State, Local Officials Say Feds Should Help More with Infrastructure

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WASHINGTON — The next president's administration needs to play a larger role in collaborating with local governments on infrastructure programs, a panel of state and local officials said this week.

They made their remarks during a panel hosted by the National Academy of Public Administration, a non-partisan group that provides studies and best practice recommendations to Congress, and George Mason University's Schar School of Policy and Government, at the school's Arlington, Va. campus.

The panel focused on the presidential election's potential impact on state and local governments and how the Oval Office transition can be a smooth and efficient one.

Penelope Gross, a member of the Fairfax County, Va. Board of Supervisors, said that the National Association of Counties wants to restore partnerships between county governments and the federal government. Now in her 13th presidential transition, Gross said the federal government should speak with local officials without using states as an intermediary.

"The feds need to learn how to speak to localities and the localities need to learn to speak to the federal government as well," Gross said.

The election gives all levels of governments the opportunity to "hit the reset button," said Michelle Sager, the director of the economic opportunity division of the Center for Best Practices at the National Governors Association. The pressures are different now than before the last presidential transition in 2008 during the Great Recession, and governments need to capitalize on the different strengths they bring to the table, Sager added.

Overall, state governments are doing better than eight years ago, she said, although NACo recently said that one-half of counties have not gotten back to pre-recession levels but have seen modest growth.

Dan Blair, president and CEO of the National Academy of Public Administration and host of the panel, said that collaboration is "vitally" important, including leveraging the capacities of non-governmental entities. Public-private partnership financing can often provide reduced costs for infrastructure projects.

In its "Transition 2016" goals outline, the National Academy of Public Administration called collaboration a "powerful antidote to stagnation."

"When government collaborates with other organizations -- within or outside of government -- the payoffs can be invaluable," the group wrote. "But like any payoff, collaboration needs early investments."

Tom Cochran, CEO and executive director of the U.S. Conference of Mayors and a member of the panel, said that infrastructure must be recognized in the next presidential plan, especially water infrastructure, which local governments spend $117 billion on each year, or $320 million per day.

"The best thing they can do is not mess with our muni bonds," Cochran said. "They keep talking about the need for infrastructure but the only thing we have left is our muni exemption given to us in 1912 by [President] Woodrow Wilson."

In its national infrastructure agenda released this month, the U.S. Conference of Mayors stressed that recent proposals by the Obama administration and Congress to cap, limit or eliminate the muni exemption would significantly drive up borrowing costs for issuers.

According to USCM, if a 28% cap on the value of tax-exemption had been implemented as proposed by President Obama in several of his recent budget requests, it would have cost state and local governments roughly $173 billion between 2003 and 2012. A full elimination of tax exemption would have cost issuers roughly $495 million, the group said.

"Efforts to limit tax-exempt municipal bonds will increase the cost of these public purpose infrastructure projects on local taxpayers at a time when the nation is clamoring for more infrastructure investment," USCM warned. "Such limits are without precedent and simply make no sense on projects that are mostly locally funded."

Gross agreed, saying, "We're talking about schools, libraries, parks and public safety centers. It's not just roads and bridges, but other things we use every day. Those are paid for by municipal bonds."

Another suggested method of providing funding for infrastructure was through online sales taxes. Christopher Morrill, the city manager of Roanoke, Va., urged Congress to make progress on passing the Marketplace Fairness Act, which would allow states to collect sales taxes on Internet purchases. Since the bill has been stalled in the House Judiciary Committee, $26 billion in potential funding for infrastructure has not been collected, he said.

"More and more is happening online and our communities need a part of that," Morill said.

On a positive note, Morrill said that the majority of state and local governments are managing pensions well, and that he hopes the next administration does not make any moves to jeopardize their current success.

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