This Week on the Hill
The House and Senate are in session this week, the last week for the House before their August recess. The Senate truncated their August recess and at this time plans to remain in session most of the month.
The House convenes today and will consider 20 bills. Over the remainder of the week, the chamber will vote on several health care bills including H.R. 5963, which delays the health insurance tax for an additional two years, and H.R. 184, which repeals the medical device tax. Several committees scheduled hearings this week: the Natural Resources Committee will hold a hearing Tuesday on alternative uses of coal; the Oversight and Government Reform Committee will hold a hearing Tuesday on ensuring integrity in elections; and the Small Business Committee will hold a hearing Wednesday on the tax law’s impact on small businesses.
The Senate convenes today and will consider the nomination of Robert Wilkie to be Secretary of Veterans Affairs. Several committees scheduled hearings this week: the Energy and Natural Resources Committee will hold a hearing Tuesday on factors impacting global oil prices; the Finance Committee will hold a hearing Thursday on improving tax administration; and the Health, Education, Labor and Pensions Committee will hold a hearing Thursday on modernizing apprenticeships.
Fiscal Year 2019 Budget Update
The House passed their second spending package, marking the halfway point in appropriations bills in that chamber. The Senate is readying a four-bill spending package for this week.
- Interior-Environment/Financial Services Spending Package: The House voted 217-199 to approve a $58.7 billion spending package (R. 6147) covering the Interior-Environment and Financial Services appropriations bills. The Environmental Protection Agency would receive $8 billion, a $100 million decrease from fiscal 2018 enacted levels, while the Interior Department would receive $13.1 billion, a decrease of $300 million from the current year. The package includes several policy riders that were opposed by Democrats, including several related to endangered species, and the Clean Air and Clean Water acts.
- Homeland Security: The House subcommittee approved $51.4 billion in discretionary spending, an increase of eight percent over the fiscal 2018 enacted level. The bill includes $5 billion for a southern border wall, which is higher than the $1.6 billion approved in the Senate. The bill also increases funding for Customs and Border Protection and Immigration and Customs Enforcement, while the Federal Emergency Management Agency would receive $7.2 billion. A vote by the full committee is scheduled for Wednesday.
- Senate Spending Package: The Senate plans to vote on a four-bill spending package this week that includes the Interior-Environment and Financial Services bills while adding the Transportation-Housing and Urban Development ( 3023) and Agriculture (S. 2976) bills. The four-bill package would total approximately $154 billion.
Four States File Lawsuit on SALT Deduction Change in Tax Bill
The States of New York, Connecticut, Maryland, and New Jersey filed a complaint on July 17 in the U.S. District Court for the Southern District of New York. The purpose is to seek to invalidate as unconstitutional the new $10,000 cap on the federal tax deduction for state and local taxes (SALT deduction). The primary constitutional argument is that the drafting and ratification by the states of the Sixteenth Amendment (ratified in 1913 giving Congress the power to lay and collect taxes on income, without apportionment among the several states), and understood by every subsequent Congress, is that the SALT deduction was in place to prevent the federal tax power from interfering with the states’ sovereign authority as guaranteed by the Tenth Amendment and the foundational principles of federalism. Moreover, when the Constitution was ratified, it was widely understood that the protection of the states’ sovereign authority to determine their own taxation was an explicit concern, and that necessity informed all decisions about imposing the first federal income tax during the Civil War, and confirmed in the enactment history of the Sixteenth Amendment.
House Committee Holding Online Sales Tax Hearing
On Tuesday the House Judiciary Committee will hold a hearing entitled Examining the Wayfair Decision and its Ramifications for Consumers and Small Businesses. Witnesses will represent Americans for Tax Reform, National Retail Federation, American Legislative Exchange Council, National Conference for State Legislatures, National Taxpayers Union Foundation, MultiState Associates Inc., and small businesses. The hearing follows the Supreme Court opinion last month in Wayfair v. South Dakota, which overturned a 1992 ruling that barred states from collecting sales tax from businesses with no physical presence in the state.
President Signs Workforce Training Executive Order
On Thursday the President signed an Executive Order establishing the President’s National Council for the American Worker and the American Workforce Policy Advisory Board to prepare Americans for the 21st century economy. The council will develop recommendations on how the public sector should engage with the private sector in worker re-training and will examine public and private-sector expenditures including tax expenditures, related to providing Americans with appropriate knowledge and skills. The council will also develop a national campaign to raise awareness of workforce issues, help expand the number of apprenticeships, and increase transparency related to education and job-training programs. A fact sheet can be found here.
USDA Announces $2 Billion in Disaster Aid Now Available
The U.S. Department of Agriculture announced $2 billion in disaster aid for agricultural producers affected by hurricanes and wildfires in 2017 is now available. The funds are available to help recover and rebuild farming operations, with signups beginning July 16 and running through November 16. Eligible crops, trees, bushes, or vines, located in a county declared in a Presidential Emergency Disaster Declaration or Secretarial Disaster Designation as a primary county, are eligible for assistance if the producer suffered a loss as a result of a 2017 hurricane. Also, losses located in a county not designated as a primary county may be eligible if the producer provides documentation showing that the loss was due to a hurricane or wildfire in 2017. A list of counties with qualifying hurricane declarations and designations can be found here. The 2017 payment factor ranges from 65 percent to 95 percent, depending upon the level of crop insurance coverage or Noninsured Crop Disaster Assistance Program (NAP) coverage that a producer obtained for the crop.
House Plans Vote to Extend Flood Insurance Program This Week
The House scheduled a vote Tuesday on a bill to extend the National Flood Insurance Program (NFIP), which expires on July 31. The bill is a clean extension, extending the program through November 30 to avoid a lapse in financing. In a statement, the bill’s authors said that while they will continue to work on getting a long-term reauthorization signed into law, the bill ensures the program does not expire during the hurricane season. The Senate voted in June to include a six-month extension of the program in its version of the farm bill and it voted to support the inclusion of the same extension in a three-bill appropriations package currently in conference committee; the chamber may also consider a stand-alone bill through an expedited voting process.
EPA Releases Coal Ash Regulation, Increases State Flexibility
Last week the Environmental Protection Agency (EPA) released a final rule that includes phase one revisions to the 2015 regulations for the disposal of coal combustion residuals, also known as coal ash, from electric utilities and independent power producers. In March 2018, EPA proposed more than a dozen changes to the regulations, and some of these are finalized in the new rules. The final regulations will extend the life of some existing ash ponds from April 2019 until October 2020, empower states to suspend groundwater monitoring in certain cases and allow state officials to certify whether utilities’ facilities meet adequate standards. EPA officials estimate the rule change will save the industry between $28 million and $31 million a year in compliance costs.
House Passes Unfunded Mandates Bill
The House recently voted 230-168 to approve H.R. 50, the Unfunded Mandates Information and Transparency Act. The bill amends the Unfunded Mandates Reform Act of 1995 (UMRA) to improve regulatory processes and codify regulatory principles; UMRA limited unfunded mandates on state, local, and tribal governments and the private sector. The bill does the following: require committees to compare funding authorizations with the costs of changes to funding conditions; expand the definition of “direct costs” on states and others; expand the point of order against unfunded mandates to include the private sector; and amend administrative and reporting requirements in the Unfunded Mandates Reform Act. The legislation now moves to the Senate, which has not scheduled a vote at this time.
Recently Released Reports
Weaknesses Exist in Medicaid Managed Care Organizations' Efforts to Identify and Address Fraud and Abuse
U.S. Department of Health and Human Services Office of Inspector General
Are Sin Taxes Healthy for State Budgets?
The Pew Charitable Trusts
Workforce Innovation and Opportunity Act: States and Local Areas Report Progress in Meeting Youth Program Requirements
U.S. Government Accountability Office
State and Local Sales Tax Rates, Midyear 2018
Tax Foundation
Economic News
Unemployment Rates Lower in 9 States in June, Stable in 38
New data from the Bureau of Labor Statistics shows that many state unemployment rates saw little change in June; 38 states and the District of Columbia had stable unemployment rates, 3 states had higher rates and 9 states had lower rates. Compared to one year earlier, 40 states and the District of Columbia had little or no change, while 10 states had unemployment rate decreases. The national jobless rate rose by 0.2 percentage point from May to 4.0 percent but was 0.3 point lower than in June 2017. Nonfarm payroll employment decreased in 1 state, increased in 5 states and was essentially unchanged in 44 states and the District of Columbia. Over the year, 32 states added nonfarm payroll jobs and 18 states and the District of Columbia were essentially unchanged.