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Payroll Tax Agreement

Payroll Tax AgreementMoney flying in air

In the early hours on Feb. 16, a 20-member House-Senate panel reached a tentative agreement to extend the 2 percentage point payroll reduction, unemployment insurance benefits, Medicare provider reiumbursements, and a host of other programs until the end of the 2012 calendar year. The next day, the House and Senate passed H.R. 3630 by a vote of 293-132 and 60-36, respectively. In late December Congress passed H.R. 3630, which gave lawmakers until Feb. 29, 2012, to pass the array of extensions.


NCSL VICTORY - Public Safety Communications and Spectrum Auction 

The agreement establishes and funds the nation's first interoperable, communications network for state and local first responders. It accomplishes this by allocating the D Block portion of the electromagnetic spectrum to public safety, thereby creating 20 MHz of contiguous spectrum to be governed through an independent board under the National Telecommunications and Information Administration (NTIA). The agreement provides $7 billion for the build out of an interoperable broadband network for public safety from proceeds raised by incentive auctions of broadcast spectrum. H.R. 3630 also compels the give-back of T-Band spectrum in nine years. It generates approximately $15 billion in additional revenue through incentive auction.

NCSL staff contacts: James Ward, Max Behlke 


 

Payroll Tax

H.R. 3630 would continue the 2 percent Social Security payroll tax reduction. Originally enacted in the comprehensive tax bill passed in late 2010, the measure is estimated to cost $93 billion over 11 years.

NCSL staff contacts: Michael Bird, Jeff Hurley


Unemployment Benefits

Extension of UI Benefits

H.R. 3630 phases-in a reduced maximum duration of benefits, from 99 weeks to 73 weeks, by September 2012. This is achieved by a net reduction of duration and eligibility for Emergency Unemployment Compensation (EUC08) benefits as follows:

  • Tier I: Duration phasing down from 20 weeks to 14 weeks by September 2012 for all states.
  • Tier II: Duration remains at 14 weeks. Currently eligible for recipients all states. In June 2012, eligibility becomes triggered to recipients in states with unemployment rates at/above 6 percent.
  • Tier III: Phasing down from 13 weeks to nine weeks by September 2012. Currently eligible for recipients in states with unemployment rates at/above 6 percent. In June 2012, unemployment rate trigger increases to 7 percent.
  • Tier IV: Duration increases from six weeks to 10 weeks by September 2012. Currently eligible for recipients in states with unemployment rates at/above 8.5 percent. In June 2012, unemployment rate trigger increases to 9 percent.

Extended Benefits (EB)

EB is permanently reauthorize and remains unchanged in H.R. 3630. However, most states are expected to lose EB eligibility in the upcoming year. EB provides up to 20 weeks of additional benefits for individuals in states long-term high unemployment.

UI Eligibility Provisions

H.R. 3630 permits states to administer drug screenings for illegal controlled substances to unemployment applicants where an applicant was terminated from their previous job related to unlawful drug use, or is applying for a job where passing a drug test is an eligibility standard. Additionally, UI recipients are required to be available and actively seeking employment, to the satisfaction of state employment agencies.

State Re-Employment Pilot Program

The bill allows the U.S. Department of Labor to grant waivers to up to 10 states to utilize unemployment trust fund money to establish state reemployment programs to replace current state UI programs for individuals out of work for longer than a year. To be eligible, state pilot programs must operate for between one to three years, conclude before the end of 2015, and not result in any increased net cost to a State’s Unemployment Trust Fund account. These programs are limited to:

  • Subsidizing employer-provided training, such as on the job training and apprentice programs.
  • Providing direct payments to employers that hire UI beneficiaries.

Support Programs to Reemploy and Retain Workers

  • The agreement directs states to provide reemployment services, and redefines such services to include providing labor market and career information, skills assessments, individual and group career counseling.
  • It authorizes DOL grants to states to promote programs to assist programs for employers to reduce hours in lieu of layoffs.
  • It provides $35 million for states to assist individuals in self employment/entrepreneur training programs operated by the state or partnership with nonprofit organizations.

NCSL staff contact: Michael Reed


Temporary Assistance for Needy Families (TANF) Block Grant

Reauthorizes TANF until Sept. 30, 2012, and creates a standardization process to simplify data reporting requirements. States must prevent use of TANF benefits for liquor purchaes, casino gambling and strip clubs or face a 5 percent reduction for TANF funding.

NCSL staff contacts: Sheri Steisel, Emily Wengrovius


Health-Related Provisions

H.R. 3630 extends the authorization for the Qualified Individual (QI) program and the Transitional Medical Assistance (TMA) program through Dec. 31, 2012. It also includes two Medicaid offsets, a reduction in the Disproportionate Share Hospital (DSH) program that has no immediate impact, but is estimated to save the federal government $4.1 billion over 10 years  and the revision of a provision of the Patient Protection and Affordable Care Act (PPACA) that affected Louisiana that provides $2.5 billion in federal savings. It also includes a number of Medicare extenders, including another temporary “fix” to address the ongoing problem related to Medicare physician fees. Medicare program offsets include a reduction in federal reimbursement for Medicare cost-sharing related to bad debt for hospitals and nursing facilities and resetting payment rates for clinical laboratories.  H.R. 3630 also reduces by $5 billion over ten years, the Prevention and Public Health Fund, a mandatory fund (not subject to appropriations) established in the PPACA that provides the Secretary of the U.S. Department of Health and Human Services (HHS) unlimited authority to spend above and beyond appropriated levels for any activity authorized by the Public Health Service Act. 

NCSL staff contacts: Joy Wilson, Rachel Morgan


Deficit Impact/Offsets 

Weighing in at $150 billion over 10 years, a third of the measure would be paid for by a variety of offsets. These include:

  • Auctioning off a portion of electromagnetic spectrum by television broadcasters ($18 billion).
  • Requiring new federal employees to contribute more more to their retirement accounts and having the federal government contribute less ($15 billion).
  • Reducing federal payments to hospitals when Medicare beneficiares fail to pay for services, cutting money allocated to a fund to finance preventive health projects, and other minor health savings ($20 billion). 

NCSL staff contacts: Michael Bird, Jeff Hurley

 

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