Budget and Revenue Standing Committee

Federal Budget and Revenue Update
June 6, 2006
Volume 12, Number 6

An Information Service of the NCSL Budgets and Revenue Committee

House Budget Resolution

On May 18th, the House adopted its budget resolution (H. Con. Res. 376) by a vote of 218 to 210; the Senate budget resolution (S. Con. Res. 83) was adopted on March 16th. The next step will be conference, though an agreement seems unlikely as there is an $16 billion dollar gap between the two resolutions. Only the House addresses further tax and entitlement cuts. Only the Senate addresses drilling in the Arctic National Wildlife Refuge (ANWR). All of these issues are fractious. And, the appropriations process is in full swing without an agreed to budget resolution.

FY 2007 Appropriations Bills

Despite the lack of a budget resolution, the House has begun work on the FY 2007 spending bills, with four bills having cleared the House floor (see table 1). Below are highlights from those measures.

Table 1: FY 2007 APPROPRIATION BILLS

HOUSE APPROVALS

SENATE APPROVALS

Approved by Subcmte

Approved by Committee

House
Vote

Approved by Subcmte

Approved by Committee

Senate
Vote

Agriculture (H.R. 5384) 5/03/06 5/09/06 5/18/06

Science/State/Justice/Commerce (House)
Commerce/Justice/Science (Senate)

Defense

District of Columbia

Energy & Water
5/11/06 5/17/06 5/24/06

Foreign Operations (House)
State/Foreign Operations (Senate)
5/19/06

Homeland Security (H.R. 5441)
5/11/06 5/17/06 Debate Has Begun

Interior & Env. (House) (H.R. 5386)
Interior (Senate)
5/04/06 5/10/06 5/18/06

Labor/HHS/Education

Legislative Branch

Mil. Qual. of Life/Veterans Affairs (H.R. 5385) (House)
Mil. Const./Veterans Affairs (Senate)
5/04/05 5/10/06 5/19/06

Trans./Treasury/HUD/Judiciary/D.C. (House)
Trans./Treasury/Judiciary/HUD (Senate)
5/24/06

Agriculture Rural Development, FDA and Related Agencies

On May 23^rd, the House passed H.R. 5384, Agriculture, Rural Development, FDA and Related Agencies Appropriations for FY2007. Here are some of the highlights:

Reduces funds for the Food Stamp Program by $2.8 billion below FY 2006 levels. The reduction of funds stems largely from funds which had been allocated to provide relief for the victims of Katrina. The program is funded at $37.8 billion in FY 2007.
Increases funds for Child Nutrition Programs by $685 million over FY2006 levels. Of the $13.3 billion allocated for child nutrition, $5.7 billion constitutes a transfer from Section 32 (this section permits the Secretary of Agriculture to allocate funds from the customs receipts to various agricultural programs).
Increases funds for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) by $39.6 million above FY2006 levels. The program is funded at $5.24 billion in FY 2007.
Increases funds for the Food and Drug Administration (FDA) by $71.6 million over FY2006 levels (to a total of $1.5 billion). This included an increase of $28.1 million for Pandemic Preparedness.
Avian Flu and Pandemic preparedness (countermeasures and monitoring) are funded at $80 million, $80 million above FY2006 levels. In addition, a total of $111 million is available through FY 2007 as a result of the supplemental approved in December.
Reduces funds for the Distance Learning, Telemedicine and Broadband Program by $5.1 million below FY2006 levels. The program is funded at $44.5 million in FY 2007, which includes funds for loans, subsidies and grants.

HR 5384 House Report

Energy and Water

On May 25^th, the House passed H.R. 5427, Energy and Water Development Appropriations Act for FY2007. The House's Energy & Water bill reduces funds for state energy activities and grants by $11 million below FY2006 levels, from $36 million to $25 million. The FY2007 allocation came through a floor amendment offered by Connecticut Representative Rosa DeLauro, as the program had been zero funded in the committee report.

House Committee Report on HR 5427

Homeland Security

On May 17^th , the House Appropriations Committee passed H.R. 5441, the Department of Homeland Security Appropriations Act for FY2007. Debate will continue as the House returns for the Memorial Day recess, the week of June 6^th. Here are the highlights from the House Committee markup:

Fails to provide any funds for state implementation of the REAL ID.
Provides $545 million for basic formula grants (close to FY 2006 levels, but well below the $1.1 billion provided in FY 2005)
Provides $1.165 billion for high-density urban areas. This includes$750 million for urban area grants, $150 million for rail security (this does not include an adopted floor amendment sponsored by Massachusetts Rep. Lynch that provides an additional $50 million for rail security), $200 million for port security, and $65 million for other infrastructure protection.
Provides $400 million for State and local law enforcement terrorism prevention grants (similar to FY 2006 levels).
Provides $180 million for Emergency Management Performance Grants (slightly below FY 2006 levels).

H.R. 5441House Report

Interior, Environment and Related Agencies

On May 18^th, the House passed H.R. 5386, the Department of the Interior, Environment, and Related Agencies Appropriations Act for FY2007. Here are the highlights:

Reduces funds for Clean Water State Revolving Fund (SRF) by $199 million, as compared to FY 2006 levels.
Increase funds for Superfund by $14.7 million over FY2006 levels.
Reduces funds for the State and Tribal Wildlife Grants by $17.4 million, as compared to FY 2006 levels. Provides for a two year grant period. Unobligated funds, as of the end of FY 2008, will be reapportioned to all states and eligible entities in FY 2009.
Eliminates funds for the Land and Water Conservation Fund. This program received $30 million in FY 2006.
Reduces funds for Payment in Lieu of Taxes by $4.5 million, as compared to FY 2006 levels.
Reduces funds for the Leaking Underground Storage Tank Program by $7.2 million below FY 2006 levels.

H.R. 5386 House Report

Transportation/Treasury/HUD/Judiciary/D.C.: On May 26th, the House Subcommittee on Appropriations approved the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act for FY2007.

Here are some of the highlights (more details will be provided once the text of the bill becomes available):

Provides $900 million for Amtrak and mandates that Amtrak reduce its operating subsidy. In addition, Amtrak would be barred from marketing ticket discounts of more than 50 percent in peak hours.
Provides $15.2 billion for the Federal Aviation Administration (FAA), $1.4 billion above FY 2006 levels. This includes funds for the Airport Improvement Program and for Essential Air Service.
$39.1 billion for the Federal-aid highways program (excluding emergency supplementals), $3.1 billion above FY 2006 levels.

Reconciliation

On May 17th, the President signed H.R. 4297 into law, the long conferenced $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.

Included in H.R. 4297, which was not present in either the House or Senate version of the bill and added on in conference, is a provision which requires all government entities, including state and local governments, to withhold 3 percent on certain, non-essential government payments for property or services. The Congressional Budget Office (CBO) has identified this provision as an intergovernmental mandate that will exceed the UMRA threshold ($64 million in 2006; adjusted annually for inflation) beginning in 2011.

The destination of the second tax bill, which is expected to include a number of extensions, including the research and development tax credit, the deductions for state and local sales taxes, college tuition, and out-of-pocket teacher expenses, is uncertain.

NCSL Annual Meeting

NCSL's 2006 Annual Meeting in Nashville August 15-18, where America's issues will take center stage.

Budget and Revenue Standing Committee

Federal Budget and Revenue UpdateJune 6, 2006 Volume 12, Number 6

Federal Budget and Revenue Update
June 6, 2006
Volume 12, Number 6