A Municipal Perspective on Federal Issues

(from Maine Townsman, March 2006)

Municipal officials from Maine were in Washington, DC during the middle of March attending the National League of Cities’ Congressional-City Conference and meeting with Maine’s Congressional delegation.

Twenty-six Maine local officials were signed up for the conference and on March 14 they were scheduled to meet with Maine’s two representatives and two senators. Similar to past years, a Federal Issues Paper (FIP) was prepared by MMA's State & Federal Relations staff and sent, in advance, to the delegation members.

This year’s FIP took a slightly different slant from prior years’ editions in that it included the results of a survey by MMA of municipal officials on federal issues and the municipal relationship with the federal government.


The survey was completed by 149 communities ranging in population from 8 to 35,962. Municipal officials were asked to share their opinions on how the decisions made at the federal level impacted the ability of municipalities to deliver local services. Municipal officials were also asked to provide information about the relationships they have with the members of Maine’s congressional delegation and federal agencies. Finally, respondents were asked to rate the relative importance of both the current federal issues facing municipalities today and the emergent federal issues that appear on the horizon.

Service Impact

Forty-seven percent of the respondents stated that the actions of the federal government have a significant impact on the ability of municipalities to deliver services. Over two-thirds of the participating municipalities with populations greater than 5,000 stated that the federal government had an impact on local government services, indicating that the actions of the federal government are perceived to have a more significant impact on Maine’s largest communities.

Unfunded federal mandates were identified as having the most significant impact on municipalities, particularly education mandates. As the federal government demands that more services be provided and funded with state and municipal revenues, less funds are available for the state and local programs that are needed and supported by the residents of Maine. Some of the respondents questioned whether the federal officials really know that municipal governments exist.

Current Issues

Municipalities were asked to rank on a scale of 1 (least important) to 5 (most important) a dozen federal issues currently facing municipalities. The list of issues ranked included affordable housing, education mandates, environmental regulations, taxation and transportation funding. When reviewing the statewide results, we found that the most important federal issues facing municipalities today were education mandates, including special education and the No Child Left Behind program, and federal transportation funding.

In general, the polling responses were relatively uniform statewide regardless of the size of the municipality by population. The one exception was the responses from the municipalities with population over 10,000. While education mandates and federal highway funding received high ranking in Maine’s largest communities, other issues also rated as important, including Community Development Block Grant funding, clean air and safe water requirements, combined sewer overflow, regulatory takings and the streamlined sales tax system. These differences in emphasis are to be expected considering that Maine’s largest communities have a different relationship with the federal government. There are more federal demands placed directly on the state’s urban areas, and the state’s larger municipalities tend to have greater access to some federal programs.

Emerging Issues

Municipalities were also asked to rank a list of federal issues that will be facing municipalities in the immediate future, including base closures, eminent domain, LI-HEAP funding and telecommunications. When reviewing the statewide results, we found that the most important emerging federal issues facing municipalities include LI-HEAP funding, federal tax reform and the need to add flexibility to the assessment and training elements of the No Child Left Behind Act.

When reviewing the rankings on the basis of population, we found that the statewide results paralleled the results in communities with populations under 3,500. In communities with populations greater than 3,500, eminent domain and telecommunications also emerged as important federal issues. Loss of local control over cable television franchise agreements (telecommunications) seemed to be prominent on the minds of municipal officials in communities with populations greater than 5,000. The authority of state and local governments (rather that the federal government) to determine the statutory limits of state and local eminent domain authority was of interest to municipal officials in towns and cities with populations over 10,000 and in communities with populations between 3,500 and 4,999.

Contact with Congressional Delegation

A remarkably high 61% of the respondents stated that they had never contacted any member of Maine’s congressional delegation, while 14% regularly contact and 25% infrequently contact the delegation. Of those municipal officials that have frequent contact with the delegation, 85% indicated that their relationship with the delegation was excellent or good. Fifteen percent of the respondents classified the relationship as fair or poor. Of those municipal officials that have infrequent contact with the delegation, 81% indicated that their relationship with the delegation was excellent or good. Nineteen percent of those respondents characterized the interaction as fair or poor.

Working Relationship with Federal Agencies

Municipal officials responded that they have interacted with over 25 federal agencies. The most frequently mentioned is the Federal Emergency Management Agency (FEMA), and the agency that was identified by the least number of respondents was the Bureau of Alcohol, Tobacco and Firearms (ATF).

Municipal officials have contacted federal agencies to get assistance on a variety of different issues including community development programs, homeland security, weather-related emergency assistance and to apply for various federal funds and grants.

As would be expected, FEMA, the Environmental Protection Agency (EPA) and Army Corps of Engineers were the federal agencies with which municipal officials have had most interaction. When asked to rank the quality of assistance provide, FEMA received the highest quality ranking. The only federal agency to get a poor quality ranking was the Federal Energy Regulatory Commission (FERC).


The remainder of this article is a discussion of federal issues that are impacting Maine municipal governments. The 2006 Federal Issues Paper follows the same format as previous years (recommendation/narrative).

What follows are the recommendations and excerpts from the narrative for the 2006 FIP. A complete copy of the Paper can be obtained from Theresa Chavarie at MMA, 1-800-452-8786 ext. 211, or by going online to the MMA website, www.memun.org


RECOMMENDATION: Maine’s municipal leaders urge Congress to honor its long-neglected financial commitment to special education, repeal recent changes to the special education laws that further concentrate administrative responsibilities on Maine’s service center communities, and create a functional “interoperability” between the disruptive and invasive No Child Left Behind Act and Maine’s Learning Results system.

There is some irony associated with the fact that of all the federal issues that concern municipal leaders, the issue of greatest concern by far is the role the federal government has assumed in the field of public education. The irony is that public education at the elementary and secondary school levels is a service that is provided at the local level, overseen at the state level, and paid for almost entirely with state and local tax dollars. According to information provided by Maine’s Department of Education, the total cost of providing K-12 public education in Maine in FY 05 was over $1.9 billion. Fifty-seven percent (57%) of that total was covered by local taxpayers and 38% was covered by state taxpayers. Although there is a long list of federal education programs that receive some funding from Washington, when you add them all up, no more than 5% of the total cost of K-12 education in Maine was provided by the federal government.

A long-standing dispute the municipalities have with the federal government centers around the level of financial support Congress provides to help fund the costs of the special education requirements. A more recent complaint is the federal imposition of the No Child Left Behind Act.

Special Education. Special education programs in Maine cost the taxpayers of our towns and cities, state and nation over $300 million a year. The federal government contributes $43 million, which represents 14% of the total special education program and approximately one-third of the financial support for the mandated special education programs as originally promised. The good news is that the federal percentage rate of financial participation has nearly doubled over the last decade, from under 7% in the mid 1990s to just over 14% today. The bad news is that the so-called “40%” law that requires the federal government to cover a certain percentage of the cost of each state’s special education program is presently being ignored to the tune of $80 million a year.

Each year, the shortfall in special education funding is a major topic of discussion in the Federal Issues Paper. Municipal officials are fully aware of the need to provide special education services, but there continue to be two primary municipal complaints with the program. The rules of eligibility are powerfully controlled by the federal entitlement law in a way that often gives school administrators limited choices between providing very expensive services or facing litigation. In short supply are the regulations that could provide clear guidance and balance all the divergent interests of parents, teachers, administrators, taxpayers and the emerging special education industry. In light of the structure of this particular federal mandate, the municipalities believe a 33-year-old federal promise of financial support should finally be honored.

New “Child Find” Obligations. Maine’s service center communities and other towns that host certain private schools were surprised to learn at the start of the FY 05-06 school year that they had been handed new assessment responsibilities for students in private schools who need certain special education services. Apparently, in amendments to the Individuals with Disabilities Education Act (IDEA), Congress shifted some administrative obligations to help out the private schools at the expense of their host municipalities.

The focus in Maine is to relieve the service center municipalities of their disproportionately high property tax rates. It is unfortunate that Congress so quietly and easily shifted certain administrative responsibilities off the tax-exempt private schools onto the communities that host them. That type of federal change is counterproductive to our efforts on the local level, and when Congress is contemplating making such a change it would be helpful if our delegation could contact us on the local level so that we might have an opportunity to provide some information about the administrative and financial impacts.

No Child Left Behind. The No Child Left Behind Act (NCLB) creates an unnecessary top-layer of educational bureaucracy that interfaces poorly with Maine’s superior, previously enacted Learning Results system. The state and federal performance measurement systems, in combination, have created a nearly obsessive testing environment in Maine’s schools where education now takes a back seat to the competing attempts to measure education. According to the state’s schoolteachers, NCLB is actually damaging the learning environment of Maine’s public schools. Unlike the special education mandate under IDEA, NCLB has no discernable redeeming features.

The real costs of NCLB are not financial and so cannot be covered by increased federal subsidies. Generally, NCLB simply repackaged a long menu of previously existing educational subsidies, and as a bulk appropriation it would appear now to be locked into the same flat funding dynamic that applies to other local government programs. Short of repealing it, the best approach to NCLB is to infuse it with flexibility and create “interoperability” between NCLB and the state-level performance programs that it otherwise tends to steamroll over.

To that end, Maine’s municipalities are supportive of S. 1690, sponsored by Senator Collins and co-sponsored by Senator Snowe. The primary benefits of S. 1690 are that it would allow for modifications in the “annual yearly progress” timelines and permit use of local assessments in those measurements in order to better integrate the federal and state-level school performance standards.

Transportation Infrastructure Funding

RECOMMENDATION: Maine’s municipal leaders urge Congress to reconsider “back-loading” the five-year federal transportation funding schedule and refrain from “earmarking” federal highway subsidies so that Maine’s already conservative highway program does not have to be sharply curtailed.

Maine’s highway system is the most important component of its transportation network. The system consists of nearly 22,700 miles of highway including 336 federal, 8,303 state and 13,862 local miles. Maine’s transportation infrastructure continues to carry an increasing volume of vehicles. As the number of vehicles owned by Maine residents increases, so do the number miles traveled over Maine roads. Over 95% of all passenger movement and 87% of Maine’s freight is shipped over the state’s aging federal, state and local road and bridge infrastructure. According to a report published by Maine Better Transportation Association, there were 14.3 billion vehicle miles of travel in Maine during the 1990 - 2000 decade.

As Maine residents become increasingly dependent on federal, state and local roads for travel and commerce, it is important that Maine’s Department of Transportation (DOT) and municipalities are able to keep the existing infrastructure in good repair. Unfortunately, recent state and federal funding shortfalls have hampered the Maine DOT’s ability to maintain its maintenance and repair schedule.

Over the next biennium (FY 06 and FY 07), the Maine DOT is facing a $90 million funding deficit. The funding shortfall is the culmination of decreasing fuel tax revenue, increasing cost of construction materials, and changes in federal highway funding priorities. According to the Maine DOT, $40 million of the $90 million shortfall is a direct result of the changes in the administration of the federal transportation program. Although Maine’s federal fund allocation will increase under the recently adopted federal transportation funding act (SAFETEA-LU), the increases in the funding will be “back-loaded”; that is, disproportionately provided to Maine toward the end of the five year program. Also, an unprecedented portion of the federal revenue has been earmarked for specific congressionally- identified projects.

In response to the shortfall, the Maine DOT has immediately deferred over 130 vital construction projects in over 100 municipalities. Since mid-December, interested parties, including state and local government officials, private sector engineers and contractors, and members of the trucking industry have been meeting to discuss ways to resolve the funding problem. Although the working group has identified possible state level solutions to address the shortfall, including exhausting all available cash resources and potentially utilizing general obligation and revenue bonds, Maine’s congressional delegation has a role to play as well.

Municipal officials urge the members of Maine’s delegation to continue to fight for additional, un-earmarked transportation appropriations that can be provided in the next two years for much-needed Maine highway projects.

Community Development Block Grants

RECOMMENDATION: Maine’s municipal leaders urge Congress to fight cuts to this vital local development tool.

Maine’s Community Development Block Grant (CDBG) program provides funding and technical support for projects that achieve local community and economic development objectives, while principally benefiting Maine’s residents with low-to-moderate income. These programs are only available to Maine towns, cities and counties for the benefit of Maine residents.

Maine receives CDBG funds through two avenues. The first is the direct funding for Maine’s “entitlement” communities of Portland, Bangor, Lewiston and Auburn, South Portland and Biddeford. The second avenue is through statewide block grants. Maine’s statewide CDBG funds are administered through the Maine Office of Community Development (MOCD). Its website (www.meocd.org) provides detailed information about the program and the projects assisted.

MOCD recently announced the recipients of both the Public Facility and Public Infrastructure grants for 2006. The average public facility grant is approximately $110,000 and the average public infrastructure grant is approximately $410,000. Some infrastructure projects awarded grants include: water system upgrades in Eastport and Madawaska; sewer system upgrades in Bucksport and Norridgewock, and an emergency communications tower in Marshfield. Public facility projects that will be aided by CDBG in 2006 include: Historic Preservation work in Calais, Corinna, Grand Isle, and community centers in Danforth, Dexter, and Orono.

Maine’s CDBG allocation was cut 9% in 2006 and faces a 25% cut in 2007. Last year’s Federal Issues Paper explained that Maine’s CDBG funding had been flat for five years and how that flat funding was undermining community development initiatives. Unfortunately, things have gotten worse. Maine’s CDBG allocation was cut from $31.7 million in 2005 to $28.9 million in 2006. Funding was cut to Maine’s six entitlement communities by 8.6% and the statewide program was cut 9.3%.

As has been widely reported, the President’s FY 2007 budget proposes to cut CDBG by 25% (from $4.2 billion to $3.0 billion) nationwide. Maine’s proportional hit would be a reduction from $28.9 million this year to $21.7 million. This would equate to a loss in Maine of $10 million in funding from 2005 to 2007.

The Maine Municipal Association believes the CDBG program has been successful and should be maintained as a separate and distinct program and that it should receive continued federal support. CDBG is one of the few remaining federal programs available to assist Maine communities in their efforts to create jobs, provide affordable housing, eliminate blight, and generate new economic development. Additional cuts to Maine’s programs should be opposed.


RECOMMENDATION: Maine’s municipal leaders urge Congress to preserve local cable television franchising and the expansion of access to broadband Internet services.

Under current Federal and State of Maine law, in order for an entity to provide cable television services by means of the public rights of way, that entity must receive a “franchise” from the municipal government. For decades, Maine’s municipalities have negotiated and enforced franchise agreements for the provision of cable television services. Telephone industry lobbyists are aggressively attacking this local franchising process on behalf of national powerhouse corporations so that they can “cherry pick” the wealthiest communities and neighborhoods in which to do business. Maine’s Congressional delegation members need to look past the rhetoric of the industry lobbyists and affirm the benefits of local authority in this area.

On February 2, 2006, Senators Burns and Inouye of the Senate’s Commerce, Science and Transportation Committee issued a series of “principles” that should guide the federal review of the franchising issue. The Senators recognize the primary role of local governments in the franchising process: “Because each community may be unique, this framework recognizes that the local franchising authority is uniquely positioned to ensure that video providers meet each community’s needs and interests in a fair and equitable manner, and are most effective in seeing that provider obligations are enforced. The Federal government has neither the resources nor the expertise to address such issues.”

MMA urges Maine’s Congressional delegation to support the basic framework and principles articulated by Senators Burns and Inouye.

Low Income Heating Assistance Program (LI-HEAP)

RECOMMENDATION: Maine’s municipal leaders urge Congress to provide funding for the 2006-2007 LI-HEAP budget in recognition of the sharp reductions in heating fuel buying-power among Maine’s low-income households

A very sharp jump in heating fuel prices in the fall of 2005, caused primarily by production disruptions associated with two major Gulf Coast hurricanes, has put the federal government’s annual LI-HEAP appropriation under a special scrutiny with regard to its adequacy.

Congress appropriated $20 million less for LI-HEAP for the current fiscal year as it appropriated for FY 05, $2.182 billion. Just in terms of dollars, the LI-HEAP program is barely treading water from year to year.

Maine’s state and local government were under-the-gun as we entered the 2005-2006 heating season, and a traditional New England winter would have brutalized Maine’s low-income households who are dependent on LI-HEAP. Despite efforts by members of Maine’s congressional delegation, Congress as a whole did not take meaningful action to address these concerns. That we lucked-out with a remarkably warm winter shouldn’t take the pressure off Congress to approach the next LI-HEAP budget with a greater sense of responsibility to fund its heating assistance program with some semblance of buying-power parity over time.

Eminent Domain

RECOMMENDATION: Maine’s municipal leaders urge Maine’s congressional delegation to leave the regulation of eminent domain to the states.

The U.S. Supreme Court decision Kelo vs. City of New London, Connecticut, (2005) recognized the right of state and local governments to take property by eminent domain for purposes of economic development, even if the property taken is not blighted. This decision has caused a firestorm of legislative activity at both the state and federal levels. Local officials in Maine believe that the State of Maine is fully capable of discussing, debating and deciding the delicate policy issues raised by Kelo.

The Federal reaction to Kelo was fairly swift.

When Congress passed the Transportation and Housing and Urban Development Appropriations bill in November 2005, it included an amendment related to eminent domain. That amendment (section 321 of the Act) prohibits the use of eminent domain for economic development where economic development is defined as projects primarily benefiting private parties.

This federal legislation does not strike municipal government as particularly unwise or onerous. However, as is the nature of federal law, when Congress acts (or reacts) it does so on a nationwide basis. That is, Maine pays the price for perceived abuses and misuses of eminent domain in other parts of the country.

In response to the backlash against the Kelo decision, MMA conducted a survey of its membership to determine the extent of the use of eminent domain by Maine’s municipalities. The survey asked whether the municipality had used eminent domain within the last five years, and if so, why. The results of the survey indicated that Maine does not have a “Kelo” problem.

No examples were given where occupied residential property was taken. Further, no takings were described which were clearly on behalf of a private developer. Thus, Maine appears not to have had anything like the Kelo situation, at least in the past five years.

Nevertheless, Maine state legislators wanted to participate in the backlash and filed no less than nine bills restricting the use of eminent domain in Maine. After the winnowing process, two have emerged as viable pieces of legislation. The most relevant bill would be more restrictive than the amendment to the Transportation/HUD bill passed by Congress. In addition, Maine had a pre-Kelo bill that would increase the just compensation award to businesses which are taken.

Given that Maine has had no Kelo-type events in the past five years and that the Maine Legislature appears poised to enact further restrictions on the use of eminent domain which are stricter than federal legislation, it would appear that Maine does not need any further federal attention to this issue.

Accordingly, MMA urges Maine’s Congressional delegation to recognize Maine’s history of responsible use of eminent domain, its ability to address Kelo policies with state law and oppose further federal attempts at restricting the use of eminent domain from the federal level.

Combined Sewer Overflow (CSO)

RECOMMENDATION: Maine’s municipal leaders urge Congress to increase funding for infrastructure investments for CSO abatement projects, including the Water Infrastructure Financing Act of 2005 (S. 1400).

The 2006 Federal Issues Paper once again identifies the issue of abating the problems associated with Combined Sewer Overflows (CSOs). Combined Sewer systems have one pipe that transports both sewage and stormwater to a wastewater treatment plant. During periods of heavy precipitation, the stormwater entering the treatment plant overwhelms the system and causes overflows. These overflows contain not only stormwater, but sewage as well. CSO events are serious environmental concerns.

Maine’s communities have made great strides on the issue of reducing CSO events. Maine’s Department of Environmental Protection reports that the number of annual CSO events has dropped considerably since the state program began in 1989. At that time, there were 60 so-called “CSO communities” in Maine. Annually, these communities had over 1,600 “discharge events” resulting in overflows totaling 5.1 billion gallons.

In 2004, the most recent year of available data, the number of communities has been cut by a third to 40, the number of discharges has been cut by more than half to 650 and the volume of discharges is down to 1.5 billion gallons, a reduction of 70%. However, achieving these results has cost approximately $240 million.

Although discharge volumes are down considerably, 1.5 billion gallons of CSO discharge still presents a considerable environmental problem. According to the Maine DEP, Maine’s CSO communities have approximately $107 million in needed investments that should be implemented over the next five years in order to address the CSO problem.

In November 2005, Maine voters approved a bond issuance of approximately $7 million dollars that would help leverage an additional $31 million dollars of federal assistance. This amount is available for all water needs, not just CSO. Obviously, this amount will barely address the most pressing CSO needs in Maine. Federal assistance is clearly needed.

The Water Infrastructure Financing Act of 2005 (S. 1400) provides $20 billion to the Clean Water State Revolving Fund over five years. This legislation, and similar bills from previous sessions has been stymied by pro-labor Davis-Bacon requirements. These requirements would obligate that federal prevailing wages be paid on construction projects funded with Revolving Funds. Maine already has a prevailing wage law and this Bacon-Davis requirement is unnecessary for the protection of Maine workers. It is very disappointing to see this important environmental legislation continually sidetracked for this reason.

Federal Tax Reform

RECOMMENDATION: Maine’s municipal leaders urge Congress to reject the finding within the President’s Advisory Panel on Federal Tax Reform that property taxes are completely local in nature and entirely unaffected by federal actions, and therefore should not be subject to a federal income tax exemption.

Maine’s municipalities are unable to accept the public policy rationale offered by the President’s Advisory Panel for eliminating the deduction in current IRS code for state and local taxes, and strongly oppose that recommendation.

On page 83 of the Panel’s report the rationale for eliminating the property tax deduction is laid out. In summary, the Panel’s position is that the state and local tax deduction is an unfair federal subsidy of purely elective services that are provided at the discretion of state and local governments. The degree to which the Panel believes that state and local services are entirely disconnected from the federal government is both alarming and disturbing.

On every page of this 2006 Federal Issues Paper – from the discussion of the federal involvement in public education to clean water and waste water controls to transportation funding and providing for our neediest citizens in the face of sharp energy price increases – the direct and irrefutable connection between federal decisions and local impacts are demonstrated. In all of these areas – education, the environment, transportation, fuel assistance, medical care – major demands on both state and local taxpayers are being made by the federal government both directly (through local funding of federally required programs) and indirectly (by supplementing federal programs insufficiently supported by Congress).

Municipal leaders in Maine strongly disagree with the position of the President’s Advisory Panel on Federal Tax Reform, which asserts that services provided by state and local governments are purely local in benefit, elective by nature, and totally divorced from the policies and interests of our federal government. Nothing could be further from the truth.