This Week on the Hill
The House and Senate are both in recess, returning next week.
House Approves Tax Bill
On Thursday the House voted 227-205 to approve H.R. 1, the Tax Cuts and Jobs Act; no Democrats voted for the bill and 13 Republicans voted against it. The House bill does not repeal the Affordable Care Act’s individual mandate and maintains the deduction for state and local property taxes up to $10,000; the bill also repeals the tax exemption for private activity bonds and eliminates advance refunding bonds. A section-by-section summary of the bill can be found here and the revenue score can be found here. Significant differences exist between the House and Senate tax plans; once a bill has been approved by the full Senate, a conference committee will be needed to reconcile differences before sending a final agreement to the President.
Senate Finance Committee Advances Tax Proposal
Also on Thursday, the Senate Finance Committee approved the chamber’s tax proposal on a party-line vote of 14-12. The proposal includes temporary tax cuts for individuals, a permanent reduction of the corporate tax rate, and a repeal of the Affordable Care Act’s individual mandate. The Senate’s plan also fully eliminates the state and local tax deduction and advance refunding bonds, but maintains the tax-exempt status of private activity bonds. The temporary nature of the individual tax rate cuts, which expire after 2025, were necessary to comply with a Senate reconciliation rule that requires any bill to not increase the deficit after 10 years. A description of the modified proposal approved by the committee can be found here and the revenue score can be found here. An updated analysis by the Congressional Budget Office on the effects of repealing the individual health care mandate can be found here. The proposal will be converted to legislative text, which is then expected to be considered on the Senate floor after the Thanksgiving break, and under reconciliation requires only 51 votes for passage.
Fiscal Year 2018 Budget Update
Funding for the federal government expires December 8, leaving two weeks for Congress to pass a new bill after returning from the Thanksgiving break. According to media reports, both parties want to increase the spending caps imposed by the Budget Control Act for fiscal year 2018, but face disagreement over topline funding levels for defense versus nondefense discretionary programs. Senate Appropriations Chairman Thad Cochran (R-MS) announced last week the committee would release the chairman’s mark of the four bills not yet marked up by the committee to help expedite completion of the appropriations bills. A status of appropriations bills in the House and Senate can be found here. Due to the work remaining on the tax bills, another continuing resolution may be needed to keep the government funded after December 8.
CMS Releases CHIP Bulletin, Sends Additional Funds to States
The Centers for Medicare and Medicaid Services (CMS) recently released an informational bulletin that provides programmatic and financial information for states about operating their Children’s Health Insurance Programs (CHIP) with a federal funding shortfall. Under current law, there are no appropriations for providing FY 2018 CHIP allotments to states and there is limited funding from previous fiscal years available to fund a portion of CHIP expenditures in FY 2018. The bulletin describes state options for transitioning children from a separate CHIP to other sources of coverage, actions for states to consider as they make these changes, implications for CHIP-funded Medicaid expansion programs, key federal requirements for submitting state plan amendments, and operational information regarding how states can access the remaining funds available for FY 2018. According to news reports, CMS has distributed roughly $600 million to 14 states and territories in October and November as a temporary fix. The House passed a CHIP reauthorization bill (H.R. 3922) on November 3, mainly on a party-line vote.
Justice Warns Jurisdictions on Sanctuary City Policies
On Wednesday the Department of Justice sent letters to 29 jurisdictions that it believes may have laws, policies or practices that violate a federal statute that promotes information sharing related to immigration enforcement (8 U.S.C. 1373). Included in the list of jurisdictions are three states (Illinois, Oregon and Vermont) and the District of Columbia. According to the department, the letters “remind the recipient jurisdictions that, as a condition for receiving certain FY2016 funding from the Department of Justice, each of these jurisdictions agreed to comply with Section 1373.” Jurisdictions that were found to have possible violations of 8 U.S.C. 1373 will have until December 8, 2017 to demonstrate that the interpretation and application of their laws, policies, or practices comply with the statute. The individual letters, which outline policies or laws identified by the department, can be found here.
House Advances Bill to Reauthorize the National Flood Insurance Program
Last Tuesday the House voted 237-189 to approve legislation (H.R. 2874) reauthorizing the National Flood Insurance Program (NFIP) for five years, while also making changes to the program to increase its solvency. The program is currently authorized through December 8. The legislation aims to establish a private market for flood insurance, while also providing programmatic reforms to help policyholders such as expediting the implementation of policyholder monthly installment payment of premiums and establishing a flood damage savings account for individual policyholders to reduce or eliminate NFIP premiums. The Senate is working on its own version of a reauthorization bill, which has not yet been marked up in committee. Additional information on the House bill can be found here.
Administration Sends $44 Billion Disaster Supplement Request to Congress
On Friday the Office of Management and Budget (OMB) sent a letter to House Speaker Paul Ryan (R-WI) requesting an additional $44 billion for disaster relief. The letter specifies that the funds would be used for recovery costs in states affected by Hurricanes Harvey and Irma, plus continued disaster response for Puerto Rico and the U.S. Virgin Islands. The requested funds would be allocated to several purposes: $25.2 billion for traditional disaster relief administered by the Federal Emergency Management Agency (FEMA) and Small Business Administration; $1.0 billion for emergency agricultural assistance; $1.2 billion for an Education recovery fund; $4.6 billion for repair or replacement of damaged federal property; and $12.0 billion for a Community Development Block Grant Disaster Recovery program focused on flood mitigation projects. To cover the cost of the request, OMB also included a list of proposed offsets totaling $59 billion, covering programs from several agencies including the Departments of Energy, Agriculture, and Transportation.
Congress Passes Defense Authorization Act, Sends to President for Signature
The House and Senate passed the Fiscal Year 2018 National Defense Authorization Act (H.R. 2810) last week, sending the bill to the president’s desk. The conference report authorizes $605.5 billion in base defense spending, $20.6 billion for national security programs in the Department of Energy, and $65.8 billion for the Overseas Contingency Operations account. However, actual spending levels are provided in appropriations bills and the Pentagon and other federal agencies are currently operating under a continuing resolution that maintains funding levels from fiscal 2017. Congress is expected to reach a budget agreement that raises the budget cap for defense spending, which is currently set at $549 billion.
Senators Release Bipartisan Bill on Background Checks for Gun Purchases
On Thursday a bipartisan group of senators released the Fix NICS Act, to ensure federal and state authorities comply with existing law and accurately report relevant criminal history records to the National Instant Criminal Background Check System (NICS). The bill reauthorizes and improves important law enforcement programs to help state governments share relevant criminal record information with NICS, while also rewarding states who comply with their NICS implementation plans through federal grant preferences and incentives. The legislation also creates a Domestic Abuse and Violence Prevention Initiative to ensure that states have adequate resources and incentives to share all relevant information with NICS showing that a felon or domestic abuser is excluded from purchasing firearms under current law. Sponsors of the bill include Senators John Cornyn (R-TX), Chris Murphy (D-CT), Tim Scott (R-SC), Richard Blumenthal (D-CT), Orrin Hatch (R-UT), Dianne Feinstein (D-CA), Dean Heller (R-NV) and Jeanne Shaheen (D-NH). The text of the bill can be found here.
Senators Release Bill on Distributing Opioid Funding to States
Last week Senators Jeanne Shaheen (D-NH), Maggie Hassan (D-NH), Joe Manchin (D-WV), and Shelley Moore Capito (R-WV) introduced a bill to prioritize federal funding for states that have been hardest hit by the opioid epidemic. The bill requires the Substance Abuse and Mental Health Services Administration (SAMHSA) to take into account mortality rates and lack of access to treatment and services when allocating State Targeted Response Opioid Crisis grants. Under current law, grant determinations are made based on the number of overdose deaths instead of per capita deaths. A similar bill was introduced in the House by Representatives Annie Kuster (D-NH) and Evan Jenkins (R-WV). The 21st Century Cures Act, approved last year with bipartisan support, appropriated $1 billion in funding to address the opioid epidemic. A list of state award amounts issued in April can be found here.
Recently Released Reports
50-State Comparison: K-12 Governance Structures
Education Commission of the States
Financial Health of Residents: A City-Level Dashboard
Urban Institute
State IT Procurement Negotiations: Working Together to Reform and Transform
National Association of State Chief Information Officers/National Association of State Procurement Officials
Health Insurance Coverage: Early Release of Estimates January-June 2017
National Center for Health Statistics
Demographic Differences in Sentencing: An Update to the 2012 Booker Report
U.S. Sentencing Commission
Economic News
Unemployment Rates Lower in 12 States in October
New data from the Bureau of Labor Statistics shows that many state unemployment rates saw little change in October; 37 states and the District of Columbia had stable unemployment rates, 1 state had a higher rate and 12 states had lower rates. Compared to one year earlier, 25 states had little or no change, 23 states had unemployment rate decreases, and 2 states and the District of Columbia had increases. The national jobless rate declined by 0.1 percentage point from September to 4.1 percent and was 0.7 percentage point lower than a year earlier. Nonfarm payroll employment decreased in 3 states in October, increased in 9 states and was essentially unchanged in 38 states and the District of Columbia. Over the year, 27 states added nonfarm payroll jobs and 23 states and the District of Columbia were essentially unchanged.
Consumer Price Index Increased in October as Real Hourly Earnings Declined
The U.S. Bureau of Labor Statistics released new data on the Consumer Price Index for All Urban Consumers (CPI-U) for October 2017, showing the CPI-U increased 0.1 percent on a seasonally adjusted basis. Over the last twelve months, the all items index rose 2.0 percent. The index for all items less food and energy rose 0.2 percent in October, while the energy index fell due to a decline in the gasoline index that outweighed increases in other energy components. Over the 12 months ending in October, the index for all items less food and energy rose 1.8 percent, a slightly larger increase than the 1.7 percent rise for the 12 months ending in September. Meanwhile, real average hourly earnings for all employees decreased 0.1 percent from September to October, seasonally adjusted. This result stems from no change in average hourly earnings combined with a 0.1 percent increase in the CPI-U.