Maryland GFOA

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Maryland GFOA

• Legislative Outlook
• January 27, 2006
• Susan Gaffney
• Director, GFOAs Federal Liaison Center
• SGaffney_at_gfoa.org

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GFOA

• Celebrating our 100th Year
• Annual Conference May 7-10 Montreal, Quebec
• Get involved
• Standing Committees
• Budget Reviewers
• Write Articles for Government Finance Review,
  Public Investor, Pension and Benefits Update
• Advanced Government Finance Institute August 13
  18
• University of Wisconsin - Madison

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Federal Liaison Center

• Mission
• Inform GFOA members about federal legislation,
  regulations, judicial actions, and policies that
  impact public finance functions
• Represent the interests of GFOA in Washington,
  DC., and enlist grassroots initiatives
• Analyze legislation and regulatory initiatives
  and provide policymakers with information on GFOA
  positions
• Maintain close relations with Members of Congress
  and the Administration as well as with regulatory
  agencies including the Securities and Exchange
  Commission (SEC), the Internal Revenue Service
  (IRS), and the Municipal Securities Rulemaking
  Board (MSRB).

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Federal Liaison Center

• Disseminating information to our members
• Web Site Federal Government Relations Page
• GFOA Newsletter
• Government Finance Review
• Pension and Benefits Update
• Public Investor

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Federal Liaison Center

• - 2006 Priorities
• Communications Reform
• Collection of Remote Sales Tax
• Pension and Retirement Savings
• Tax-Exempt Bond Regulations and Legislation
• Direct Funding to Local and State Governments
• Health Care Cost Containment
• Medicare and Retiree Health Issues
• Tax Reform Deductibility of State and Local
  Taxes

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Leftovers from 2005

• Budget Reconciliation
• 50 Billion Savings Over 5 Years
• 4.8B Medicaid Savings
• 6.4B Medicaid Savings
• 12.7B Student Loan Subsidy Savings
• FDIC Reform
• Deposits insured up to 100,000
• will be indexed to inflation beginning in 2010
• Most retirement accounts insured up to 250,000
• No special provision for municipal deposits

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Leftovers from 2005

• Tax Reconciliation
• 60 Billion Savings Over 5 Years
• Senate AMT patch
• House Dividend and Capital Gains Tax Breaks
  After 2008
• Katrina Tax Breaks - 23B
• Bonus Depreciation
• Tax Breaks for Individuals and Businesses
• Gulf Opportunity Zone Bonds
• Additional Advance Refunding

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Leftovers from 2005

• Tax Reconciliation
• Tax-Exempt Bond Provisions Senate
• Pooled Financings Four New Requirements
• Written commitment from the ultimate borrower
• 50 of net proceeds must be LENT in first year
• Redemption of monies not used to federal
  government
• Small issuer exception for arbitrage rebate
  eliminated
• Reporting Requirement for Tax-Exempt Interest
• All TEB bond interest would have to be reported
  to IRS
• Would work like taxable products
• Concerns regarding use of information by IRS TEB
  Enforcement
• WWW.BUILTBYBONDS.ORG

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Leftovers from 2005

• Pension Reform Provisions for S/L Governments
• Allow public employees to purchase service
  credits (S)
• Clarifying validity of hybrid plan
  designs/features (S)
• Asking Treasury to issue minimum distribution
  regulations (S)
• Allow governments to operate on a good-faith
  basis
• Allow governments to provide meaningful
  cost-of-living adjustments, death benefits, and
  beneficiary payments
• Allow public safety retirees to deduct health
  care premium expenses from retirement income (H)
• Make permanent 2001 tax provisions that allow for
  (H)
• Greater portability of pension assets
• Purchase of service credits
• 457 Plan Flexibility

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2005 Highlights FY06 Budget

• CDBG
• President sought to cut funding nearly in half
  and consolidate with 18 other programs
• Congress rejected the proposal
• Final funding - 3.8B (400 less than FY05)
• COPS Funding - 478m/20 decrease from FY05
• Homeland Security
• Grants to State and Local Governments decreased
  16
• Grant formula based on risk
• SRF Funding 17 decrease from FY05

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2005 Highlights

• Katrina
• 62B in direct aid mostly given to FEMA
• Nearly 1/3 was unused as of December, 2005
• Implications for governments across the country
• Federal/State/Local partnership
• Post-disaster FEMA operations
• Paying your bills
• SAFETEA-LU Transportation Funding
• Nearly two years overdue
• Provides 286.5B in funding 2004-2009
• CREBs - 800 million tax credit bonds for
  renewable energy projects (solar, wind
  generation, etc.)

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2005 Highlights

• E-Rate and E-911 Grants
• 1-year extension
• Fix accounting problems that interfered with
  providing 400 million to local governments for
  e-rate program
• Eminent Domain
• Supreme Court Decision Kelo v. City of New
  London
• Localities may exercise their power of eminent
  domain to force homeowners to vacate their
  properties to make way for planned commercial
  development
• H.R. 4128 Passed 11/3
• Would withhold federal economic funds from states
  and localities who exercise eminent domain
• S. 1313 Introduced no action

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2005 Highlights

• Presidents Advisory Panel on Federal Tax Reform
  Report Issued November 1, 2005
• Eliminates deductibility for state and local
  incomes/sales/property tax deductions
• Tax-exempt status on municipal bonds will only be
  offered to individuals
• One size fits all retirement savings platforms
• Tim Firestine testified before the panel in April
• Testimony and report is available at www.gfoa.org

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2006 Congress/WH Initiatives

• Finish Reconciliation Bills
• Pension Reform?
• FY07 Budget
• Lobbying Reform
• Increase Debt Limit
• 2001/2003 Tax Cuts Permanent
• Health Care Costs
• Limited Budget
• Reauthorizing the Patriot Act

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2006 InitiativesRemote Sales Tax

• Streamlined Sales Tax Project
• Voluntary system went on-line October, 1, 2005
• 19 states representing more than 20 of the US
  population have adopted the Agreement
• The Agreement sets forth rules that states and
  vendors agree to if they want to collect remote
  sales tax. These include
• Uniform definition of goods
• Uniform sourcing destination-based sourcing
• Standardization of tax holidays
• Centralized state administration of sales tax and
  redistribution
• Electronic system for vendors
• Creation of a tax rate database per state

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2006 InitiativesRemote Sales Tax

• Streamlined Sales Tax Project
• State and Local Government Advisory Council
• Created to assist Governing Board with technical
  issues associated with implementing the Agreement
• Each state is represented plus 12 local reps
• 3 reps from GFOA, NLC, USCM, NACo
• Helping with white papers and technical issues
• Providing platform for local government concerns
  to be addressed
• www.streamlinedsalestax.org

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2006 InitiativesRemote Sales Tax

• Federal Legislation
• S. 2152 Senator Enzi (R-WY)
• S. 2153 Senator Dorgan (D-ND)
• Provides federal authority for mandatory
  collection of taxes on remote sales.
• S. 2153 includes a small issuer exception
  provision
• KEY PROBLEM Both call for state and local govts
  to simplify their communications taxes before
  being able to collect taxes on remote sales
• Local govts Keep the two issues separate. We
  could lose more with communications reform than
  we could gain with new remote taxes.

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2006 Initiatives Telecom Reform

• Franchising
• Legislation
• Pre-emption of local franchising authority over
  video service offered by telephone companies and
  maybe cable (ROW)
• Could limit the amount of taxes localities could
  collect
• Senate Commerce Hearing 1/31 locals testifying
• FCC Action
• Notice of Proposed Rulemaking Due February
• Is local franchising a barrier to new video
  competition?
• Are local governments unreasonably denying
  franchises to new video competitors, such as
  telephone companies seeking to compete with cable
  companies?
• Grassroots letter template available at
  WWW.GFOA.ORG

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2006 Initiatives Telecom Reform

• Communication Taxes
• Conversations with Industry State and Locals
  Locals
• Local Government Issues
• Maintaining revenue neutrality
• Expanding tax base (VoIP, satellite)
• Central collection how can/would this work?
• Telecom requesting to be taxed as a general
  business
• Maintaining the ability to set and collect fees
  (911)\
• What next?
• GFOA, NLC, USCM, NACo efforts

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Why/How You Should Help Lobby

• Why
• Importance of input from constituents
• Importance of input from government officials
• Importance of real data and anecdotal evidence
• Quality of interaction with Congress
• Quantity of interaction with Congress

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Why/How You Should Help Lobby

• Senator Sarbanes
• Ranking Member, Banking, Housing Urban Affairs
  Committee
• Foreign Relations Committee
• Joint Economic Committee
• Senator Mikulski
• Appropriations Committee
• Health, Education, Labor Pensions Committee
• Select Intelligence Committee

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Why/How You Should Help Lobby

• House Members with Committees of Note
• Ben Cardin Ways Means Homeland Security
• Al Wynn Energy and Commerce
• Steny Hoyer Appropriations Minority Whip
• Elijah Cummings Transportation Infrastructure

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Why/How You Should Help Lobby

• How
• Join the FOCAL Team
• Apply to a GFOA Standing Committee
• Write/Email/Call Members of Congress
• Make contact with Congressional staff in DC and
  at home
• Stay informed!

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Federal Liaison Center

• Staff and Issues of Expertise
• Susan Gaffney taxes, tax-exempt bonds, budget,
  banking, and general outreach
• Barrie Tabin Berger pensions and retirement,
  health care, communications, budget
• Deborah Reaves office operations
• 202-393-8020