Tying Business Incentives to an Economic Development Strategy

This is a guest post written by Ellen Harpel. Post originally appeared on the Smart Incentives blog.

Construction-in-SingaporeEconomic development initiatives like this construction project in Singapore are more successful when investment incentives align with the values articulated by the overall development strategy. (Getty Images)

Incentives are not just about winning a deal or completing a transaction with an investor. Smart incentive use is always connected to a larger economic development strategy.

Economic strategy

Any project for which incentives are offered needs to be evaluated in the context of community economic goals and strategies. Many communities have an economic development strategy, though perhaps of varying quality, and making sure that an incentivized project aligns with the broad statements and values within that strategy is an important first step. Unfortunately, a surprising number of communities either do not have strategies in place or do not align their incentive programs to those strategies. Community discussions on incentive use focus on the deal, not the reason for the deal. My work around the country has revealed that the public, elected officials and even economic development board members do not see how incentives are connected to the broader economic development mission, seeing them entirely as necessary evils to enable business recruitment.

Program goals

Policymakers are increasingly ensuring that individual incentive programs have clear goals, although we have seen that guiding legislation can be frustratingly unclear, making both implementation and evaluation difficult. Clearly defining the purpose of an incentive program helps ensure it will be used as intended. Otherwise, it runs the risk of being offered to all comers regardless of their capacity to connect to community goals. Communities also often have specific objectives related to supporting target industries or developing individual sectors of the economy. Economic developers may be urged to support small businesses or firms meeting certain demographic criteria. Economic development organizations often work with regional or national organizations and may need to align efforts with their broader strategies. Sustainable development may be a priority. These are all additional strategic factors that should be considered when assessing the basic project benefits that an incentives investment might generate. Good economic development organizations know their communities well and should be able to relatively easily assess whether a proposed investment aligns with community values on these factors, singly or in combination.

Ellen Harpel bio photoAbout the Author: Ellen Harpel is President of Business Development Advisors (BDA) and Founder of Smart Incentives. She has over 17 years of experience in the economic development field, working with leaders at the local, state and national levels to increase business investment and job growth in their communities. Contact Ellen at eharpel@businessdevelopmentadvisors.com or ellen@smartincentives.org. You can also follow her on Twitter at @SmartIncentives.

5 Ways Cities Can Promote Afterschool and Summer Meal Programs

Providing meals for children through federal Afterschool and Summer Meal Programs is a win-win opportunity for cities. Cities benefit by bringing more federal funds into their neighborhoods, and can improve the health and well-being of low-income children by increasing their access to healthy meals and their participation in fun and safe activities during out-of-school time hours.

It is important for mayors and other city leaders to build strong partnerships with stakeholders, such as statewide anti-hunger groups, schools, food banks and other community organizations, to implement meal programs in ways that maximize quality and participation. These stakeholders can serve as important outreach partners that help city leaders connect with their residents to make sure they are aware of the resources available to them.

Here are five ways that city leaders can promote afterschool and summer meal programs in their communities.

1. Use the bully pulpit to raise awareness of child hunger and promote out-of-school time meal programs. Local elected officials can write op-eds for local newspapers, emphasize the need for afterschool and summer meal programs in public speeches or at events, and promote afterschool and summer meal programs on the city’s website and through newsletters and social media. Nashville2. Publicize out-of-school time meals through a targeted marketing strategy. An important component of any marketing strategy for out-of-school time meals is a kick-off event. These events can raise awareness about meal programs in a way that brings key stakeholders and families together. Mayors can use kick-off events to frame afterschool and summer meals as a top priority for the city before a large audience of community leaders. Cities can also take advantage of existing national resources such as the National Hunger Hotline (1-866-3HUNGRY) to make meal program site locations and operating hours easily accessible to families. In addition, cities can advertise information about meal sites on utility bills, via robo-calls, or through the city’s 311 information line or the United Way’s 211 information line. Philadelphia3. Sponsor Afterschool or Summer Meal Programs. City agencies such as parks and recreation or departments of housing are well-suited to be sponsors of afterschool and summer meal programs and to host meal sites at local facilities, e.g., recreation centers. Staff from a mayor’s office can also coordinate a working group or task force that focuses on the issue of child hunger and identifies strategies to reduce it, including initiatives to increase participation in out-of-school time meal programs. City staff relationships with key community partners, as well as knowledge of where young people congregate after school and during the summer, are integral to the success of these programs. Houston4. Partner with community organizations that serve afterschool and summer meals. Local nonprofits and other afterschool providers often act as sponsors to provide afterschool and summer meals as well as activities for young people before and/or after meals. Cities can leverage funding for meal programs in partnership with community-based organizations.Seattle5. Incorporate child nutrition goals into a broader citywide agenda. City leaders can work with staff responsible for broader citywide initiatives such as Let’s Move! Cities, Towns and Counties or other initiatives that focus on children and youth to expand the reach and scope of child nutrition programming. FontanaTo learn more, check out our new issue brief on afterschool and summer meals.

Jamie Nash bio photo About the Author: Jamie Nash is Senior Associate of Benefit Outreach in the National League of Cities’ Institute for Youth, Education, and Families. To learn more about how local government leaders can support out-of-school time meal programs, contact Jamie at nash@nlc.org.

Meet the Freshman: Rep. Brenda Lawrence

This is the first in series of closer looks at new members of Congress coming from city government office.

Brenda Lawrence bio photo

Congresswoman Brenda Lawrence.

Rep. Brenda Lawrence (D-Mich.-14) is no stranger to city concerns. A lifetime resident of the Detroit area, Rep. Lawrence spent 17 years prior to her election to Congress in city government, first as a city council member and then mayor of Southfield, a suburb of Detroit with over 72,000 residents.

Rep. Lawrence’s work in Southfield positioned her to be a champion for city residents. During her time as mayor, she led her city in partnership with NLC on a number of initiatives, including Let’s Move! Cities, Towns and Counties, the Cities United violence prevention initiative, and the Mayors’ Action Challenge for Children and Families. She has most recently served NLC as a member of the NLC University Board of Advisors. Rep. Lawrence has also previously worked with Mayors Against Illegal Guns as part of an effort to curb gun violence. She has the distinction of becoming the first female and first African-American mayor of Southfield, and the first African-American female Democratic Lieutenant Governor nominee in Michigan.

“I’ve been fortunate to have served as a mayor who has provided perspective to Congress like in the aftermath of the home mortgage foreclosure crisis,” said Representative Lawrence about her time spent in city government. “[I] have lobbied for and administered federal block grant dollars that are used to enhance and improve services at home. So while I’m a freshman member, I’m certainly not new to the federal government process. Equally important, I truly understand the needs of our nation’s cities.”

Representative Lawrence was appointed to serve as a “Senior Whip” for the House Democratic Caucus by Congressman Steny Hoyer of Maryland. She will serve on the influential House Oversight and Government Reform Committee, which has oversight responsibility for federal agency activity and regulations.

Learn more about Rep. Lawrence and the other freshman members of Congress using NLC’s interactive map tool.

Panettieri photoAbout the author: Angelina Panettieri is the Senior Associate for Grassroots Advocacy at the National League of Cities. She helps empower city leaders to engage directly with Congress on the issues most important to them.

Collaborative Government is Here to Stay

This is a guest post by Alan Mond.

collaborative government blog post photoHeavy equipment like the bulldozers pictured above could be shared more often between public agencies in the future. (Alex Banner)

Whether you know it or not, you are already affected by the sharing economy. In fact, you are likely a part of it. Car rentals, taxi rides, hotel accommodations and even the food we eat are all products of the sharing economy. Sharing economy companies like Uber, Airbnb and ZipCar have quickly become household names.

I believe that government is the next sector that is ready to play a role in the sharing economy.

Government is naturally collaborative. Cities, counties and towns don’t necessarily compete with each other – they just happen to be in different geographic jurisdictions, and they already share the very important goal of delivering valuable services to taxpaying citizens in the most efficient manner. The idea of government sharing resources existed long before the sharing economy ever became part of our cultural landscape. In the case of mutual aid agreements (contracts signed between municipalities for emergency situations), most units of governments join forces to support each other. The term collaborative government is a new way of referring to this growing trend we are seeing at the local, state and even federal levels.

Providers in the sharing economy are solving problems that typically aren’t addressed by the prevalent economic framework. For example, heavy duty equipment used by pubic works departments, such as excavators and street sweepers, is expensive to buy and costly to maintain. Geographic regions are composed of large and small municipalities with fleet utilization discrepancies. Large municipalities often have more equipment than they need. Smaller communities lack heavy-duty equipment and often resort to renting from expensive commercial rental shops or contractors.

The logical solution to these problems would be for a large city to loan equipment to a smaller city in order to reduce equipment expenses for both parties. In my work, I often ask city managers why this doesn’t happen more often, and I usually receive an all-too-common answer: liability. Liability seems to be the main reason city staff often avoid the otherwise sound practice of sharing resources. When I dug deeper, I discovered that “liability” was really a blanket term for two specific concerns: property damage to the machines involved, and liability in the case of operator injury. Because underutilized equipment is such an enormous problem, my business partners and I decided to attack the liability issue in order to remove the primary barrier to sharing.

In my recent blog post, “Five Tips to Write a Shared Services Agreement,” I outlined some of the general tips to writing a shared services agreement. After working with over twenty-five different local government attorneys, my company was able to create a workable intergovernmental agreement. On the property damage side of things, we established simple rules of the game. For example, we decided that, if a piece of equipment was incidentally damaged, the renter or borrower was responsible. Regarding the liability issue, we solved the problem by requiring that all participating agencies show proof of insurance covering liability, property of others, and workers’ compensation.

This was a great victory. Risk managers, city attorneys, city managers and even finance directors were happy with the resulting agreement. However, not all Public Works Directors were convinced. Some of the common questions asked were: “What if I need my excavator exactly when a neighboring community had borrowed it?” and “What if I have a water main break and someone is using my Vactor truck?”.

As I mentioned before, collaborative government is not a new concept, and we were able to address all of these questions. We asked for advice from public works directors who were already sharing resources. Some of these folks had been sharing equipment within the states of Oregon and Minnesota, for example; some had been sharing for more than 20 years on a smaller scale. They told us the answers were simple.

Developing trust and relationships as a first step was highly recommended. Equally as important was the idea that owners should have the right to retrieve their equipment at any time should emergencies arise. This made a lot of sense – if the city that rented the equipment knew that it might be needed in an emergency, then they would understandably return the machine. Most of the equipment that is made available by companies such as ours typically comes with an operator, so the equipment often returns to the owner’s yard at the end of the day.

In my experience, many barriers to operating as part of the sharing economy can be removed through the development and establishment of best practices, enabling federal, state and local governments and their agencies to collaborate and share resources more effectively.

Alan Mond bio photo croppedAbout the Author: Alan Mond is the CEO of MuniRent, a web-based platform that makes it easy for local governments to lease heavy duty equipment to other local governments. He will be hosting a webinar, “The Path to Efficient Government Fleets”, on January 29 at 10am. You can also connect with him on LinkedIn or follow him on Twitter at @mondalan.

Next Monday, Be a Part of the Movement with the #CitiesServe Hashtag

This is a guest post by Mari Andrew.

Candlelight Vigil Marks 44th Anniversary Of Martin Luther King Jr.'s AssassinationThe Martin Luther King, Jr. memorial in Washington, D.C. (Getty Images)

On January 19, cities across the nation will celebrate the legacy of Dr. Martin Luther King, Jr. by promoting service and civic engagement. Dr. King’s courageous and tireless work toward his vision of equality inspired legislators to transform the King Holiday into a day of volunteer service – a day when people from diverse backgrounds could join forces to make their communities better places to live.

The Corporation for National & Community Service conservatively estimated that, on last year’s Day of Service, 360,000 people received emergency food provisions, 38,000 veterans and military members received assistance, and 58,000 youth received tutoring. Citizens in all 50 states participated in projects that refurbished schools, supported job-seekers, and collected clothing. This year, the projects are numerous and quickly growing.

In West Hollywood, California, volunteers of all ages will beautify their local elementary school by painting a mural. Residents of Beverly, Massachusetts have made a commitment to read with preschool children during the entire week. A Philadelphia charter school will be taking donations for their women’s shelter, a community in Fort Lauderdale will revitalize the home of an elderly woman, a nature-loving group in San Jose will make improvements to park trails, and residents of the Twin Cities will work together to sort donations that support services for people with disabilities.

Ready to join the movement? The National League of Cities wants to know what your city has planned for this year’s MLK Day of Service. We invite you to share your volunteer plans for the holiday on Twitter or Facebook using the hashtag #CitiesServe. We’ll be posting pictures and updates from your community’s projects next week, and we look forward to seeing cities in action!

Mari Andrew bio photoAbout the author: Mari Andrew is the Senior Associate of Marketing at the National League of Cities. She works hard to help city leaders build better communities, and believes the world would be a better place if people wore more colorful clothing.

Five Steps to Get to Know Your New Legislator

capitoldomeOn Feb. 6, 2015, new senators and representatives will be officially sworn in to the 114th Congress. (Getty Images)

Do you remember your first day of freshman orientation? Did you feel lost on the large campus, worried about making new connections with your classmates, or excited about new opportunities?

This week, as the 114th Congress convenes, 69 new senators and representatives will have that same experience. These new members of Congress start from scratch – they must hire staff, establish district offices, sift through the mountain of mail that began piling up Nov. 5, and navigate the committee and caucus pecking order of Capitol Hill – all while still finding their way around the campus!

That’s why now is the time to establish a strong working relationship with your new senator or representative and his or her staff. Over the coming months and years, many other people and interests will compete for your legislator’s time, attention, and sympathy – and the sooner you connect with your legislator, the better.

Here are five ways that you can make sure to connect with your freshman and make a positive impression from the start:

  1. Make the time to meet in-person. Members of Congress and their senior staff consistently say that the most effective advocacy happens in a face-to-face meeting. If you attend the National League of Cities’ Congressional City Conference in March, you’ll have time to meet with your senators and with House staff (the House will not be in session that week). You can also choose a time during a district work period to meet with your legislator closer to home. Either way, make the time to meet in person, not just over the phone.
  2. Do your homework. During the campaign, and in prior public office, your member of Congress probably shared their opinions on a wide variety of issues. In addition to learning about your legislator’s personal, educational, and professional background, use public statements, campaign promises, and previous actions to understand his or her likely positions on your city’s federal priorities.
  3. Be an asset, not a problem. All members of Congress are busy, but new members with a skeleton staff and many logistical decisions to make are particularly busy. Offer yourself to the office as a resource and information channel for your community. Make your advocacy requests clear and easy to understand. Your new legislator and his or her staff will be more likely to call upon you for your input – and to take your requests and concerns seriously – if you establish yourself as reliable, trustworthy, and easy to work with. Even if your new legislator is from the opposing party, make an effort to build a strong working relationship from the start.
  4. Don’t neglect staff. In the first 90 days after taking office, new members of Congress scramble to fully staff their Washington and district offices. The first staff hired are likely your legislator’s most trusted advisors. As you get to know your new freshman, be sure to get to know his or her chief of staff, legislative director, and district chief of staff. These staff members’ opinions and perceptions carry a lot of weight with their bosses.
  5. Follow up. Advocacy is a marathon, not a sprint. After you have made your initial outreach, follow up by keeping in regular touch, inviting your legislator to visit important sites in the community, thanking them when they meet with you or provide assistance, sending them and their staff regular updates on the progress of your city’s federal priorities, and connecting on social media.

Panettieri photoAbout the author: Angelina Panettieri is the Senior Associate for Grassroots Advocacy at the National League of Cities. She helps empower city leaders to engage directly with Congress on the issues most important to them.

NLC Joins Amicus Brief Contemplating Fourth Amendment Challenges

hotel registryAt issue in this particular amicus brief is the question of whether or not police should be allowed to inspect hotel registries without first obtaining a warrant. (Getty Images)

The State and Local Legal Center’s (SLLC) Supreme Court amicus brief in Los Angeles v. Patel, which the National League of Cities joined, makes a number of traditional amicus arguments: it asks the Court to not rule that state and local governments can be sued for yet another thing; it points out that, if a ruling against the city is established in this case, many other cities and states will be affected; and it states that a ruling against the city will likely impact many similar but unrelated statutes and ordinance.

Los Angeles v. Patel concerns a Los Angeles city ordinance which requires hotel and motel operators to keep specific information about their guests and allows police to inspect guest registries without warrants. Motel operators claim this ordinance is facially invalid under the Fourth Amendment. The Ninth Circuit Court agreed, stating that the ordinance fails to expressly provide for pre-compliance judicial review before police can inspect the registry.

The State and Local Legal Center (SLLC) filed a Supreme Court amicus brief in Los Angeles v. Patel arguing that Fourth Amendment facial challenges should be disfavored, and that if the ordinance in this case is unconstitutional, similar hotel registry ordinances across the country—and laws and ordinances requiring record keeping and inspection of other businesses—may be unconstitutional as well.

A facial challenge to the ordinance in this case requires a court to determine whether all searches that might be conducted pursuant to the ordinance are unconstitutional (as opposed to an as-applied challenge where the court would decide whether a particular search under the ordinance violates the Fourth Amendment).

The SLLC argues that Fourth Amendment facial challenges don’t make sense, because whether a search violates the Fourth Amendment depends on whether it is reasonable, which is necessarily a fact-based determination. Under some set of facts, almost any search would be reasonable. For example, depending on the facts, warrantless searches of hotel registries could be reasonable under the “community care-taking exception,” because the registry is “in plain view,” or because of “exigent circumstances.”

The SLLC’s brief notes that hotel registry ordinances are very common and all may be invalidated if the Court concludes Los Angeles’s ordinance violates the Fourth Amendment. Los Angeles cites two state laws (Maine, Massachusetts) and over 100 hotel registry ordinances from 28 states. The SLLC’s brief points out that at least 70 California cities have such ordinances, as do cities in 15 additional states.  Finally, in many states mobile home parks, second-hand dealers like pawnshops and junkyards, scrap metal dealers, and massage parlors are subject to registration and inspection laws and ordinances. These measures may be called into question if Los Angeles’s hotel registry ordinance is struck down.

Tom McCarthyWilliam Consovoy, and Michael Connolly of Consovoy McCarthy and the George Mason University School of Law Supreme Court Clinic wrote the SLLC’s brief, which was joined by the National League of Cities, the National Association of Counties, the International City/County Management Association, the United States Conference of Mayors, and the International Municipal Lawyers Association.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

Cities Can Help Close the Meal Gap on Weekends and Holidays

Holiday meals - blogCity agencies can serve meals and reach more children by utilizing existing resources. (Getty Images)

During the weekends and holidays, many of us look forward to spending quality time with our family and friends, and much of that time is spent around the dinner table. It is important to remember, though, that many children and families will go hungry this holiday season – just as many children do on the weekends when they don’t have access to federal Afterschool and Summer Meal Programs. For many families across the country, the Afterschool and Summer Meal Programs provide healthy meals that parents and caretakers rely on to help ensure their kids are fed during out-of-school time hours. Providing meals on weekends and holidays is a great opportunity for these programs to reach even more kids. Local leaders and city agencies that sponsor meal programs can help fill a critical need by building off of their existing programs to serve weekend and holiday meals. Under the federal Child and Adult Care Food Program (CACFP), public agencies such as public housing authorities and parks and recreation departments, as well as schools, nonprofits (e.g., Boys and Girls Clubs, YMCAs) and faith-based organizations are eligible to serve meals and snacks on weekends and holidays. Many meal program sponsors find it challenging to fully staff their meal sites on weekends and holidays, but they can work with vendors and other partnering organizations to develop a plan to gradually phase in weekend and holiday meals based on existing enrichment programs. A gradual, phased approach could provide sponsors with needed flexibility to respond to staffing and funding needs. Below are a few strategies for cities that are thinking about serving meals on weekends and holidays:

  • Utilize existing staff and staff from volunteer programs: In Minneapolis, the Nite Owlz late night teen program is held primarily in inner city parks on Friday and Saturday nights. They are currently expanding their meal service program, and the involvement of the Minneapolis Park and Recreation Board would allow this program to extend healthy food choices to over 350 teens each weekend night throughout the year.
  • Develop creative partnerships between city agencies and community partners: In Washington, D.C., a strong partnership between the Department of Parks and Recreation (DPR), and Metroball, a local nonprofit summer basketball league, has helped to reach over 300 teenagers on Saturdays during the summer. DPR acts as the meal program sponsor and serves the meals at the basketball league sites, and the local police department helps spread the word about the program. Summer meals sites are open in D.C. on Saturdays at select Department of Parks and Recreation Centers, D.C. Public Library locations and community-based organizations.
  • Start by serving one meal on Saturdays during the school year. There are approximately 40 Saturdays during the school year, and these days provide a great opportunity for sponsors that implement the Afterschool Meal Program during the school year to serve meals one additional day per week.

For more information on serving weekend and holiday meals, check out the Food Research and Action Center’s resources, including this Afterschool Meal Matters recorded call.

Jamie Nash bio photo
About the Author:
Jamie Nash is Senior Associate of Benefit Outreach in the National League of Cities’ Institute for Youth, Education, and Families. To learn more about how local government leaders can support out-of-school time meal programs, contact Jamie at nash@nlc.org.

Heien v. North Carolina—A Win, But Not a Free Pass

traffic stop 2If you were arrested for a crime as the result of a traffic stop, the Supreme Court has ruled that your subsequent court decision can be upheld even if a police offer made a reasonable mistake in pulling you over. (Getty Images)

In Heien v. North Carolina, the Supreme Court held that a reasonable mistake of law can provide reasonable suspicion to uphold a traffic stop under the Fourth Amendment.

The ruling stems from an incident in which a police officer pulled over a car that had only one working brake light because he believed that North Carolina law required both brake lights to work. The North Carolina Court of Appeals, interpreting a statute over a half a century old, concluded only one working brake light is required.

When the vehicle’s occupants behaved suspiciously, the officer asked to search the car. The occupants consented, and the officer found cocaine. The owner of the car subsequently argued that the stop violated the Fourth Amendment because driving with one working brake light doesn’t violate North Carolina law.

The Supreme Court has long held that reasonable mistakes of fact do not undermine Fourth Amendment searches and seizures. Justice Roberts reasoned in this 8-1 decision: “Whether the facts turn out to be not what was thought, or the law turns out to be not what was thought, the result is the same: the facts are outside the scope of the law. There is no reason, under the text of the Fourth Amendment or our precedents, why this same result should be acceptable when reached by way of a reasonable mistake of fact, but not when reached by way of a similarly reasonable mistake of law.”

The Court emphasized that mistakes of law (and fact) must be objectively reasonable, and that this inquiry is not as forgiving to the officers as the qualified immunity inquiry (qualified immunity protects “all but the plainly incompetent or those who knowingly violate the law”). The Court concluded that the officer’s mistaken understanding of North Carolina law in this case was objectively reasonable. As Justice Kagan pointed out in her concurring opinion, the officer’s mistaken interpretation “had much to recommend it.”

Justice Sotomayor’s dissenting opinion predicts that lower courts will have difficulty determining which mistakes of law are objectively reasonable. If the ruling is indeed followed by lower courts, Justice Kagan’s opinion, which was joined by Justice Ginsburg, should assuage some of Justice Sotomayor’s concern as well as indicate that this decision isn’t a free pass for law enforcement to fail to learn the law. Justice Kagan opines that relying on incorrect memos or training programs isn’t objectively reasonable, and that only mistakes made based on “very hard questions of statutory interpretation” should be considered as such.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

Supreme Court Accepts Affordable Care Act Case

Last month, the Supreme Court’s docket went from boring to big with the grant of just one case: King v. Burwell. The issue in this case is whether tax credits for low and middle income health insurance purchasers are available under the Affordable Care Act (ACA) if insurance is purchased on a federal exchange rather than a state exchange. Only 16 states and the District of Columbia have established exchanges.

SC-Blog(Getty Images)

The ACA makes tax credits available to those who buy health insurance on exchanges “established by the State.” The Internal Revenue Service (IRS) interpreted that language to include insurance purchased on federal exchanges as well.

The Fourth Circuit upheld the IRS’s interpretation of King v. Burwell, concluding that the phrase “established by the State” is ambiguous when read in combination with other sections of the ACA, and could include federal exchanges. The “board policy goals of the Act,” persuaded the court that the IRS’s interpretation was permissible.

The implications of the Supreme Court ruling that health insurance purchased on federal exchanges is not eligible for subsidies is huge. Many people who want to buy insurance on the exchange would no longer be able to afford it without the subsidy. And depending on their income, many who don’t want to buy insurance would no longer be subject to the individual mandate that penalizes people for not buying insurance. Similarly, large employers that don’t offer health insurance to fulltime employees would no longer have to pay a penalty.

More significantly, the Fourth Circuit (and many others) predict the ACA would “crumble” if tax credits are unavailable on federal exchanges. The ACA bars insurers from denying coverage or charging higher premiums based on a person’s health. The tax credit combined with the individual mandate was intended to create “an influx of enrollees with below-average spending for health care,” which would counteract adverse selection, where individuals disproportionately likely to use health care drive up the cost. Such an influx is unlikely without the subsidy.

The Supreme Court generally hears cases when there is a circuit split, meaning two federal courts of appeals have decided the same issue differently. Many were surprised when the Court agreed to hear this case given there is currently no circuit split, especially considering that last month the Court refused to hear a series of cases challenging the constitutionality of same-sex marriage bans. However, the Court also accepts cases involving “important question[s] of federal law,” which this case seems to raise.

On the same day in July, a three-judge D.C. Circuit panel ruled opposite to the Fourth Circuit Court on this issue. The entire D.C. Circuit was going to re-hear the case, but it has been asked not to rule prior to Supreme Court resolution of King v. Burwell.

Wondering how the Supreme Court may rule? SCOTUSblog offers an excellent symposium on this topic.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.