The House Select Committee on Homeland Security has unanimously approved H.R. 3266, Faster and Smarter Funding for First Responders Act of 2004. Citing concern for the almost $9 billion that has been appropriated or budgeted since 2001 but not yet expended by state and local governments, the committee endorsed this legislation to change the criteria for distributing funds for two existing grant programs: the State Homeland Security and the Urban Area Security Initiative; and authorize $3.4 billion for first responder grants in fiscal year 2006. Grant programs from agencies other than the Department of Homeland Security (DHS) and firefighter assistance grants are not affected by this legislation.

The existing State Homeland Security grant program distributes three-quarters of one percent of the amount appropriated to each state. Remaining funds are distributed according to state population. The Urban Area Security Initiative program provides grants to high threat areas of the country, initially seven municipalities, now expanding to 50. Under H.R. 3266 these two programs would be consolidated and funds would be distributed based on threats, vulnerabilities, and risk assessments. States would be required to disburse 80 percent of the grant money to local governments within 45 days of receiving funds from the federal government or face penalties as well as pay 25 percent of the grant activities. Federal funds could be provided directly to local recipients if states fail to perform.

Eligible grant recipients are states or regions, defined as any area consisting of 2 or more contiguous states, counties, municipalities, or other local government that have a combined population of at least 1,650,000 or have an area of not less than 20,000 square miles, or any other combination of local government units recognized by DHS as a region.

Grant funds may be used for a wide range of service and equipment costs. However, grants funds may not be used for buildings and other physical facilities, land acquisition, or to supplant traditional services of law enforcement, firefighting, emergency medical, or public health. Additional personnel costs for responding to terrorism alerts are specifically cited as an eligible grant activity. A 25% non-federal match is required and may be satisfied with in-kind contributions.

The House bill has been referred to three other committees, which share jurisdiction with the Homeland Security Committee. Those committees must complete their consideration of the bill by June 7th. When the legislation goes to the floor for a vote later this summer, expect to see an amendment to authorize grants directly to local governments. Some members remain convinced that is the only way to ensure timely implementation of grants.

A similar Senate bill, S. 930, the Emergency Preparedness and Response Act, was reported out of the Senate Environment and Public Works Committee in February. The Senate bill guarantees the same basic level of funding as existing law and sets aside at least 10 percent of the appropriated funds for direct assistance to local governments recommended by the governor. The 28 existing Urban Search and Rescue teams are guaranteed $1.5 million annually, and no additional teams may be established until all existing teams are trained and equipped for two teams to be deployed simultaneously. The bill is ready for floor consideration in the Senate.

Congress is returning to work on April 20 after a one-week recess for the Senate and a two-week break for the House. We thought this would be a good time to take a snapshot of where things stand on some issues of interest and look ahead to how they may be dealt with the in weeks ahead.

Appropriations

Lawmakers are expected to adopt a budget resolution shortly after they return from Easter break on April 19. Discretionary spending will likely be targeted at $821 billion. Meanwhile, the appropriations subcommittees continue hearings through May on the President’s budget requests and will receive their budget allocations in preparation for writing the 13 appropriations bills. Leaders of the House and Senate Appropriations Committees have been advising a slow mark-up process, predicting that most--if not all the bills--will be wrapped into an omnibus appropriation to be enacted sometime after the November election.

The VA, HUD bill and the Labor, HHS, Education bill are considered most likely to feel the budget pinch. Education initiatives will fare better than Labor programs. HUD and EPA are also predicted to experience restrained spending. Despite harsh criticism of Congressional earmarks for specific projects and programs, Congress is expected to include earmarks in the final bills, although competition will be fierce as the demand for earmarks continues to grow and budget constraints tighten. Don’t expect final action on earmarks until the end of the process—November at the earliest.

Transportation

With both Houses of Congress in spring recess, staffs are not doing any work to reconcile the House and Senate surface transportation reauthorization bills. In fact, House Transportation and Infrastructure Chairman Don Young (R-Alaska) has told his committee staff that they are not to meet with Senate staff until his return to Washington, D.C. on or after April 26. Senate Minority Leader Tom Daschle (D-South Dakota) favors a pre-conference on the reauthorization bill, which he feels will ensure minority participation. Recently, Senator Daschle has been dismayed at what many Democrats feel are attempts by Republicans to exclude them from all conference committees. For months, Daschle has fought attempts by Republicans to shut out Democrats in conference and has even issued threats to block certain conference committees from considering legislation. Senate Majority Leader Bill Frist (R-Tennessee) opposes a pre-conference on the basis that Democrats would only use such an occasion to stall negotiations until their demands were met. However, Daschle maintains that a pre-conference is the only mechanism to guarantee Democrats a voice in the entire process.

The current extension of the program runs through April 30, and it is certain that another extension will be required. Another extension will again drop the bills' costs, but almost certainly not enough to appease the Administration, which has threatened to veto any bill larger than $256 billion.

Welfare Reauthorization

The prospects for passage of welfare reauthorization this year looks slim. The administration and its congressional allies had hoped to use the reauthorization of welfare law to impose tougher work rules on welfare recipients and implement a new marriage initiative. Instead, Republican leaders suspended debate on the reauthorization package after their motion to invoke cloture on the measure was nine votes short of the 60 needed to proceed.

During consideration of the welfare bill, Democrats refused to allow a final vote unless Republicans agreed to a voice vote on an amendment to increase the minimum wage. Democrats also attempted to attach other amendments that would extend supplemental federal unemployment benefits, and an overtime proposal.

An amendment to provide $6 billion in additional child care funding over the next five years was adopted during Senate floor consideration. This amendment offered by Sen. Olympia Snowe (R-Maine) gave senators from both parties a chance to make a statement in favor of children and families in an election year.

Congress has extended the existing program through June 30 and a further extension is beginning to look like a likelihood.

Workforce Investment Act

It looks like the reauthorization of the Workforce Investment Act (WIA) is in permanent limbo. Congress is near the end of the rewriting and reauthorizing of the 1998 law which consolidated more than 60 programs into block grants allocated to the states. It also allowed workers to use vouchers for training and education and established one-stop career centers.

Senate Democrats have not allowed the legislation to go to Conference with the House because they fear that they will not have any input on the final bill. So while the Senate and the House have passed their respective versions of the reauthorization bills, but it appears that larger issues are preventing conferees from being names. Last Monday, President Bush, in a speech in North Carolina and Senate Majority Leader Bill Frist (R-Tennessee) called for conference to proceed.

Special Education (IDEA)

Senate Majority Leader Frist has announced that the Individuals with Disabilities Education Act (IDEA) reauthorization should be coming to the Senate floor in early May. The reauthorization has passed the House and out of the Senate Committee on Health, Education, Labor and Pensions last year. In the Senate, the legislation has been developed in a bipartisan manner - but there still may be some contentious issues on the disciplining of an IDEA student and funding levels. Senate majority staff is commited to getting to conference as that's where they are going to iron out these issues. But the House has indicated that if the Hagel-Harkin amendment which calls for mandatory full funding is in play - they will not name conferees.

This is one piece of major legislation that appears ready for enactment this year.

Reconsideration of Medicare Prescription Drug Bill

Congress is facing increased pressure on two fronts to reconsider the recently passed Medicare prescription drug law. First, because of rising drug costs, lawmakers are being asked to take a second look at allowing the importation of drugs from other countries into the U.S. Second, lawmakers are demanding answers from the Administration over reports that the Administration purposefully withheld the true costs of the prescription drug benefit to Medicare.

Lawmakers are looking at legislation to allow consumers to import U.S. approved prescription drugs from other countries. Still undecided is whether to allow imports from Canada only. Senate Majority Leader Frist (R-Tennessee) has said that the Senate would begin a process for developing proposals to permit the safe importation of drugs if they were approved by the FDA.

Democratic lawmakers were also upset over recent revelations that an administration’s actuary’s job was threatened if he revealed the estimates of the costs of adding a prescription drug benefit to Medicare. Senate Democrats have asked President Bush what information he had about the costs of the bill before Congress voted.

The cost of the Medicare bill – estimated originally by the Congressional Budget Office at $400 billion over 10 years when it passed has sparked an outcry from both conservative Republicans and Democrats when the administration released new estimates that the overhaul would cost $139 billion more than congressional estimates.

While this issue will generate a lot of talk in the coming weeks, it is unlikely it will be the subject of serious legislation this year.

Auto-Enrollment for Prescription Drug Card

In order to enroll Medicare beneficiaries quickly in the new discount drug card program, the Centers for Medicare and Medicaid Services (CMS) is working with states that have pharmaceutical assistance programs for seniors to possibly enroll participants automatically. CMS is also looking at ways to enroll individuals in the low-income assistance portion of the prescription drug card program. Beneficiaries who meet income and other eligibility standards receive $600 in drug assistance on their cards in both 2004 and 2005.

Enrollment in the program begins in May 2004 and use of the cards begins in June.

Higher Ed

There is a remote possibility that Higher Education Act may come up for reauthorization this year. The House has already taken action on Higher Ed. They divided the Act into separate bills by title. Most of the titles have been passed except for the more contentious one - Title 4 which relates to Pell Grants and Student Aid. A bill has not been introduced in the Senate Committee on Health, Education, Labor and Pensions as of yet. There is a move to have the Committee introduce a bipartisan bill. With the President proposing a time limit for eligibility for Pell Grants, there may encourage to take action.

Water Resources Development Act (WRDA)

The Senate Environment and Public Works Committee expects to markup amendments to the WRDA in May. WRDA authorizes the water resource projects and programs conducted by the U.S. Army Corps of Engineers, including flood control, environmental restoration, harbors, and certain types of infrastructure. The schedule will be determined by the reauthorization of the surface transportation bill (TEA 21 reauthorization), which will be in a conference committee involving many of the same staffers over the next several weeks. The House passed its version of the bill (H.R. 2557) last year. WRDA amendments are usually adopted every two years, but the last reauthorization was in 2000.

Other issues will be popping up from time to time and we will keep our friends and clients posted on developments as they do.

In an effort to enroll Medicare beneficiaries quickly in the new Medicare discount drug card program, the Centers for Medicare and Medicaid Services is considering working with states that have pharmaceutical assistance programs for seniors to possibly enroll participants automatically.

CMS is also looking into ways to get beneficiaries enrolled in the new low-income assistance program. Beneficiaries who meet income and other eligibility standards receive $600 in drug assistance on their cards in both 2004 and 2005.

No final decision has been made yet, however, on the auto enrollment and the interaction with state programs. CMS has said that there are legal issues involved with coordinating between federal and state laws.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (Public Law No. 108-173), which created the program was signed by the president in December 2003. On March 25 the Department of Health and Human Services approved 71 sponsors to offer the drug discount cards. Beneficiaries will be able to enroll in the program in May and begin using the card in June.

Senator John McCain (R-Arizona) introduced legislation on April 8 to restructure, reform and reauthorize Amtrak at a cost of around $2 billion per year. S. 2036 would begin to take effect 180 days after enactment, splitting up the existing National Railroad Passenger Corporation by creating a new American Passenger Railway Corporation which would take the Amtrak name, and use it to take control of passenger rail services. NRPC would continue to supervise freight rail.

The bill would also alter the way short-corridors (sub 750 mile routes) are funded. Currently some states pay a percentage share for certain corridors within their borders, while others pay nothing. S. 2306 would require all states to pay 70% of the operating losses of short corridors by 2010. The problem of long-distance corridors would be addressed by a new commission which would seek solutions on a train-by-train basis, rather than a more broad measure. The profitable Northeast corridor would also be turned over to a multistate compact, allowing states to manage the corridor services.

Finally, the legislation creates a new rail development program modelled on New Starts, providing up to $3.25 billion for projects to introduce rail into new corridors, including high-speed rail.

With both chambers of Congress on recess until the week of April 19, lawmakers will have a tough time reconciling differences between the two reauthorization bills by April 30, when the current TEA-21 extension bill elapses. Members of both parties would like to avoid passing a third temporary extension, especially as the transportation construction season begins in many of the northern states. Speaking for Senate Democrats, BNA News Service reported that Minority Leader Tom Daschle (D-South Dakota) commented that Democrats are “very hopeful that we can move to the discussions about how we can resolve the differences with the highway bill as quickly as possible.”

Senator Daschle favors a pre-conference on the reauthorization bill, which the Senator feels will ensure minority participation. Recently, Senator Daschle has been dismayed at what many Democrats feel are attempts by Republicans to exclude them from conference committees. “My concern is that as we’ve seen with virtually every conference, Democrats are locked out or unable to sustain the position even that the Senate itself has taken on given issues”, said Daschle.

For months, Daschle has fought attempts by Republicans to shut out Democrats in conference and has even issued threats to block certain conference committees from considering legislation. Daschle became even more vocal is his denunciation of Republican tactics during the conference committee on the pension reform bill. At the request of the White House, conferees on H.R. 3018 removed a provision supporting certain multi-layer employer plans without the consent of Democrats and over the objection of a majority of Senators. The Democrats decried the actions of conferees, claiming that no Democrat was consulted before the provision was removed from the conference report. Republicans have answered Daschle’s charges by accusing the Senate Minority Leader of obstructionism and using the Senate floor as a campaign tool. Senate Majority Leader Bill Frist (R-Tennessee) commented that he was “really bothered by the fact that we are not being allowed to govern, to debate, to amend, to pass legislation that is in the best interest of the American people.”

With regard to the highway bill, Senator Frist opposes a pre-conference on the basis that Democrats would only use such an occasion to stall negotiations until their demands were met. However, Daschle maintains that a pre-conference is the only mechanism to guarantee Democrats a voice in the entire process.

With the Republicans refusing to pre-conference on the highway bill, Democrats can either relent in their demands or delay the entire process, which would necessitate the passage of a third TEA-21 extension bill. State transportation departments and highway contractors desperately want a long-term bill passed soon, so highway construction planning can commence.

A spokeswoman for Majority Leader Frist confirmed that the Senator would try and appoint conferees by the end of the week. Republican leaders in both chambers must still sort out how large the conference committee will be and how many committees in the House and Senate will have jurisdiction over the reauthorization bill.

Yesterday the Senate voted 78-19 to provide American companies more than $80 billion in pension savings. It saves companies substantial amounts on their pension plans by changing the way their required contributions are calculated. The legislation ends a requirement that contributions be tied to interest rates on 30-year Treasury bonds; it substitutes a rate based on a composite of long-term corporate bonds for 2004 and 2005. The passage of this measure allows President Bush to sign legislation that provides $1.6 billion in additional relief to steel companies and larger airlines.

Opponents of the bill criticized the bill as unfair because it didn't provide the same benefits to some smaller union pension funds. Multi-employer plans which cover 10 million Americans were not covered in the legislation. Many Democrats were split because some labor unions backed the bill as did some segments of the auto industry. Democratic leadership did not send signals that it would stand in the way of final approval. The Senate may get another chance to vote on aid for smaller businesses participating in regional plans covering unionized workers next month. Senator Ted Kennedy (D-Massachusetts) has a proposal for helping them which could be voted on as a part of a stalled proposal for a tax break for exporters which is expected to come up after a weeklong recess.

Low fare airlines including JetBlue and America West opposed the legislation because these companies don't have the pension obligations of their larger competitors and gave the larger airlines an unfair advantage. Supporters of the bill said that this measure was only a temporary fix and that other pension plans could be helped later.

Of the 19 Senators who opposed the bill, twelve were Democrats and nine were Republicans.

The measure has already passed the House of Representatives and supporters of the bill were hopeful to get the bill to the President's desk in time to give a break to companies that have to make quarterly pension payments on April 15.

According to an audit prepared for the Department of Transportation by its Office of the Inspector General, the Federal Highway Administration has $284 million in unneeded obligations sitting unused on highway and other transportation projects. Here's their full report in .pdf format. OIG noted that internal state reviews seemed incapable of catching the obligations, as there was a 25% difference between the number of unneeded obligations detected by OIG (29% at 10 states) than by the number states came up with themselves (4% at 35 other states).

The administration and its congressional allies had hoped to use the reauthorization of welfare law to impose tougher work rules on welfare recipients and implement a new marriage initiative. Instead, Republican leaders last week suspended the debate on the reauthorization of the welfare law. They did so after their motion to invoke cloture on the measure, which would have limited debate and blocked Democratic amendments on a series of workplace and labor issues, was nine votes sort of the 60 needed to proceed.

The outlook for passage of welfare reauthorization this year looks slim.

During consideration of the welfare bill, Democrats refused to allow a final vote unless the Republicans agreed to a voice vote on an amendment offered by Senator Barbara Boxer (D-California), that would increase the minimum wage from $5.15 to $7 an hour over the next two years. Democrats were also trying to attach an overtime proposal as well as an amendment to extend supplemental federal unemployment benefits to the welfare bill. Democrats have used these three issues to question President Bush’s handling of the economy, arguing that the administration is insensitive to the needs of working class Americans.

The scuttling of welfare reauthorization will have an acute impact upon state governments. The 1996 law converted welfare into a block grant program that gave states the flexibility to set the rules for public assistance. State officials, many whom are struggling with budget crises, were closely watching the congressional debate to determine future levels of federal aid, and whether Congress would impose new rules for moving more people off welfare rolls.

Many in Congress believe there is support for a compromise that would fall somewhere between the bill passed by the House and the version written by the Finance Committee and debated in the Senate. The end result would likely increase work requirements for beneficiaries from the current 30 hours to about 35 hours a week; provide at least $3 billion more in mandatory child care funding over the next five years and provide $1 billion for Bush’s marriage effort.

To win Senate Finance Committee approval, Chairman Grassley (R-Iowa) had promised Sen. Olympia Snowe (R-Maine) that she could offer the first amendment during the floor debate – to increase child care funding. Grassley thought the Snowe amendment would be adopted and would help win Senate approval of the bill.

Snowe’s amendment was adopted, giving senators from both parties a chance to make a statement in favor of children and families in an election year. However, in the end Democrats and Republicans refused to budge on whether to hold votes on the labor related issues.

Yesterday President Bush called for an overhaul of the nation's worker training initiative. This is in spite of the fact that the Congress has nearly finished its reauthorization of the program.

President Bush is proposing to consolidate programs under the Workforce Investment Act (WIA) to give governors more flexibility on how they spend the funds in the program that help 16 million workers annually. His plan is as follows:

• Double the number of workers receiving job training by maximizing the available federal dollars going to workers and eliminating unnecessary overhead costs by an additional $300 million. His plan consolidates four major training and employment grant programs totaling $4 billion into a single grant to governors.
• Increased Innovation Training Accounts (ITAs): The president proposes to increase the use of Innovation Training. These ITAs would allow workers considerable flexibility to tailor training programs to meet their needs.
• Under the plan, governors would be given more flexibility to design their own workforce training programs. But they would also be required to set clear goals and outcomes focused on the number of workers placed in jobs, the duration of the job placement, and the earnings of the job. The president proposes consolidating the number of state performance goals of the federal job training system from 17 to 3.
• Jobs for the 21st Century Initiative: The president’s Jobs for the 21st Century Initiative, announced in the State of the Union address, includes a $250 million proposal to help America’s community colleges train 100,000 additional workers for the industries that are creating the most new jobs. This expands the Department of Labor’s High Growth Job Training Initiative, launched under President Bush in 2001, which has provided $71 million in 38 partnerships nationwide between community colleges, public workforce agencies, and employers.
• Personal Reemployment Accounts: The president has also proposed $50 million for a pilot program of accounts of up to $3,000 for some unemployed workers to use toward job training, transportation, childcare, or other assistance in obtaining a new job. Workers who found a job quickly would be able to keep the balance of the account as a reemployment bonus.

However, Congress is near the end of the rewriting and reauthorizing the 1998 law which consolidated more than 60 programs into block grants allocated to the states. It also allowed workers to use vouchers for training and education and established one-stop career centers.

Senate Democrats have not allowed the legislation to go to conference with the House because they fear that they will not have any input on the final bill.

Head over to the analysis side for the final committee report on HR 3550.