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March 9, 2000

The Honorable C.W. Bill Young
U.S. House of Representatives
2407 Rayburn House Office Building
Washington, DC 20515-0910

Dear Representative Young:

On behalf of the National Conference of State Legislatures (NCSL), we urge your continued support for state-federal partnership programs as you move forward on the Fiscal Year 2001 federal budget. America's state legislatures offer their assistance as you begin the arduous task of preparing a bipartisan, fiscally prudent, balanced federal budget.

In February 2000, the country recorded the longest economic expansion in U.S. history. Adherence to fiscal discipline in federal budgeting has played an instrumental role in achieving this remarkable feat. As you prepare your FY 2001 budget, the nation's state legislatures share your enthusiasm for the opportunities that such strong economic times offer. We recognize the challenges and constraints that the current budget process rules present and we also understand the need to reduce federal debt and restore long-term solvency to Social Security and Medicare.

As you prepare the FY 2001 budget resolution, the National Conference of State Legislatures asks that that you give consideration to the following recommendations:

1. Discretionary Spending Caps. NCSL fully supports a balanced federal budget. Yet, as we suggested last year, we believe that circumstances compel an upward adjustment of discretionary spending ceilings to fully maintain commitments to state-federal programs and other pressing national priorities.
2. Continue our mutual commitment to the State Children's Health Insurance Program (S-CHIP). We urge continued full authorized funding for the S-CHIP program. We support efforts to increase S-CHIP funds for U.S. commonwealths and territories and to expand S-CHIP to lower-income parents of eligible children. These changes, recommended by the administration, must provide states with maximum flexibility to implement, resist unfunded mandates and must not shift the burden of costs for the program to the states.
3. Strengthen the Child Care and Development Block Grant. An increased investment in child care is essential to our shared commitment to addressing the challenges of welfare reform. Whether these necessary increases are accomplished through programmatic increases, tax changes or a combination of both, families across the nation have made this a priority issue deserving of our mutual attention and action.
4. Protect the TANF and Social Services Block Grants. We urge continued full authorized funding for the Temporary Assistance to Needy Families program and restoration of the Social Services Block Grant (Title XX) to the $2.38 billion authorization level agreed to in the welfare reform bill. Further we ask that you restore transferability of TANF funds to the Social Services Block Grant from the current 4.25% back to 10%. SSBG supported programs are predominately targeted to children, the elderly and the disabled. SSBG helps states care for these vulnerable citizens in their homes. Both TANF and SSBG funds provide a safety net for millions of Americans, not currently enjoying the fruits of our present economic expansion.
5. Fully protect the guaranteed funding levels for highways, mass transit and public safety programs set in the TEA-21 agreement. NCSL long sought to restore full integrity to transportation trust funds. We maintain that the TEA-21 Act has restored confidence to the trust funds through guaranteed annual funding to the states. We urge you to resist efforts to redistribute excess gas tax receipts away from the special transportation programs and core highway programs that these funds support.
6. Reauthorize our aviation programs. NCSL is pleased with the conference agreement on H.R. 1000. State aviation programs will benefit from the Airport Improvement Program (AIP) and general funds authorized by the measure. NCSL looks forward to working with you to ensure full annual appropriation of all receipts and interest in the federal aviation trust funds.
7. Maintain our commitment to state revolving loan funds (SRF). The Safe Drinking Water and the Clean Water State Revolving Loan Funds remain two of the most popular state-federal partnership programs among America's state legislators. These drinking water and clean water SRF investments should be maintained at no less than FY 2000 levels.
8. Restore Benefits for Legal Immigrants. NCSL concurs with the president's efforts to restore SSI, Medicaid and Food Stamp benefits to certain categories of legal immigrants, as in his FY 2001 budget recommendation. NCSL has long supported the restoration of benefits to legal immigrants. Additionally, we support the administration's efforts to allow states the option to provide Medicaid or SCHIP to legal immigrant children and pregnant women regardless of their date of entry into the U.S.
9. Support pension portability and simplification. Fast-approaching demographic changes and a dismal national savings rate demand action on efforts to expand retirement savings opportunities. Comprehensive pension reform, inclusive of reforms beneficial to state and local government employees, is vital to our national interests. We encourage you to include support for public pension provisions, included in H.R. 1102, in the budget resolution.
10. Provide comprehensive funding for school construction and repair. As we enter the new millennium, state legislators understand that many of our nation's public schools are inadequate to meet our present and future needs. States are addressing this issue vigorously. There are some changes that could be made at the federal level to supplement state efforts. These include: 1) expansion of the private activities for which tax-exempt bonds may be used, 2) relief from arbitrage provisions, 3) establishment of a state school construction revolving fund, similar to safe drinking water funds, and 4) the establishment of a state school infrastructure bank.
11. Promote the Interstate Shipping of Meat and Poultry Inspection. The president's FY 2001 budget provides funds to facilitate capacity building for state meat and poultry inspection programs and to ensure that these programs operate seamlessly with the federal inspection program. In addition to these efforts, NCSL supports federal legislation that would promote interstate shipment of state-inspected meat and poultry.
12. Support the National Resource Conservation Service (NRCS). In 1999, the National Resource Conservation Service experienced funding shortfalls that threatened to compromise technical assistance to the states for conservation and water quality programs. Congress responded to the shortfall by providing supplemental appropriations to the program. For FY 2001, the president has proposed to fund the NRCS at $1 billion, including technical assistance funds targeted to animal feeding operations (AFOs). We support the targeting of funds to AFOs and urge you to provide adequate funding to the NRCS to ameliorate the need for supplemental funds in the coming year.

We do have several concerns about proposals found in the president's FY 2001 budget, some of which Congress has addressed before. These include:

1. Reductions to the TANF block grant. The president's recommended $250 million reduction of TANF supplemental grants to states is premature and violates the agreement between the states and the federal government on welfare reform. We urge you to reject this recommendation.
2. Earmarking of SSBG funds. We vehemently oppose the earmarking of SSBG funds for any purpose, regardless of merit. NCSL has long lauded the merits of the SSBG and has continually praised the flexibility provided to the states under the program.
3. Redirection of TEA-21 funds for unauthorized uses. The NCSL opposes the redirection of any portion of the excess gas tax revenues that are to be distributed to the states for transportation projects under the TEA-21 Act. States face tremendous challenges in maintaining our national highway system and in making improvements that will keep this system viable in the 21^st century. We urge you to reject the diversion of $740 million RABA funds to activities inconsistent with current law, as proposed by the administration.
4. Implementation of Medicaid Cost Allocation. The president proposes to expand Medicaid related activities while reducing the federal contribution for Medicaid administrative costs. We urge you to reject this recommendation. Arbitrary reductions in the federal contribution for administrative costs without concurrent statutory changes shift costs to the states and reduces support for this valuable state-federal partnership program. We further urge you to resist efforts to reduce or cap other state-federal entitlement and mandatory programs, such as child welfare programs.
5. Match rate reductions in Child Support. While we are encouraged by the president's recommendation to allow enhanced pass-through of child support collections to families, we are concerned with many of the recommended changes to child support included in his FY 2001 budget. The proposed reduction of the federal match rate for paternity testing to 66% from the current level of 90% will result in a direct cost shift to the states. Reducing federal funds will compromise the states' ability to collect payments for children and will compromise efforts to meet federal paternity establishment goals. Further, the recommendation to require states to boot vehicles of non-custodial parents who are in arrears is an unfunded federal mandate. While a few states have engaged in this activity within targeted communities, only one state has initiated a statewide program similar to what the president proposes. States at present are not in a position to carry out this mandate and should not be expected to without significant funding from the federal government. We urge you to resist the president's efforts to reduce the federal match rate for paternity testing and to impose additional unfunded mandates on the states.
6. State Bank Exam Fees. As you have in the past, NCSL urges you to reject this recommended offset. The Administration's proposal, to require the Federal Deposit Insurance Corporation and the Federal Reserve to recover their costs for supervision and regulation of state-chartered banks and bank holding companies would constitute a double tax on state chartered banks. The proposed fee would create an inequity in our nation's dual banking system as national chartered banks would not be assessed this double charge.

The nation's state lawmakers continue to welcome opportunities to work with you throughout the FY 2001 budget and appropriations process to provide critical support for our shared state-federal priorities. Please have your staff contact either Gerri Madrid (202-624-8670) or Michael Bird (202-624-8686) for further details and information.

Sincerely,