American County
Platform
1998-99 Platform and
Resolutions-- Taxation and Finance
11.1.1 Intergovernmental Taxation And Fiscal
Comity—Counties, as political subdivisions of state government, but
with closer relationships to the people, have a right and a responsibility
to raise the necessary revenues, unhindered by federal impositions or
restrictions, in order to finance critical basic public services of a wide
variety, many of which are federally mandated.
The United States Constitution recognizes states as sovereign entities.
It follows that one government’s tax policies and practices must not
impede another governments’ ability to tax. Moreover, the counties note
that it has been long established, under Constitutional doctrine of
intergovernmental immunity, not only that the state and federal
governments shall not tax one another, but that each government may not by
taxation interfere with the legitimate functions of the other.
Furthermore, it may be argued that the Constitution, by requiring that the
federal government guarantee a republican form of government to the
states, requires that state and local governments must have the power to
finance their legitimate functions free from federal interference. (Art.
IV, S 4)
In order to uphold these standards of representative government and the
doctrine of reciprocal immunity, NACo supports the following
intergovernmental tax policies:
A. The federal tax system should be financed by personal,
corporate, and fiduciary income taxes based on a rate structure that
reflects a taxpayer’s ability to pay. Additionally, the federal tax system
must acknowledge the direct and indirect linkages between federal and
local tax systems.
B. The federal tax code must retain the deductibility of
all state and local taxes, particularly the property tax, which is, by
far, the largest single local revenue source for most county governments.
It must reinstate the deductibility of sales taxes and not allow federal
tax policies to dictate states’ revenue sources.
C. The federal government shall not tax county
governments or their respective functions, just as local governments
cannot tax the federal government. Therefore, NACo supports:
1. The right of counties to issue governmental debt for
essential public services by marketing bonds to investors with interest on
such bonds remaining totally exempt from federal taxation. Furthermore,
counties should have the right to determine the public purposes to be
financed by their bonds. NACo opposes:
a. application of an Alternative Minimum Tax (AMT) on interest
earned on all tax exempt bonds;
b. inclusion of “excess” corporate book income, to the
extent that it includes interest earned on tax exempt bonds, in the
minimum tax base;
c. requirements that non-abusive arbitrage earnings from
investments of bond proceeds in higher yielding securities be rebated to
the United States Treasury; and
d. restrictions on counties’ ability to refinance their bonds at
lower interest rates, which, if refunded, would save taxpayers millions of
dollars.
2. The right of counties to be free from direct federal taxation
of county services, operations and/or equipment, including the federal
highway tax, just as the federal government is exempt from similar local
taxation.
D. The federal government should not deprive counties of their
effective power to tax, through creation of quasi- governmental
instrumentalities that are exempted from state and local taxes.
11.2.1 Municipal Bonds—Just as federal debt is
exempt from local taxes, county governments vigorously oppose any action
which would directly or indirectly tax, under the federal income tax,
interest on state or local government municipal bonds, or would place
these bonds in an inferior competitive position with federal debt
instruments and corporate securities.
The tax-exempt nature of tax-exempt bonds shall be safeguarded, when
they meet a public purpose that benefits the community as a whole, and not
merely as individuals, regardless of ownership. Ownership or the employing
power of those who operate a facility should not be the criteria by which
public purpose is defined. However, eligibility for tax-exempt bonds
should rest on a test of public purpose, defined in the following
manner.
A public purpose shall be met:
1. When a general purpose state or local government’s
general revenues have been used to finance a purpose or service over an
historic period prior to issuance of a bond for a project determined to be
necessary to the provision of such a purpose or service, or;
2. When local governments carry out a public service as directed
by a federal mandate, i.e. jail overcrowding, clean air or water, or;
3. Where a bond issue is proposed by the local government and
meets state and/or local requirements for bond approval. This process
shall not be used to override Congress’ acts that certain facilities shall
not be eligible for tax-exempt financing. Tax-exempt bonds fall into three
major categories:
A. Governmental Bonds—Governmental bonds must meet at
least one of the above three public purpose tests and their ultimate
credit must be pledged from the general revenues of the local government
that is the issuer of the bond.
B. Partnership/Private Activity Bonds—Tax- exempt bonds
that fall into this category are treated differently from governmental
bonds in that they are subject to state-by-state volume limitations based
on the population of the state. Partnership bonds are issued on behalf of
a governmental body for public purposes that meet one or more of the above
three tests. However, they differ from governmental bonds because they
have no claim on the general tax revenues and are largely financed through
the revenues generated by the project itself. Furthermore, the bond
proceeds benefit a larger percentage of the private sector than the
proceeds of governmental bonds.
Examples of projects that may generally fall into this category are:
moderate to low income single family housing; and small scale highly
targeted economic development. Special exceptions shall be made for
multifamily housing and solid waste facilities and they shall not be
subject to volume caps.
C. 501(c)(3) Non-Profit organization Bonds—These
are bonds that are issued by authorities created by a government on behalf
of organizations that qualify for tax-exempt status under the federal tax
code and Internal Revenue Service regulations. They are tax-exempt because
they are deemed to perform a charitable service and help government to
address the burdens of public service in a progressive manner. Therefore,
these organizations shall be eligible to use tax-exempt bonds as a capital
financing tool as long as they meet certain public service requirements.
These bonds are subject to the following restrictions and requirements
that distinguish them from purely governmental bonds:
1. 501(c)(3) non-profit hospitals shall be required to meet
appropriate Medicaid/charity care tests in return for the benefit received
from using tax-exempt bonds. As long as they provide an appropriate
percentage of their services to the uninsured or underinsured their bonds
shall not be subject to penalties or to the $150 million volume cap for
all other 501 (c) 3 institutions currently authorized under the Tax Reform
Act of 1986.
2. 501 (c)(3) non-profit long term care facilities for the
elderly, disabled or terminally ill patient, (i.e., AIDS), shall continue
to be subject to the current law $150 million volume cap unless, on a case
by case basis, they meet appropriate Medicaid/charity care tests.
11.2.2 Criteria for Municipal Bond Legislation—When considering
any legislation which would have an impact on the municipal bond market,
Congress should adhere to the following criteria:
A. Access of state and local governments to the existing
tax-exempt market should not be impaired.
B. Any credit assistance program should be automatically
applicable to all legitimate state and local borrowing.
C. Such assistance should not be subject to elaborate
administrative procedures.
11.2.3 Tax Exemption of Municipal Bonds—County
government opposes any action which would directly or indirectly tax,
under the federal income tax, interest on state or local government
municipal bonds, or would place these bonds in an inferior competitive
position with federal debt instruments and corporate securities.
11.2.4 Disclosure of Information by Municipal Bond
Issuers—NACo recognizes the need for full disclosure of all relevant
information concerning a county’s financial condition to potential
investors, citizens, and other interested parties in municipal bonds. NACo
opposes federally imposed standards for county financial accounting and
reporting and supports and endorses those principles put forth by the
Governmental Accounting Standards Board.
NACo supports disclosure guidelines developed by the Government Finance
Officers Association and the Governmental Accounting Standards Board in
cooperation with public interest groups and urges county governments to
adhere to these guidelines.
11.3.1 Targeted Fiscal Assistance—Counties, having to provide
numerous essential public services and having to fulfill the many federal
and state mandates placed on them, have been placed under unfair hardship
with the elimination of the General Revenue Sharing program resulting in
severe cuts or curtailment of these services and/or increased local taxes.
Therefore, NACo supports a general program of targeted assistance to
needy local governments along with the establishment of a permanent
counter-cyclical program that would provide fiscal assistance to
governments with the greatest need.
A general targeted assistance program is the most efficient, effective
and flexible federal program possible that allows counties to continue to
provide essential public services and be used by county government as they
see fit based on locally determined needs.
Unfunded federal mandates in all areas, including the environment,
criminal justice and health and human services, place financial burdens on
local governments. Therefore, such a program should be authorized to
reimburse local governments for all costs associated with complying with
federal mandates.
11.4.1 Property Taxes—Counties should have the
ability to employ means of financing county government other than relying
primarily on the traditional and inadequate property tax.
The property tax must be regarded as a necessary part of an overall tax
system because it raises a substantial amount of money and is, in fact,
the largest single source of local tax revenue. The assessment of property
should be performed on a timely basis utilizing the most accurate
procedures and in accordance with the standards of the International
Association of Assessing Officers. Property tax revenues are no longer
sufficient to support all functions of local government, and the property
tax is no longer the best measure of a person’s ability to pay. Therefore,
NACo recommends the following policies to relieve and reform the property
tax:
A. Federal and state financing of public assistance and
income-maintenance programs should be maintained by federal and state
governments.
B. Legislation must be enacted by the states to reimburse
counties for any loss in property tax revenues caused by new or revised
legislation which reduces or exempts property from taxation.
C. Adequate additional sources of tax revenue should be
developed and included in any proposal to modify the property tax.
11.4.2 Criteria for Tax Relief—Counties are urged to adopt
policies and programs, where appropriate, which focus eligibility
standards for property tax relief and service delivery discounts on an
individual’s need or ability to pay rather than solely on the basis of an
individual’s age.
11.4.3 Authorization for Additional County Revenues—To
supplement the revenues of counties where the property tax is deemed by
the county to be either inappropriate or inadequate for the necessary
funds for county functions, NACo urges the states to authorize the county
to levy appropriate fees, rents, tools, licenses, sale taxes, or excises
at the discretion of the county’s governing body.
NACo opposes any effort by the federal government to enact real estate
transfer taxes to finance federal programs and priorities, as this amounts
to a direct incursion into the state/local tax base.
11.4.4 Coordination of Nonproperty Taxes—States
should promote interlocal cooperation in local nonproperty tax policies
and practices to minimize competition between local governments, to reduce
taxpayers’ compliance burdens, and to reduce government’s enforcement
costs by:
A. Granting local governments uniform taxing powers and
authority for cooperative tax enforcement;
B. Accompanying such authority with specification respecting the
structure of such taxes and administrative practices;
C. Providing technical assistance to local governments by
organizing training facilities for their tax enforcement personnel,
advising them on the usefulness of state tax records in local enforcement,
and by serving as a clearinghouse of information on tax experience
elsewhere, particularly within the state; and
D. Allow the consolidation of all assessing and tax collection
agencies within counties.
11.5.1 Equalization in Federal Grants—The
distribution of federal grants should reflect relative inequalities among
recipient governments in program needs and in the fiscal capabilities to
meet these needs by:
A. Requiring the several departments and agencies administering
federal grant programs to review periodically the adequacy of the need
indices employed in the respective grant programs and the appropriateness
of their equalization provisions;
B. Requiring the appropriate agencies of the national
government to examine those grant programs which distribute funds directly
to local governments or support local projects, in order to assess the
extent to which variations in local fiscal capabilities should be
recognized in their distribution and appraise the feasibility of
administering effective and equitable equalization provisions in such
grants;
C. Requiring the states to recognize, to the extent practicable,
disparities in fiscal needs and resources among local governments in the
redistribution of federal grant funds; and
D. Requiring that all federal grant programs recognize that
county governments serve all citizens within their boundaries, including
those in incorporated areas within the county.
WHEREAS, Federal arbitrage restrictions are one of the most complex and
costly areas of tax law; and
WHEREAS, states, counties and other local governments spend millions of
dollars annually on lawyers, consultants and in-house staff to track bonds
expenditures and investments and to calculate whether any rebate is even
owed; and
WHEREAS, according to a recent U. S. Treasury Department analysis, less
than 1,000 out of 27,000 issues reported for 1989 had to pay a rebate;
and
WHEREAS, state and local governments need greater freedom from onerous
compliance burdens and flexibility now that federal financial support has
been substantially reduced and state and local governments have to
shoulder more financial responsibilities; and
WHEREAS, other measures to assist issuers in complying with or legally
avoiding the rebate requirements have proven unworkable for many local
governments:
THEREFORE, BE IT RESOLVED that the National Association of Counties
(NACo) urges Congress and President Clinton to support an amendment to the
tax code that would permit a state, county or city to determine at the
time they issue their bonds whether a rebate will be owed and that such an
amendment should establish simple and clear criteria to determine whether
a bond issue qualifies for such an arbitrage rebate exception or
safe-harbor.
Adopted July 15, 1997
WHEREAS, legislation (the Stop Tax-Exempt Arena Debt Issuance Act) has
been introduced in Congress for the last two years to prohibit the use of
tax exempt bond financing for publicly owned professional sports
facilities; and
WHEREAS, such proposed legislation represents a dangerous precedent for
federal intrusion into state and local governments financing by dictating
the types of projects that state and local governments may finance through
tax exempt bonds; and
WHEREAS, the legislation is intended to eliminate tax-exempt bond
financing for stadiums and arenas built to lure or retain multi-million
dollar professional sports franchises but it goes far beyond that by
prohibiting the use of tax-exempt bond financing for many other publicly
owned facilities including ball parks, tennis courts, and ice skating
rinks, which on occasion may be used by sports teams and for sporting
events, including minor league teams and events; and
WHEREAS, by eliminating tax-exempt financing for the sports facilities
mentioned above, the cost to state and local taxpayers for building new
sports facilities or rehabilitating existing ones would be dramatically
increased or possibly become unaffordable:
THEREFORE, BE IT RESOLVED that the National Association of Counties
(NACo) urges Members of Congress to oppose legislation that would impose
further limitations on state and local governments’ use of tax-exempt bond
financing.
Adopted July 15, 1997
WHEREAS, tax –exempt private activity bonds foster public-private
partnerships in a variety of areas including housing and economic
development; and
WHEREAS, the Tax Reform Act of 1986 imposed a unified statewide volume
cap on tax-exempt private activity bonds, including Mortgage Revenue
Bonds, “Small Issue” Industrial Development Bonds, multifamily housing
bonds, student loan bonds, and certain exempt facilities; and
WHEREAS, the 1986 tax act set the statewide volume cap at the greater
of $250 million per state or $75 per capita, with those amounts declining
to $150 million per state or $50 per capita, based on an assumed “sunset”
on the authority to issue Mortgage Revenue Bonds and Small Issue
Industrial Bonds; and
WHEREAS, instead of allowing the authority to issue Mortgage Revenue
Bonds and Small Issue Industrial Development Bonds to sunset in 1998,
Congress passed several short-term extensions, before making both programs
permanent in 1993; and
WHEREAS, over the past decade the purchasing power of the volume cap
has declined by an estimated 45% due to the cumulative effect of
inflation, while demand has risen sharply; and
WHEREAS, legislation has been introduced both in the House and Senate
to increase the cap to the greater of $250 million per state or $75 per
capita and index it to inflation thereafter;
THEREFORE, BE IT RESOLVED that the National Association of Counties
hereby supports legislation to increase the statewide private activity
volume cap from its present greater of $150 million per state or $50 per
capita to the greater of $250 million per state or $75 per capita; and
BE IT FURTHER RESOLVED that the National Association of Counties hereby
urges the Congress to pass this legislation during the second session of
the 105th Congress.
Adopted March 1, 1998
WHEREAS, the Administration’s FY1999 federal budget includes
two-proposed tax increases that would significantly raise borrowing costs
for state, county and other local governments; and
WHEREAS, these proposed tax increases are ostensibly targeted at
eliminating corporate welfare; and
WHEREAS, one of the proposals would increase property and casualty
insurance companies “proration percentage” and would create a disincentive
for such insurance companies to invest in state and local bonds; and
WHEREAS, property and casualty insurance companies over the last
several years increased their reinvestment in municipal securities by $29
billion and have been the only major source of new demand for state and
local bonds; and
WHEREAS, the other proposal in the Administration’s budget would extend
the “pro rata disallowance” to all financial intermediaries which would
reduce demand for state and local securities and raise borrowing costs;
and
WHEREAS, the “pro rata disallowance” proposal would increase the tax
burden for leasing and finance companies and make it more expensive for
state and local governments to finance new capital equipment; and
WHEREAS, the Administration had proposed a similar version of a “pro
rata disallowance” provision in previous budgets but was not enacted
because of strong Congressional opposition:
THEREFORE, BE IT RESOLVED that the National Association of Counties
strongly opposes the Administration’s budget proposals to increase
borrowing costs for states, counties and other local governments and urges
the Congress to leave these provisions out of any tax legislation.
Adopted March 1, 1998
WHEREAS, tax-exempt bonds are the major financing tool used by states,
counties, and other local governments to build roads, jails, hospitals,
schools solid waste projects and other public facilities; and
WHEREAS, Congress approved legislation in 1986 which adversely
affects the ability of states, counties and other local governments to
finance these vital capital improvement projects; and
WHEREAS, Representative Beryl Anthony established a working
group composed of state, county, city officials and other experts, called
the “Anthony Commission,” to study and recommend changes in laws
restricting the issuance of tax-exempt bonds to finance needed public
infrastructure projects; and
WHEREAS, legislation has been introduced in the House and Senate
which includes several recommendations of the “Anthony Commission” that
would provide some relief from the restrictions included in the 1986 tax
legislation:
THEREFORE, BE IT RESOLVED that the National Association of Counties
urges Congress to approve legislation simplifying current tax-exempt bond
statutes and that the legislation include provisions to:
• raise the small-issuer arbitrage rebate exception from $5 million to
$25 million;
• permit issuers to retain 10 percent of the rebate owed as an
incentive to maximize investment earnings;
• raise the small-issuer bank interest deduction exception from $10
million to $25 million;
• make the arbitrage rebate relief provision enacted in 1989
retroactive to bonds issued after August 31, 1986;
• repeal the five percent unrelated or disproportionate use rule;
• eliminate the yield restriction requirement if the issuer complied
with the rebate requirement; and
BE IT FURTHER RESOLVED that member county governments of NACo
pass resolutions urging their state Congressional delegations to support
legislation to remove restrictions on states, counties and local
governments in issuing tax-exempt bonds to finance needed capital
improvement projects.
Adopted July 16, 1991
WHEREAS, the Securities and Exchange Commission (SEC) recently adopted
new rules on the disclosure of significant information to the municipal
securities market; and
WHEREAS, the SEC worked with the National Association of Counties and
nine other organizations in drafting disclosure rules and included most of
their recommendations in the final rules; and
WHEREAS, the new SEC rules are responsive to investor needs and are
respectful of the special status of state, county and municipal issuers in
our federal system of government; and
WHEREAS, the SEC disclosure rules should be given a fair chance to be
implemented; and
WHEREAS, repeal of the Tower Amendment which prohibits the SEC and the
Municipal Securities Rule Making Board (MSRB) from requiring municipal
issuers to file any documents prior to the sales of securities would not
have prevented or responded in any way to the recent financial problems in
Orange County, California; and
WHEREAS, repeal of the Tower Amendment is inconsistent with
Congressional support for unfunded federal mandates relief since new
registration requirements would increase costs to states, counties and
cities significantly:
THEREFORE, BE IT RESOLVED that the National Association of Counties
urges Congress to withhold action on any legislation to repeal the Tower
Amendment or to require further disclosure until the SEC rules have been
implemented and evaluated as to their effectiveness.
Adopted July 25, 1995
WHEREAS, the Federal Government has imposed more and more
responsibilities on states, counties and cities without providing the
funding required to meet these responsibilities; and
WHEREAS, legislation was enacted in 1995 to provide financial relief
for future federal legislative and regulatory mandates; and
WHEREAS, states, counties and cities are still saddled with the
financial responsibility of meeting the requirements of existing laws;
such as the Clean Water Act, Americans with Disabilities Act and Criminal
Justice; and
WHEREAS, states, counties and cities have used tax-exempt bonds to
finance existing unfunded mandates but the restrictions and limitations
imposed on municipal bonds over the past several years have increased the
complexity and cost of tax-exempt financing; and
WHEREAS, to address the problems of funding mandates and the
restrictive limitations on the use of tax-exempt bonds, it has been
proposed that Congress enact a new category of bonds called Mandatory
Infrastructure Facility bonds (MIF); and
WHEREAS, this category of bonds could be used by state and local
governments to finance mandated infrastructure facilities, defined as real
property that is governmentally-owned and used to serve the general
public; and
WHEREAS, under the proposal, MIF bonds would not be subject to complex
arbitrage requirements, statewide volume caps, limitations on advance
refunding and would be accorded “pre 1986” treatment on other
provisions:
THEREFORE, BE IT RESOLVED that the National Association of Counties
supports legislation that would create a new category of bonds called
Mandated Infrastructure Facility Bonds to assist states, counties and
cities in financing federal infrastructure mandates by easing the costs
and complexities involved in issuing and managing tax-exempt bonds.
Adopted July 25, 1995
WHEREAS, counties have a right and a responsibility to raise the
necessary revenues, unhindered by federal impositions or restrictions, in
order to finance critical basic public services, many of which are
federally mandated, and, this includes issuing debt in the form of tax
exempt bonds; and
WHEREAS, it has long been established, under the Constitutional
Doctrine of Reciprocal Immunity, not only that the state and federal
governments shall not tax one another, but that each government may not by
taxation interfere with the legitimate functions of the other; and
WHEREAS, the federal government has cut grant-in-aid to local
governments and severely restricted state and local governments’ abilities
to issue bonds, including the taxation of such bonds through the inclusion
of tax exempt interest in the corporate alternative minimum tax; and
WHEREAS, as a result, banks and insurance companies, major
institutional investors in the tax-exempt bond market, are dropping their
portfolios at a rapid rate, which threatens the stability of the market
and the demand for tax-exempt bonds; and
WHEREAS, legislative proposals to expand and increase this tax are
currently being considered by Congress, creating further volatility in the
market:
THEREFORE, BE IT RESOLVED that the National Association of Counties
opposes further efforts to expand the alternative minimum tax to include
general obligation bonds and other borrowings used by state and local
governments for needed public services.
Adopted July 11, 1992
WHEREAS, since early 1997, numerous proposals have been introduced in
the Congress to impose a moratorium on state and local taxes on the
Internet and other forms of electronic commerce; and
WHEREAS, because the tax laws and regulations of most state and local
governments were established long before the advent of the Internet, their
application to this new medium could have unintended consequences; and
WHEREAS, state and local governments recognize the vital importance of
the Internet and advance communications systems for all levels of
governments, and realize the need for a coordinated simplified tax
structure that will not impede the growth of the Internet and electronic
commerce; and
WHEREAS, state and local governments have demonstrated their support
for the development and growth of the Internet by not enacting
Internet-specific taxes, and several states have passed laws in recent
years exempting the Internet from various state and local taxes; and
WHEREAS, representatives of national organizations that represent
state, county and local governments, industry and academia are
participating in the National Tax Association’s Communications and
Electronic Project which is examining issues involving the application of
state and local taxes to electronic commerce and developing
recommendations to help states develop a more uniform, simplified tax
system for electronic commerce; and
WHEREAS, after consulting with state and local leaders Rep. Christopher
Cox recently introduced legislation which was endorsed by the National
Association of Counties (NACo) and other national organizations
representing state and local governments; and
WHEREAS, the House Commerce and Judiciary Committees approved modified
versions of Rep. Cox’s bill which incorporated many of the provisions from
the earlier bill, calling for a three-year moratorium on new Internet
taxes, a grandfather clause to protect existing state (but not local)
taxes on Internet access and online services, and establishing an Advisory
Commission on Electronic Commerce to recommend legislation to simplify how
sales and use taxes are applied to remote sales (direct mail, telephone
and the Internet); and
WHEREAS the House of Representatives passed legislation (H.R. 4105)
incorporating provisions of the bills approved by the House Commerce and
Judiciary Committees; and
WHEREAS, NACo continues to have serious concerns about a number of
provisions in the modified version approved by the House of
Representatives, including the lack of protection for existing local taxes
on Internet access, particularly the preemption of home rule authority
granted counties and cities in some states; a federal mandate requiring
states to pass new laws to reaffirm existing state taxes on Internet
access and online services in order to maintain such taxes; and technical
language contained in certain definitions; and
WHEREAS, the Senate is considering legislation that would impose a
six-year moratorium on state and local taxes on Internet access and online
services and establish an advisory commission to study the impact of
electronic commerce which would only make legislative recommendations for
sales using the Internet electronic commerce:
THEREFORE, BE IT RESOLVED that the National Association of Counties
(NACo) urges Congress to support Internet Tax legislation which:
• establishes a three-year moratorium on new Internet taxes; and
• protects existing state and local sales taxes on Internet access;
simplifies state and local sales taxes as they apply to electronic
commerce, enables state and local governments to collect taxes on all
remote sales; preserves the home rule authority currently granted to some
counties and cities to extend local taxes in electronic commerce; and
BE IT FURTHER RESOLVED that NACo opposes legislation that has a
six-year moratorium on state and local taxes on Internet access and online
services and legislation that does not include a study and legislative
recommendations for all remote sales.
Adopted July 19, 1998
WHEREAS, out-of-state, direct-market and border sales are effectively
exempt from sales and use tax collections due to a 1967 Supreme Court
decision, National Bellas Hess v. Illinois Department of
Revenue, that ended the obligation of out-of-state direct marketers
and border sellers to collect “use” taxes from consumers; and
WHEREAS, the U. S. Supreme Court recently reaffirmed (Quick v. North
Dakota) part of this decision and stated that Congress should
determine whether such tax collections interfered with interstate
commerce; and
WHEREAS, mail order sales are expected to reach 20 percent of the
retail market within the next four years; and
WHEREAS, counties have increasingly relied on sales taxes as a portion
of their general funds; and
WHEREAS, states and local governments are losing as much as $4 billion
in uncollected taxes through the sales of direct marketers and border
sellers:
THEREFORE, BE IT RESOLVED that the National Association of Counties
urges introduction of federal legislation that would require out-of-state
businesses to collect and remit state and local taxes to their customers’
states.
Adopted July 11, 1992
WHEREAS, adult criminals, juvenile offenders, and the parents of
juvenile offenders are ordered by courts of law to pay the following types
of obligations: restitution to the victims of their crime; court fines and
penalty assessments; legal costs such as public defender fees; probation
costs; incarceration costs; investigation costs; and drug testing or other
costs; and
WHEREAS, many of these obligations are not paid in a timely manner for
a variety of reasons which has the effect of imposing a fiscal burden on
the victims of crimes, taxpayers and county governments; and
WHEREAS, collections of these obligations would be greatly enhanced at
minimal expense if the Internal Revenue Code (IRC) were amended to permit
counties and other local agencies to intercept federal tax refunds for
these court order criminal and juvenile obligations; and
WHEREAS, some states have provided local governments with a similar
intercept of state income tax refunds for outstanding court orders;
and
WHEREAS, there is precedent for this reciprocal intercept of federal
tax refunds because the IRC contains a provision which allows for a
similar intercept of federal income tax refunds for outstanding child
support payments:
THEREFORE, BE IT RESOLVED that the National Association of Counties
pursue federal legislation in 1997 to amend the Internal Revenue Code to
allow counties and other local agencies to intercept the federal tax
refunds of taxpayers who owe outstanding court-ordered obligations in
criminal and juvenile justice proceedings.
Adopted July 15, 1997
WHEREAS, there is an emerging sequence of Federal legislation
attempting to usurp state jurisdiction over ad valorem taxes that has
adversely affected the revenues of all units of local government including
counties:
THEREFORE, BE IT RESOLVED that the ad valorem tax is a matter that must
be left under the historic jurisdiction of the state and local level of
government subject to relevant guarantees of equal treatment provided
under the U. S. Constitution and the National Association of Counties
opposes any action to invade such authority.
WHEREAS, current federal legislation authorizes the railroads to take
local tax assessment practices before the federal district courts; and
WHEREAS, the federal district courts have overturned numerous local tax
assessment practices, which have adversely affected the revenues of all
units of local government, including counties; and
WHEREAS, legislation is pending in the House Judiciary Committee to
extend the privileges of access to the federal courts regarding ad valorem
assessments to the interstate pipelines; and
WHEREAS, such legislation would further adversely impact counties and
other jurisdictions; and
WHEREAS, other industries including telecommunications and trucking are
attempting to be included in the pending proposal:
THEREFORE, BE IT RESOLVED that the National Association of Counties
opposes federal legislation which intrudes into state and local government
valuation and taxing decisions and such matters shall be left under the
historic jurisdiction of state and local government.
Adopted July 17, 1990
WHEREAS, homeownership is an important factor in promoting economic
security and stability for American families; and
WHEREAS, homeownership is a fundamental American ideal, which promotes
social and economic benefits beyond the benefits that accrue to the
occupant of the home; and
WHEREAS, homeownership promotes and stabilizes neighborhoods and
community; and
WHEREAS, it is proper that the policy of the Federal Government is and
should continue to be to encourage homeownership; and
WHEREAS, the increase in the cost of housing over the last ten years
has been greater than the increase in family income; and
WHEREAS, for the first time in 50 years, the percentage of people in
the United States owning their own homes has declined;
WHEREAS, the current federal income tax deduction for interest paid on
debt secured by first homes located in the United States has been a
valuable cornerstone of this nation’s housing policy for most of this
century and may well be the most important component of housing-related
tax policy in America today; and
WHEREAS, the current federal income tax deduction for interest paid on
debt secured by second homes located in the United States is of crucial
importance to the economies of many communities; and
WHEREAS, it is estimated that if the federal income tax deduction for
mortgage interest was eliminated, home values would decrease by 15 percent
in the first two years with further decreases in later years; and
WHEREAS, such decreases in home values would adversely impact county,
city and school property tax revenues and require local governments to
either increase property tax rates, reduce services or take both
actions:
THEREFORE, BE IT RESOLVED that the National Association of Counties is
opposed to any further changes in the current federal income tax deduction
for mortgage interest payments.
Adopted July 25, 1995
WHEREAS, the United States Constitution requires that state governments
and its political subdivisions have the power to finance their legitimate
functions free from federal interference, and to raise necessary revenue
unhindered by federal restrictions so they may finance critical basic
public services; and
WHEREAS, all local governments agree that the level of government
closest to the people it serves, serves them most efficiently and
successfully; and
WHEREAS, it is an indispensable need of counties, cities and school
districts to have taxing authority to provide police protection, safety
from fire, education of children, paving roads, and other such
responsibilities, and to raise revenue through established general and
specific taxes; and
WHEREAS, it is of critical significance for those fiscal officers
charged with the responsibility to rightfully and lawfully recover
legitimate unpaid tax obligations from individuals and businesses; and
WHEREAS, the current United States Bankruptcy Code by its content, by
interpretation of the federal bankruptcy judges, by precedent of court
cases differing in various jurisdictions to prevent, negate, reduce, and
subordinate lawful statutory tax claims in federal bankruptcy proceedings;
and
WHEREAS, the United States Supreme Court has consistently defended the
fiscal prerogatives of local government that provide “essential services”
in acknowledgement of the critical role these services represent in the
day to day life of all Americans; and
WHEREAS, state statutes that support the underlined principles of
public sector finance are abated in federal bankruptcy courts in regard to
collection of taxes:
THEREFORE, BE IT RESOLVED that the National Association of Counties
urgently request the United States Congress to accept, and include in the
current legislation under consideration pertaining to bankruptcy reform,
all of the issues outlined in the paper entitled “Local Governments
Recommendations for Reform of the United States Bankruptcy Code” prepared
by the National Association of County Treasurers and Finance Officers;
and
BE IT FURTHER RESOLVED that the U. S. House of Representatives and the
United States Senate adopt these proposals before the adjournment of the
105th Congress.
Adopted July 19, 1998
WHEREAS, H.R. 3451 was introduced in the 105th Congress by
Representatives George W. Gekas of Pennsylvania and Martin Frost of Texas
as a bill to amend the Internal Revenue Code of 1986 to exempt from
certain reporting requirements certain amounts paid to elections officials
and elections workers; and
WHEREAS, passage of such legislation would allow local governments to
eliminate the costly and unnecessary mailing of W-2 forms to election
workers who have had no federal taxes withheld from their pay at the local
level, thus saving local taxpayers considerable costs; and
WHEREAS, the bill will have numerous cosponsors on a bipartisan basis
from throughout the United States based on the premise that such
assistance to local governments is of benefit to local taxpayers:
THEREFORE, BE IT RESOLVED that the National Association of Counties
fully supports legislation to amend the Internal Revenue Code of 1986 to
exempt from certain reporting requirements certain amounts paid to
elections officials and elections workers.
Adopted July 15, 1997
WHEREAS, the Department of the Treasury, Internal Revenue Service, had
mandated, as a part of the NAFTA Legislation that effective July 1, 1997,
all entities or individuals who paid $50,000 or more in federal taxes
during 1995, begin making federal tax deposits electronically on the date
of payroll; and
WHEREAS, the Internal Revenue Service has delayed the imposition of
penalties for not making such deposits until January 1, 1998; and
WHEREAS, such a mandate may, in many cases, result in the loss of
interest revenue to local governing bodies due to their payment process
and investment procedures; and
WHEREAS, it is the belief of the National Association of Counties
(NACo) that local governing bodies should have the authority to make their
own decisions with regard to the means by which they provide such
payments, either by means of check or electronically, if they so
choose:
THEREFORE, BE IT RESOLVED that NACo supports a change in the mandate of
the Department of the Treasury, Internal Revenue Service, to become
effective January 1, 1998, to provide for optional payment at the
discretion of the local government body rather than mandatory electronic
payment as established by the Department of the Treasury, Internal Revenue
Service, through the signing of the NAFTA Legislation.
Adopted July 15, 1997
WHEREAS, the National Association of County Treasurers and Finance
Officers (NACTFO) desires to establish a basic investment policy to be
utilized by county governments throughout the United States, at their
discretion; and
WHEREAS, NACTFO, by this action, seeks to join the Government Finance
Officers Association (GFOA) and the Municipal Treasurers Association of
the United States and Canada as an effort toward uniformity in government
investments:
THEREFORE, BE IT RESOLVED that the National Association of Counties
endorses the following basic investment policy:
• Investments for local county governments shall be made with judgment
and care, under circumstances then prevailing, which persons of prudence,
discretion and intelligence exercise in the management of their own
affairs, not for speculation, but for investment, considering the probable
safety of their capital as well as the probable income to be derived.
• Investments of local county government public funds shall be made in
accordance with written policies. Such investment policies shall address
liquidity, diversification, safety of principal, yield, maturity and
quality and capability of investment management, with primary emphasis on
safety and liquidity.
• Local county governments should have, if they do not already possess
the legislative ability to do so, the authority to purchase and invest
prudently in:
- obligations of the U. S. Government, its agencies and
instrumentalities;
- certificates of deposit and other evidences of deposit at banks and
savings and loan associations;
- prime bankers’ acceptances;
- prime commercial papers;
- repurchase agreements whose underlying collateral consist of the
foregoing;
- money market funds whose portfolios consist of the foregoing.
Adopted July 18, 1989
WHEREAS, in recent years there have been several cases involving
treasurers and finance officials wherein in the good faith performance of
their duties there have been purported performance failures caused by
illegal and in some cases, unscrupulous dealings by external sources;
and
WHEREAS, it is strongly believed that while honesty above reproach and
good faith and effort in duty to job must at all times be priorities for a
treasurer or finance official, that in cases where external forces create
such inequities, the treasurer or finance official should not be held
personally responsible:
THEREFORE, BE IT RESOLVED that the National Association of Counties
urges that counties, cities, and states shall indemnify treasurers and
finance officials (officials/employee) for any action, claim or proceeding
instituted against said treasurer or finance official (official/employee)
arising out of the performance, purported performance or failure of
performance in good faith of the treasurer’s or finance official’s duties
for, or employment with, the county, city or state and that the county,
city and state shall hold said treasurer or finance official
(official/employee) harmless from all expenses connected with the defense,
settlement or monetary judgements from such actions, claims or
proceedings.
Adopted July 18, 1989
WHEREAS, Visa/Mastercard has placed extreme pressure on bankers
throughout the United States to compel local governments to bear the user
(i.e. "discount") fee for credit card usage; and
WHEREAS, it has been the custom of local and state governments to pass
on the fee for using the card to the cardholder; and
WHEREAS, such practice is perfectly consonant with the concept that
services which are provided to only a portion of the population should be
paid for in full or part by those recipients in the form of a fee; and
WHEREAS, the absorption of such a fee (Charge) by government is
inherently unfair and would be deeply resented by those citizens who paid
by check or cash; and
WHEREAS, County Treasurers are required by state statutes to collect
100 percent of the tax assessed; and
WHEREAS, unlike businesses, governments collect taxes, fines,
forfeitures and other involuntary assessments and are unable to adjust
their "pricing" to cover the costs of collections:
THEREFORE, BE IT RESOLVED that state and local governments should not
be required to absorb usage fees for involuntary assessments, and thereby
force all taxpayers to bear the cost of the use of credit cards. A card
issuer should not prohibit or otherwise limit the ability of state and
local governments to assess and collect from the user of a credit card
issued by the card issuer a fee for honoring such credit card; and
BE IT FURTHER RESOLVED that the National Association of Counties
endorses and supports federal and state legislation to place a prohibition
on limiting the ability of governmental agencies to charge fees for
honoring credit cards.
Adopted July 20, 1993
WHEREAS, county governments across the country make considerable use of
volunteers in many and various programs; and
WHEREAS, the cost of automobile expenses has increased to the extent
that volunteerism is moving in the direction where Americans with average
or fixed income can no longer afford to donate their efforts; and
WHEREAS, the loss of volunteers will either increase the costs or
reduce the amount of services that county governments provide to their
citizens; and
WHEREAS, NACo supports the concept of volunteerism to enhance the local
grant/private sector partnership:
THEREFORE, BE IT RESOLVED that the National Association of Counties
encourages the passage of federal legislation that allows mileage
deductions from federal income taxes for volunteers at the same rate as
business deductions; and
BE IT FURTHER RESOLVED that the Association encourages state government
to enact state tax laws which allow the same.
Adopted July 18, 1989
WHEREAS, recent U.S. Postal Service postage rate increases have
generally exceeded the rate by which local government can increase its
general fund revenue base; and
WHEREAS, postage rate increase impact the ability of local government
to maintain consistent levels of service which are funded primarily by
capped property tax revenues; and
WHEREAS, local government, unlike the federal governments, cannot
budget expenditures unless real revenues have been identified to
appropriate, and local government does not operate for profit; and
WHEREAS, the U.S. Postal Service currently recognizes the uniqueness of
Nonprofit, Classroom, and Science-of-Agriculture with a Special
Second-Class Mail rate for qualified purposes, thereby establishing the
precedent for granting special rate considerations for the public purposes
of financially limited entities.
THEREFORE, BE IT RESOLVED that the National Association of Counties
reaffirm and aggressively pursue the establishment of a new discounted
Presort First-Class postage rate for specified local governmental mailings
mandated by federal or state law, such as property tax statements,
summons, jury duty pay, and voter registrations, for which no federal or
state funds are received by counties to defray local government’s
administrative costs; and
BE IT FURTHER RESOLVED that the National Association of Counties urge
Congress to enact federal legislation which requires the U.S. Postage
Service to establish a new discounted Presort First-Class postage rate for
specific, mandated local governmental mailings which is at least 10% Less
than the lowest presort rates currently in place and utilized.
Adopted July 25, 1995
WHEREAS, the United States Government is empowered pursuant to the
provisions of Title 21, Sec. 881, United States Code, to seize and forfeit
certain property, including any right, title or interest in real estate
which is used or intended to be used in any manner or part to commit or
facilitate the commission of a violation of Title 21 of the United States
Code; and
WHEREAS, the United States Government has in the past seized real
property subject to forfeiture and has filed complaints in the United
States District Court to effectuate such seizures, the United States
Government intends to continue such practices, to accomplish the
legitimate interest of deterring the use and distribution of illegal
drugs; and
WHEREAS, the United States Government is not required by law to notify
tax collectors who are charged with collecting real estate taxes if the
property subject to forfeiture is seized; and
WHEREAS, various taxing districts have adopted budgets based on the
assessed valuation of properties located within a county which may include
properties seized by the United States Government pursuant to the
provisions of 21 U.S.C. Section 881; and
WHEREAS, tax collectors have a statutory duty to enforce state law
which requires selling real property if taxes on the real property are not
paid; and
WHEREAS, the United States Attorney’s Office has based on the
principles of sovereign immunity adopted a policy that property seized
under Title 21, United States Code, is not subject to payment of real
estate taxes which have been imposed subsequent to the seizure by the
United States; and
WHEREAS, the policy of the United States Attorney’s Office is in
conflict with the State laws which direct the sale of real property if
taxes are delinquent; and
WHEREAS, the Federal Government could seek and obtain a stay from the
United States District court similar to a bankruptcy stay which would
enjoin and prevent a county from selling property.
WHEREAS, a county could be prevented by a federal injunction from
selling property if taxes were delinquent until the federal forfeiture
proceeding is a final judgement and, at a later date, the county could
receive the proceeds of any sale and pay the taxes due and owing on the
property so that the delinquent taxes, interest and penalties could be
remitted to various taxing districts which are legally entitled to receive
the revenue previously budgeted:
THEREFORE, BE IT RESOLVED that Federal legislation be enacted to
establish a procedure whereby taxing districts could receive their
lawfully budgeted revenue from properties subject to forfeiture under
Title 21 of the United States Code.
Adopted July 16, 1991
WHEREAS, the Financial Institution Reform, Recovery and Enforcement Act
(FIRREA) of 1989 sets forth certain requirements to validate a collateral
agreement (to perfect a county's security interest in the collateral
supporting deposits); and
WHEREAS, such securities generally underlay a Bank Depository Contract
or Agreement entered into by a county with one or more financial
institutions; and
WHEREAS, specifically, FIRREA states the Agreement (Bank Depository
Contract) must be approved, in writing, at a meeting of the Bank's Board
of Directors or Loan Committee; and
WHEREAS, most depositors and bankers have not heeded this technical
provision of FIRREA; however, the importance of this requirement has been
underscored by recent publicity concerning a September 1992 U. S. Court of
Appeals Ruling in which a public sector depositor incurred a loss when the
FDIC refused to give the entity the securities pledged to its deposits at
a failed savings and loan; and
WHEREAS, in light of this court ruling neither a governmental body or
financial institution should be remiss in meeting all the requirements of
FIRREA to protect security interests of local governments:
THEREFORE, BE IT RESOLVED that the National Association of Counties
urges all county governments in the United States to immediately become
acquainted with and meet the requirements set forth in the Financial
Institution Reform, Recovery and Enforcement Act (FIRREA) of 1989 and
acquire, pass and/or have approved any official documents required in
order to protect security interests and funds of county governments
throughout the United States.
Adopted July 20, 1993
11A. Resolution On Legislation Establishing an
Arbitrage Rebate Safe-Harbor
Would save counties substantial costs.
11B. Resolution To Oppose Restrictions On Use Of
Tax-Exempt Bonds For Professional Sports Facilities
Unknown fiscal impact.
11C. Resolution Supporting an Increase in the
Tax-Exempt Private Activity Bond Volume Cap
Increase the amount of borrowing for public private projects.
11D. Resolution Opposing Administration's Tax
Increases that Adversely Affect State and Local Borrowing Costs
Decrease county borrowing cost.
11E. Resolution Supporting Legislation Removing
Restrictions in Issuing Tax-Exempt Bonds for Needed Capital
Improvement Projects.
Substantial savings to states and local governments. Cost estimate not
available.
11F. Resolution Opposing Repeal of Tower Amendment
Undetermined.
11G. Resolution on Mandated Infrastructure Facility
Bonds (MIFs)
Potential Large Savings to Counties.
11H. Resolution Opposing Further Expansion of
Alternative Minimum Tax
State and local borrowing costs will be reduced.
11I. Resolution Internet Taxes Moratorium
Increase county revenues.
11J. Resolution of Interstate Sales Tax
Collections
No Federal fiscal impact, but would increase revenue to state and local
governments by approximately $1.5 to $2 billion annually.
11K. Resolution Regarding Federal Tax
Intercept
Increase local revenues.
11L. Resolution on the 4-R Act
Avoids major loss of counties’ tax bases.
11M. Resolution in Opposition to the Intervention of
the Federal District Courts in State and Local Assessment
Practices
Would result in increased revenues to counties. No Federal fiscal
impact.
11N. Resolution Supporting Home Mortgage Interest
Deduction
Undetermined.
11O. Resolution on Reform of the United States
Bankruptcy Code
Increase county revenues.
11P. Resolution Exempting Election Workers From IRS
Reporting Requirements
Would save counties some administrative costs.
11Q. Resolution On Electronic Tax Deposits
Unknown fiscal impact.
11R. Resolution on County Investments of Public
Funds
Allows counties to use prudent investment and cash management
techniques to lower costs of capital projects resulting in savings at the
local and federal levels.
11S. Resolution to Indemnify County Treasurers and
Finance Officers
Fiscal impact cannot be determined.
11T. Resolution on Relationship Between Governmental
Agencies and Use of Credit Cards by Counties
County costs would be decreased if card issuers permitted counties to
charge any additional fees to affected taxpayers.
11U. Resolution on Volunteers
Would result in decreased federal and state revenues for purposes of
subsidizing volunteers used by counties for public services. The use of
volunteers by counties results in a cost savings and in a productive use
of the community toward a public service.
11V. Resolution on Discounted Postal Rate for
Mandated Local Government Mailings
Significant savings to counties.
11W. Resolution Supporting Federal Legislation
Insuring Collection of Delinquent Taxes on Forfeited Property
Savings to local governments. Cost estimate not available.
11X. Resolution Urging Counties to Comply with
FIRREA
Counties could suffer losses at banks and other financial institutions
if not fully familiar with act.
11I. Resolution on Internet Tax Moratorium
Urban and Rural – Potentially would allow urban and rural counties to
collect sales tax revenues due from out of state vendors.
11O. Resolution on Reform of the United States
Bankruptcy Code
Urban and Rural – would allow rural and urban counties to collect tax
revenue due in bankruptcy proceedings.
For additional information about this section contact:
Ralph Tabor, Associate Legislative
Director
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