FAIR Unit Wrestles with Issues of Taxation, Social Security, Y2K
Peterson, Doug, Nation's Cities Weekly
Reforms to Social Security, the future of tax exempt bonds for municipal electric systems, liability for computer problems in the year 2000 and the U.S. census were among the topics that NLC's Finance, Administration and Intergovernmental Relations (FAIR) Steering Committee wrestled with during its recent meeting in Rochester, Minnesota.
The meeting brought officials from the two most populous Rochesters in the United States together: Rochester, Minn. Mayor Charles Canfield hosted the committee which met under the chairmanship of Rochester, N.Y. Councilmember Maxine Childress Brown. The recommendations coming out of this meeting will be considered by the FAIR Policy Committee at 9 a.m. Wednesday, December 2 as part of the Congress of Cities in Kansas City, Missouri.
The FAIR Policy Committee in March selected reform of the Social Security system as the second-highest priority for the Steering Committee to work on during 1999. In reforming the Social Security system the Steering Committee will be recommending that the federal government be allowed to invest in corporate stocks subject to caps and restrictions, to assure diversification and to avoid concentrating ownership in any one firm. As a starting point, the committee is recommending that the federal government be prohibited from owning more than five percent of any one firm. NLC has, for a number of years, advocated broadening the Social Security portfolio to include corporate and municipal securities, in addition to the Federal securities that it is currently restricted to. The policy advocates that these investments be managed by a Federal board with a degree of independence comparable to that enjoyed by the Federal Reserve Board.
After extended discussion, the committee voted to make more explicit NLC's opposition to mandatory enrollment of municipal employees into the Social Security system. Municipalities not now covered by Social Security have created retirement systems in the absence of Social Security and making coverage mandatory after so many years would create insoluble problems involving conflict between state constitutions, labor agreements and pension plan provisions.
Combined with existing NLC policies advocating restraint in indexing of benefits, taxation of benefits and a needs analysis of Social Security benefits these reforms would restore the Social Security system to solvency according to projections.
Revenue Base Erosion
This topic was the top priority work item assigned to the FAIR Steering Committee by the FAIR Policy Committee and the Steering Committee devoted much of its earlier meeting in Yuma, Arizona to this topic. The NLC Board this summer approved a policy modification that the FAIR Steering Committee recommended to them out of the Yuma meeting.
The revised policy provides NLC more latitude in advocating the inclusion of cities in any agreement covering the collection of taxes from remote sellers, whether they be mail-order or Internet sellers.
The committee reviewed developments on this issue since the Last meeting and also began exploring the implications of international agreements which also have the effect of restricting city tax, revenue and regulatory policies. …