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March 1, 2006

State Tax Credits: Cuno Argument

The U.S. Supreme Court will hear argument today in Daimler Chrysler Corp. v. Cuno and Wilkins v. Cuno (Docket 04-1704). 

Questions presented are as follows:  (1) Whether Ohio's investment tax credit, Ohio Revised Code, sec. 5733.33, which seeks to encourage economic development by providing a credit to taxpayers who install new manufacturing machinery and equipment in the state, violates the Commerce Clause of the U.S. Constitution? (2) Does the dormant Commerce Clause allow a state to attempt to attract new buisness investment in the state by offering credits against the state's general corporate franchise or income taw, where the amount of the credit is based on the amount of the business' new investment in the state? (3) Whether Cuno has standing to challenge Ohio's investment tax credit law?

The case may have major implications for states' use of investment tax credits to lure and retain business.

March 1, 2006 in Case Developments | Permalink | Comments (0) | TrackBack

Kelo, Eminent Domain, and Bond Ratings

Fitch Ratings has issued a short report warning that legislation to curtail eminent domain powers of local governments could adversely affect municipal credit.  In summary, the report states:

"If these efforts prove successful and eminent domain powers are restricted to a significant degree, Fitch Ratings believe municipal credit quality could be restrained or negatively affected.  By impairing a state or local government's efforts toward economic development, such legislation, if enacted, may limit opportunities for credit quality improvement and rating upgrades.  Moreover, Fitch believes that restrictive legislation has the potential to contribute to a diminution of credit quality over a longer term, in that the proposed laws limit a state or local government's ability to respond to economic blight or weakened conditions."

March 1, 2006 in Hot Topics | Permalink | Comments (0) | TrackBack

February 27, 2006

More Katrina & Governance

Brookings Institution recently held a major program to discuss "Forming the Federal-State-Local Government Partnership for Southern Louisiana" in the aftermath of Hurricane Katrina. 

Here's the description:

As we approach the six-month mark of the post-Katrina recovery effort, the Brookings Institution will host leaders from the New Orleans area along with federal policymakers for a public dialogue on how best to rebuild the city of New Orleans and southern Louisiana. The program will assess the state and local progress on the ground, and then focus on the role the federal government needs to play in order to facilitate the re-building of communities and residents' lives. Participants include the co-chair of the Louisiana Recovery Authority and the federal coordinator for Gulf Coast rebuilding.

The forum is designed to be highly interactive. It will be comprised of two panels. The first will focus on the status of state and local plans for rebuilding southern Louisiana and New Orleans–honing in on details of the local and state visions for long-term rebuilding, whether these plans are complementary, and the extent of the challenges that remain. The second panel will consist of federal leaders who will discuss what the federal response ought to be, given what the people of Louisiana and New Orleans envision and need.

The transcript is available at the above link.

February 27, 2006 in Think Tanks and Organizations | Permalink | Comments (0) | TrackBack

Empowerment Zones?

For those interested in different approaches to assisting economically distressed areas, a new University of Illinois student note is worth reading.  Jennifer Forbes, "Using Economic Development Programs as Tools for Urban Revitalization:  A Comparison of Empowerment Zones and New Markets Tax Credits," 2006 U. Ill. L. Rev. 177 (2006).  Here's the author's summary:

"This note examines the Empowerment Zones/Enterprise Communities (EZ/EC) and the New Markets Tax Credits (NMTC) and their reliance on tax incentives to revitalize economically distressed, low-income areas.  After examining the history, purpose, program requirements, and projects resulting from the two market-based initiatives, the author concludes that the current tax incentives primarily benefit private interests.  While the goal of both programs is to reduce poverty in low-income areas through economic growth, the programs are built on two distinct theoretical frameworks.  The EZ/EC program is built on a "place-based people" policy that focuses on building the community as a method to help the local residents.  The NMTC program, in contrast, adopts a "pure place strategy."  This policy focuses on a specific geographical area rather than the economic needs of the area's residents.  Ultimately, these programs fall short of economic revitalization goals because they do not effectively promote sustainable social change.  Finally, the note proposes that the tax-incentive programs should shift their focus from place-based restrictions to the development of human capital within the inner-city residents.  This direct investment of resources, which would include training programs, counseling services, and more direct residential involvement on project advisory boards, would ultimately create solid social structures within economically depressed areas and support the goal of the economic initiatives in present and future years."

February 27, 2006 in Academic Insights | Permalink | Comments (0) | TrackBack

Ethics in State Government

Paula Franzese and Daniel O'Hern, Sr. have been serving as senior ethics counsel in New Jersey.  They've just published an article on ethics reform of state government there:  "Restoring the Public Trust:  An Agenda for Ethics Reform of State Government and a Proposed Model for New Jersey," 57 Rut. U. L. Rev. 1175 (2005).  Their recommendations include the following:

1.  Creation of a new, independent enforcement agency ("state ethics commission") that among other things would conduct ethics audits, perform ethics training, and coordinate with other agencies having responsibilities for fighting fraud, waste and ethical misconduct

2.  Enact a uniform ethics code applicable to all state employees, with provisions requiring public disclosure of personal financial interests of public offiials and prohibiting contingent fees for influencing legislation.

3.  Implement a plain language ethics guide.

4.  Implement a business ethics guide that is binding on third parties that do business with the state.

5.  Provide leadership form the top.

6.  Close the revolving door by adopting rigorous post-employment restrictions.

7.  Strengthen anti-nepotism laws.

8.  Impose ethics laws on administration transition teams.

9.  Ensure transparency and promote integrity in the procurement process.

10.  Adopt a zero-tolerance policy on gifts.

11.  Enact a strengthened local government ethics law.

12.  Enact a uniform law to ban pay to play at the county and municipal levels of government.

13.  Ban various forms of dual-office holding.

14.  Merge ethics committees.

15.  Cross-index campaign contribution records.

16.  Amend the debt limitation clause of the state constitution to limit authority debt.

17.  Limit opportunities for abuse of state pension system.

Congratulations to Professor Franzese of Seton Hall and Justice O'Hern for this impressive work. 

Other states should learn from New Jersey's experience.

February 27, 2006 in Academic Insights | Permalink | Comments (0) | TrackBack

February 26, 2006

Conundrums of government torts & immunity

I've always found it challenging to teach the unit on state tort law involving local governments.  That may be in part because: it's difficult to paint a national picture since the states do many different things; there have been changing standards of immunity from the courts over time; legislation doesn't always cure these problems; and facts vary widely.  At least it's useful to have some interesting fact patterns.  A new North Carolina Court of Appeals case, Willett v. Chatham County Board of Education, provides precisely that.

Plaintiff had been attending a public middle school basketball game when the bleachers folded beneath him, allegedly giving rise to injuries for which he sought redress.  The school had charged an admission fee to help support the program ($1 for students and $2 for adults).  The plaintiff argued that this charge should qualify the program as "proprietary" in character. He further argued that the school board's participation in a state-wide trust fund amounted to a waiver of immunity and that the obligation of the Board to maintain facilities in good repair gave rise to a duty that had been breached.

The appellate court found for the defendant school board on the ground that there had been no waiver of immunity by participation in the trust fund under prior precedent (North Carolina allows government entities to waive immunity to the extent of insurance coverage).  More notably, the court reiterated traditional law, explaining that "If the undertaking of the municipality is one in which only a governmental agency could engage, it is governmental in nature. It is proprietary and 'private' when any corporation, individual, or group of individuals could do the same thing." The court rejected the claim that the athletics program had become proprietary because a fee had been charged, citing the statute giving local boards of education the power to regulate programs "including a program of athletics, where desired, without assuming liability therefor."  The school board's statutory duty to maintain the school in good repair was focused on the obligation to protect public investment and did not give rise to a private cause of action against the board.

February 26, 2006 in Case Developments | Permalink | Comments (0) | TrackBack