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'Involve us in economic plan changes' local, county leaders tell key senators.

Key municipal and county leaders launched a coordinated state-local campaign to insist--in separate meetings with Senate leaders John Breaux (D-La.), Don Riegle (D-Mich.), J. Bennett Johnston (D-La.), and Carol Mosely-Braun (D-Ill.)--that state and local governments be at the table as the Senate considers changes to President Clinton's economic recovery plan.

The meetings came just hours after the White House announced it would agree to major changes in the Btu energy tax and significantly deeper spending cuts. City leaders have supported the administration's economic recovery package, but have been increasingly concerned about changes proposed in the Congress to shift more burdens onto local governments.

Ben Marks, councilmember of Farmington Hills and president of the Michigan Municipal League, told Sen. Don Riegle (D-Mich.), chairman of the Senate Banking, Housing and Urban Affairs Committee and chair of the Senate Urban Task Force:

"We need to ensure that the Senate, in considering changes to the Btu energy tax and deeper entitlement spending cuts, focuses on the impact on the nation's cities and towns. The American people in our communities are fair. They--and we--are all more than willing to do our fair share to help reduce the deficit. But the repeated exemptions and proposals to impose more mandates on the backs of local governments are simply not fair."

Riegle responded that he was troubled by the implications of the Btu tax, especially with regard to how it would impact police and safety efforts by local governments.

Mayors Hazel Beard of Shreveport, La., Tom McHugh of Baton Rouge, La. Gerald Johnson of Deridder, La. and John Berthelot of Gonzalez, La. joined Marks and Michael Yenni, President of Jefferson Parrish and John Stroger, NACo President, of Cook County, Illinois in urging Sen. John Breaux (D-La.) that if the Senate is going to agree to make more exemptions to the tax, then it must exempt essential public operations--especially for safety, such as police, emergency rescue and fire.

Charles Pasqua, executive director of the Louisiana Municipal Association, told Breaux that local governments should not be forced to raise local taxes to pay |We represent the same citizens as you. We need to devote our own local resources to meeting local needs and priorities--including balancing our own budgets, providing for public safety, and paying for unfunded federal mandates."

Breaux responded that the exemptions were getting to be greater than those left to pay the tax and the estimates of the cost of enforcing the new tax had grown to 20 percent of whatever new revenues would be raised. He said he was working with the White House on an alternative, broad-based transportation tax that would not be riddled with exemptions, but would probably apply only to those currently subject to federal transportation taxes--not state and local governments.

The meetings came at a critical time as the White House announced at the end of the day it was willing to drop the BTU energy tax entirely and consider alternatives.

Breaux told the city and county officials he had spoken to the President well after midnight on Tuesday morning as well as to U.S. Treasury Secretary Lloyd Bentsen about alternatives to the BTU energy tax which would reduce the federal deficit by a comparable amount, but not impose a taxing mandate on state and local governments. The Senate Finance committee had been considering BTU exemptions for farms, hydro power, western coal, ethanol, chemicals, cement, paper, glass, and steel. To pay for the additional exemptions, Sen. David Boren (D-Okla.) and others have suggested that the committee might shift substantially greater liabilities and mandates onto states and local governments to pay for these exemptions.

The President's and House-passed version of the bill would set a precedent by altering the principle of reciprocal immunity and imposing a federal tax on the essential operations of state and local governments. Cities are prohibited from imposing local taxes on the federal government to help reduce local deficits.

According to Congress' Joint Tax Committee, the new tax would cost state and local governments nearly $10 billion over the next five years--meaning states and local governments would be responsible for 13 percent of the total BTU tax revenues.

To pay for exemptions from the BTU tax for special interests, the House opted to increase the tax rate on states and local governments and others who were not exempted. Sen. Boren (D-Okla.) has proposed a cap on federal entitlement spending. But the Boren cap would not reduce the level of mandated services to individuals at the local level, it would simply shift the liability and burden to states and local governments.

The NLC-NACo team urged the Senate leaders to oppose caps on means-tested entitlement programs, unless specific changes are made in the law to limit state and local responsibilities and liabilities:
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Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Jun 14, 1993
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