Capitol to Capitol | Feb. 12, 2018

Budget Battle Leads to Long-Term Deal

DYK?

The first North American Mardi Gras was celebrated in Alabama (sorry, Louisiana).

French-Canadian explorer Pierre Le Moyne d’Iberville arrived in what is now modern-day Mobile, Ala., on Fat Tuesday, 1699. He named the location Point du Mardi Gras and threw a little party. In the years that followed, French travelers would come to the spot explicitly for Fat Tuesday celebrations. To this day, Mobile claims to hold the oldest Mardi Gras celebrations in the country. Visit this Town and Country Magazine article or more facts about Mardi Gras.

President Donald Trump is planning to unveil his FY 2019 budget today, but the spending deal that Congress reached last week means that the executive budget is even less relevant than usual. After Congress briefly “shut down” Friday morning— due to Senator Rand Paul (R-Ky.), who blocked consideration of the legislation to draw attention to the deal’s estimated $320 billion growth of the federal budget deficit over the next two years—both chambers of Congress passed the agreement, which the president quickly signed into law on Friday morning. The legislation, the Bipartisan Budget Act of 2018, will keep the government open through March 23, but more important, the deal set new limits on how much the government can spend through FY 2019, which ends on Sept. 30, 2019.

Next Steps? Now that the spending caps have been set, congressional appropriators have six weeks to write the omnibus spending bill that Congress will have to pass by March 23 to avert yet another government shutdown.

What’s in the Bill? Here are highlights of the 650-page budget agreement:

  • $500 billion—Total cost (including disaster aid and tax provisions).
  • Funds government through March 23, 2018.
  • Increases spending by $300 billion, compared to current levels, over two years.
  • Increases defense spending by $80 billion in FY 2018, and by $85 billion in FY 2019.
  • Increases non-defense spending by $63 billion in FY 2018, and by $68 billion in FY 2019.
  • Suspends the debt limit through March 2019.
  • Ensures that annual deficits will exceed $1 trillion indefinitely.
  • Provides $89.3 billion in disaster recovery, primarily for Texas, Florida, Puerto Rico and the U.S. Virgin Islands.
  • Includes billions of dollars for other disasters, including wildfires and droughts.
  • Restores eight tax breaks known as “Medicare extenders.”
  • Infrastructure: Provides a $20 billion increase ($10 billion for both FY 2018 and FY 2019).
  • Extends funding for the Children's Health Insurance Program through 2028.
  • Extends funding for community health centers, the National Health Service Corps, and teaching health centers that operate Graduate Medical Education  programs.
  • Repeals Medicare payment cap for therapy services and permanently repeals the annual payment limits for outpatient therapy services.
  • Includes $6 billion to fight the opioid epidemic and fund mental health initiatives.
  • Extends National Flood Insurance Program through March 23.

The legislation also established a Joint Select Committee on Budget and Appropriations Process reform that is required by Nov. 30, 2018 to provide recommendations to improve the budget and appropriations process. Maybe they can start by reviewing this tutorial?

GOP Summary of the Bipartisan Budget Act of 2018

CBO Cost Estimate of the Bipartisan Budget Act of 2018

NCSL Contacts: Max Behlke, Jake Lestock

President Trump Releases FY 2019 Budget

The White House will release its 2019 budget proposal, entitled Efficient, Effective, Accountable: An American Budget, this morning. As discussed above, the budget is largely dead-on-arrival given the budget agreement reached last week, but the document will outline the administration’s priorities over the coming year. Unlike the president’s FY 2018 budget proposal, the FY 2019 budget does not eliminate the government’s deficits in 10 years, conceding that increased spending and the recently enacted tax cuts make this goal unattainable.

According to an outline of the budget that was released by the Office of Management and Budget late Sunday evening, the budget:

  • Calls for severe reductions in nondefense spending.
  • “Includes an aggressive set of spending reforms that cut deficits by $3 trillion over 10 years.”
  • Requests $200 billion intended to spur at least $1.5 trillion in infrastructure investments.
  • Requests $23 billion for border security/wall.
  • Requests $10 billion in new funding to combat the opioid epidemic.

NCSL Contacts: Max Behlke, Jake Lestock

Senate to Debate Immigration this Week

I do think that we can get something done this week. We’re going to have something in the Senate that we haven’t had in a while. It’s a real debate on an issue where we really don’t know what the outcome is going to be.

—Senator Jeff Flake (R-Ariz.), Feb. 11, 2018

Today, the Senate is expected to begin debate on immigration and nobody knows what will happen. Even if the Senate strikes a bipartisan immigration deal, it is unclear if it would be considered in the House or if Trump would sign it into law. Moreover, now that an agreement has been reached on spending, supporters of an immigration compromise have largely lost the leverage they had in combining the issue with government funding.

Unlike most debates on Capitol Hill, the Senate debate on immigration will not begin with a prepared piece of legislation. Instead, Majority Leader Mitch McConnell (R-Ky.) will bring up an unrelated “shell” bill, which would become the vehicle for the immigration legislation. The shell bill will be crafted through amendments, which require 60 votes to pass. Once all of the amendments have been considered, the final bill will be considered, which, procedurally, will also need 60 votes to pass.

Senators have been working since last month’s shutdown to craft an immigration compromise that could easily pass the chamber. Senator Susan Collins (R-Maine) has been working with about 25 senators in a bipartisan “Common Sense Caucus,” but so far the group has been unsuccessful. The White House immediately dismissed a proposal offered by Senators John McCain (R-Ariz.) and Christopher Coons (D-Del.) last week because it did not curb legal immigration or immediately authorize spending for a wall along the southern border.

Today, Republican Senators Tom Cotton (Ark.), Chuck Grassley (Iowa), John Cornyn (Texas), Thom Tillis (N.C.), David Perdue (Ga.), James Lankford (Okla.), and Joni Ernst (Iowa) will introduce legislation that incorporates the four tenets of the president’s plan, but it is unclear if the legislation will gain traction:

  • For 1.8 million young unauthorized immigrants, a 10-12 year path to citizenship.
  • $25 billion for a border wall.
  • Ending the diversity visa lottery program.
  • Terminating family-based immigration for parents and siblings.

What to Expect: Crafting a comprehensive immigration plan on the Senate floor could take weeks. Even if a bill clears the Senate, it will have a tougher road in the more conservative House.

NCSL Contacts: Susan Frederick, Lucia Bragg

White House to Release Infrastructure Proposal

DYK?

Confused of the order of the parade of nations during the opening ceremony of the Winter Olympics?

As is true at every Olympics, the teams enter the stadium alphabetically, according to the alphabet of the host country. Additionally, Greece, the host of the ancient Olympics as well as the host of the first modern games, always enters first and the host nation marches in last.

The president is expected to formally release “principles” for his long-awaited national infrastructure plan today.

The plan is expected to have two central themes:

  • Additional Federal Funding:  Provide $200 billion in direct federal investment that would lead to the creation of three new grant programs, two competitive and one formula based, along with increases to existing federal financing programs. The plan anticipates that this new federal investment, along with additional combined state, local and private infrastructure investment, would lead to $1.5 trillion in overall infrastructure investment.
  • Reduce infrastructure project permitting times: Enact specific limits on the amount of time such reviews could take, likely no more than two years, while also streamlining the process among federal agencies involved, including removing EPA’s authority to review environmental reviews performed by other federal agencies.

We anticipate that while the package released by the White House may propose funding the $200 billion of federal funding through cuts to existing infrastructure programs, including the Transportation Investment Generating Economic Recovery (TIGER) grants, Amtrak, and transit funds, it is highly unlikely such cuts would be approved by Congress.

Trump is scheduled to host a bipartisan meeting of lawmakers at the White House on Wednesday to discuss infrastructure.

Transportation Infrastructure’s Fundamental Problem: A permanent revenue stream. The federal gas tax was last raised in 1993 to 18.4 cents per gallon. Taking into account inflation alone, this revenue stream has been more than halved. And even if the gas tax was inflation adjusted, it would only address the funding problem in the short term, as vehicles continue to become more fuel efficient and alternative fuel vehicles continue to grow in the market.

State and Local Governments: Let’s Rebuild America: NCSL, along with the leading organizations that represent state and local governments, released a statement last week regarding infrastructure.

NCSL Contacts: Ben Husch, Kristen Hildreth

Treasury Cautiously Wades into Marijuana Banking Debate

“I assure you that we don't want bags of cash,” Treasury Secretary Steven Mnuchin told the House Financial Services Committee last Tuesday. Mnuchin went on to say, "we want to make sure that we can collect our necessary taxes and other things." Recently, questions have been swirling around the state of play and legality of financial institutions providing financial services to marijuana related businesses. Business practices, public safety and law enforcement are all affected by the lack of financial services afforded to these enterprises.

During the testimony, Mnuchin stressed the need for clear policy and avoiding the situation where banking services for marijuana businesses exist in a regulatory vacuum. “We are looking at what Justice has done. … we're sensitive to the issue of dealing with the public safety issue, and also making sure that the IRS and others have ways of collecting taxes without taking in cash,” Mnuchin said.

Mnuchin’s testimony comes as marijuana businesses fret over Attorney General Jeff Session’s recent decision to overturn the Obama administration’s industry-friendly enforcement guidelines, otherwise known as the “Cole Memo.” The current administration’s seemingly divergent marijuana policies leave the industry seeking financial services guidance and best practices. Making matters worse for both industry and financial institutions is not knowing to what extent the Trump administration will, or will not, enforce federal drug policy.

Also making news last week was a Denver-based credit union, Fourth Corner, receiving a “conditional” approval for a master account with the Federal Reserve Bank of Kansas City. Fourth Corner seeks to provide financial services to businesses which are “ancillary” to the marijuana industry. Specifically, the conditional master account requires Fourth Corner to not provide services to business that “touch the plant.” Rather, the master account would let the credit union service businesses that advertise, advocate and promote the marijuana industry.

NCSL Contact: Ethan Wilson

Complete NCSL Survey on 529 Plans

DYK?

On this day, in…

  • 2004, the city of San Francisco began issuing marriage licenses to same-sex couples in response to a directive from Mayor Gavin Newsom. (The licenses were later nullified.)
  • 1998, a U.S. federal judge declared that the presidential line-item veto was unconstitutional.
  • 1915, in Washington, D.C., the first stone of the Lincoln Memorial was put into place on the 16th president’s birthday.

Effective Jan. 1, 2018, the Tax Cuts and Jobs Act included changes to Qualified Tuition Plans, also known as Section 529 Plans. One such change is that federal law now allows parents to contribute up to $10,000 per tax year, per beneficiary, for expenses related to tuition or attendance at an elementary or secondary public, private, or religious school. In most states, such disbursements were limited to qualified higher education expenses. NCSL and the Education Commission of the States are surveying states to learn more about how state legislatures are approaching this new change in federal, and therefore state, tax and education policy.

States are invited to respond by close of business Thursday, Feb. 15.

NCSL Contact: Joan Wodiska

Senate Hearing on Higher Education  

Last week, the Senate Health, Education, Labor and Pensions Committee held a hearing to discuss affordability in higher education. Panelists covered a variety of topics, including the federal investment in Pell Grants and Free Application for Federal Student Aid simplification. The hearing is a part of the ongoing discussions in the Senate to reauthorize the Higher Education Act.

NCSL Contact: Joan Wodiska

Place Your Bets! NCSL Podcast on State Gaming Laws

An estimated $150 billion or more is wagered illegally on sporting events each year largely because sports gambling is allowed only in Nevada, with a few exceptions. A case before the U.S. Supreme Court, which is considering a challenge to The Professional and Amateur Sports Protection Act of 1992, could allow more states to allow these types of wagers.

This NCSL Podcast features insight and perspective on the issue from NCSL experts.

NCSL Contacts: Ethan Wilson, Jake Lestock

Also of Note …

  • On Feb. 9, the White House Council of Economic Advisors released a report of ideas for how to reduce U.S. drug prices.

 

Capitol-to-Capitol will take a break next week during the congressional recess and will return on Monday, Feb. 26.

Read the Feb. 5, 2018 Capitol-to-Capitol.

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We are always looking for interesting trivia about states, legislatures and American history. If you have some great facts, don't keep them to yourself.  Let us know by clicking this link. We will likely include them in a future edition of Capitol to Capitol!

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NCSL's Advocacy in Washington

NCSL's Washington staff advocate Congress, the White House, and federal agencies on behalf of state legislatures in accord with the policy directives and resolutions that are recommended by the NCSL Standing Committees and adopted by the full conference at the annual NCSL Legislative Summit Business Meeting. As a result of the advocacy that is guided by these policies positions, NCSL is recognized as a formidable lobbying force in state-federal relations.

NCSL Staff in Washington, D.C.

  • Neal Osten | 202-624-8660 | Molly Ramsdell | 202-624-3584 | Directors
  • Max Behlke | 202-624-3586 | Budgets and Revenue
  • Danielle Dean | 202-624-8698 | Communications, Financial Services
  • Susan Frederick | 202-624-3566 | Law, Criminal Justice, and Public Safety
  • Abbie Gruwell | 202-624-3569 | Human Services
  • Ben Husch | 202-624-7779 | Natural Resources and Infrastructure 
  • Jon Jukuri  | 202-624-8663 | Labor, Economic Development and International Trade
  • Haley Nicholson | 202-624-8662 | Health
  • Ethan Wilson | 202-624-8686 | Commerce and Financial Services
  • Joan Wodiska | 202-624-3558 | Education