International Municipal Lawyers Association Mid-Year Seminar. Washington, DC. Legislative Update. Ready, Set, Go. Jacqueline J. Byers, Esq.

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1 International Municipal Lawyers Association 2009 Mid-Year Seminar Washington, DC Legislative Update Ready, Set, Go Jacqueline J. Byers, Esq. Director of Research and Outreach National Association of Counties April 19, International Municipal Lawyers Association. This is an informational and educational report distributed by the International Municipal Lawyers Association during its 2009 Mid-year Seminar, held April 19-21, 2009 in Washginton, DC. IMLA assumes no responsibility for the policies or positions rpesented in the report or for the presentation of its contents. 1

2 Legislative Update Ready, Set, Go One of the primary goals of the National Association of Counties in its legislative efforts this year is restoring the partnership with the national and state levels of government. This partnership, which has been strong in previous years, has been allowed to wither over the last decade. We believe that county government inclusion as a partner is instrumental in the practice of Federalism. Counties need to have a seat at the table as important policy decisions are being made. Many of the legislative issues on tap for counties this year were funding reauthorizations or program reauthorizations. The American Reinvestment and Recovery Act as well as the earlier Neighborhood Stabilization Program and Troubled Assets Relief Program have largely addressed these priorities. Programs of particular interest to counties where well funded, but the issues that remain include the distribution methods for the funding as well as the issuance of the regulations that govern the administration of the funding. Among the programs funded through ARRA that are of particular interest to counties, many of which are included in NACo s legislative priorities are: Agriculture and Rural Affairs Rural Development Provisions Rural Water and Waste Disposal Program: Provides $1.38 billion to support $3.788 billion in loans and grants for rural water and waste disposal projects. Of this amount $968 million is for grants and $2.82 billion is for direct loans. This funding level fulfills NACo s request to completely fund the backlog of rural water and wastewater infrastructure projects at USDA and will assist hundreds of rural communities that have been waiting for this funding. Rural Community Facilities Program: $130 million to support $1.234 billion in grants and loans to rural areas for critical community facilities, such as healthcare, education, fire and rescue, jails, day care, community centers, and libraries. Of this amount $63 million is for grants and $1.171 billion is for direct loans. 2

3 Rural Business Programs: $150 million to support $3.01 billion in rural business loans and grants. The Guaranteed Business and Industry loan funding will translate into $2.99 billion in loans for rural businesses, while the Rural Business Enterprise Grant program is allotted $20 million and is available to public bodies to encourage the development of small and emerging private business enterprises. Rural Housing: USDA s Rural Housing Insurance Fund will receive $200 million to support $ billion in direct and guaranteed single family housing loans to help rural families and individuals buy homes during the credit crunch. Of this amount, $1 billion is for direct loans and $ is for guaranteed loans. Persistent Poverty Counties: The conference agreement requires that at least 10 percent of USDA Rural Development funding (excluding the broadband program) be allocated for assistance in persistent poverty counties. This is defined as any county that has had 20 percent or more of its population living in poverty over the past 30 years, as measured by the 1980, 1990, and 2000 decennial censuses. NACo fought for inclusion of this provision that will benefit our nation s 383 persistent poverty counties. Rural Broadband: USDA s Distance Learning, Telemedicine and Broadband Program will receive $2.5 billion. The funding is for grants, loans and loan guarantees with 75% required to go to rural areas that lack sufficient broadband speed for economic development. The bill also provides $4.7 billion to the Commerce Department s National Telecommunications and Information Administration s (NTIA) Technology Opportunities Program (TOP) for competitive grants to accelerate broadband deployment in unserved and underserved areas. Loans for Beginning Farmers: $20.44 million for Direct Farm Operating Loans, which disproportionately help beginning farmers. Rural Energy Programs: Funding for USDA s recently authorized Rural Energy for America Program and biorefinery assistance did not survive conference negotiations. Community and Economic Development Housing and Urban Development The final agreement provides $1 billion for the Community Development Block Grants (CDBG) for community and economic development related projects to be distributed through existing formula from fiscal year Priority for distribution of funding will be given to projects that can award contracts based on bids within 120 days. The Neighborhood Stabilization Program (NSP) receives $2 billion to help states and localities ease the burden on communities due to the foreclosure crisis. Funds will be awarded on a competitive basis to states, localities and non-profits to help areas with the greatest number and percentage of foreclosures. Fifty-percent of funding must be obligated within two years and 100 percent within three years. The legislation also repeals onerous program income requirements. 3

4 HOME Investment Partnerships (HOME) is allotted $2.25 billion for state housing credit agencies to be distributed by formula from fiscal year Each state would award low-income housing tax credits based on a competitive bid process. Public Housing Capital Fund receives $4 billion to enable local public housing agencies to complete building repair and construction projects in local communities. Of this amount, $3 billion will be awarded through existing formulas and $1 billion will be released through competitive process for projects improving energy efficiency. Section 8 Project Based Rental Assistance receives $2 billion for full year payment to owners receiving Section 8 project-based rental assistance and $250 million for grants or loans for energy retrofits and green investments. Homeless Assistance Emergency Shelter grants receive $1.5 billion to prevent a surge in homelessness, provide short term or medium term rental assistance, housing relocation and stabilization services, and will distributed by formula. Economic Development Assistance programs receive $150 million to address long-term economic distress in urban industrial cores and rural areas based on need and ability to create jobs. EDA leverages $10 in private investments for $1 in federal funds. $100 million is provided for Competitive Grant Lead-Based Paint Abatement to be awarded to state and local governments and non-profits to eliminate lead poisoning as a public health threat to children. Regarding housing tax provisions, the bill provides up to an $8,000 tax credit to taxpayers purchasing homes after January 1, 2009 with no repayment requirement. The credit is available for home purchases up to December 1, 2009 Environment, Energy and Land Use Energy Efficiency and Conservation Block Grant (EECBG) Program was funded at $3.2 billion, however, only $2.8 billion is strictly dedicated to the EECBG formula created through the Energy Independence and Security Act of 2007 (42 U.S.C et seq.). The remaining $400 million will be awarded on a competitive grant basis, yet to be determined. The purpose of the EECBG program is to help local governments reduce greenhouse gases and promote energy efficiency in their jurisdictions. The 2007 enacted energy bill created the following formula for the EECBG program: 68 percent of the total appropriated funds will be given as grants to eligible units of local government; 28 percent will be allotted to the states; two percent to Indian tribes; and two percent for competitive grants to non-eligible communities. In county-speak, eligible units of county government are those over 200,000 in population and/or the ten most populated counties in a state. The EECBG program is under the auspices of the Department of Energy (DOE). While the guidelines for the EECBG program have not been published, the DOE has indicated the guidelines will be released shortly. In the meantime, the DOE suggests that entities that plan to 4

5 apply for these funds start a registration process that may take up to 21 days. The process is as follows: Step 1:Request a DUNS Number at Step 2:Register with the Central Contractor Registry (CCR) at: Step 3:E-Business Point of Contact registers at: Only after the registration process is completed, can an eligible grant recipient submit an application for funding. Application website is: Smart Grid For electricity delivery and energy reliability, $4.5 billion was allotted to modernize the electric grid. The funds will be used to enhance security protocols while ensuring a steady supply of energy. Clean and Drinking Water State Revolving Funds The Clean Water State Revolving Fund (CWSRF) was funded at $4 billion and the Drinking Water State Revolving Fund (DWSRF) was funded at $2 billion. Notwithstanding the states priority list, priority for funds will be given to projects that are ready for construction within 12 months of enactment of this bill. The bill requires a state to use at least 50 percent of their allotted amount for forgiveness of principal, negative interest loans or grants. Assuming that there are eligible projects, the bill specifies that 20 percent of funds appropriated shall be used for green infrastructure projects, water and/or energy efficiency improvements, or other similar environmentally friendly projects. Army Corp of Engineers (Corps) The Army Corps of Engineers was funded at $4.6 billion. Priority is given to projects that can be scheduled quickly, employ the most people and have the least risk. Other Environmentally Related Programs The Brownfields program was funded at $100 million and the Superfund program at $600 million. The Diesel Emission Reduction Act (DERA) grants program was funded at $300 million. DERA is instrumental in helping local governments retrofit trucks, buses and heavy equipment with pollution control equipment. The Defense Environmental Clean-up Program was funded at a little over $5.1 billion. Clean Renewable Energy Bond (CREB) Limits The bill authorizes $2.4 billion for Clean Energy Bonds that are used to finance renewable energy facility projects, such as wind, biomass, landfill gas, trash combustion, etc. This is an increase of $1.6 billion over previous limits. 1/3 of this money is allotted for qualifying projects for State/local/tribal governments. Energy Conservation Bond Limits The bill allows for $3.2 billion of tax credit bonds for green community programs. This is an increase of $2.4 billion. The language also allows the bonds to be used to finance loans to individual homeowners for the purpose of energy efficiency retrofits to existing homes 5

6 Finance and Intergovernmental Affairs One-Year Deferral of Three Percent Withholding Requirement In spite of the best efforts of local government associations and the business community, the final bill adopted a one-year deferral of the three percent withholding requirement. It was hoped the conferees would follow the House lead and fully repeal this unfunded mandate. As it now stands, the withholding provision will take effect on January 1, NACo will continue to seek repeal of the provision and will be filing comments in response to the IRS-proposed regulations concerning the withholding requirement. Comments are due March 5, Help for the Municipal Bond Market The bill contains a number of provisions geared towards increasing investment in municipal bonds: (1) interest earned on private activity bonds will be excluded from the alternative minimum tax; (2) the small issuer limitation will be increased from $10 million to $30 million, which will permit small issuers to place their debt directly with community banks; and (3) banks will be able to deduct 80 percent of the cost of buying and carrying tax-exempt bonds as long as their investment does not exceed two percent of the bank s total assets. All three of these provisions will be in effect for two years. New Funding Option The bill contains a new taxable bond option the Build America Bonds program that allows issuers the option of issuing tax-credit bonds in lieu of tax-exempt bonds for governmental purposes. The taxable bond option allows issuers to either receive a 35 percent federal government reimbursement of interest paid to investors or to provide investors a 35 percent tax credit. Census Gets Additional $1 Billion The bill provides for an additional $1 billion for Periodic Censuses and Programs to help ensure adequate resources to conduct the upcoming 2010 Decennial Census. The data collected from the census will be used for many purposes, including the annual distribution of $300 billion in federal funds to state, local and tribal governments. Health House and Senate conferees approved $86.6 billion for an increase to the Medicaid federal medical assistance percentage (FMAP) for a 27-month period from October 1, 2008 through December 31, This would include an across-the-board increase to all states of 6.2 percent and additional relief in the form of a decrease in the non-federal share based on the state s unemployment rate. It is estimated that the conference agreement would provide about 65 percent of its spending via the hold harmless and across-the-board increases, and about 35 percent via the unemployment-related increase. States will be required to pass the FMAP increase on to counties that must contribute to the non-federal share. The agreement also raises states FY2009 Disproportional Share Hospital (DSH) allotment by 2.5 percent and the FY2010 allotment by 2.5 percent over the FY2009 amount, including the increase, for a total of $460 million. 6

7 Conferees agreed to extend moratoria on the Medicaid regulations for targeted case management, provider taxes, and school-based administration and transportation services through June 30, They also added a new moratorium on the rule for hospital outpatient services through June 30, The conference report includes a Sense of Congress that the Secretary of HHS should not promulgate the rules concerning payments to public providers, graduate medical education and rehabilitative services. The plan to kick-start the use of electronic medical records was also agreed to and would cost about $19 billion: $17 billion for incentives for Medicare and Medicaid providers to implement HIT and $2 billion for Health Information Technology (HIT) grants and loans. The legislation codifies the Office of the National Coordinator for Health Information Technology (ONCHIT) and establishes a process to develop standards by 2010 that would allow for secure nationwide electronic exchange of health information. $2 billion would go immediately for funding HIT infrastructure, training, dissemination of best practices, telemedicine, inclusion of HIT in clinical education, and state grants to promote HIT. The Prevention and Wellness Fund would receive $1 billion under the agreement, including $650 million for prevention and wellness programs like the CDC s Healthy Communities Program. Health Resources and Services Administration (HRSSA) is allotted $2 billion for community health centers and $500 million for health workforce development. $1.1 billion is allotted for comparative effectiveness research. Conferees agreed to provide a 60 percent premium subsidy for unemployed workers to maintain COBRA Continuation Coverage for nine months. The program will be administered by the Department of the Treasury and allow employers (or health plans if they administer COBRA benefits) to receive a credit against payroll taxes. People with annual incomes above $125,000 (single) or $250,000 (couples) would not be eligible. Human Services and Education The biggest change in the human services side is that the Temporary Assistance for Needy Families (TANF) block grant s emergency fund is now $5 billion. Originally, it was funded at $2 billon in the House and $3 billion in the Senate. The funds are available fiscal years 2009 and The total amount that a state may receive is 50 percent of their annual TANF grant. Originally the cap was 25 percent. The agreement also includes extending TANF supplemental grants that go to states with high population growth and low benefits through FY Two other important TANF provision include clarification that carryover funds can be used for any allowable TANF benefit or service and a temporary modification of the caseload reduction credit. Child support, foster care, and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) also fared very well. The agreement extends states ability to use child support enforcement incentive funds to draw down federal funds through September 30, The FMAP increase, with the exception of the targeted increase, will also apply to foster care IV-E payments. There is a temporary increase of 13.6 percent in SNAP benefits as well as $145 7

8 million in FY 1009 and $150 million in FY 2010 for increased state administrative costs. The agreement also eases the SNAP work requirements for single adults through The only human service program increases that were included in one of the two bills but were not included in the final agreement were those for the Low Income Home Energy Assistance Program and the Social Services Block Grant. The Child Care Development Block Grant received $2 billion, Head Start $1 billion, Early Head Start $1.1 billion, and the Community Services Block Grant $1 billion. Nutrition programs for the elderly also received a boost: $65 million for Older Americans Act congregate meals and $32 million for home-delivered meals. One of the biggest changes in the education funding is that there will not be a line item for school construction. That funding will not be under $53.6 billion State Fiscal Stabilization Fund. Most of the state allocation, 81.8 percent, is dedicated to elementary, secondary, and postsecondary education and can also be used for early childhood education and services. Governors may use up to 18.2 percent of their allocation for school construction, modernization, renovation and. Other education increases include $10 billion for Elementary and Secondary Education Title grants to local education agencies, and $11.7 billion for the Individuals with Disabilities Education Act state grants. Justice and Public Safety Under the provisions of the Conference Report, the Department of Justice would receive: $2 billion for the Byrne JAG formula grant program $225 million for Byrne Competitive Grants for competitive, peer-reviewed grants $1 billion for COPS for the hiring and rehiring of additional career law enforcement officers. The bill waves the 25% local match and the $75,000 per officer cap $125 million for assistance to law enforcement in rural areas to combat the persistent problems of drug-related crime in rural America. Funds will be available on a competitive basis and includes funding for the hiring of police officers and for community drug prevention and treatment programs $225 million for Violence Against Women Programs $50 million for Internet Crimes Against Children initiatives. $40 million for law enforcement along the southwest border and in High Intensity Drug Trafficking Areas The Department of Justice will be required to submit a spend plan to the Hill within 60 days of passage. Homeland Security Homeland Security The final version of the Economic Stimulus Package would provide roughly $610 million dollars in competitive grants to local governments. Notably, the legislation proposes $150 million for public transportation and railroad security assistance, $150 million for Port Security Grants, and $100 million for FEMA s Emergency Food and Shelter Program. The legislation also provides $210 million for FEMA s Firefighter Assistance Grant Program for modifying, upgrading or constructing local fire stations. Finally, the legislation 8

9 removes the $5 million cap on FEMA s Community Disaster Loan Program for eligible applicants who applied in 2008, and authorizes funding for redeveloping foreclosed and abandoned homes damaged or destroyed as a result of the 2005 hurricanes, severe flooding in the Midwest in 2008, and other natural disasters. Labor and Employment The American Recovery and Reinvestment Act (H.R. 1) contains considerable boosts for job training programs. Under H.R.1, an additional $5.1 billion will be provided for existing workforce development and related programs administered by the Department of Labor. The ARRA would provide funding for a number of existing workforce development programs, including three state formula grant programs that provide funding for youth, adults, and dislocated workers- Title I-B of the WIA. Other programs authorized by the WIA would also receive funding. WIA Title I Programs: $2.9 billion for state job training grants: to provide funding for state formula grants for adult, youth, and dislocated worker training and employment activities. Funds will be allocated through existing state grant formulas. o $500 million for Adult Employment and Training: to be provided for adult employment and training activities. Funds will be allocated through existing state grant formulas. o $1.2 billion for Youth Activities: to be for grants for youth activities, including summer employment. The age for eligible youth under this program is changed from 21 to 24. o $1.25 billion for Dislocated Workers: $750 million for high growth and emerging industry sector grants: to provide worker training and placement in high growth and emerging industry sectors. Of the total proposed allotment, $500 million will be reserved for research, labor exchange, and job training projects that prepare workers for energy efficiency and renewable energy industries. $200 million for National emergency grants: to be used for grants to eligible entities to serve workers affected by major economic dislocations (i.e. plant closures or mass layoffs). $ 50 million for Youthbuild: to be used for funding Youthbuild activities. Additional workforce development funding: $120 million for the Community Service Employment for Older Americans program: $250 million for JobCorps: 9

10 $400 million for State Employment Service Grants: for state unemployment insurance and employment services operations, of which, $250 million will be allocated for reemployment services for UI claimants. $80 million for the enforcement of worker protection laws: for the enforcement of worker protection laws, oversight, and coordination activities. Unemployment Insurance Benefits: $36 billion for Unemployment Insurance Benefits: More than $36 billion will be allocated to provide unemployment insurance benefits, with $27 billion allotted to continue the current extended unemployment benefits program, and $9 billion to increase the current average unemployment insurance benefit. Public Lands Public Lands & Natural Resources Provisions The Conference Committee compromise on the American Recovery & Reinvestment Act has included funding for key public lands management agencies. Bureau of Land Management construction, land management, and wildland fire was funded at $320 million. Fish and Wildlife Service resource management and construction was funded at $280 million. National Park Service operations & construction was funded at $750 million. USGS surveys, investigations, and research was funded at $140 million. USDA Forest Service capital improvement and maintenance received $650 million. USDA Forest Service wildland fire management programs were funded at $500 million. Bureau of Reclamation water project funding was listed at $1 billion. Telecommunications and Technology Broadband The bill splits broadband grant funding between the National Telecommunications and Information Administration (NTIA -$4.7 billion) and Rural Utility Service (RUS-$2.5 billion). After deduction for various funding requirements that won't go to broadband grants & for administrative costs, the NTIA grant amount will probably be around $3.8 billion. The NTIA grant program has very flexible criteria, giving the NTIA considerable leeway in determining grant award winners. It doesn't define unserved and underserved, nor does it set minimum speed requirements. The former should help municipalities in suburban and perhaps even urbanized areas, while both the former & the latter may help incumbents. (Both public and private providers will be eligible.) All grants are to be awarded by September 30, Net neutrality is required, as defined by NTIA in consultation with the FCC. The RUS program will focus on rural areas and 75% of the funds must go to such areas that also lack sufficient access to broadband. The program will also give priority to deployment of competitive broadband systems, which should help municipalities possibly hurt incumbents. There is some language about preference for "open" networks, but it is apparently much softer than the NTIA program net neutrality requirement. Preference would be given to current and former RUS telephone loan recipients. On the other hand, no area receiving RUS funding under the program would be eligible for the NTIA fund program. 10

11 Transportation The stimulus bill provides $48.1 billion for transportation programs. In most cases the legislation includes 100 per cent funding with no match requirements and there are use it or lose it provisions or time limits for spending the funds in most categories and a number of oversight and transparency reporting requirements. Highways and Bridges The bill provides $27.5 billion for highways and bridges. Fifty percent of the money will be distributed to the states based on states 2008 share of highway and bridge dollars and 50 percent using the Surface Transportation Program (STP) formula. The funds can be used any STPeligible project with no state or local match required. In a victory for NACo, the legislation requires that 30 percent of the funds apportioned to each state be suballocated within a state using the existing STP formula, which distributes funds to areas over 200,000 population, under 200,000 and under This totals to about $8 billion. These are the funds that generally county governments will have access to and in large metropolitan areas are programmed by the MPO. The House bill did not include this provision. Additionally, three percent of each state s share will be available to the Enhancement Program, which counties have often been able to use for their local projects. This totals to about $800 million. There are several other set asides, including $310 million for Indian reservation roads and $170 million national park roads, $60 million for the Forest Highway Program, $10 million for Refuge Roads and $20 million for highway surface transportation and technology training. The remaining $17.9 will be spent at the discretion of the states. Generally, 50 percent of the highway funds must be obligated within 120 days and 50 percent within one year. The $8 billion in funds suballocated have a year to be obligated. Competitive Grants for Surface Transportation The bill includes $1.5 billion for new competitive/discretionary grants to state and local governments for transportation projects. Highways, bridges, transit, rail and ports are eligible. Grants would be made in the $20 million to $300 million range and generally need to be completed in three years. Funds must reflect an equitable geographic distribution and balance between addressing urban and rural needs. Mass Transit The bill provides $8.4 billion for mass transit, almost of which goes to local governments and all with a 100 percent federal share. The transit formula program will receive $6.9 with 80 percent going to urbanized areas, 10 percent to rural areas and 10 percent to high growth and highdensity regions. Within this formula there is a set aside for tribal transit needs and $100 million for grants to transit agencies to reduce energy consumption and greenhouse gases. The fixed guideway modernization program will distribute $750 million in formula grants. For both these formula programs, recipients will have 180 days after grant awards to obligate 50 percent of the money and two years after the award for the remaining 50 percent. The new starts program will receive $750 million and priority will be given to projects that are currently under construction or can be obligated within 150 days. 11

12 Aviation The bill provides $1.1 billion for the Airport Improvement Program (AIP), which provides grants to locally owned airports, with a 100 percent federal share. Unlike the existing AIP program, the spending will be all discretionary rather than formula based and must be applied for. Fifty percent of the grants must be awarded within 120 days and the remaining 50 percent within one year. Rail The rail section of the bill provides for $9.3 billion in spending. Amtrak would receive $850 million for capital projects with priority given to repair, rehabilitation and upgrading of rail infrastructure. An additional $450 million is provided for security grants. The largest rail funding is $8 billion for high speed rail. The Secretary of Transportation is given flexibility in allocating these funds with the goal of advancing the deployment of intercity high speed rail service in the United States. It is not clear how these funds are to be spent on upgrading existing rail service versus the development of new high speed rail routes. The President s FY 2010 Budget The President s Budget was sent to Congress on February 25. Although it was just an outline of his budgetary plans and lacked detail, as it stands many programs that affect counties were addressed: FY 2010 President s Budget: This Bulletin reflects the President s submittal to Congress on February 25 and is only a summary of the Administration s budget. Further line item details will not be available until sometime in April, and we will report the more specific numbers at that time. Agriculture and Rural Affairs President Obama s FY10 budget outline includes $26 billion in discretionary funding for the U.S. Department of Agriculture (USDA). This is $2 billion above the likely 2009 level and will be bolstered by $6.9 billion in recovery act funding. USDA Rural Development programs are funded through the department s discretionary funds. The budget specifies that over $20 billion in grants and loans will be available for rural development programs. This would be a $300 million increase over the current version of the 2009 Omnibus. This increase will only be meaningful if it is not achieved through a shift from grants to loans. NACo will work for a strong commitment to grants and priority county programs, including rural water and wastewater infrastructure, rural community facilities, rural housing, rural broadband infrastructure and rural business programs. Rural broadband and rural renewable energy are two key pillars of the President s rural development strategy. The budget provides $1.3 billion in loans and grants to increase broadband capacity and improve telecommunications services in rural areas. The budget also provides $250 million in loans and grants to promote rural renewable energy initiatives including biofuels and wind power. 12

13 The budget demonstrates a commitment to rural small businesses and value-added agriculture. A total of $61 million will be split between five Rural Development programs which focus on these issues. The programs in this category are the Rural Microentrepreneur Assistance Program, Rural Cooperative Development Grants, Value-Added Producer Grants, grants to minority producers and cooperative research agreements. The Resource Conservation and Development (RC&D) program is targeted for elimination. The administration believes that the program s councils are self sustaining at the state and local level. President Bush also tried to eliminate this program, but Congressional appropriators continued the program which first began in The newly authorized Rural Collaborative Investment Program is not mentioned in the budget, but NACo will continue to advocate for full funding for this innovative rural development program. Housing and Urban Development The U.S. Department of Housing and Urban Development fiscal year 2010 budget proposes to provide $4.5 billion to fully fund the Community Development Block Grant (CDBG) and revamp the program with a "more effective formula, appropriate incentives and accountability measures, and a new Sustainable Communities Initiative. The budget would provide $1 billion to fund the Affordable Housing Trust Fund to finance, rehabilitate, and preserve affordable housing for very low income families. The Trust Fund was authorized last year as part of the Housing and Economic Recovery Act of The FY 2010 budget also proposes increased funding for the Housing Choice Voucher program and Project-Based Rental Assistance and preservation of 1.3 million affordable housing rental units. Two other initiatives are proposed: a new Choice Neighborhoods Initiative to transform neighborhoods with concentrated poverty, utilizing public, private, and nonprofit partners and a new Energy Innovation Fund to drive the creation of an energy-efficient housing market including usage of private sector lending for "retrofitting" older; energy inefficient housing. The HUD budget also proposes funds for efforts to combat mortgage fraud and predatory lending practices and increases funding for fair housing enforcement. It calls for elimination of the Section 108 Community Development Loan Guarantees program, and also the American Dream Downpayment Initiative, which did not receive funding in FY Environmental Protection Agency (U.S. EPA) The President s Budget proposal provides $10.5 billion for the U.S. EPA. This is anticipated to be 34 percent over 2009 likely enacted levels of $7.6 billion. The Clean Water and Drinking Water State Revolving Funds (SRF) combined would receive a total of $3.9 billion. This is approximately $1.5 billion more than expected 2009 levels. This approximation does not include the $6 billion that was included in the recently enacted American Recovery and Reinvestment Act (ARRA) legislation. The SRF fund allows states to provide funding to wastewater and drinking water treatment systems through low-interest loans to communities. 13

14 The Superfund program would be funded at approximately $1 billion. The Budget also proposes to reinstate Superfund excise taxes that expired in The Administration estimates that this move will re-energize the fund at a tune of $1 billion per year. However, the taxes would not be reinstated until after 2011 to give the economy time to recover. Additionally, the Budget also expressed a strong intent to pass climate change legislation through a cap-and-trade program, after enactment of the Budget. The Administration proposes to institute an economy-wide emissions reduction program to reduce greenhouse gases to 14 percent below 2005 levels by 2020, and 83 percent below 2005 levels by Department of Energy (DOE) The budget proposes $26.3 billion for the Energy Department in fiscal This is relatively consistent with 2009 proposed numbers, aside from the $7.5 billion in emergency loans to the automobile industry, included in the 2009 numbers. Additionally, the DOE received $38.7 billion in the stimulus package for the period for alternative energy and efficiency programs. The Budget focuses on smart grid technologies, transmissions system/upgrades and other ways to upgrade the current transmission infrastructure. Additionally, it focuses on ways to improve use of wind, solar and energy efficient vehicles. On the issue of Yucca Mountain though, the Budget proposes to cut back on costs until the Administration and the involved agencies can craft a new proposal on nuclear waste disposal. There is no mention of potential funding for the Energy, Efficiency, Conservation Block Grant program which received $3.2 billion in ARRA. Finance and Intergovernmental Affairs 2010 Budget Requests Increased Funding for Census Bureau The President s $3.55 trillion budget request includes approximately $7 billion for the Census Bureau to ensure it has the resources necessary to complete the 2010 Decennial Census. This is approximately $3 billion more than the Bureau received for fiscal year In addition, the Bureau is receiving another $1 billion from the American Recovery and Reinvestment Act. The decennial census will employ an estimated 500,000 temporary workers and will engage in extensive advertising and other activities to encourage a full and accurate count. Census data is used to determine how seats in the U.S. House of Representatives will be apportioned and how federal funds will be distributed to state, local, and tribal governments. Health President Obama s FY 2010 Budget Summary lays out an ambitious plan for health reform this year, laying to rest speculation that the recession might cause him to scale back or delay his campaign promise to fundamentally change the health care system. The centerpiece of the proposal is a reserve fund of $634 billion over ten years to pay for fundamental reform of the system to bring down costs and expand coverage. According to the White House half of it is paid for by program savings and half with taxes. On the tax side, the plan reduces the schedule A deductions for couples making over $250 thousand per year. On the program side it would create a competitive bidding process for Medicaid Advantage plans, increase and Medicaid payments. The plan calls for all program savings to go into the reserve fund. The White House explains that because cost, coverage and quality are all interrelated, all three 14

15 structural problems with the heath system have to be dealt with at the same time, rendering an incremental approach useless. However, the President is not offering detailed legislation, preferring to begin negotiations with Congress over legislation with money on the table. According to White House officials, the President will come to the negotiations with eight basic principles: first, the plan must protect the financial health of all Americans not just the poor and uninsured; second, coverage must be affordable; third, universal coverage is the ultimate goal; fourth, coverage must be portable, so that people can leave their jobs without losing their insurance; fifth, people must be able to keep the plans they currently have, if they choose; sixth, significant investments in prevention and wellness must be made; seventh, improvements to patient safety and quality of care must be made; and finally, the plan must be fiscally responsible and sustainable. The White House believes that enacting the budget, with this reserve fund, will be an essential precondition to achieving its health reform aims. Other highlights include: $6 billion for cancer research at the National Institutes of Health; $330 million to address the health workforce shortage in underserved areas; $211 million for research into the causes of and treatments for Autism Spectrum Disorders (ASD), screenings, public awareness, and support services; $73 million to strengthen regional and local partnerships among rural health care providers, expand community-based prevention interventions, and promote the modernization of the health care infrastructure in rural areas. The summary also suggests that the detailed budget, which will be released in April, will call for expanding the treatment capacity of drug courts including services to protect the youngest victims of methamphetamines as well as resources to reduce health disparities, which is identified as a Presidential priority. The summary mentions the ongoing work to implement the Health Information Technology provision contained in the stimulus bill, but provides no additional detail on that project. Besides the mention of ASD and substance abuse, behavioral health does not feature prominently, a fact conceded by White House staff on a health budget briefing conference call Wednesday. Human Services The President s budget summary proposes a major increase in early childhood education. Specifically, the Administration wants to double funding for Early Head Start, and increase the Head Start program and the Nurse Home Visitation program. In the realm of child nutrition, the Administration is proposing a $1 billion a year increase as part of the reauthorization process, but doesn t specify how that increase would be divided among the different programs. The proposal also calls for $3.2 billion for the Low-Income Home Energy Assistance Program. Justice Budget Emphasizes 50,000 COPS More The general summary of the FY10 Budget places major emphasizes on hiring an additional 50,000 law enforcement officers under the COPS program. While NACo supports the concept of community policing, the Association has favored the systematic focus of the Byrne/JAG 15

16 program. In 2002 counties spent $53 billion on criminal justice more than any other unit of local government. County justice function span the entire system. In addition, counties are the primary providers of health and human services programs in the public sector at the local level. These functions frequently interrelate to justice programs at the local level. Labor and Employment The President s proposed budget will include a slight increase in discretionary funding for the Department of Labor from FY 09 levels. The budget allocated more than $13.3 billion dollars in discretionary funding to the DOL, in addition to the $4.8 billion included in the American Reinvestment and Recovery Act. Some highlights of the budget proposal include: Unemployment Insurance System Reform- The budget will focus on making the UI program more accessible to unemployed workers, and ensuring the financial integrity of the system. The budget will propose legislation to make the Extended Benefits (EB) available more quickly to long term unemployed workers. In addition, the budget will propose increased funding for program integrity and propose legislative changes that would, among other things, collect benefit overpayments through garnishment of Federal income tax refunds, and boost States resources to go after benefit overpayments and UI tax evasion. Support for Workforce Training Programs in Emerging Industries- The budget proposal will build on significant support in the Recovery Act for training in green jobs, as well as supporting new transitional jobs and career pathway programs. Investments in Youthbuild, and other programs which focus on expanding opportunities for disadvantaged young people, will receive support in the President s budget proposal. In addition, the budget will provide additional resources to support job training for exoffenders returning to their communities, as well as, service members transitioning to civilian employment. Restores Labor Standards- The budget will increase funding for the Occupational Safety and Health Administration, increase enforcement resources for the Wage and Hour Division, and increase funding for the Office of Federal Contract Compliance Programs. Establishes Automatic Workplace Pensions- The President s proposal will lay the groundwork for future establishment of a system of automatic workplace pensions, to operate along side of Social Security. Under this proposal, employees will be automatically enrolled in workplace pension plans. Employers who do not currently offer a retirement plan will be required to enroll employees in a direct deposit IRA. Employees may opt out if they choose Makes the Saver s Credit Refundable-The budget proposed to modify the existing Saver s Credit to provide a 50- percent match on the first $1,000 of retirement savings for families that earn less than $65,000. The credit will be fully refundable. 16

17 Public Lands The President s FY10 budget request for the Department of the Interior and the USDA Forest Service provided several significant funding highlights. Both USDA Forest Service and Department of the Interior fully fund the 10-year average for wildland fire suppression costs. In addition, a $282 million (USDA Forest Service) and & $75 million (DOI) discretionary contingent reserve have been created to fund firefighting when the appropriated $1.1 billion 10- year average is exhausted. Other highlights include: 1. $50 million increase to USDA Forest Service operations 2. $410 million (Forest Service and DOI) for state and Federal land acquisition through the Land and Water Conservation Fund (LWCF) 3. Increases of $50 million in DOI youth environmental education programs 4. Creates a new western water conservation initiative within the Bureau of Reclamation to assist local communities create voluntary water banks, wastewater treatment, and other market-based conservation measures. 5. $130 million in new funding to assess and respond to the impacts of climate change on wildlife. Reform proposed for fee structure, royalties, and other federal payments related to oil, gas, and other mineral development on federal lands. Transportation The President s FY2010 budget provides $72.5 billion for transportation, which represents about a 2.5 percent or $1.8 billion increase. While few details are included in the budget, the proposal does state, The Administration intends to work with Congress to reform surface transportation programs to improve the system s financial viability, enhance transit options, and generate better investments to reduce congestion and improve safety. There were several specifics in the budget: A proposal to spend $5 billion over the next five years on high speed rail. This would be in addition to the $8 billion for high-speed rail in the stimulus bill. A proposal to spend $800 million to modernize the air traffic control system, a proposal known as Next Gen. A proposal to increase spending for rural air service by $55 million and reforming Essential Air Service to continue to give small communities access to the nation by subsidizing commercial air service. A change on the budgetary treatment of transportation programs to make the process more transparent. This could cause an alteration in how transportation spending is scored in the federal budget process. 17

18 House Passes 2009 Omnibus Appropriations Bill On Wednesday, February 25 the House passed the 2009 Omnibus Appropriations Bill (H.R. 1105) by a vote of The Senate is expected to take up the measure next week. The majority of the federal agencies are currently funded through a Continuing Resolution that expires March 6 th. The following is a summary of key provisions important to counties, compared to 2008 funding. These figures do not include any additional funds that were part of the economic stimulus bill. Funding included in the 2009 Omnibus Appropriations Bill signed by President Obama on March 11, 2009 includes: Agriculture and Rural Development USDA Rural Development Programs Summary$2.7 billion, $400 million above 2008 levels. Many of these program accounts are flush with funding as this yearly appropriation will add to stimulus funding that is double and in some cases triple the yearly appropriation for rural housing, rural water projects, rural community facilities and rural economic development efforts. Rural Housing: $7.6 billion, nearly $2 billion more than 2008, which will help to bolster several different rural housing programs. The majority of the agency s overall funding increase is due to a doubling of the Rural Rental Assistance Program. Rural Community Facilities: Funded at $63.83 million, $4.64 million below However, grant funding remains level at $20.37 million in grants, while direct loans increase slightly and guaranteed loans decrease by $1.24 million. Rural Business Programs: Funded at $87.39 million, most business programs remain relatively unchanged from The Rural Business Enterprise Grants remain funded at $38.73 million and the Rural Business Opportunity Grants are at $2.48 million. The Value Added Agricultural Product Grants are cut to $3.87 million because the $15 million in mandatory Farm Bill funding was used in Rural Empowerment Zones and Enterprise Communities Grants stay flat at $8.13 million. Rural Water and Waste Disposal Program: $556 million for the Water and Waste Disposal Program, around $2 million less than 2008 due to a cut in high energy cost grants. The bill provides the same budget authority for water and wastewater loans and grants as 2008 at $ million. NACo and appropriators are concerned about the Farm Bill s provision that seeks to place a higher reliance on loans and less on grants. Therefore, appropriators direct USDA to deliver at least the same level of funding to all communities including the poorest and most remote that cannot more reliance on loans. 18

19 Rural Broadband: Provides an estimated loan program level of $ million, $100 million more than The Distance Learning and Telemedicine Grant program stays funded at $34.76 million. Census and Elections Help America Vote Act (HAVA): $106 million was appropriated to the Election Assistance Commission for election reform programs, including $100 million for requirements payments to states that are in compliance with HAVA Census: Approximately $2.9 billion was appropriated to the Census Bureau for expenses related to periodic censuses and programs required by law. Specific authority was given to permit the use of such funds for additional promotion, outreach, and marketing activities associated with the 2010 Decennial Census. The Census Bureau also received an additional $1 billion in the American Recovery and Reinvestment Act to cover expenses related to the 2010 Decennial Census. Criminal Justice Byrne Justice Assistance Grants: $532 million for formula grants, an increase of $360 million. State Criminal Alien Assistance Program: $400 million, a decrease of $5 million. Drug Courts: $40 million. Energy and Water Energy Efficiency and Renewable Energy: $140 million for research on energy efficient buildings; $200 million for weatherization grants, and $40 million for water power research. Climate Change Research: Provides $178 million, an increase of $41 million. Department of Energy Environmental Clean Up: $6.5 billion, an increase of $301 million. Army Corps of Engineers: Overall funding is reduced to $5.4 billion, $185 million below Dept. of Interior Water Reclamation: $39 million, an increase of $15 million, to expand the use of recycled water. Interior and the Environment Clean Drinking Water & Wastewater: $1.5 billion for the State Revolving Fun, including $689 million for the Clean Water State Revolving Fund, $829 million for the Drinking Water State Revolving Fund, and $145 million for STAG grants for drinking and wastewater infrastructure. Cleanup of Hazardous Waste and Toxic Sites: $815 million, an increase of $22 million, including $605 million for Superfund, $112 million for underground toxic spills, and $97 million for Brownfields. 19