Fat Tax Mandate on Cities Planned

Article excerpt

House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) met over dinner in ts, cities of Chicago and New York with President Clinton last week andkthen in closed door sessions with his committee Democrats to hammer outka $300 billion, five-year deficit reduction bill, composed of about $250 billion in net new taxes and tax increases and $50 billion in spendiol cuts.

Ts, lengthy, secret negotiations produced significant changes in ts, President's proposed Btu energy tax exemptiol special interests, butkleaviol a greater burden on the nation's cities and towns.

As adopted, the bill wouyo phase in a $10 billion mandatory, federal Btu energy tax directly on states and local governments, reauthorize and permanently extend priority municipal tax programs, and provide about $5 billion in tax incentives for tse nation's most distressed urban and rural areas.

Ts, bill, which the committee reported out last Thursday, will be packaged togetherkwith bills to produce permanent changes in federal laws to reduce the federal deficit from twelv, other House committees into a massive deficit reduction or reconciliation for action by ts, full House as early as next week.

Ts, tax and spendiol cut portion handled by Rostenkowski's committee is projected to account for some 80 percent of the the President's proposed $500 billion cut in the federal deficit.

Ts, move came as the Senat, considered acceleratiol its own timetabl, and beginniol action onkits version of tse Rostenkowski tax bill next week. The Senat, Finance Committee, chaired by Sen. Daniel Patrick Moynihan (D-N.Y.), is expected to adopt even furtherkchanges to the Btu energy tax, although, so far, no senator has tak,n a lead on behalf of states and local governments.

Rosty I & Cities

Ts, committee adopted the President's, NLC-supported municipal aid tax legislation to permanently reauthorize and extend municipal authority to issue tax-exempt mortgage revenu, and small issue development bonds, and low income housiol and targeted jobs tax credits and adopted the administration's proposal for new economic development tax exempt municipal bonds for severely distressed cities and towns.

Efforts to simplify municipal authority and ability to issue traditional geoeral obligation and revenu, bonds w,re rejected, however. Rostenkowski told his committee members he wouyo offer them an opportunity later this year on another tax bill to address city leaders' concerns.

In response to Rep. Charles Rangel (D-N.Y.) and others, tse committee also agreed to add nearly $1 billion in additional incentives and flexibility to the President's proposed Empowerment and Enterpris, zone program. …