Our strong local-federal partnership is essential

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From The Beacon, March 2017
 
Massachusetts is fortunate to have a congressional delegation that stays in close touch with local officials. When I talk with my colleagues from other states, they are envious of the strong relationship that we have with our U.S. representatives and senators.
 
That’s the good news. The more challenging news is that community leaders will need to burn up the phone lines during the coming year and rely heavily on these relationships. That’s because of the growing number of federal policy proposals that would preempt municipal authority and interfere with hometown governance.
 
In January, U.S. Sens. Elizabeth Warren and Ed Markey and Congressman Mike Capuano (a former mayor and MMA President) all attended our Annual Meeting and pledged their continued support to work side-by-side with cities and towns to protect and advance our communities. And over the past several years, the MMA has worked with the offices of all members of our federal delegation on critical issues, from flood maps and stormwater permitting to protecting the tax status of municipal bonds and funding infrastructure investment.
 
The following are some key federal-local issues for Massachusetts:
 
Protecting the tax-exempt status of municipal bonds: With President Donald Trump and Congress pledging a major overhaul of the federal tax code, local leaders are rightly concerned that powerful interests will attempt to fund major tax cuts by ending or weakening the tax-exempt status of municipal bonds. The MMA estimates that each year, cities and towns in Massachusetts issue $3 billion in tax-exempt bonds and notes. Under current interest rate conditions, repealing the tax-exempt debt authority of cities and towns would add approximately 80 basis points to an issuance, which would translate into $225 million in additional costs to local taxpayers in Massachusetts over the life of a 20-year bond.
 
Under normal market conditions, repealing the tax-exempt debt authority of cities and towns would add as much as 2 full percentage points to an issuance, leading to approximately $525 million or more in additional costs to local taxpayers in Massachusetts over the life of a 20-year bond.
 
At the end of 20 years, if tax-exempt financing is repealed, the annual burden on Massachusetts taxpayers would be $525 million, a massive cost-shift. Even a partial repeal, such as the previously proposed 28 percent tax-benefit cap, would result in an annual burden on Massachusetts cities and towns of more than $200 million.
 
Protecting the tax-deductibility of state and local taxes: Another major issue in the tax debate will be retaining the deductibility of local property taxes and state income taxes. A repeal of deductibility would translate into a real tax increase for the average homeowner (with no corresponding increase in services received), which would put enormous new pressure on tight local budgets and make it even harder to fund essential municipal and school services.
 
Protecting municipal authority over public rights of way: The Federal Communications Commission is expected to vote soon on a proposal to strip cities and towns of their authority to appropriately regulate the use of public rights of way by telecommunications companies. So-called “small cell” network builders and carriers are seeking to have the FCC weaken local control so that they can fulfill their business model, which is to gain a competitive advantage by deploying their telecom network at a lower cost than traditional carriers. Their plan is to cap what communities can charge for the use of publicly owned property and make it much more difficult for communities to protect neighborhoods from blight and aesthetic deterioration.
 
Investing in municipal infrastructure needs: President Trump has spoken of a $1 trillion infrastructure investment initiative, but the emerging details show that the plan would not increase funding for states and cities and towns. Rather, the proposal would give private businesses billions of dollars in tax credits to entice them to invest in public projects. The problem is that this would restrict new funding only to those projects that can be monetized, leaving behind almost all local roads and bridges, schools, police and fire stations, and nearly everything else. Further, the only feasible way to use these funds would be through a forced public-private partnership structure, adding complex transparency and accountability layers. The best way to get America building again is to give municipalities the funds directly, rather than providing certain businesses with funding boosts.
 
Closing the online sales tax loophole: For years, Main Street retailers in our communities have been disadvantaged because of the internet tax loophole that allows online companies to avoid collecting and paying sales taxes. While we have come close in past years, Congress has not closed this loophole, which costs Massachusetts hundreds of millions of dollars in lost revenue every year and has hurt our brick-and-mortar merchants. Closing this loophole would not generate direct local funding, but it would provide an important source of revenue for the Commonwealth, funds that could be appropriated by state lawmakers to increase Chapter 70 education aid and meet other vital funding needs.
 
Protecting grants from unrelated federal mandates: Recently, communities across the state have become deeply concerned that bedrock federal grant programs, such as Community Development Block Grants, Clean Water Grants, Brownfields grants, and housing funds could be threatened by unrelated federal requirements. One example is the proposal to link continued grant funding in all these areas to a local decision about whether to enroll local police departments into the enforcement of civil (not criminal) federal immigration provisions. The U.S. Supreme Court has ruled against such proposals in the past, stating that the federal government does not have the ability to coerce local or state agencies by threatening penalties in unrelated programs. With the court in transition, however, it will be important to oppose the passage of any federal law or executive order that could create a dangerous precedent and lead to the erosion or elimination of local home rule and community-based decisions.
 
In February, MMA President Mel Kleckner and I participated in a “Washington Fly-In” to visit Capitol Hill and discuss the concerns of cities and towns with key staff and legislators. The event was organized by the National League of Cities, and delegations from 20 states participated in the “quick strike” lobbying effort. In just two days, we were able to cover a wide range of these issues. We connected directly with Sen. Markey, Congressman Richard Neal (another former mayor and MMA member), and Sen. Warren’s office. As expected, they were all very supportive and appreciated the outreach. We also provided detailed comments to key FCC staff and met with the senior staff of the Subcommittee on Water Resources and the Environment.
 
We both came home knowing that this was just the start. The most important action will be taken by local officials all across Massachusetts. This is the time for municipal leaders to talk with their senators and members of Congress, to thank them for their support so far and explain how all of these issues will affect our cities and towns. Our federal partners need information and examples to share and highlight during the high-stakes debates that will come later this year.
 
The outcome of these issues will shape our communities for years to come, which is why we must do our best to leverage the strong relationship that exists between our federal and local leaders into positive action in our nation’s capital.