Congress Reaches Short Term Budget Deal, Administration Proposes Tax Overhaul

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Congress has reached a short-term budget deal that adheres to existing overall spending levels and, for the most part, preserves funding for city priorities. Due to the advocacy efforts of the League, NLC and many other stakeholders, Congress did not adopt any of the mid-year cuts that had been proposed by the Trump Administration. This ensures cities will not face unanticipated shortfalls or systematic clawbacks of spent-out FY17 federal funds.

Key programs the budget deal maintains funding for are CDBG and the Great Lakes Restoration Initiative. Specific program outcomes are presented below and indicates whether funding was Decreased, Preserved, or Increased.

Transportation

  • TIGER: Preserved
  • Federal Transit Administration Capital Investment Grants: Increased
  • Essential Air Services: Preserved

Housing

  • CDBG: Preserved
  • Homeless Assistance: Preserved
  • Housing Assistance Vouchers: Preserved

Labor / Education / Health

  • AmeriCorps (Corporation for National Community Service): Preserved
  • IMLS (Library Services): Increased
  • Job Corps: Preserved
  • LIHEAP (Low-Income Housing Energy Assistance Program): Preserved
  • SSBG (Social Services Block Grant): Preserved
  • CCDBG (Child Care Development Block Grant): Increased
  • 21st Century Community Learning Centers: Increased
  • State Response to the Opioid Abuse services: Increased to $500 million

Interior-EPA

  • Clean Water and Drinking Water SRFs: Preserved
  • Brownfields: Preserved
  • Superfund: Preserved
  • WIFIA: Preserved
  • Great Lakes Restoration Initiative: Preserved

Energy-Water

  • Department of Energy Office of Energy Efficiency and Renewable Energy: Increased

Commerce

  • Economic Development Administration Funding: Increased
  • U.S. Census: Increased

Justice / Homeland

  • New funding for countering heroin and opioid epidemic: Increased to $103 million
  • State Local Law Enforcement Grants: Decreased $128 million to $2.08 billion
    •  Byrne JAG: Decreased by $150 million to $1.26 billion
    •  Community Oriented Policing (COPS): Increased
    • Juvenile Justice: Decreased by $23 million to $247 million
    • Violence Against Women Act: Increased
  • State and Local Homeland Security grants: Preserved
    • Urban Area Security Initiative: Increased
    • Flood Hazard Mapping and Risk Analysis: Decreased by $10 million to $178 million
    •  Predisaster Mitigation Fund: Preserved
    • Assistance to Fire Fighters and Staffing for Adequate Fire and Emergency Response (SAFER) grants: Increased
  • Sanctuary Cities: No change to current law

Agriculture

  • Rural Water and waste Water: Preserved
  • Rural Housing: Increased

Additionally, the Trump Administration released their framework for tax reform. In a call with NLC staff late last week, the outline provided for the Administration’s tax overhaul proposal appears to eliminate all state and local income tax deductions, only preserving the charitable and mortgage exemptions.  What was not included in the proposal was any mention of eliminating the tax-free status of municipal bonds.  NLC staff view this omission as a big victory and their contacts in the White House have indicated that municipal bond tax status will not be addressed within a tax reform conversation.  Instead, this issue will be included in the infrastructure spending plan that will likely be a September conversation for the Administration.

The League will continue to work with NLC to show our support for local government priorities in the areas of tax reform, infrastructure and the federal budget.

John LaMacchia is the Assistant Director of State and Federal Affairs for the League handling transportation, infrastructure, energy and environment issues. He can be reached at jlamacchia@mml.org or 517-908-0303.