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Urban aid bill's fate questionable as recess nears.

Action in the Senate on the so-called urban aid package remained uncertain last Thursday as city officials worked to support key provision, but oppose costly new mandates in the bill.

As The Weekly went to press, action on the bill, HR 11, had been deferred until the Senate finished action on key appropriations bills and the 1992 defense authorization bill - raising questions about whether the Senate would complete action on any urban aid legislation before its scheduled recess this Wednesday.

For the nation's cities and towns, the huge and complex bill poses a dilemma. While the bill would reauthorize priority, expired municipal tax programs and create a new kind of tax-exempt economic development bond for every distressed city and town, the bill would make cities pay far more than they would get in return.

What began as an urban aid bill to respond to the civil disturbances in Los Angeles has turned into a huge, catch-all, $31 billion tax bill with less than $3 billion targeted to cities. But new, unfunded mandates and double taxation provisions in the bill are proposed to raise more than $6 billion in new federal tax revenues.

The bill would reauthorize the expired authority of local governments to issue single family mortgage revenue and small industrial development bonds for 18 months and reauthorize low income housing tax and targeted jobs tax credits for 18 months.

The bill includes special provisions advocated by NLC to create a new kind of municipal tax exempt economic development bond that is partially exempt from state volume limits and deductible to banks for all distressed cities and towns. This provision - to help all distressed communities - would provide cities with new tools to assist local businesses and to encourage local banks to make credit available in distressed areas. Neither the

But in order to pay for the more than $30 billion in tax breaks proposed in the legislation, the bill includes more than $30 billion in revenue increases over the next five years - including two directly impacting communities and local taxpayers.

The first would mandate an NLC-opposed local reporting requirement on all local tax collectors. The provision, which the House last week rejected by a 369-48 margin, would mandate cities and towns to report to local taxpayers and the IRS the amount of local property taxes and fees that are deductible for federal income tax purposes. This would require individualized reports to every taxpayer. The paperwork mandate is projected to increase tax compliance revenues to the federal government by about $150 million.

The bill also proposes an NLC-opposed permanent extension of limitations on the deductibility of state and local taxes.
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Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Aug 10, 1992
Words:439
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