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

Volume 19   Issue 6- February 17, 2012

 

PAYROLL TAX DEAL CUT

Congress passed legislation today extending employee payroll tax cuts, unemployment insurance benefits and protections of Medicare provider reimbursements for the rest of the year. The House and Senate passed the measure by votes of 293-132 and 60-36, respectively. H.R. 3630 will cost $150 billion—one-third will be offset with revenues and two-thirds will be borrowed. NCSL supported provisions in the bill that establish and fund the country’s first interoperable communications network for state and local government first responders.
What are the state implications?

  • Seven more months (through Sept. 30, 2012) of funding for the Temporary Assistance for Needy Families (TANF) block grant. States must ensure within two years that TANF benefits are not used for liquor purchases, casino gambling or strip club adult entertainment. 
  • Continued federal funding (through Dec. 31, 2012) of the Transitional Medical Assistance (TMA) program that allows low-income families to keep their Medicaid coverage after getting a job and increasing their income. 
  • An extension (through Dec. 31, 2012) of the Qualifying Individual (QI) program that allows the Medicaid program to pay Medicare Part B premiums for certain low-income beneficiaries. 
  • An extension of emergency unemployment compensation benefits but a shorter time eligible individuals can receive this assistance.


The agreement also: allows up to 10 states to conduct reemployment demonstration projects with the long-term unemployed; compels states to collect overpayments of unemployment insurance (UI); allows states to administer drug testing of UI applicants in certain circumstances; provides temporary financing of state short-term work-sharing compensation programs; and allows states to create self-employment assistance programs via one-year federal grants. NCSL has developed a comprehensive page detailing H.R. 3630, available here: http://www.ncsl.org/legislatures-elections/state-federal/payroll-tax-agreement.aspx. The bill is available at: http://www.rules.house.gov/Legislation/legislationDetails.aspx?NewsID=742. NCSL staff contacts: Michael Bird, Jeff Hurley (legislation generally), James Ward (interoperable communications), Sheri Steisel, Emily Wengrovius (TANF), Joy Johnson Wilson, Rachel Morgan (Medicaid, TMA, QI), Michael Reed (unemployment)


BUDGET BATTLE BEGINS

On Monday, President Obama unveiled his FY 2013 spending proposal. Weighing in at $3.8 trillion, the budget, if adopted, would run a projected deficit of $900 billion, a decrease from $1.3 trillion in FY 2012. The proposed budget would eliminate the sequestration trigger required after the failure of the joint select committee on deficit reduction to reach agreement. The budget would necessitate the president to work out a solution with Congress to avoid the automatic cuts. Under the president’s proposed budget, the sequestration reductions, which are currently slated to begin in January 2013, would instead be replaced with $3 trillion of deficit savings over 10 years. Half of these savings would be achieved by allowing the 2001/2003 tax cuts for high-income earners to expire and reducing itemized deductions for high-income families. The remaining reductions would come from “war savings” and mandatory/entitlement spending cuts. These latter cuts include decreasing the Medicaid provider tax threshold and blending the matching rate for Medicaid and the Children’s Health Insurance Program (CHIP) program. Without sequestration, across-the-board domestic and defense discretionary cuts would be averted, and state-federal grant programs overall would be increased slightly. In the short-term, the president proposes a $350 billion stimulus package that resembles his jobs package offered last September, including funding to school modernization infrastructure and to retain and hire teachers and first responders. President Obama’s budget can be viewed here: http://www.whitehouse.gov/omb/budget. NCSL’s comprehensive overview of the president’s FY 2013 proposal is available at: http://www.ncsl.org/issues-research/budget/presidents-fy2013-budget.aspx. NCSL contacts: Michael Bird, Jeff Hurley


MEDICAID: HERE YESTERDAY, GONE TODAY

The president’s FY 2013 budget proposal offered three Medicaid federal savings requests as part of his long-term deficit reduction strategy that have state implications:

  • incremental reduction of the state Medicaid provider tax threshold, 
  • establishment of a blended Medicaid/Children’s Health Insurance Program single matching rate, and 
  • reduction of state Disproportionate Share Hospital (DSH) allotments.

Together these three would “save” the federal government $48 billion over 10 years (according to the Office of Management and Budget), but certainly would challenge states’ Medicaid funding. Negotiators on H.R. 3630 (see story above) quickly saw how plucking the DSH savings ($4.1 billion per the Congressional Budget Office) out of the budget could be a partial offset for reducing Medicare provider reimbursements for the remainder of 2012. The negotiators also found offsets by increasing the amount new federal employees must contribute toward pensions, auctioning off spectrum, reducing the number of authorizations for the Prevention and Public Health Trust Fund, and eliminating the “disaster-recovery Federal Matching Assistance Payments” rate. The last two offsets were written into federal health care reform law. NCSL staff contacts: Joy Johnson Wilson, Rachel Morgan


YIELD: WORK IN PROGRESS

Initial signs that both chambers of Congress would bring their respective transportation measures to a full vote this week have soured. The House, after splitting up the American Energy and Infrastructure Jobs Financing Act of 2012 (H.R. 7) into three bills, has run into difficulties after the Congressional Budget Office (CBO) determined the legislation would be unable to keep the Highway Account of the Highway Trust Fund solvent. With passage of H.R. 7 in doubt, House leaders decided to delay the vote until after the President’s Day recess. The Senate’s legislation, the Moving Ahead for Progress in the 21st Century (S. 1813), is also on ice until the week of February 27. It would provide $109 billion over two years for highway and other transportation programs, while H.R. 7 would provide $260 billion for five years. The president, meanwhile, offered a six-year, $476 billion surface transportation reauthorization in his budget proposal (a decrease from what he proposed last year) along with $50 billion in stimulus funding for immediate investments in infrastructure projects. NCSL staff contacts: Molly Ramsdell, Jennifer Arguinzoni