Capitol to Capitol
An Information Service of NCSL's Standing Committees

Volume 18   Issue 31 - September 9, 2011


DEFICITS! JOBS! DOLLARS

This week witnessed the sending of mixed, revised and inconclusive messages to states on a wide range of fiscal issues. 

First, the Joint Select Committee on Deficit Reduction held its organizational session and laid out the procedural path to finding at least $1.5 trillion in deficit savings over the next 106 days. The committee's co-chairs, Texas Rep. Jen Hensarling and Washington Sen. Patty Murray urged compromise and bipartisanship in their opening statements. Murray called for a “balanced plan,” and Hensarling stated, “We can work together to tackle these challenges.” The fanfare surrounding the committee's first meeting, however, took a seat to a meeting occurring on Sept. 7 by Virginia Sen. Mark Warner and Georgia Sen. Saxby Chambliss. They reconvened their bipartisan "Gang of Six" and found another dozen or so senators to discuss a much larger deficit reduction effort. Their discussions have rekindled talk of finding $4 trillion in deficit savings. This would match up with targets set by the President's National Commission on Fiscal Responsibility and Reform, Rep. Paul Ryan's FY 2012 budget resolution, the Gang of Six's July 2011 proposal, and nearly two dozen bipartisan study commission efforts. 

Second, House and Senate appropriators shifted into third gear with the road ahead both clear and cloudy. House appropriators cleared the FY 2012 transportation funding bill, then put off tackling their biggest challenges:  health, human services and labor. Some House majority members remain displeased with the overall domestic discretionary spending level agreed to in the Budget Control Act (BCA). This level is $23 billion higher than that approved in the House budget resolution, resulting in lower, immediate spending cuts. The BCA calls for a reducing $7 billion in FY 2012, while the House budget resolution seeks $30 billion. Since the Senate is following the BCA, the two chambers will ultimately have to negotiate on the significant differences. States will most likely be handed continuing resolutions in two weeks with appropriators appearing nowhere close to the goal line on most, if any, of the dozen FY 2012 appropriations bills. This means FY 2011 funding levels for state-federal programs will be maintained until mid-November, with the imminent seven-week continuing resolution. 

Third, around 30 percent of President Obama’s $447 billion “American Jobs Act” outlined on Sept. 8 (with a promise to offer a broader deficit reduction plan on Sept. 19) would send funds to states for:  transportation, public school and community college construction and repair work; retaining teachers and first responders; and developing an infrastructure bank. It would also extend unemployment benefits and temporarily halve employee and employer payroll taxes. The president also called for enacting three pending trade agreements, which was the only part of his plan also included in the House majority's “America's Job Creators” plan. That proposal calls for reducing federal regulations, overhauling the tax code, modernizing the patent system, reforming the visa system, changing the drug and medical device approval process and enhancing domestic energy production. Stay tuned, perhaps enactment of a “jobs” package includes a combination of both proposals. NCSL staff contacts: Michael Bird, Jeff Hurley


ON THE HORIZON

Federal disaster assistance funds for states are depleted, but proposals to require offsets to replenish these funds have surfaced. Later this month, states should expect these funds to be replenished in either a continuing resolution or another measure headed to the president's desk. … States should look for a four-month extension, through Jan. 2012, of surface transportation program authority. The Senate Committee on Environment and Public Works unanimously passed the “Surface Transportation Extension Act of 2012.”