Federal Budget and Revenue Update

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Budgets and Revenue Committee

Federal Budget and Revenue Update
Volume 10, Number 1A February 2, 2004

An Information Service of the NCSL Budgets and Revenue Committee

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Fiscal Year (FY) 2005 Budget

Today, President George Bush unveils his FY 2005 budget. Click her for more details.

FY 2004 Appropriations Update: It's Over

On January 23, President Bush signed the H.R. 2673 (P.L. 108-199), legislation containing seven of the unfinished FY 2004 annual appropriations bills. The Senate approved the legislation the day before, despite continuing objections to numerous legislative riders and more than $10 billion in special projects. H.R. 2673 includes an NCSL-sought boost of $1.5 billion in state grants to implement the Help America Vote Act. It also includes an NCSL-sought increase of $1.2 billion in state grants for the Individuals with Disabilities Education Act. Both actions address NCSL's attempts to blunt revived efforts to expand unfunded federal mandates. H.R. 2673 also boosts state highway obligation ceilings by 6 percent ($2 billion) allowing continuing growth and economic development in TEA-21 programs. The omnibus does impose a 0.59 percent across-the-board reduction to most discretionary programs.

Online Tobacco Sales Bill

On January 28, the House Judiciary Committee approved H.R. 2824 (Representative Mark Green, R-Wisconsin) that requires online vendors to pay state excise taxes on Internet tobacco and smokeless tobacco product sales. The bill specifies that only retail sales, not legal wholesale distribution, are affected. The bill does not expand state authority to collect taxes on tribal lands. The NCSL-supported legislation appears headed for floor consideration in early February with a conference committee to follow to reconcile differences with the Senate-passed S. 1177.

Congressional Budget Office Releases Report on Budget and Economic Outlook for FY 2005-2015

The Congressional Budget Office (CBO) released its budget and economic outlook report last week, projecting that the deficit for FY 2004 will reach $477 billion and is projected to total $1.9 trillion for the 2005-2014 period. The report states that "such a deficit for this year would set a record in dollar terms, but at 4.2 percent of the nation's gross domestic product, it would represent a smaller share of the economy than the deficits of the mid-1980s and early 1990s." A copy of the report can be found at: www.cbo.gov.

Executive Committee Clarifies Position on Internet Tax Moratorium; Hearings on Streamlined Legislation Anticipated for February

The National Conference of State Legislatures' Executive Committee, at the request of its Task Force on State and Local Taxation of Telecommunications and Electronic Commerce, has voted to rescind NCSL's support of the Managers' Amendment to S. 150, the Internet Tax Non-Discrimination Act. This reaffirms NCSL's position that the organization neither supports nor opposes an extension of the moratorium on state and local taxes on Internet access; however, any extension by Congress must be competitively neutral. Meanwhile, we anticipates that U.S. Senator Chuck Grassley (R-IA) will commence a hearing on the Streamlined Sales and Use Tax Act (S. 1736) in his Senate Finance Committee come February. State legislators should contact their congressional delegations and urge them to seriously consider co-sponsoring S. 1736 and its House companion, H.R. 3184.

For more information contact NCSL staff Molly Stauffer (molly.stauffer@ncsl.org; 202-624-3584) or Nick Steidel (nick.steidel@ncsl.org; 202-624-8673).