Federal Budgets and Revenue Update

April 22, 2005
Volume 11, Number 5

An Information Service of the NCSL Budgets and Revenue Committee

MTBE PROVISION IN ENERGY BILL IDENTIFIED AS MANDATE BY CBO

On April 21, the U.S. House passed it’s comprehensive energy package (H.R. 6), including a provision granting product liability immunity, or safe harbor, to manufacturers of renewable fuel or methyl tertiary butyl ether (MTBE). The Congressional Budget Office recently identified this provision as an intergovernmental mandate above the current Unfunded Mandates Reform Act (UMRA) threshold of $62 million. This mandate limits more than 100 existing water contamination claims, based on defective product, filed by states and local communities against oil companies for associated clean-up costs. North Carolina State Representative Joe Hackney and Indiana State Senator Beverly Gard, Chair and Vice-Chair of the NCSL Standing Committees, sent a letter on April 20 to the Chairmen and Ranking Members of the U.S. House Energy & Commerce and Rules Committees supporting a point of order against H.R. 6 for unfunded mandates in the bill that exceed the UMRA threshold.

DRIVER’S LICENSE MANDATES ON TO CONFERENCE

On April 21, the U.S. Senate passed another wartime supplemental spending package (H.R. 1268) granting $81.26 billion in additional funding for FY2005 for the war in Iraq and tsunami relief. On April 19, NCSL sent a floor alert to members of the United States Senate asking them to oppose the potential inclusion of an amendment, which includes REAL ID Act language prescribing rigorous driver’s license mandates on states and stripping out the negotiated rulemaking process on federal driver’s license standards ordered by enactment of last year’s 9/11 Commission. NCSL opposes the REAL ID Act. The Senate amendment was later withdrawn by its sponsor, but the House-passed version of the supplemental contains similar REAL ID Act language. Members of Congress must now go to conference to hammer out their differences.

PRESIDENT’S TAX PANEL REVIEW’S STATE-FEDERAL TAX LINK

The President’s Advisory Panel on Federal Tax Reform met again on April 18, hosting a discussion on how the federal income tax code interacts with state and local tax systems. Presenters included Utah State Tax Commissioner R. Bruce Johnson, representing the Multistate Tax Commission, and Harley Duncan, Executive Director of the Federation of Tax Administrators. Meeting materials can be found on the Advisory Panel’s website at http://www.taxreformpanel.gov/meetings/meeting-04142005.shtml

MEDICAID REMAINS BUDGET STICKING POINT

Action on the FY 2006 budget resolution is still at a standstill as of April 22. Senate Budget Committee Chairman Judd Gregg (R-New Hampshire) arbitrarily offered the House a mandatory program reconciliation cut number of $43 billion. This figure hits the midpoint between the House’s $69 billion cut in H.Con.Res. 95 and the Senate’s $17 billion in S.Con.Res. 18. However, it oddly exceeds the highest figure contained in the Senate’s budget resolution by 33 percent, before NCSL and others successfully had the Medicaid reconciliation cut instructions eliminated. Representative Heather Wilson (R-New Mexico) has garnered the signatures of 44 House Republicans on H.R. 985, legislation that would eliminate the House’s proposed Medicaid cuts and create a commission to examine Medicaid (it is the same language that Senators Gordon Smith, R-Oregon, and Jeff Bingaman, D-New Mexico, were successful in adding to S.Con.Res.18). This puts Representative Wilson in a command position should House leadership decide to make a motion to go to conference with the Senate on the two budget resolutions. If this occurred, Representative Wilson would move to instruct conferees to abide by the language in H.R. 985. Altogether, the House Medicaid Commission bill has 187 cosponsors.

For more information contact NCSL staff: Molly Stauffer, Nick Steidel.