SEC. 2. FINDINGS. 
The Congress finds the following: 
(1) Pursuant to clauses 1 and 3 of section 8 of 
article I of the Constitution of the United States, 
the Congress has the authority to condition the con-
tinuation of certain specified Federal tax benefits 
upon State or local government employee pension 
benefit plans provision of meaningful disclosure 
under section 4980J of the Internal Revenue Code 
of 1986, as added by this Act. 
(2) State or local government employee pension 
benefit plans have promised pension benefits to ap-
proximately 20 million Americans who are active em-
ployees of these entities. An additional 7 million re-
tirees and their dependents currently receive benefits 
from State or local government employee pension 
benefit plans. The interests of participants in many 
of such plans are in the nature of property rights 
under State law. 
(3) State or local government employee pension 
benefit plans are substantially facilitated by the fa-
vorable tax treatment of participants and bene-
ficiaries, investment earnings, and employee con-
tributions with respect to such plans provided by the 
Federal Government under the Internal Revenue 
Code of 1986. 
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(4) The investment of State or local govern-
ment employee pension benefit plan assets, the dis-
tribution of benefits under such plans, and other re-
lated financial activities are facilitated through the 
use of instrumentalities of, and substantially affect, 
interstate commerce. These activities, which are 
interstate in nature and have a substantial impact 
on the national economy, affect capital formation, 
regional growth and decline, the national markets 
for insurance, and the markets for securities and the 
trading of securities of State and local governments. 
(5) The financial status of State or local gov-
ernment employee pension benefit plans also has a 
direct impact on the national markets for insurance 
and trading of securities of State and local govern-
ments. 
(6) State or local government employee pension 
benefit plans additionally have a substantial impact 
on interstate commerce as a consequence of the 
interstate movement of participants. 
(7) State or local government employee pension 
benefit plans are becoming a large financial burden 
on certain State and local governments and have al-
ready resulted in tax increases and the reduction of 
services. 
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(8) In fact, a recent study published in the 
Journal of Economic Perspectives found that the 
present value of the already-promised pension liabil-
ities of the 50 States amount to $5.17 trillion and 
that these pension plans are unfunded by $3.23 tril-
lion. Another study determined that the total un-
funded liability for all municipal plans in the United 
States is $574 billion. 
(9) Some economists and observers have stated 
that the extent to which State or local government 
employee pension benefit plans are underfunded is 
obscured by governmental accounting rules and 
practices, particularly as they relate to the valuation 
of plan assets and liabilities. This results in a 
misstatement of the value of plan assets and an un-
derstatement of plan liabilities, a situation that 
poses a significant threat to the soundness of State 
and local budgets. 
(10) There currently is a lack of meaningful 
disclosure regarding the value of State or local gov-
ernment employee pension benefit plan assets and li-
abilities. This lack of meaningful disclosure poses a 
direct and serious threat to the financial stability of 
such plans and their sponsoring governments, im-
pairs the ability of State and local government tax-
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payers and officials to understand the financial obli-
gations of their government, and reduces the likeli-
hood that State and local government processes will 
be effective in assuring the prudent management of 
their plans. The status quo also constitutes a serious 
threat to the future economic health of the Nation 
and places an undue burden upon State and local 
government taxpayers, who will be called upon to 
fully fund existing, and future, pension promises. 
(11) State or local government employee pen-
sion benefit plans are affected with a national public 
interest and meaningful disclosure of the value of 
their assets and liabilities is necessary and desirable 
in order to adequately protect plan participants and 
their beneficiaries and the general public. Meaning-
ful disclosure would also further efforts to provide 
for the general welfare and the free flow of com-
merce. 
SEC. 3. REPORTING OF INFORMATION WITH RESPECT TO 
STATE OR LOCAL GOVERNMENT EMPLOYEE 
PENSION BENEFIT PLANS TREATED AS A TAX 
EXEMPTION, ETC., REQUIREMENT FOR STATE 
AND LOCAL BONDS. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter B of chapter 1 of the Internal Revenue Code of 
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1986 (relating to requirements applicable to all State and 
local bonds) is amended by adding at the end the following 
new section: 
‘‘SEC. 149A. REPORTING WITH RESPECT TO STATE OR 
LOCAL GOVERNMENT EMPLOYEE PENSION 
BENEFIT PLANS. 
‘‘(a) IN GENERAL.—In the case of a failure to satisfy 
any requirement of subsection (a) or (b) of section 4980J 
(relating to failure of State or local government employee 
pension benefit plans to meet reporting requirements) with 
respect to any plan maintained with respect to employees 
of one or more States or political subdivisions of one or 
more States, no specified Federal tax benefit shall be al-
lowed or made with respect to any specified bond issued 
by any such State or political subdivision (or by any bond-
ing authority acting on behalf, or for the benefit, of such 
State or political subdivision) during the noncompliance 
period. 
‘‘(b) NONCOMPLIANCE PERIOD.—For purposes of 
this section, the term ‘noncompliance period’ means, with 
respect to any State or political subdivision in connection 
with any failure, the period beginning on the date that 
the Secretary notifies such State or political subdivision 
of such failure and ending on the date that such failure 
is cured (as determined by the Secretary). 
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‘‘(c) SPECIFIED BOND.—For purposes of this section, 
the term ‘specified bond’ means— 
‘‘(1) any State or local bond within the meaning 
of section 103, 
‘‘(2) any qualified tax credit bond within the 
meaning of section 54A, and 
‘‘(3) any build America bond within the mean-
ing of section 54AA. 
‘‘(d) SPECIFIED FEDERAL TAX BENEFIT.—For pur-
poses of this section, the term ‘specified Federal tax ben-
efit’ means— 
‘‘(1) any exemption from gross income allowed 
under section 103 (relating to interest on State and 
local bonds), 
‘‘(2) any credit allowed under section 54A (re-
lating to credit to holders of qualified tax credit 
bonds), 
‘‘(3) any credit allowed under section 54AA (re-
lating to build America bonds), and 
‘‘(4) any credit or payment allowed or made 
under section 6431 (relating to credit for qualified 
bonds allowed to issuer).’’. 
(b) REPORTING REQUIREMENTS.—Chapter 43 of 
such Code is amended by adding at the end the following 
new section: 
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