Taxpayer Protection Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 8385 To establish the Taxpayer Protection Program to provide forgivable loans to State, territory, Tribal, and local governments, and for other purposes. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 24, 2020 Mr. LAHOOD introduced the following bill; which was referred to the Committee on Oversight and Reform A BILL To establish the Taxpayer Protection Program to provide forgivable loans to State, territory, Tribal, and local gov- ernments, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Taxpayer Protection 4 Act of 2020’’. 5 SEC. 2. TAXPAYER PROTECTION PROGRAM. 6 (a) ESTABLISHMENT.—The Secretary of the Treas- 7 ury shall establish the Taxpayer Protection Program to 8 provide forgivable loans to State, territory, Tribal, and 9 local governments, in accordance with this section. 10 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 8385 IH (b) APPLICATION.—Any State, territory, Tribal, or 1 local government that seeks to receive a loan under the 2 Program shall submit an application in such form and 3 manner, and containing such information, as the Sec- 4 retary may require. 5 (c) APPROPRIATION; LOAN AMOUNTS.— 6 (1) APPROPRIATION.—Out of any money in the 7 Treasury not otherwise appropriated, there are ap- 8 propriated to the Secretary to carry out the Pro- 9 gram, $186,000,000,000. 10 (2) STATE LOAN AMOUNTS.— 11 (A) IN GENERAL.—Of amounts appro- 12 priated under paragraph (1), the Secretary 13 shall use $100,000,000,000 to carry out the 14 Program with respect to the States. 15 (B) RESERVED AMOUNT.—The Secretary 16 shall reserve $835,000,000 of the amount de- 17 scribed under subparagraph (A) for each State. 18 (C) REMAINDER.—The Secretary shall ap- 19 portion the remaining $58,250,000,000 to the 20 States based on a State’s relative population 21 proportion amount, calculated in the manner 22 described under section 601(c)(3) of the Social 23 Security Act. 24 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 8385 IH (3) TERRITORIES.—Of amounts appropriated 1 under paragraph (1), the Secretary shall use 2 $3,000,000,000 to carry out the Program with re- 3 spect to the District of Columbia and the territories 4 of the United States, with each such District or ter- 5 ritory receiving an amount based on the relative pop- 6 ulation proportion amount, calculated in the manner 7 described under section 601(c)(6) of the Social Secu- 8 rity Act. 9 (4) TRIBAL GOVERNMENTS.—Of amounts ap- 10 propriated under paragraph (1), the Secretary shall 11 use $8,000,000,000 to carry out the Program with 12 respect to Tribal governments, with each Tribal gov- 13 ernment receiving an amount based on increased ex- 14 penditures, calculated in the manner described under 15 section 601(c)(7) of the Social Security Act. 16 (5) LOCAL GOVERNMENTS.— 17 (A) IN GENERAL.—Of amounts appro- 18 priated under paragraph (1), the Secretary 19 shall use $75,000,000,000 to carry out the Pro- 20 gram with respect to local governments of 21 States. 22 (B) AGGREGATE RESERVATION FOR LOCAL 23 GOVERNMENTS OF A STATE.—With respect to a 24 particular State, the Secretary shall reserve a 25 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 8385 IH percentage of the amount of money described 1 under subparagraph (A) for the local govern- 2 ments of the State, in the aggregate, equal to 3 the percentage of the amount described under 4 paragraph (2)(B) that is reserved for such 5 State. 6 (C) RESERVATION FOR METROPOLITAN 7 CITIES.—The Secretary shall reserve 8 $26,250,000,000 of the amount described under 9 subparagraph (A) for metropolitan cities. 10 (D) RESERVATION FOR NON-METROPOLI- 11 TAN NON-COUNTY GENERAL PURPOSE LOCAL 12 GOVERNMENTS.—The Secretary shall reserve 13 $11,250,000,000 of the amount described under 14 subparagraph (A) for local governments that 15 are not metropolitan cities or counties. 16 (E) RESERVATION FOR COUNTIES.— 17 (i) IN GENERAL.—The Secretary shall 18 reserve $37,500,000,000 of the amount de- 19 scribed under subparagraph (A) for coun- 20 ties, with each county receiving an amount 21 based on the relative population of the 22 county compared to the aggregate popu- 23 lation of counties described under this sub- 24 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 8385 IH paragraph with respect to the State in 1 which the counties are located. 2 (ii) NON-INCLUSION OF METROPOLI- 3 TAN CITY POPULATION.—In calculating the 4 population of a county under clause (i), the 5 population of the county shall not include 6 any resident of the county that is also a 7 resident of a metropolitan city. 8 (d) USE OF FUNDS.—Loan amounts received under 9 this section— 10 (1) may be used— 11 (A) to cover revenue losses caused by busi- 12 ness interruptions, unemployment, or other eco- 13 nomic hardship directly caused by the COVID– 14 19 pandemic; and 15 (B) for infrastructure or essential govern- 16 ment service expenditures, including all general 17 operating expenses; and 18 (2) may not be used for the service of any debt 19 obligation or unfunded liability for employee retire- 20 ment benefits. 21 (e) TRANSPARENCY.—Each recipient of a loan under 22 the Program shall comply with the following: 23 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 8385 IH (1) ACCOUNTING.—Loan funds shall be ac- 1 counted for separately from all other revenue 2 sources. 3 (2) WEBSITE.— 4 (A) IN GENERAL.—The recipient shall 5 maintain a publicly available website that 6 prominently displays, either on its homepage or 7 on a page linked directly from the homepage, a 8 record of the following: 9 (i) The dollar amount of each expend- 10 iture of funds received under the Program. 11 (ii) The vendor or recipient of each 12 such expenditure of funds. 13 (iii) The purpose and date of each 14 such expenditure of funds. 15 (B) TIMING.—The information described 16 under subparagraph (A) shall be made available 17 on the website within 30 days of the related ex- 18 penditure. 19 (f) DISBURSEMENT; TERMS AND INTEREST 20 RATES.— 21 (1) DISBURSEMENT.— 22 (A) IN GENERAL.—Loans under the Pro- 23 gram shall be disbursed quarterly, in accord- 24 VerDate Sep 11 2014 01:29 Oct 22, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 8385 IH ance with subparagraph (B), until the earlier 1 of— 2 (i) the date on which the full loan dis- 3 bursement has been made; or 4 (ii) June 30, 2022. 5 (B) LIMITATION ON QUARTERLY DIS- 6 BURSEMENTS.—A recipient of a loan under the 7 Program may not receive a disbursement with 8 respect to a particular quarter that is more 9 than the decrease in— 10 (i) the recipient’s own-source revenue 11 collections over the previous fiscal quarter, 12 from 13 (ii) the recipient’s own-source revenue 14 collections for the same fiscal quarter in 15 2019. 16 (2) INTEREST RATE.—The Secretary shall set 17 interest rates on loans under the Program based on 18 the credit strength of the recipient, using the same 19 calculation used by the Municipal Lending Facility 20 of the Board of Governors of the Federal Reserve 21 System. 22 (3) REPAYMENT.—With respect to a loan made 23 under the Program that is not forgiven, the recipient 24 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 8385 IH shall be required to repay the loan in quarterly pay- 1 ments beginning on June 30, 2022. 2 (g) LOAN FORGIVENESS.— 3 (1) IN GENERAL.—The Secretary shall forgive a 4 loan made to a recipient under the Program if the 5 recipient is— 6 (A) a local government other than a coun- 7 ty— 8 (i) with a population of less than 9 250,000; or 10 (ii) with a population of 250,000 or 11 more that has sound pension funds; 12 (B) a county— 13 (i) with a population of less than 14 500,000; or 15 (ii) with a population of 500,000 or 16 more that has sound pension funds; or 17 (C) a State that, as of June 30, 2022— 18 (i) has sound pension funds; 19 (ii) has a truly balanced budget; 20 (iii) has rainy-day fund protections; 21 and 22 (iv) does not use a fixed cost of living 23 adjustment with respect to any pension 24 system administered by the State. 25 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 8385 IH (2) TREATMENT OF GOVERNMENTS ESTAB- 1 LISHING SOUND PENSION FUNDS.— 2 (A) IN GENERAL.—With respect to a 3 State, a local government described under para- 4 graph (1)(A)(ii), or a county described under 5 paragraph (1)(B)(ii) that does not have sound 6 pension funds at the time of application for as- 7 sistance under the Program, such State, local 8 government, or county shall only be eligible to 9 receive loan forgiveness under paragraph (1) 10 if— 11 (i) the State, local government, or 12 county has sound pension funds before 13 such forgiveness; and 14 (ii) any changes made to employer 15 contributions schedules to achieve sound 16 pension funds do not result in a contribu- 17 tion schedule which increases estimated fu- 18 ture actuarially determined employer con- 19 tributions relative to the contribution 20 schedule in place on July 1, 2020. 21 (B) ACTUARIALLY DETERMINED EM- 22 PLOYER CONTRIBUTIONS.—For purposes of 23 subparagraph (A)(ii), actuarially determined 24 employer contributions shall follow generally ac- 25 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 8385 IH cepted actuarial principles, as defined by the 1 Secretary. 2 (h) FINDINGS AND SENSE OF CONGRESS RELATED 3 TO STATE BENEFIT PLANS.— 4 (1) FINDINGS.—The Congress finds the fol- 5 lowing: 6 (A) Securing the health, safety, welfare 7 and property of, and the pursuit of happiness 8 by, residents is each State’s supreme obligation. 9 (B) State reported unfunded pension liabil- 10 ities among the several States at the end of fis- 11 cal year 2018 totaled $1,237,791,372,000. 12 (C) The economic impact of the COVID– 13 19 pandemic is likely to further increase the 14 unfunded liabilities of employee benefit plans of 15 the States and increase the annual cost of these 16 systems, creating fiscal tension between funding 17 essential government services and servicing un- 18 funded liabilities. 19 (D) The COVID–19 pandemic has caused 20 reductions in expected revenues of the States 21 while at the same time increasing public de- 22 mand for essential government services. 23 (2) SENSE OF CONGRESS.—It is the sense of 24 the Congress that if and to the extent a State’s leg- 25 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 8385 IH islature determines that performance of its supreme 1 obligation is impaired by funding otherwise required 2 under any health, welfare, retirement, or other ben- 3 efit plan offered to its employees, then that State’s 4 legislature, with its Governor’s consent, may change 5 the terms of any such benefit plan to the extent it 6 was not contemporaneously funded in any manner it 7 determines to be necessary and proper, notwith- 8 standing the terms of any State law or constitution 9 to the contrary. 10 (i) DEFINITIONS.—In this section: 11 (1) INDIAN TRIBE.—The term ‘‘Indian Tribe’’ 12 has the meaning given that term in section 4(e) of 13 the Indian Self-Determination and Education Assist- 14 ance Act (25 U.S.C. 5304(e)). 15 (2) LOCAL GOVERNMENT.—With respect to a 16 State, the term ‘‘local government’’ means a county, 17 municipality, town, township, village, parish, bor- 18 ough, or other unit of general government below the 19 State level. 20 (3) METROPOLITAN CITY.—The term ‘‘metro- 21 politan city’’ has the meaning given that term under 22 section 102(a) of the Housing and Community De- 23 velopment Act of 1974 (42 U.S.C. 5302(a)). 24 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 8385 IH (4) PROGRAM.—The term ‘‘Program’’ means 1 the Taxpayer Protection Program. 2 (5) RAINY-DAY FUND PROTECTIONS.— 3 (A) IN GENERAL.—With respect to a 4 State, the term ‘‘rainy-day fund protections’’ 5 means that the State— 6 (i) has a fund that— 7 (I) is intended to be used during 8 emergency periods when revenues de- 9 crease, to offset such decrease; and 10 (II) is subject to safeguards to 11 prevent use of amounts in the funds 12 for nonemergency purposes, such as 13 requiring a resolution approved by a 14 legislative supermajority that an 15 emergency or disaster has occurred 16 before amounts may be appropriated 17 from the fund; and 18 (ii) has enacted a State statute— 19 (I) setting a target for the fund 20 of holding reserves of 5 to 10 percent 21 of annual general revenues; and 22 (II) under which amounts are 23 automatically deposited in the fund in 24 order to meet such target, during any 25 VerDate Sep 11 2014 18:43 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H8385.IH H8385 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR 8385 IH year in which the economy is not in a 1 declared recession. 2 (B) ALTERNATE CERTIFICATION.—Not- 3 withstanding subparagraph (A), a State has 4 ‘‘rainy-day fund protections’’ if the State cer- 5 tifies to the Secretary that— 6 (i) the State has protections for the 7 State’s rainy-day fund that are at least as 8 effective as those described under subpara- 9 graph (A); and 10 (ii) the State’s rainy-day fund held an 11 amount equal to more than 5 percent of 12 the State’s 2019 annual operating budget 13 in reserve as of January 1, 2020. 14 (6) SECRETARY.—The term ‘‘Secretary’’ means 15 the Secretary of the Treasury. 16 (7) SOUND PENSION FUNDS.—With respect to a 17 recipient under the Program, the recipient has 18 ‘‘sound pension funds’’ if— 19 (A) all pension funds of the recipient are 20 based on generally accepted act [Text truncated for display. 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