03-14-1988 - Agenda Packet City Council - regular meeting

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for violations of either notification or reporting requirements for the newly mandated federal program. New gasoline (and perhaps these , fuel excise tax obligations for cities also emerged at the close of the 1987 Congress. No longer will cities be eligible for a tax exemption; instead cities must pay federal excise taxes cat the time of purchase and then apply for a reF .a from the federal government on a quarterly basis, thereby permitting the fede.al government the use and interest earnings (arbitrage) on the taxes paid by local (and state) government. For smaller cities which purchase less gasoline, the federal government appears intent on granting only an annual rebate of the amount owed. Tax -Exempt Financing. In the area of tax-exempt financing, cities continued to experience severe declines in the level of private activity bonding. Nationally, the reduction in municipal bond issues fell below $93.9 billion in 1987. The 1987 per capita state volume limit of $75 has now fallen to $50 per capita for 1988. Although Con. -ess refrained from imposing new restrictions on cities' authority to use tax- exer ' financing, it is clear that many federal lawmakers remain convinced that such met._ures are necessary to provide needed increased revenues to reduce the no- tional deficit. Cries' plans to finance purchase of privately -owned electric or gas utilities with mun'dpal bonds also face new restrictions as a «. A legislation approved at the close of the 1987 Congress. Acquisition of such I. is will only be allowed if the plant is 10 or more years old and does not increase the geographic service area of the city -owned facility by 10 percent or more.