By Larry Jones
June 27, 2005

Jackson (MS) Mayor Harvey Johnson, Chair of the Conference of Mayors Urban Economic Policy Committee, led members through a full agenda on June 11. Mayors on the committee heard from four speakers on a wide range of topics and took action on nine resolutions.

The first speaker, U.S. Census Bureau Director Charles Louis Kincannon, told mayors that the Bureau is experiencing success in implementing the American Community Survey (ACS), which replaces the census long form. Instead of every ten years, the ACS will be conducted annually to provide more up-to-date census data to public and private sector officials for planning purposes. In the first months of implementation, Kincannon said the survey is achieving a 96 percent response rate. "The American Community Survey will provide more timely data for states and local communities," he added.

David Quam, Federal Relations Director for the National Governors' Association, told mayors that state and local groups have been working with representatives from the communications industry since last December to identify their differences on communications tax issues and to move towards a compromise on an approach to modernize the nation's communications tax laws. He pointed out that industry's key concern is that there are too many discriminatory taxes on communications services. Industry officials assert that state and local taxes on communications are higher than taxes imposed on the general business sector and they are pushing to have the same taxes imposed on communications as are imposed on the general business sector. From the government's angle, Quam said state and local officials feel very strongly about protecting their taxing authority and revenue base. He explained that government and industry representatives are making progress on developing a set of principles to guide us in putting together legislative recommendations.

On the Streamlined Sales Tax Project (SSTP), Quam told mayors that 22 states have adopted the necessary legislation to simplify their sales and use tax systems in accordance with standards set by the SSTP. Each participating state must be certified that it is in compliance with the simplification standards. After enough states are certified, they will be able to collect taxes on remote sales (purchases made by a resident over the Internet, telephone or mail-order from out-of'state merchants). A number of companies have agreed to begin October 1, 2005 on a voluntarily basis to collect taxes on remote sales. Once the simplified system is up and operating, it will be easier to convince Congress to pass legislation authorizing states and local governments to require the collection of taxes on remote sales. Quam said the Senate is expected to introduce legislation endorsing the SSTP concept in June.

Terri Gullo, Unit Chief of the State and Local Cost Estimation Unit of the Congressional Budget Office, told mayors that since the enactment of the Unfunded Mandates Reform Act of 1995 (UMRA), the Congressional Budget Office has been responsible for monitoring bills introduced in Congress and issuing a statement on whether they include an unfunded mandate. She said between 1996 and 2004, CBO examined 5,269 proposals. Of this amount, 617 (12 percent) included mandates. Further, she explained that 58 (9 percent) of the 617 included mandates exceeding the cost threshold. Under UMRA any member can raise a point-of-order to stop action on a bill that includes such a mandate. A simple majority vote in both houses is required to overcome the point-of-order).

Gullo said that only five unfunded mandates exceeding the threshold have been enacted since 1995. However, she pointed out that many areas are not covered by UMRA such as national security and emergency aid. She also explained that many federally imposed costs such as grant conditions are not defined as mandates. And although preemptions are usually defined as mandates, she said they rarely exceed the threshold and therefore are generally not subject to a point-of-order.

Amy Edwards, a partner with Holland and Knight Law Firm in Washington (DC) told mayors that the Department of Defense has an obligation to remediate Base Realignment and Closure (BRAC) sites before transferring ownership of the property to local governments. She said under current law, the federal government is required to include a covenant in the deed warranting that "all remedial action necessary to protect human health and the environment with respect to any such hazardous substance remaining on the property has been taken before the date of such transfer." In cases involving environmentally contaminated sites, she pointed out that Risk-Based Corrective Action cleanups can save time and money if conducted properly and in accordance with the community's/developer's vision of the highest and best use of the site.

Edwards said, "It is critically important to reach consensus on a reuse plan early in the BRAC process. The reuse plan will drive how much remediation is required and in which portions of the site."

After hearing from the speakers and discussing the issues, the committee considered and adopted the following resolutions:

Resolution # 69: Urging Protection of Local Taxing Authority in the Modernization of the Nation's Communications Tax Laws.

Resolution # 78: Urging Congress to Strengthen the Unfunded Mandates Reform Act.

Resolution # 79: Urging the Preservation of Deductions for State and Local Taxes.

Resolution # 80: Urging Tax Reform that is Friendly Towards Families and Small Business.

Resolution # 81: Urging Federal Funding for the Clean up of Closed Military Bases.

Resolution # 18: Urging Preservation of the Earned Income Tax Credit.

Resolution #82: Urging Binging Fairness and Relevance to Census Bureau Counts of Incarcerated Americans.

Resolution # 56: Urging Permanent Extension and Expansion of the Brownfields Tax Credit.

Resolution #83: Urging Support for the Economic Development Act to affirm state and local use of tax incentives to promote economic development.