New Weekly Update from the Northeast-Midwest Institute (Dec.23)

W E E K L Y U P D A T E December 23, 2019

In this Week's Issue:

Budget Includes $25MM for Defense Mfg. Communities

Democrats Plant to Introduce PFAS Legislation

Congress Considering Restoring SALT Deduction

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Happy Holidays from the Northeast-Midwest Institute!

FY 2020 Budget Includes $25 Million for Defense Manufacturing Communities

The FY 2020 Budget that passed both the House and Senate this week and is expected to be signed into law by President Trump includes a $25 million appropriation for defense manufacturing communities. This federal investment will help communities deliver two priorities that have bipartisan support: good-paying manufacturing jobs and military readiness.

The new funds will allow the Department of Defense (DOD) to implement Section 846 of the 2019 National Defense Authorization Act which authorized the Defense Manufacturing Communities Support Program (DMCSP) to "make long-term investments in critical skills, facilities, research and development, and small business support in order to strengthen the national security innovation base by designing and supporting consortiums as defense manufacturing communities."

The DMCSP will build from a successful competitive 2014-2016 pilot program that challenged communities to develop a regional coalition of leaders to create and execute a regional manufacturing economic development plan (The Investing in Manufacturing Communities Partnership). "We appreciate that Congress has recognized what we have learned: by bringing industry and community together to develop and execute a common plan, sustainable manufacturing can and will thrive in America," said Matt Bogoshian, Executive Director of AMCC. The 24 communities designated by the IMCP have shown how well-organized communities can effectively develop new programs to fill talent gaps, increase the number of suppliers in defense procurement and incubate small businesses. "AMCC is grateful for the unwavering support of Senator Gillibrand and Representative David Cicilline and all the leaders of the Appropriations committees," continued Bogoshian.

This new program is designed to address problems American manufacturing has seen for decades to include those DOD identified in the industrial base review ordered by the President in 2017: a declining base of suppliers, increased foreign dependence for critical components and an erosion of the talent base. The Defense Manufacturing Communities Support Program will be operated out of the DOD Office of Economic Adjustment. The American Manufacturing Communities Collaborative (AMCC) is a coalition of Federal designated communities and national organizations, coordinated by the Northeast-Midwest Institute (NEMWI), visit www.americanmancc.org.

For background on the Defense Manufacturing Communities Support program click here.

Democrats Plan to Introduce PFAS Legislation in January

After the bipartisan agreement to add federal cleanup standards for per- and polyfluoroalkyl substances (PFAS) to the National Defense Authorization Act was rejected by House Energy and Commerce Chairman Frank Pallone (D-N.J.), many wondered how Democrats would approach much-needed PFAS regulation. Rep. Pallone said recently that Democrats plan to introduce PFAS legislation when Congress reconvenes in January. While some Democrats expressed frustration over the failure of the previous deal, Rep. Pallone pointed out that the language in the original deal would have resulted in a drinking water standard "even weaker than current guidelines." The current EPA health advisory guideline for PFOA and PFOS in drinking water is 70 parts per trillion.

In other PFAS news, a federal court allowed a lawsuit by Pennsylvania residents concerning PFAS releases from Naval facilities to move forward. The Navy had attempted to have the lawsuit blocked or at least frozen for half a year while state and federal regulators classify PFOA and PFOS as hazardous substances. The residents allege that the Navy illegally disposed of waste at their facilities which resulted in PFAS contamination to the surrounding communities.

Please contact Senior Policy Analyst, Chris Askew-Merwin, for more information.

Congress Could Take Up Legislation Restoring SALT Deduction

The U.S. House of Representatives passed the Restoring Tax Fairness for States and Localities Act (H.R. 5377), as introduced by Representative Tom Suozzi (NY) by a vote of 218-206. The bill, which will now be sent to the Senate, would fully restore the state and local tax (SALT) deduction for 2020 and 2021, while also eliminating the marriage tax penalty by doubling the cap to $20,000 for joint filers in 2019. The bill proposes to pay for these provisions by returning the top individual tax rate from 37 percent back to 39.6 percent, which was the top individual tax rate prior to the passage of the Tax Cuts and Jobs Act of 2017.

Last Congress, the Tax Cuts and Jobs Act capped the SALT deduction at $10,000, meaning that taxpayers who pay more than $10,000 in state and local taxes can only deduct that amount. The cap has disproportionally impacted many states in the Northeast and Midwest regions, as compared to other regions that traditionally have lower tax rates in place. The bill, which was approved by the House and Ways Committee last week, has received the backing of a handful of organizations including the U.S. Conference of Mayors, the National Association of Counties, and the National League of Cities.

For more information, please contact Matthew McKenna, Director of the Great Lakes Washington Program at the Northeast-Midwest Institute.

This Week in Washington

Congress in recess from December 23 - January 3.

NEMWI: Strengthening the Region that Sustains the Nation