This Week on the Hill
The House and Senate are both in session this week, as the Senate turns to a debate on immigration. The President released his fiscal year 2019 budget proposal this morning, along with a set of principles outlining his $1.5 trillion infrastructure proposal.
The House convenes Tuesday and will consider nine bills under suspension of the rules. On Wednesday the chamber will consider two bills, including H.R. 3299, Protecting Consumers’ Access to Credit Act; on Thursday the House will consider the ADA Education and Reform Act (H.R. 620). The House Budget Committee will hold a hearing on the President’s budget on Wednesday.
The Senate convenes today and will resume consideration of the motion to proceed to the expected legislative vehicle for an immigration bill (H.R. 2579). At 5:30 p.m., the Senate will vote on the motion to invoke cloture on the motion to proceed. The Senate Budget Committee will hold a hearing on the President’s budget on Tuesday.
President Signs CR, Two-Year Spending Deal
On Friday President Trump signed a continuing resolution (CR) and spending deal, ending a brief government shutdown. The bill (P.L. 115-123) does the following:
- funds the federal government at current year levels through March 23;
- increases the spending caps for fiscal years 2018 and 2019 for defense and nondefense discretionary spending by $143 billion in 2018 and by $153 billion in 2019;
- suspends the debt ceiling until March 2019;
- provides $89.3 billion in emergency funding for areas affected by disasters;
- extends authorization of the Children’s Health Insurance Program for an additional four years, for a total of ten years;
- authorizes $7 billion for community health centers for two years; and
- includes one-year extensions for several tax breaks that expired after 2016.
The appropriations committees in each chamber will now work to apportion the new funds across federal agencies, although the spending deal includes specific callouts for priorities such as infrastructure and addressing the opioid crisis. Below is a chart outlining increased nondefense discretionary spending, which includes a cancellation of the sequester that went into effect in 2013 to address deficit reduction by lowering annual spending caps.
There are several items included in the spending deal of interest to states, highlighted below:
- Medicaid – Puerto Rico and Virgin Islands – $4.9 billion cap increase over two years and 100 percent FMAP applied to new funds.
- US Army Corps of Engineers - $15 billion for constructing flood and storm damage reduction projects, of which $10.425 billion is for states and insular areas affected by Hurricanes Harvey, Irma and Maria and the remainder for projects in states and insular areas that have had more than one flood-related Stafford Act major disaster declaration between 2014 and 2017.
- US Army Corps of Engineers – high-priority studies for risk reduction from future floods and hurricanes, including $75 million for states and insular areas that were impacted by Hurricanes Harvey, Irma and Maria.
- FEMA – a provision making the federal cost share 90 percent for debris removal costs related to disasters declared as a result of a wildfire in 2017.
- FEMA – a provision allowing the President to increase the federal cost share for certain disaster assistance from 75 to 85 percent if recipients have taken steps to make themselves more resilient against disasters.
- Several provisions aimed at advancing evidence-based policymaking, such as setting aside funds to make payments to state and local governments implementing “social impact partnerships” or “pay for success” projects that achieve desired outcomes for service recipients and save taxpayer dollars.
- Labor – The agreement also phases in evidence-based requirements for department grants to states for reemployment services, whereby states must use a certain percentage of grant funds for evidence-based programs, starting in fiscal 2023.
A summary of the provisions in the overall spending deal can be found here, while provisions in the continuing resolution can be found here and disaster relief items can be found here. A cost estimate of the bill from the Congressional Budget Office can be found here.
President Releases Fiscal Year 2019 Budget
The President released his fiscal year 2019 budget proposal this morning, including an addendum addressing the higher funding levels adopted by last week’s spending deal. Overall, the budget proposes $3 trillion in spending cuts over 10 years to move towards a balanced budget and identifies the spending caps approved last week as a ceiling. Pillars of the budget include: ending wasteful spending; expanding economic growth and opportunity; preserving peace through strength; building the wall; rebuilding our infrastructure; supporting working families; protecting veterans; combatting opioid addiction; and moving from welfare to work. Below are some highlights from the budget.
Spending Priorities
- $200 billion for the infrastructure proposal funded by cuts in other areas
- $23 billion for border security and immigration enforcement
- $83.1 billion for the Department of Veterans Affairs
- $5 billion over the next five years to address the opioid epidemic
Spending Cuts
- Eliminates several discretionary programs including education grants, impact aid, community services block grant, low-income home energy assistance program, community development block grant, and TIGER grants.
- Proposes savings in mandatory spending including repealing and replacing the Affordable Care Act, Farm Bill savings, eliminating public service loan forgiveness, eliminating the social services block grant, and eliminating wasteful spending in Medicare and Medicaid.
- Reduces funding for several agencies, including a cut of $2.8 billion to the Environmental Protection Agency, $3.7 billion to the Department of Agriculture and $7.1 billion to the Department of Education.
The President’s budget is often seen as a statement of policy priorities and is not usually adhered to by Congress when it sets annual appropriation levels for agencies and programs.
Administration Releases Infrastructure Principles
Today President Trump released his infrastructure principles, which are intended to use $200 billion in federal funds to spur $1.5 trillion in infrastructure investments with partners at the state, local, tribal and private level. Beyond the total spending levels, the principles include: new investments in rural America; returning decision-making authority to state and local governments; removing regulatory barriers; streamlining and shortening project permitting; and supporting and strengthening America’s workforce. The $200 billion in federal spending includes: $100 billion to create an Incentives Program to spur additional dedicated funds from states, localities and the private sector; $50 billion for a new Rural Infrastructure Program; $20 billion for the Transformative Projects Program; $20 billion to expand infrastructure financing programs (including $6 billion to expand private activity bonds); and $10 billion for a new Federal Capital Revolving Fund. Under the Rural Infrastructure Program, most of the funding would be allocated to governors, “giving states the flexibility to prioritize their communities’ needs.” The full legislative outline can be found here.
HHS Announces $8 Million for States to Explore Federal Market Reforms
Last week the U.S. Department of Health and Human Services (HHS) released a notice of funding opportunity for states to stabilize and strengthen the private health insurance market. The State Flexibility to Stabilize the Market Grant Program will provide a funding source to enhance and support the role of states in implementing and planning for federal market reforms and consumer protections. The mandatory letter of intent to apply is due by February 26 and the application due date is April 1, with notices of award anticipated on June 5. The total amount of available funding is $8.1 million.
Education Releases Per Pupil Funding Pilot Application
The U.S. Department of Education recently announced a new funding pilot program intended to give school districts new flexibility to create funding systems under the Every Student Succeeds Act (ESSA). The flexibility will allow school districts to combine eligible federal funds with state and local funds in order to allocate resources to schools based on the number of students and the corresponding level of need. All local educational agencies are eligible to apply and the department is authorized to award flexibility to 50 agencies; no financial awards are available. The application period opens on February 7 with applications due by March 12 for agencies that want to use the flexibility in the 2018-2019 school year, and July 15 for use in the 2019-2020 school year. Additional information, including a link to the application, can be found here.
GREAT Act Advances in House, Would Mandate New Grant Reporting Standards
On February 1, Representatives Virginia Foxx (R-NC) and Jimmy Gomez (D-CA) introduced H.R. 4887, the bipartisan Grant Reporting Efficiency and Agreements Transparency Act (GREAT Act). Last Tuesday the House Oversight and Government Reform Committee passed the bill on a voice vote. The bill requires the creation of a comprehensive and standardized data structure, or “taxonomy”, covering all data elements reported by recipients of federal awards, including both grant and cooperative agreements; amends the Single Audit act to provide for grantee audits to be reported in an electronic format consistent with the data standards; and requires each grantmaking agency to begin collecting grant reports using the new data standards within three years. The National Association of State Auditors, Comptrollers and Treasurers is collecting comments from their members on the legislation through March 2.
IRS and Treasury Issue Guidance on Opportunity Zones in Tax Bill
Last Thursday the Treasury Department and Internal Revenue Service (IRS) issued guidance on Opportunity Zones, which were established in the Tax Cuts and Jobs Act to spur private investment in distressed communities across the country. According to the release, governors or chief executive officers of states, the District of Columbia, and U.S. possessions will nominate areas within their jurisdictions (population census tracts that satisfy the definition of “low-income community”) to be Opportunity Zones and investments in these areas will benefit from tax incentives. The deadline to make nominations is March 21, although states may request one 30-day extension. The full guidance can be found here.
Long-Term Energy Outlook Released
Last week the U.S. Energy Information Administration released its Annual Energy Outlook 2018 report, which shows continued development of U.S. shale and tight oil and gas resources paired with modest energy consumption growth, leading to the transition of the U.S. from a net energy importer to a net energy exporter across most cases examined in the report. The U.S. has been a net energy importer since 1953, but the 2018 energy outlook projects the country will become a net exporter by 2022. The report also presents updated projections for U.S. energy markets through 2050, with key findings showing that almost all new electricity generation capacity is fueled by natural gas and renewables after 2022 and production of U.S. liquids and natural gas continues to grow through 2042 and 2050 respectively. The full outlook can be found here.
White House Releases Plan to Address Drug Prices
On Friday the Council of Economic Advisers released a report entitled “Reforming Biopharmaceutical Pricing at Home and Abroad.” The report considers policy options to advance two goals: domestic drug prices paid by Americans should be reduced and the price of better health in the future should also be reduced by spurring medical innovation. According to the report, drug prices can be high due to government regulations, and changes to Medicare and Medicaid are examined that could help lower domestic prices, including reforming reimbursement policies.
GAO Report on Oversight for Assisted Living under Medicaid
The Government Accountability Office (GAO) issued a report examining state and federal oversight of assisted living services in Medicaid. The report by GAO describes state spending and coverage of these services, how state Medicaid agencies oversee the health and welfare of beneficiaries in these settings, and the extent that the Centers for Medicare and Medicaid Services (CMS) oversees state Medicaid agency monitoring of assisted living services. GAO recommends that CMS include clarifying state requirements for reporting program deficiencies and requiring annual reporting of critical incidents. The Department of Health and Human Services concurred with GAO’s recommendations to clarify deficiency reporting and stated that it would consider annual reporting requirements for critical incidents after completing an ongoing review.
Recently Released Reports
Initiatives From Preschool to Third Grade: A Policymaker's Guide
Education Commission of the States
State Film Production Incentives and Programs
National Conference of State Legislatures
Health Coverage Varies Widely By State
Center for Retirement Research at Boston College
Medicaid Access in Brief: Adolescents' Use of Behavioral Health Services
Medicaid and CHIP Payment and Access Commission
Economic News
Job Openings at 5.8 Million in December
The number of job openings was little changed at 5.8 million on the last business day of December, according to data recently released by the U.S. Department of Labor; the job openings rate was unchanged at 3.8 percent. Job openings increased in December for information (+33,000) and federal government (+13,000) but decreased in professional and business services (-119,000), retail trade (-85,000), and construction (-52,000). The number of hires was little changed at 5.5 million in December and the hires rate was 3.7 percent. The number of separations was little changed at 5.2 million. The 3.3 million quits reported in December were little changed from November; many economists closely watch the number of quits as a measure of employee confidence in finding another job. Finally, layoffs and discharges were little changed at 1.6 million. Over the 12 months ending in December, hires totaled 64.7 million and separations totaled 62.6 million, yielding a net employment gain of 2.2 million.