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i. A-eo CONPROMISE EMERGES ON INTERNET T AX-NON-DISCRIMINA TION ACT (S.150) CITIES URGED TO VOICE SUPPORT The League has decided to join the National measure was introduced last week as S. 2084: Govemors Association, the National League of Tht' Carper-Alexander Internet Access Tax Cities, the US Conference of Mayors and Senator Ban ~nslon and Im.)rovement Act. Feinstein in supporting S. 2084, compromise Intemet tax moratorium legislation introduced last S 2084 would extend the moratorium for two week by Senators Lamar Alexander (R-TN) and years with a less severe expansion of the defini- Thomas Carper (D-DE) as an alternative to S. 150. tion of "Internet Access", thereby reducing (al- though not eliminating) the financial impact on Although the League would prefer that Con- state and local governments. Importantly, the gress not act to reinstate Internet tax moratorium Carper-Alexander compromise is also viewed as legislation at all, we see this compromise measure an altematlve that will force Congress to properly as California cities' best and perhaps only hope of revisit this matter two years from now, when we halting passage of S. 150. will have a better understanding of how a tax moratorium on rapidly emerging technological Cities concerned about the dramatic impact innovations will erode local tax bases. that S.150 would have on their revenues are urged to send letters indicating their support for the S. 2084 is essentially identical to the compromise legislation to Senator Dianne Alexander/Carper amendment to 5. 150 that the Feinstein as well. A sample letter is available on League, NLC and state and local government the Federal page of the League's website organizations supported last year as a politically (www.cacities.ora/federal). viable, less hannful altemative to S.150. The National Governor's Association, the National Continued Strong Support for S. 150 Makes League of Cities and the U5 Conference of Mayors once again join the League in its support Compromise Essential for an alternative to 5. 150 in its newly introduced form as 5. 2084. The League and other state and local govem- ment associations have objected to S. 150 be- Expanded Definition Would Threaten Local cause it seeks to vastly expand the federal morato- Revenues rium on Internet taxes in a manner that would severely restrict the ability of local governments to continue to levy a utilities user tax (UUT) on a broad Last year the League, along with the National and growing range of telecommunications ser- League of Cities, the National Governor's Asso- vices. Unfortunately, the political dynamics and ciation, the US Conference of Mayors and many telecommunications industry's strong support for other state municipal leagues, were vocal oppo- S.150 mean that the deck is still stacked high nents of 5.150 because the measure's imprecise against state and local governments. The House of language threatened to expand the scope of Representatives overwhelmingly approved a bill existing tax exemptions to cover non-Internet identical to 5.150 and continues to stand strongly related telecommunications services that are behind it. Senate Majority Leader Frist (R-TN) has currently subject to taxation at the local level. made S.150 a priority and is pressing for its pas- sage. The impact of this language on cities, coun- ties and the State could be significant as individu- Senate proponents of states and cities' con- als and businesses increasingly use "Voice over cerns have been working hard to try to craft com- the Internet Protocol (VoIP)" technology, which promise legislation that would reduce state and delivers traditional telecommunications services local exposure to revenue loss. That col1)promise via DSL, cable modem or other fonns of broad- Continued on Pa~ 11 PAGE 6/PRIORITY FOCUS Visit the League's Official Web Site--www.cacities.org