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Budget and Revenue Committee

Federal Budget and Revenue Update

April 25, 2006
Volume 12, No. 5
An Information Service of the NCSL Budgets and Revenue Committee

Back Issues Archive

Cuno Decision

On May 15, 2006, the United States Supreme Court issued its decision in DaimlerChrysler v. Cuno, holding that the

Plaintiffs lacked standing to challenge the Ohio franchise tax credit. Standing is a legal term that refers to the plaintiffs alleged injury. In order to sue for relief, a party must have a definite and direct personal injury, rather than an injury that is “conjectural or hypothetical.” The case will be remanded and dismissed and the decision of the 6^th Circuit Court of Appeals, which held the Ohio franchise tax credit invalid, will be vacated.

Supplemental Appropriations Legislation

Negotiations are ongoing regarding dollar differences between the Senate and House supplemental appropriation legislation (H.R. 4939) regarding the War on Terror and Katrina relief. The Senate supplemental contains an additional $17 billion in various add-ons, including approximately $3.9 billion in agricultural disaster relief.

House Bill: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4939eh.txt.pdf
Senate Bill: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4939eas.txt.pdf

Tax Reconciliation

On May 17^th, the President signed H.R. 4297 into law, the long awaited $70 billion tax reconciliation package carried over from 2005. The legislation extends the reduced tax rates on capital gains and dividends through 2010, the alternative minimum tax (AMT) relief for one year (and increases the AMT exemption amount), and contains numerous other extensions and revenue offset provisions.

A number of provisions, including the deductibility of state and local sales tax, and research & development credits, dropped from the reconciliation negotiations, will be considered in a separate package and, potentially added as a rider to the pension legislation which that is stalled in conference.

COPE Act and CBO Report

On May 1^st, the House Energy and Commerce Committee passed the Communications Opportunity, Promotion and Enhancement Act of 2006 (COPE Act, H.R. 5252). The COPE Act amends the Telecommunications Act of 1996, which affects state in two significant ways: (1) allows video service providers to obtain a national video franchise, in lieu of state or local franchises; and (2) preempts state law relating to the municipal broadband networks.

The Congressional Budget Office’s (CBO) review of H.R. 5252 identified a number of intergovernmental mandates.  As a consequence of these mandates, CBO estimates that states would lose anywhere from $100 million to $350 million dollars by 2011.

Senate Committee on Homeland Security and Government Affairs Katrina Report

In late April, the Senate Committee on Homeland Security and Government Affairs released its report on the Katrina disaster. The report proposes to eliminate FEMA and, in its place, creates the National Preparedness and Response Authority (NPRA). NPRA’s director would report directly to the President.

For more details: http://hsgac.senate.gov/index.cfm?Fuseaction=Links.Katrina

Register for the NCSL Annual Meeting

NCSL's 2006 Annual Meeting in Nashville August 15-18, where America's issues will take center stage. http://www.ncsl.org/annualmeeting/