Monthly Archives: July 2014

Weekly Legislative Report July 18, 2014

J.R. Reskovac
Sarah Strup

 

Appropriations

Defense

The Senate Appropriations Committee on Thursday approved by voice vote the FY15 defense spending bill, subject to amendments.  The markup is ongoing.

The measure would cut President Obama’s $5 billion request for a new Counterterrorism Partnership Fund to train and equip foreign forces in half.  Military and civilian employees of the Defense Department would get one percent raises next year and a Pentagon plan to slow the rate of growth in housing allowances would be approved.

The bill would allocate $549.3 billion for defense and intelligence programs.  It would provide $489.6 billion for the Defense Department’s base budget and $58.3 billion for Defense as part of a $59.7 billion Overseas Contingency Operations account.  The bill focused on the following priorities: supporting the troops, veterans and their families; investing in innovation to maintain our technological edge; restoring readiness and supporting high priority programs; and instituting reforms.

For more information on this bill, click here.

Financial Services

The House on Wednesday voted 228-195 to pass a $20.2 billion Financial Services appropriations bill (H.R. 5016), making it the seventh FY15 spending measure to pass in the lower chamber.

The $21.3 billion in funding is $566 million below the FY14 enacted level and $2.3 billion below the President’s request for these programs.  The legislation prioritizes programs critical to enforcing laws, maintaining an effective judiciary system, and helping small businesses, while targeting lower-priority or poor-performing programs.  The bill would make steep cuts in funding for the IRS, receiving $9.8 billion under the measure, a 13 percent cut to current spending levels, and several riders would seek to limit the reach of the agency following alleged political targeting at the IRS.

For more details on this measure, click here.

Interior/Environment

The House Appropriations Committee voted 29-19 on Tuesday to approve its FY15 Interior-Environment spending bill, which blocks the administration from implementing a new Clean Water Act rule or a listing of grouse as endangered or threatened.  The committee also rejected attempts to designate some wildfire funding as emergency spending.

The measure would provide $4.1 billion both to prevent and fight wildfires, including $470 million for the Forest Service to cover the expected shortfall in suppression funding this year.

The proposed water rule that would be blocked by the bill would define what waters are regulated under the pollution law (P.L. 95-217).  The Energy-Water bill contains a similar provision.  The issue will ultimately have to be settled by House and Senate leaders.

For more information regarding this bill, click here.

Taxes

The House on Tuesday passed the Permanent Internet Tax Freedom Act, a bill that would permanently ban the government from taxing broadband Internet access.  The legislation (H.R. 3086) was passed by voice vote, and would also eliminate an exemption that currently allows seven states tax certain Internet services.  The House Judiciary Committee approved the legislation 30-4 last month.

H.R. 3086 is an uncontroversial, bi-partisan bill, but its passage in the House has lowered the likelihood that the chamber will pass legislation that allows states to tax out-of-state online sales transactions.  The Senate passed an Internet sales tax bill, known as the Marketplace Fairness Act (S. 743), in April of last year, and the House has so far failed to respond.

Senate Majority Leader Reid (D-NV) is in support of attaching the online sales tax measure to a 10-year extension of the Internet Tax Freedom Act (ITFA).  However, the author of ITFA, Finance Chairman Ron Wyden (D-OR), is opposed to the Marketplace Fairness Act because his home state of Oregon does not charge a sales tax, therefore believes it places an undue burden on states such as his.

The Marketplace Fairness Act gives states the authority to collect sales tax from online purchase even if the retailer does not have a physical presence in the state.  It is very unlikely that the House would pass the Senate-passed bill without amending it first (perhaps including carve-outs for small businesses).  The states wouldn’t have the authority to force the online retailers until the first day of the calendar quarter that is 90 days after enactment of the legislation, so it would be a 2015 event at the earliest.

Timing of this paired Internet legislation package is fairly fluid, though it does benefit from the action-forcing event of the ITFA’s expiration on November 1.  IFTA is the best vehicle for the online sales tax measure, though if it fails to catch a ride by November 1 it could be attached to the tax extenders package in the Lame Duck after the midterm elections.

Transportation

On Tuesday the House passed a nearly $11 billion patch (H.R. 5021) to keep the Highway Trust Fund solvent until next May.  Members voted 367-55 to pass the measure signifying overwhelming support for transport programs that create jobs in numerous members’ districts.

The bill uses changes to pension rules known as pension smoothing, an extension of customs duties and a $1 billion transfer from a fund intended to clean up underground storage tank spills to pay for the extension.

The Senate will take up the House-passed bill next week and will also likely vote on two Democratic amendments (and possibly two Republican amendments offered by Sen. Mike Lee from Utah).  One of the democratic amendments is authored by Finance Chairman Ron Wyden (D-OR) and would replace the House’s offsets with a similar package of offsets that rely less on pension smoothing, and more on improving compliance of tax laws.

Both chambers are committed to passing a fix for the trust fund before the August recess.

Washington Outlook

Next week in Congress, the Senate will take up a House-passed $10.8 billion measure that would temporarily replenish the fund that pays the federal share of road and highway repairs.  Senators will likely vote on the House highway-spending bill as well as on separate amendments.

House and Senate leaders are also attempting to work together to address the flood of unaccompanied children crossing the border.  President Obama called on congressional leaders Wednesday night to quickly pass an emergency measure that would ease the border crisis, where tens of thousands of unaccompanied minors have created a logjam.

In the Senate, the Appropriations Committee has begun work on a supplemental bill, according to a Democratic aide.  The funding will be roughly at the $3.7 billion level that President Barack Obama has asked for, or slightly less and it’s unclear whether it will include policy changes.

House leaders, meanwhile, are debating whether to move forward on legislation that would provide significantly less funding than Obama is seeking and attaching policy language that would change a 2008 anti-trafficking law to make it easier to return children to their home countries if they’re not from Mexico or Canada.  The White House has expressed openness to such a move but some Democrats are resistant.

Whether or not Congress can act on the border crisis before the August recess remains uncertain.

Weekly Legislative Report July 11, 2014

J.R. Reskovac
Sarah Strup

Appropriations

Energy/Water

Thursday afternoon the House passed the FY15 Energy-Water Appropriations spending bill that will boost funding for natural gas, oil, and coal.  The bill is for $34 billion and passed 243-170.  The funding will be divided between several programs, mainly the Energy Department and the Army Corps of Engineers.  The White House has threatened to veto the bill because of the funding levels for renewable fossil research as well as environmental policy riders and restriction on nonproliferation cooperation with Russia.

For more information on this bill, click here.

Interior/Environment

Wednesday, the House Interior-Environment Appropriations Subcommittee approved by voice vote a $30.2 billion FY15 draft bill that would cut funding by 50 percent for the EPA’s budget and congressional affairs offices, as well as the office of Administrator Gina McCarthy.  The move is in retaliation to the agency’s unresponsiveness to the committee’s inquiries about its spending.  The draft bill would cut overall funding to the EPA by 9 percent compared to FY14 levels, down to $7.5 billion.  The agency’s staffing levels would be held to 15,000, the lowest level since 1989.

The full Appropriations Committee will likely mark up the bill next week.  For more information on the draft bill, click here.

Taxes

Today House Republicans voted 258-160 to advance a permanent extension of a generous tax break for asset purchases by businesses.  The $287 billion proposal (H.R. 4718) would extend indefinitely without any offsets the allowance for 50 percent bonus depreciation of business purchases of machinery, and it includes a $25 billion provision that would permanently allow businesses to claim accelerated Alternative Minimum Tax credits in lieu of bonus depreciation.

On the Senate side, Democrats are hoping to promote a post-election deal on a Senate proposal (S. 2260) by Finance Chairman Ron Wyden (D-OR) that includes a two-year extension of bonus depreciation for about $3 billion and similar extensions of other tax breaks.

Transportation

The House Ways and Means Committee and Senate Finance Committee approved separate legislation Thursday to transfer almost $11 billion to the dwindling Highway Trust Fund, moving to avoid declining funding that could hinder major infrastructure construction projects this summer.  Both committees reported their bills by voice vote.

The House legislation (H.R. 5021) would rely on changes to pension programs known as “pension smoothing,” an extension of customs fees and a $1 billion transfer from a separate trust fund intended to clean up underground oil spills.  The Senate bill relies on the same offsets, but to a lesser degree, adding tax compliance provisions such as one requiring more information on tax returns related to mortgage interest and one requiring more due diligence for tax preparers who handle child tax credits.

The bills now move to the House and Senate floors, where passage could be difficult.  Some Republicans in both chambers have criticized the measures for their reliance on 10 years of cuts and revenues to pay for less than a year of transportation programs.  Some Democrats are unhappy that the bills would extend the funding until the end of May 2015, when Democrats are no longer guaranteed to be in control of the Senate.

Meanwhile, states are beginning to independently come up with their own plans to address the Highway Trust Fund issue.  Next week voters in Missouri will vote on a proposed Constitutional amendment that would raise the statewide sales tax by ¾ a cent for the next ten years.  Kansas City will also vote next week to create a transit district line for a streetcar line.

Washington Outlook

While the House continued work on FY15 spending bills this week, Senate appropriators seem increasingly resigned to having to move a Continuing Resolution this fall before the end of the fiscal year.

This week, Senate Appropriations Chairwoman Barbara Mikulski (D-MD) acknowledged for the first time that she is leaning toward doing an omnibus spending package for FY15 appropriations bills in a lame duck session following the election.  Mikulski says that she would prefer individual spending bills, and is still looking for a way forward, but conceded time is running short since the Senate has yet to pass any FY15 spending bills and time is now being taken up by the new supplemental spending request for child migrants and wildfires sent to Congress by the President this week.  In addition, Majority Leader Harry Reid this week omitted FY15 spending bills from his agenda for the work period, after having promised to set aside two weeks in July for their consideration on the Senate floor. 

The Senate Appropriations Committee will mark up their FY15 Defense Appropriations bill next Thursday, after it is considered in subcommittee on Tuesday.  

The House to date has passed six FY15 spending bills.  Next week they are due to take up the Financial Services bill under an open rule, which could draw partisan amendments on bans on abortion coverage in certain federal health exchanges and marijuana decriminalization in the District of Columbia.  The full House Appropriations Committee on Tuesday will attempt to move its FY15 Interior-Environment Appropriations bill, which stalled in committee last year in a fight over EPA funding and environmental riders, however, it appears that the panel may not take up the FY15 Labor HHS bill in the near future.  

House Labor HHS Subcommittee Chairman Rep. Jack Kingston (R-GA) this week said that he is “not certain” that his bill will get a subcommittee markup in the weeks ahead.  The Labor HHS bill is the only FY15 bill that the House Appropriations Committee has yet to release.  Kingston has been tied up in a tight race for the Republican nomination for Georgia’s open Senate seat with a runoff set for July 22.