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Federal Budget and Taxation Committee
2000 Annual Meeting Summary
July 15 - 20, 2000

 Updated September 7, 2000

NCSL's Annual Meeting was held from July 15-20 at the Sheraton Chicago Hotel and the Navy Pier Convention Center in Chicago, Illinois. Prior to the start of the meeting, several members of the Federal Budget and Taxation Committee participated in the eighth meeting of the Executive Committee Task Force on State and Local Taxation of Telecommunications and Electronic Commerce on Friday, July 14 and Saturday, July 15.

Members of the Federal Budget and Taxation Committee participated in the following sessions:

Mandatory Social Security Coverage of State and Local Government Employees: the 10% Solution or a $25 Billion Unfunded Mandate?

Covering Our Assets: Maintaining State Authority Over Public Pension Regulation and Taxation

Nexus in Cyberspace

The Great Rebate Debate

The Road Less Traveled: Innovative Transportation Funding

Federal Budget Disco

Telecommunications in the 21st Century: More Than Just a Phone!

Public Pension Innovations in the States

What's Up With Gas Prices?

The Costs and Coverage of Pharmaceuticals

The Digital Economy, the Internet and State Taxation

Taxing Telecommunications

When School Lets Out: State Support of After-School Programs

Legislatures and Performance Budgets

The Economies of Tobacco: Myths and Realities

What's Ahead for the Economy?

Mandatory Social Security Coverage of State and Local Government Employees: the 10% Solution or a $25 Billion Unfunded Mandate? Approximately 25 percent of state and local government employees do not pay into the Social Security system; instead, these workers contribute to government retirement plans. The recent debate on how to shore up Social Security has included proposals to extend mandatory coverage to all newly hired state and local employees. This session served as background for committee adoption of a new policy, which was subsequently approved at the annual NCSL Business Meeting. Speakers for this session included:

Covering Our Assets: Maintaining State Authority Over Public Pension Regulation and Taxation. Since the 1980's, state and local governments have faced constant efforts by Congress and the executive branch to tax and regulate public pension funds and benefits. NCSL policy, on the other hand, has maintained that state law and regulation best protect state retirement systems, assets and employees. This session provided background for committee renewal of a policy on this topic, which was subsequently approved at the annual NCSL Business Meeting. Speakers for this session included:

Nexus in Cyberspace. Since 1967, states have been unable to collect sales and use taxes for phone and mail order purchases made through out-of-state vendors. The U.S. Supreme Court has determined that a vendor must have sufficient "nexus" in a state for that vendor to be required to collect the state's sales and use taxes. Before the Internet boom, it was estimated that states were losing about $4.5 billion in sales and use tax revenues due to phone and mail order sales. The growth of electronic commerce is expected to vastly increase the loss to state treasuries. In this joint session with the AFI Commerce and Communications Committee, Scott Mackey, Chief Economist for NCSL, explored the nexus issue and provided background for joint adoption of a new policy, which was subsequently approved at the annual NCSL Business Meeting.

The Great Rebate Debate. Economic good times have prompted a growing number of states to refund excess tax revenues. This roundtable session explored state experiences with and the pros and cons of tax rebates. This session was sponsored by the ASI Fiscal Affairs Committee. Speakers included:

The Road Less Traveled: Innovative Transportation Funding. This joint session with the AFI Energy and Transportation Committee, the ASI Fiscal Affairs Committee and the NCSL Transportation Program highlighted innovative transportation finance methods using state and federal funds. Speakers included:

See also this full summary prepared by the ASI Fiscal Affairs Committee.

Federal Budget Disco. The budget debate in Washington is in a state of flux now that surpluses have replaced deficits. Not only is the budget process that was designed to reduce the deficit no longer applicable to the decisions that have to be made, but representatives and senators find themselves totally perplexed by the new politics of federal spending, taxing and debt reduction. In this joint session with the ASI Fiscal Affairs Committee, Stanley E. Collender, Senior Vice President of Fleishman Hillard, explored what is happening and why, and what that means for continued state-federal program support. Marcia Howard, Director of Federal Funds Information for States, provided further details on the specifics of federal proposals affecting key state-federal programs.

Telecommunications in the 21st Century: More Than Just a Phone! The mergers of major industry providers and the convergence of telephone, Internet, data transmission and cable television services is challenging the way states have traditionally regulated and taxed phone and cable services. Speakers for this joint session with the AFI Commerce and Communications Committee included:

Public Pension Innovations in the States. Tight labor markets, an increasingly mobile workforce, concerns about the solvency of Social Security and the brain drain that occur as baby boomers transition out of the workforce have created new challenges for state policymakers in formulating pension policy. This session explored state innovations in providing retirement savings for their employees. It also included an update on pending federal legislation that would provide increased portability of pension assets and relief from federal tax policy provisions that limit the states' ability to be innovative. Speakers included:

What's Up With Gas Prices? Consumers around the country are demanding relief from gasoline prices that are reaching record highs. Is the price problem overstated? Will gas tax reductions help? This session reviewed the makeup of gas prices, took a look at supply and demand issues, and considered the pros and cons of gas tax reductions. Speakers for the session included:

The Costs and Coverage of Pharmaceuticals. Drug companies are under attack for high prices. Yet many "miracle" drugs ultimately save millions of dollars by preventing more drastic problems or interventions. Nonetheless, high prices leave some people without needed prescriptions, while state budgets feel the impact of rising Medicaid costs. States have proposed both modest and controversial solutions. At this session, legislators discussed these issues and addressed proposed solutions. Speakers included:

The Digital Economy, the Internet and State Taxation. The rapid development of commerce over the Internet raises fundamental federalism questions and could threaten the long-term viability of state and local governments. Electronic commerce also presents state and local officials with the opportunity to simplify and modernize their revenue systems. This panel reviewed both the threats and opportunities posed by the expansion of electronic commerce. Speakers included:

Taxing Telecommunications. On the whole, the telecommunications industry files 55.748 state and local tax returns a year. The present telecommunications tax structure dates back to the era of the great Ma Bell monopoly. The monopoly no longer exists, but the taxes do. Unless states begin to simplify telecommunications taxes, the providers may find new ways to reduce their tax and administrative burden through structural changes or even seek federal preemptive relief. This session provided an overview of the major telecommunications tax reform proposals. Speakers included:

    • Scott Mackey
      Chief Economist, NCSL
    • Bruce Yancey
      Bell South, Georgia

When School Lets Out: State Support of After-School Programs. Preventing crime, promoting school success, developing job skills at a young age, and supporting parents: many state legislators consider these factors when they turn to after-school programs, many of which are linked to public schools. This session explored the funding, structures, quality levels and effects of these policies. Speakers included:

Legislatures and Performance Budgets. Legislatures are still enthusiastic about the value of performance budgeting, but it's turned out to be hard for lawmakers to integrate into their budget practices. This session examines what actually happens when legislators try to turn their budgets into performance budgets - the obstacles they meet, the success stories, and why it has been so hard to adopt what sounds like a common-sense reform. Speakers included:

The Economies of Tobacco: Myths and Realities. Interest in, even obsession with, the economics of tobacco reflects the old adage that "money talks." Session speakers debated economic arguments used by the tobacco industry, the public health community and tobacco growers. Fallacies underlying various economic arguments were presented and challenged. Areas of discussion included: 1) tobacco's role in a nation's, or region's economy; 2) economic hardships of specific tobacco control policies in non-tobacco industries; 3) fiscal burdens of health care costs to treat smoking-caused diseases and reduced productivity; 4) tax implications on government revenues and legal cigarette sales; and 5) whether or not advertising and other forms of promotion affect smoking decisions. Speakers included:

What's Ahead for the Economy? In February, the United States set a new record for the longest economic expansion in its history. This red-hot economy has boosted state finances to their healthiest level in two decades. How long can this robust economy last? This session featured nationally renowned economist David Wyss of Standard and Poor's, who addressed these and other economic questions.

For more information, contact Gerri Madrid, Committee Director or Alysoun McLaughlin, Policy Associate with the Federal Budget and Taxation Committee.