – in both Democratic and Republican congressional districts – claim SALT. Of the top 20 highest-SALT congressional districts, 45 percent have Republican representatives.

If Congress eliminates SALT, middle class homeowners will see their taxes increase. Homeowners that make between $50,000 and $200,000 would see an average tax increase of $815 – even if the standard deduction is doubled.

More facts

States and localities generally raise about $2.3 trillion in taxes each year. Of that, $425 billion are used to help pay for roads, transit, education, and public infrastructure. If states and localities reduce their revenue collection and infrastructure spending, the state of America’s crumbling infrastructure would likely get much worse.

State and local taxes pay for a wide range of important services beyond those previously mentioned – they also pay for higher education, public welfare, and public safety.

What does this mean?

If states and localities are forced to reduce their taxes, many community services will be reduced or eliminated. Above all, families and individuals across the nation will be likely to experience diminished quality of life.

What can I do?

As efforts to reform the nation’s tax system gain steam, so too must efforts to preserve this vital deduction – the state and local tax deduction.

Now is the time for elected officials and those that value good government to tell their senators and representatives that eliminating the SALT deduction may lead to significant, long-term damage in our communities – and ultimately, states, counties and cities will bare that responsibility.

Contact your senator and representative to tell them that while it may be the time for tax reform, it is not the time to eliminate the SALT deduction. For more information see GFOA’s report on revenue losses by congressional district and the Big 7’s Americans Against Double Taxation.

[1] http://www.taxpolicycenter.org/briefing-book/what-breakdown-tax-revenues-among-federal-state-and-local-governments
[2] www.naco.org
[3] http://www.americansagainstdoubletaxation.org

Texas Regional Council Preparation and Recovery Efforts for Hurricane Harvey

If you watched any of the coverage for Hurricane Harvey at the end of August, you have an idea of the devastation it caused. Hundreds of images filled our television sets and computer screens, from totally submerged apartment buildings to water-filled streets that looked more like canals, not to mention the hundreds of people displaced to shelters. Some areas of Texas received more than 50 inches of rain from the storm. The Houston Chronicle reported that the hurricane broke the record for heaviest rainfall ever logged in the United States during a tropical storm, totaling 64.58 inches in Nederland, Texas. Local, state, and federal officials all agree on one thing: it will take Southeast Texas months, if not years, to fully recover.

Local officials and regional councils had pivotal roles to play in the preparation and recovery efforts for Hurricane Harvey. The following sections highlight just some of the actions our members carried out, whether they were directly affected, neighbored the affected, or just took the initiative to help other regions and the state bounce back from the record-breaking hurricane.

Texas Association of Regional Councils, Statewide

 The impact of Hurricane Harvey was felt by more than 60 counties within nine of the state’s 24 regional councils. The Federal Emergency Management Agency estimates that more than 792,000 households have applied for federal assistance in Texas alone because of this event. As the state and the nation were looking for ways to assist in the storm’s aftermath, the Texas Association of Regional Councils (TARC) began its efforts by offering a forum to the impacted regions in which they could discuss possible opportunities for collaboration with state and federal agencies.

In its role as a liaison between its members and agencies taking a lead in disaster response and recovery efforts, TARC initiated calls with the impacted regions to ensure all were speaking with one voice and benefiting from the same information. TARC is continuing to follow up with its members as state and federal programs are activated. Because of the partnerships with state agencies created by TARC and its members, the association was also able to quickly build a framework allowing their impacted member regions to provide technical assistance and coordination to their communities and lead recovery agencies. Disasters are local, but with an event of this magnitude, it was and remains important for the regional councils in Texas to continue serving as a steady, reliable, and transparent partner with local, state, and federal government entities.

Houston-Galveston Area Council, Houston, Texas

The Houston-Galveston Area Council (H-GAC) serves 13 counties that are continuing to grow and become more diverse over time. Houston was the largest city to be impacted by the hurricane, and the effects were severe. The Texas Tribune reported that parts of the city received more than four feet of rain. Dozens of Houstonians lost their lives, and thousands of homes and vehicles were damaged or destroyed. According to the Texas Tribune, Houston officials estimate that the first responders’ overtime, debris collection, and other expenses associated with response and recovery will cost more than $250 million.

One of H-GAC’s initial actions was to create a Hurricane Harvey Recovery Resources page on their website, to provide easy access to information for residents, organizations, and local governments that sought updates, assistance, or next steps for recovery. The webpage offers updated information on disaster recovery centers, recovery efforts, and post-disaster reports, as well as recorded webinars on disaster preparedness and economic recovery. H-GAC highlighted pertinent programs they manage that provide services for recovery efforts and shared disaster-related material for each, including HGACBuy Disaster Debris Clearance and Removal Services, disaster debris resources, workforce solutions, and the Houston-Galveston Area Agency on Aging.

After Hurricane Harvey, the H-GAC Board of Directors approved the acceptance of $10,531,000 in workforce disaster assistance funds from the Texas Workforce Commission. H-GAC has planned to use this funding in a variety of ways, including providing temporary jobs for clean-up and repair of government facilities, financial assistance for dislocated workers, and training for individuals who need it to return to work. H-GAC estimated that the funds would create a minimum of 400 temporary jobs and serve at least 1,000 dislocated workers – 85 percent of this budget is earmarked for wages, benefits, and assistance to temporary workers.

Lastly, the H-GAC GIS team has acquired over 10,000 square miles of post-Hurricane Harvey aerial imagery of the major flooding in their region. The resolution of the imagery is one foot and the images are available in natural color and color-infrared. This GIS imagery will help those involved in the recovery efforts understand the impact of the storms and where the flooding was most prevalent. Those that are interested in participating in the cost-sharing effort of this project should reach out to the Data Services GIS team at DSGIS@h-gac.com.

Brazos Valley Council of Governments, Bryan-College Station, Texas

The Brazos Valley Council of Governments (BVCOG) serves seven counties in the eastern part of the state. According to their local newspaper The Eagle, some areas of the region expected anywhere from 3-25 inches of rainfall and wind gusts up to 30-40 miles per hour. This area of Texas is mostly rural, so severe flooding was a major concern for local officials. When the hurricane finally came onshore, the small city of Bedis received 30 inches of rainfall, while other cities in the region garnered 10-20 inches.

BVCOG supported the “whole community approach” that local governments and stakeholders in the region took to help the areas most impacted by the hurricane. Despite some of the areas in the region suffering from flooding themselves, they still supported their neighbors like Houston and Beaumont in the following ways:

  • The City of Bryan and Texas A&M University provided personnel and ambulances to the Emergency Medical Task Force-7 (EMTF-7) to those on the coastline and in the mega-shelter George R. Brown Convention Center in Houston for patient transportation and medical treatment;
  • The fire departments in the cities of College Station and Bryan deployed engines with personnel and swift water rescue assets to the heavily flooded areas;
  • The Navasota Fire Department responded as a Texas Intrastate Fire Mutual Aid System (TIFMAS) water strike team and sent a boat with personnel to impacted areas along the coast (despite being one of the hardest hit counties in the BVCOG region);
  • Temporary evacuation centers were created for displaced families;
  • A large animal shelter was opened at the Brazos County Export Center;
  • Ambulance services from CHI St. Joseph EMS, PHI Air Medical, and Allegiance transported hospital patients and nursing home residents out of harm’s way to designated safe areas; and
  • Regional hospitals, such as CHI St. Joseph Regional Hospital, took in patients from hurricane impacted areas.

The region also served as a major state staging area, providing skilled services, shelter, and medical assistance for those most impacted. Texas A&M University’s RELLIS Campus was a staging area for the Texas A&M Forest Service (TFS) TIFMAS assets, the Texas Department of Transportation (TXDOT), Texas Task Force-1, and the Texas Military Department assets, relief supplies, and equipment. The cities of Brenham and Bryan also staged Texas Military personnel. The BVCOG region’s local governments and stakeholders also provided these personnel groups shelter and meeting space to make sure they were well prepared to enter the hardest-hit areas of the storm.

The local government officials that made these major decisions sit on BVCOG’s Board of Directors. Looking beyond their own communities, they realized that they needed to help the more flooded counties in their region and the areas with the heaviest rainfall in the state of Texas. The BVCOG region’s collective efforts provided support and relief to its citizens and served a greater role as a state team player helping neighboring regions in need.

Deep East Texas Council of Governments, Jasper, Texas

Deep East Texas Council of Governments (DETCOG) covers 9,790 square miles in the eastern part of the state. The region, which sits right above Houston, Texas, saw six of its 12 counties included in the Presidential Disaster Declaration. A map provided by Longview News-Journal showed that the region was going to avoid the heavy rainfall expected in Houston and on the Gulf of Mexico. However, the rural region still expected anywhere from 3-15 inches of rain with the heaviest concentration of rain in the south.

During the storm, DETCOG was an important source of information for those that were impacted by Hurricane Harvey. DETCOG is one of 25 Area Information Centers for 211 Texas, a program designed to connect Texans that call 2-1-1 to state and local health and human services programs 24/7. Before Hurricane Harvey hit, DETCOG’s office received an average of 104 calls a day. In the 15 days following the hurricane, the DETCOG office received 3,172 calls – an average of 212 calls each day. Numbers from their online inquiries were not immediately available, but DETCOG expected that those numbers were higher than normal as well. Their call center even served as a shelter for those that needed it. DETCOG offered vital disaster-related information and resources to thousands in their region, assisting with initial recovery efforts.

DETCOG has also been offered an opportunity to help oversee some of the immediate assistance in some of its more impacted counties in the region. The Alabama-Coushatta Tribe, located in DETCOG’s region, donated $500,000 to various organizations in the 11 counties surrounding them for Hurricane Harvey relief. They asked DETCOG to oversee this assistance in Jasper and Newton counties, each receiving $25,000 from the Alabama-Coushatta Tribe. With this generous donation, DETCOG has been able to help provide emergency assistance with housing, transportation, groceries, cleaning supplies, and building materials to those most affected by the hurricane in Jasper and Newton.

Alamo Area Council of Governments, San Antonio, Texas

The Alamo Area Council of Governments (AACOG) serves a 13-county region. Early hurricane models showed that Hurricane Harvey was going to head towards San Antonio after it left the Gulf of Mexico, but it doubled back to the coast before making landfall. The city, according to a San Antonio Express News article, only received a total of 1.94 inches from the hurricane.

In the face of earlier predictions, AACOG took precautionary measures to ensure the safety of citizens in the region. In a press release disseminated the same day that Hurricane Harvey hit Texas, AACOG said that they were carrying out the following preparations to help their membership counties in South Central Texas:

  • The AACOG team took the lead in activating emergency operations centers and preparedness measures in their region;
  • Their Homeland Security Program served “as a liaison between smaller jurisdictions in the region and the City of San Antonio and Bexar County;”
  • The Alamo Regional Transit system, a low-cost public transportation bus service run by AACOG in 12 rural counties, was prepared to assist with regional evacuations if necessary;
  • Employees from the Bexar Area Agency on Aging and Alamo Area Agency on Aging were ready to conduct case management work at designated shelters, much like they did during Hurricane Ike in 2008;
  • Through AACOG’s Long-term Care Ombudsman Program, AACOG staff members planned on conducting on-site visits to dozens of nursing homes and assisted living centers in the region. If the residents were being moved to a safer location, AACOG staffers would make sure that they would still receive the proper care and medication they need.

AACOG took a multi-faceted approach to preparation efforts that readied the region for the worst-case scenario. They were a leader and a liaison for various cities and counties in their region, and they prioritized putting procedures in place for the most vulnerable populations.

After the hurricane made landfall in other areas, San Antonio became a huge hub for hurricane evacuees. The San Antonio Food Bank, which has a regional reach of 16 counties in South Central Texas, provided food to evacuees. The AT&T Center in AACOG’s home city became a command center for more than 300 first responders from around the state. AACOG and the local officials that make up their Board of Directors were quick to turn their preparation efforts at home to disaster relief and response for their neighbors.

NARC would like to thank H-GAC, BVCOG, DETCOG, and AACOG for the information they provided and for their efforts during Hurricane Harvey. Stay tuned for our next blog, which will cover regional efforts in response to Hurricane Irma.