Helmke Hails Tax Bill as Win for Cities

Brownfields, Empowerment Zones, Welfare-to-Work, Other Programs Reflect Mayors’ Efforts in Administration and Congress

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A tax and budget reconciliation package which the President of The U.S. Conference of Mayors says "will equip mayors with tools they can use" was announced July 29 by President Clinton at the White House and by the Congressional leadership on Capitol Hill.

Conference President Paul Helmke, Mayor of Fort Wayne, said that across the nation, “mayors are expressing their appreciation to the President and the Congress for a job well done” on an agreement that contains most of the items that mayors have been calling for in Washington. "The tax and budget reconciliation package they produced," said Helmke, "will equip mayors with tools they can use to spur their local economies and generate new jobs for their residents."

In a briefing package on the agreement sent to mayors, Conference Executive Director J. Thomas Cochran said the agreement represents "a major victory for America’s cities, and for urban and suburban residents throughout the nation. We won on a number of our key issues because of the personal contributions that you as mayors made in your fight for our priorities."

The key issue, according to Cochran, was "whether tax incentives and federal funds would be provided directly to cities and to businesses within our cities. President Clinton told us in San Francisco this June that he would fight for tax incentives for the clean-up of brownfields and for a second round of Empowerment Zones. In addition, he promised us $3 billion for welfare-to-work back in August 1996, after he signed the welfare reform bill, and last February he included this funding in his budget. It is important that we thank President Clinton for his focus and personal contribution to ensuring that his Administration followed through."

Earlier this year, Cochran explained, Chicago Mayor Richard M. Daley, Fort Wayne Mayor Helmke and Salt Lake City Mayor Deedee Corradini met with Speaker Newt Gingrich to reiterate Conference priorities. "Just this month, our new President, Mayor Helmke, along with the National Association of Counties officers, met with Senate Majority Leader Trent Lott on our priorities, and it is important for you to know that Mayor Helmke has been working the phones with the Republican leaders to advocate our cause,” Cochran said. “We appreciate Speaker Gingrich and Senate Majority Leader Lott for their response to us and for their leadership on behalf of our cities."

Following is a summary of how most of the Conference’s key issues appeared in the agreement:

Brownfields Tax Incentives

The budget agreement includes $1.5 billion for a brownfields tax incentive. To be available for a three-year period, this program will allow businesses to "expense" the cost of cleaning up brownfields sites in qualified areas such as Empowerment Zones, Enterprise Communities, EPA pilot grant areas, and census tracts with more than 20 percent poverty and contiguous industrial areas. In his budget request last February, President Clinton sought a permanent $2 billion in tax incentives for brownfields, and during negotiations with White House officials, Congressional leaders offered to include $247 million in the tax bill for brownfields for a five-year period. The President made a strong push to increase the amount, with mayors contacting their Congressional delegations to urge their support.

Welfare-to-Work Grants

The agreement provides $3 billion over two years through the Department of Labor to provide funds to local agencies to move recipients from welfare to work. About 64 percent of the funds would pass through the states, on a formula basis, directly to local Private Industry Councils. Another one-fourth of the funds would be administered as a competitive grant program by the Secretary of Labor, with particular consideration given to areas with high poverty populations and to rural areas. Grants would be awarded to PICs and local political jurisdictions in accordance with a number of specified criteria, most of which relate to expected effectiveness in moving recipients into jobs.

On other welfare-related issues, the agreement includes no provisions which would deny employee protections to welfare recipients, particularly those engaged in public service workfare programs. This means that the Administration’s ruling that such workfare participants are covered by the Fair Labor Standards Act stands, and that participants will receive the minimum wage and other employee protections. In addition, it provides $1.5 billion over five years to allow states to exempt from the work requirement up to 15 percent of their food stamp caseload who are able-bodied 18-50-year-olds with no dependents, and provides additional work slots for those affected by the work requirement.

Empowerment Zones (Second Round)

The tax agreement will create 15 Empowerment Zones in cities and five in rural areas. Tax incentives to create jobs for the new EZs will differ from those of the first round. The new EZs will be eligible for the brownfields tax incentive and special expensing for business assets, and will qualify for private-activity bonds.

Immigrant Assistance

The agreement provides continued eligibility for SSI for non-citizens legally residing in the U.S. on August 22. This includes both those receiving SSI on that date and those who later become disabled and qualify, and is expected to cost $11.4 billion over five years. In addition, children who lose SSI eligibility will be able to continue to be eligible for Medicaid.

Tax Credits for Working Families/EITC

The agreement includes a $400-per-child tax credit starting in 1998 and $500-per-child starting in 1999 for working families with children under the age of 17. The tax credit will be available to individuals with annual earnings up to $75,000 and couples with annual earnings up to $110,000. It will be phased out for individuals and couples with annual earnings exceeding these amounts. Working families with annual earnings as little as $18,000 and who are currently receiving the earned income tax credits (EITC) will also qualify for the child care tax credit.

Children’s Health Care

Funded through an increase in the tobacco tax, the agreement includes $24 billion over five years to extend health care coverage to five million of the nation’s 10 million uninsured children. States will establish programs through enhanced Medicaid funding, state health insurance programs and/or direct services (limited to 15 percent of the funds). States will have flexibility in designing the benefits package and will be required to use the funds to cover uninsured children, not replace existing public or private spending. Low income parents are to be protected against overly burdensome cost-sharing requirements.

Section 8

Adjustments will be made in the Section 8 assisted housing program to ensure that expiring contracts can be renewed in the years ahead. For example, in reforms that would be made permanent in Fiscal Year 1999, the agreement reduces the annual adjustment for Section 8 projects whose rents are in excess of local fair-market rent. The legislation also would reduce the annual adjustment for those housing units where there has been no tenant turnover.

Transportation Trust Funds

The agreement shifts more than $6 billion in annual revenue produced by the 4.3-cent-per-gallon gas tax from the general fund to the transportation trust funds. While the agreement does not provide for increased transportation investment (i.e., ISTEA), it is an important step in continuing Congressional efforts to ensure that, in the future, all gas tax revenues will be used for such investment and not dedicated to deficit reduction.