relationship with Indian tribes. 3. Treatment of Indian tribes as States with respect to bond issuance (a) In general Subsection (c) of section 7871 of the Internal Revenue Code of 1986 (relating to Indian tribal governments treated as States for certain purposes) is amended to read as follows: (c) Special rules for tax-Exempt bonds In applying section 146 to bonds issued by Indian tribal governments (or subdivisions thereof) the Secretary of the Treasury shall annually— (1) establish a national bond volume cap based on the greater of— (A) the State population formula approach in section 146(d)(1)(A) (using national tribal population estimates supplied annually by the Department of the Interior in consultation with the Census Bureau), and (B) the minimum State ceiling amount in section 146(d)(1)(B) (as adjusted in accordance with the cost of living provision in section 146(d)(2)), and (2) allocate such national bond volume cap among all Indian tribal governments seeking such an allocation in a particular year under regulations prescribed by the Secretary. . (b) Repeal of essential governmental function requirements Section 7871 of such Code is further amended by striking subsections (b) and (e). (c) Effective date (1) Subsection (a) The amendment made by subsection (a) shall apply to obligations issued in calendar years beginning after the date of the enactment of this Act. (2) Subsection (b) The repeals made by subsection (b) shall apply to transactions after, and obligations issued in calendar years beginning after, the date of the enactment of this Act. 4. Treatment of pension and employee benefit plans maintained by tribal governments (a) Amendments to the Internal Revenue Code of 1986 (1) Qualified public safety employee Section 72(t)(10)(B) of the Internal Revenue Code of 1986 (defining qualified public safety employee) is amended by— (A) striking or political subdivision of a State and inserting , political subdivision of a State, or Indian tribe