Federal Update

Municipal Leaders Urge Congress to Fund Energy Block Grant Program

More than 400 municipal leaders signed onto a letter urging Congress to fund the Energy Efficiency and Conservation Block Grant program that was enacted as part of the Energy Independence and Security Act of 2007.

According to the letter, "The nation's energy crisis continues to challenge our country with the threat of climate change, rising energy prices, and the depletion of natural resources. The Block Grant program provides an important element in a new partnership among cities, states, and the federal government to respond to these challenges making our country more energy efficient and energy independent, and strengthening our economy."

Next week, the letter will be delivered to House and Senate Appropriations Committee members, House Speaker Nancy Pelosi (D-CA), and Senate Majority Leader Harry Reid (D-NV).
House and Senate Adopt Budget Resolutions

The House and Senate each adopted their respective budget resolutions this week, non-binding blueprints for the FY'09 federal budget. The House would provide $22 billion more in domestic discretionary spending than the President, rejecting most of the President's proposed cuts-especially for public safety, while the Senate proposes restoration of $18 billion. The passage of the budget resolutions clears the way for the annual appropriations process to move forward.

Frank Holds Hearing on Municipal Bond Market Turmoil

On March 12, at a House Committee on Financial Services meeting, federal lawmakers and market participants debated options for resolving the current turmoil in the municipal securities market. During the hearing, Committee Chairman Barney Frank (D-MA), blasted the municipal bond insurers for acting on "grievous misjudgments" by exposing themselves to subprime mortgage risk that has led to "unfair excessive costs" for issuers, including local governments. Testifying at the hearing were state treasurers, municipal bond insurers, the Connecticut Attorney General, and ratings agency representatives.

Although the Committee did not reach consensus on any of the options debated, there was agreement that something must be done quickly. "This has got to be fixed," Frank said. "We cannot tolerate a situation where elected officials trying to build schools and comply with federal mandates from the federal government to improve the treatment of sewage and build highways.are charged much more than they should be charged."

Frank and Dodd Announce Proposals to Stem the Rise in Foreclosures

On March 13, Rep. Barney Frank (D-MA) and Sen. Christopher Dodd (D-CT) unveiled proposals to stem the significant rise in mortgage foreclosures by allowing the Federal Housing Administration to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. According to a summary, Frank's proposal would provide up to $300 billion in new loan guarantees for "at risk" borrowers to refinance. Lenders would be required to write down a loan's principal amount - to no more than a home's current market price - before the FHA would back the revised loan; additionally, the new loan would have to be made on terms that a borrower could repay. Frank estimates that his proposal could potentially refinance between one to two million loans, protect neighborhoods, and help stabilize the housing market.

National Infrastructure Bank Proposals Gain Momentum

After years of discussion about a national infrastructure bank that could issue taxable tax-credit bonds to fund infrastructure projects, House and Senate leaders are vowing to move quickly on legislation that would create a national infrastructure bank to develop public-private investments for large transportation and water projects.

Senators Christopher Dodd (D-CT) and Chuck Hagel (R-NE) introduced S.1926, the National Infrastructure Bank Act of 2007, last summer and on March 11 held a hearing on the bill before the Senate Banking, Housing, and Urban Affairs Committee, which Dodd chairs. According to Sen. Dodd, the bill would use "limited Federal resources, it would leverage the significant resources and innovation of the private sector. It would tap the private sector's financial and intellectual power to meet our nation's largest and most critical structural needs." On March 12, House Speaker Nancy Pelosi (D-CA) announced she also wants the House to take up infrastructure development legislation quickly.

NAPA Releases Transportation Finance Report

Earlier this week, the Intergovernmental Forum on Transportation Finance, a body convened by the National Academy of Public Administration on behalf of six national associations: National League of Cities, National Governors Association, National Association of Counties, National Conference of State Legislatures, The Council of State Governments, and International City/County Managers Association, released a report, "Financing Transportation in the 21st Century - An Intergovernmental Perspective."

The report highlights the integrated role of all levels of government and the private sector in developing and maintaining our national transportation network. According to the report, "All levels of government must work together to set system-performance goals and provide the financial means to meet those goals."

FAA Reauthorization Stalled

Senate leaders remain skeptical that the Senate will be able to reconcile internal differences and pass an airport reauthorization bill before the end of this year, despite the fact that the federal airport programs expired in September 2007 and are running on short term extensions. The House passed a reauthorization bill last year, but the Senate remains mired in the controversy between industries over who should bear the greater cost for modernizing the air traffic control system.

Immigration Proposals Being Discussed

House Members are threatening to use a procedural motion to bring an immigration enforcement-oriented bill to the House floor. The bill, the Secure America with Verification and Enforcement (SAVE) Act, HR 4088, sponsored by Rep. Heath Shuler (D-NC), has gained the support of 93 Republicans and 48 Democrats. The legislation would authorize more technology at the border, the hiring of 8,000 additional border agents over five years, and a mandatory verification system for employers.

In addition, House leaders are considering legislation to issue more visas for summer workers, an issue that cuts across ideological lines. The H2B visas give foreign workers non-immigrant status to work seasonable jobs that can't be filled by Americans. In 1990, Congress capped the visas at 66,000 annually, but the demand routinely exceeds that number. In fiscal year 2006, Congress allowed an additional 50,000 workers to be admitted.

These proposals put Congress back into the middle of the immigration debate in an election year, and the outcome is unclear.