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Facing the challenges of governing the nation; what a changed federal government may mean for cities.

For municipal leaders, the new president and changes in the Congress could mean an end to the gridlock. With the Congress no longer able to blame the deficit and economic problems on the White House and vice versa, the era of vetoes should end. A new era of accountability and challenge will begin--at every level of government in every part of our nation.

A New President & A New Congress

President-elect Clinton has already begun the task of accepting what many have called the "challenge of governing and accountability." He will work with a new 103rd Congress that has solid Democratic majorities in beth the House and Senate and few changes in its leadership. But while the leadership in both parties will remain nearly unchanged, the House will have 110 new members--more than a 25 percent turnover. The Senate will have 11 new members.

The extraordinary level of turnover, the greatest change in 40 years, is almost certain to lead to changes in the way the Congress works. The new class, moreover, boasts an extraordinary level of experience at the state or local level. Nearly three quarters of the newly elected House members have experience as state or local officials, promising a far greater understanding of the issues and concerns of states and local governments.

Senate Majority Leader George Mitchell (D-Maine) made clear the Congress would work closely with the new President to implement his commitment to make the economy the first priority in the new Congress: "I think the highest priority must be economic growth, the creation of new jobs in our country, the deficit, and health care reform."

The very first proposal by the new administration to Congress is expected to be a 'jobs" stimulus package. The President-elect had set a target of introducing a jobs-investment package on his first day in office.

Indicating his wish to replace "trickle down" economics, Clinton proposed both a Rebuild America Fund and tax credits for private investment in his campaign as part of a jobs program that would jump start the economy, but provide long term results.

How the new Clinton team will shape this agenda, how it will affect the nation's cities and towns, and how Congress will react remains to be seen.

Clinton's Economic Strategy

President-elect Clinton proposed his "Putting People First" agenda last June, which many believe will serve as a guidepost for his agenda for the first 100 days. In his plan, Clinton urged approximately $50 billion annually in new investments over the next four years, paired with slightly greater amounts of cuts and tax increases - so that he would change budget priorities to reduce the federal deficit, but invest substantially more in human and public infrastructure in our communities

Following are the key proposals affecting cities:

* Rebuild America Fund: $20 billion annually for four critical areas: Transportation; National Information Network; Environmental Technology for Advanced Cleanup and Recycling; and Defense Economic Conversion;

* Investing in Communities:

Target funding and GDBG for rebuilding infrastructure; create a nationwide network of community development banks for investments in inner cities; put 100,000 new police officers on the street. and create a National Police Corps to help cities fight crime; create urban enterprise zones; pass a more progressive Community Reinvestment Act;

* Encourage Private Investment in America: provide targeted .investment tax credits and offer a 50 percent tax exclusion to those who make risky long term investments in new businesses;

* Human Investment: Ex- pand the Earned Income Tax Credit; fully fund both Head Start and the Women, Infants, and Children (WIC) programs; enact a Safe Schools Initiative; create a Youth Opportunity Corps; create a National Apprenticeship Program; inaugurate a National Service Trust Fund; and create an employer-funded Worker Retraining program; and

* Quality, Affordable health Care: Provide universal, affordable access to health care through national spending caps, universal coverage, managed care networks, and a core benefits package.

The Budget, Jobs, Taxes and the Deficit

President-elect Clinton will set the pace. He will propose a legislative and regulatory package on his first day in office combining tax, spending, and regulatory changes to attempt to spur immediate job creation and economic growth in cities and towns. In February, he will send Congress his first budget, setting

forth his proposals for changing federal tax and spending priorities and cutting the federal deficit.

"The economic stimulus package and budget President Clinton sends to the new Congress will show the nation what the president's priorities are for the nation's cities and towns--exactly what resources he will propose to get local economies going again and to pay for federal mandates, to help fight drugs and crime, to meet community and economic development priorities, to provide access to health care.

In March, the United States will hit its national debt ceiling or borrowing authority, forcing Congress and the new administration to act on legislation that could have a profound impact on federal budget priorities. To achieve credible deficit reduction will require fundamental changes in federal spending priorities as well as substantial revenue increases. It will require limiting the growth of federal entitlement programs-such as Medicare, Veterans benefits, and Social Security--which now consume more than half of all federal revenues and are growing so fast that by the year 2002, these programs together with interest on the national debt are projected to consume all revenues. The debt ceiling legislation will impose limits on spending and investment affecting cities for years to come; it will almost certainly impact the ability of the federal government to pay for unfunded and underfunded federal mandates.

With the veto of the urban aid tax bill, Congress is almost certain to. begin work, in January on a streamlined version of the vetoed urban aid bill, preserving the vital extensions and provisions critical to immediate investment in housing, jobs and job training, and economic development; distressed cities economic development block grants; and removal of costly impediments to municipal bend financing of infrastructure. But the new President and Congress are also likely to consider far more reaching changes in our federal tax code, such as a value added tax or a consumption tax. Such changes could affect the ability of cities and counties in Virginia to issue tax exempt municipal bonds or revenues from local sales taxes.

Environment and Cities

With Congress and a new Environmental Protection Agency Administrator ready to address major environmental legislation, almost all the major environmental statutes--Clean Water Act; Safe Drinking Water Act; the Resource Conservation and Recovery Act (solid and hazardous waste management); Endangered Species Act as well as Superfund are potential legislative items. But cities are nearing the end of their rope trying to pay for the existing environmental mandates.

Municipal Benefits and Costs

Congress, the new Administration, and the courts will certainly focus on a number of key issues affecting municipal employee costs and benefits including: Family and Medical Leave, the Fair Labor Standards Act (FLSA), Age Discrimination, taxing health care banefits, and extending OSHA mandated regulations to municipal employees.

Community Investment

With the nomination of former NLC President Henry Cisneros to be the Secretary of Housing and Urban Development, the new Administration will reconsider the role of cities in the national economy. That will involve the role in the Community Development Block Grant (CDBG) program in building infrastructure; it will involve changes in federal banking laws to enhance the Community Reinvestment Act (CRA) and to create a network of community development banks across the nation; and it will involve efforts to create a new kind of urban development action grant program to leverage investment in cities from the private sector.

There will continue to be great tension between local governments and the non-profit sector as to who can best deliver federal dollars at the local level to make a difference.
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Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Jan 4, 1993
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