October 12, 2004

Senate Passes FSC/ETI Conference Report

On Monday, October 11, the Senate passed the conference report to the $138 billion (over 10 years) corporate tax bill (American Jobs Creation Act, FSC/ETI, H.R. 4520) after averting potential filibusters over tobacco subsidy language, U.S. Department of Labor overtime pay rules, and tax breaks for companies who maintain active duty National Guard and reservists on their payrolls. All three provisions were added to other legislation. The House passed the conference report on Thursday, October 7, and the President is expected to sign it soon.

The bill also contains a provision that would allow taxpayers who itemize, to deduct sales and local sales tax in lieu of state and local income taxes. Nevada taxpayers and residents of other states that do not currently have a state income tax will have the ability for the next two years to deduct sales and local sales tax. The deduction will be available for tax years 2004 and 2005. Figures on how individuals would benefit from the newly passed tax break are not yet available, however, preliminary reports suggest that savings for Nevadans would be anywhere from $200-$240 million a year.

House and Senate Pass Homeland Security Funding Conference Report

On Saturday, October 9, the House by voice vote, passed the conference report to the FY 2005 appropriations bill for the Department of Homeland Security. The Senate passed the measure on Monday, October 11, by a voice vote. The final agreement provides $33.1 billion for DHS in FY 2005, which is an increase of $1.1 billion above the FY 2004 level. A package of disaster and drought relief funding was removed from the report and attached to the military construction conference report.

The final agreement provides $4 billion for first responders programs, including: $1.1 billion for the formula State Homeland Security Grant Assistance Program (SHSGAP). The conference report directs DHS to make the SHSGAP funds available to states in 45 days, states will have another 45 days to apply after the grants are announced, and states must obligate 80 percent of the funds in 60 days.

$1.2 billion for the urban areas security initiative, with $150 million for rail security, $150 for port security, $10 million for intercity bus security, and $5 million for trucking security;
$400 million for state and local law enforcement terrorism prevention grants;
$715 million for firefighter grants;
$2.0 billion for disaster relief;
$180 million for Emergency Management Performance Grants; (the conference report directs DHS to continue funding personnel expenses without a limit, and to continue current administrative practices, including grant allocation in a manner identical to FY 2004.) and;
$195 million for first responder training

In other areas of importance to states, the conferees agreed to provide $855 million in FY 2005 for critical infrastructures and key assets. This particular funding includes $191.6 million for protective actions, including $22.9 million to place protective security advisors and teams in geographical areas with high concentrations of critical infrastructure; $11.0 million to identify and characterize potential bio-terrorist attacks; $67.4 million for cyber-security; and $35 million for Homeland Security Operations Center, including $10 million for secure communications with state and local governments.

Congress Passes Disaster/Drought Relief Package

This weekend, both the House and Senate approved a disaster assistance package, including $11.6 billion for hurricane relief and $2.9 billion in drought aid (with offsets from conservation program funding). The package, which was included in the conference report for the FY 2005 Military Construction appropriations bill (H.R. 4837) provides:

$6.5 billion for Federal Emergency Management Agency disaster recovery efforts;
$1.1 billion for DoD for costs associated with base recovery and damage to structures and equipment;
$929 million for disaster relief activities of the Small Business Administration;
$1.2 billion for highway and infrastructure repairs;
$206 million to repair facilities and damage to National Parks and wildlife refuges;
$608 million for agricultural and rural assistance;
$362 million for the Army Corps of Engineers for beach replenishment and dredging;
$150 million for Community Development to replace damaged homes and other properties and businesses;
$50 million for public health and social services emergencies; and
$70 million for the American Red Cross to perform missions to shelter, feed, and care for victims

House Passes Intelligence Reform Package

On Friday, October 8, the House passed by a vote of 282 to 134, its version of a bill (H.R.10) to reform intelligence operations and implement the 9/11 Commission recommendations. H.R. 10 reorganizes the intelligence agencies by creating a position of national intelligence director (NID) that would supervise the nation's 15 domestic and foreign intelligence agencies. The legislation also creates a National Counterterrorism Center. The bill includes a provision to fund a first responder program, with each state receiving a minimum base allocation of .25 percent. In addition, the bill contains a mandate for states to include numerous types of uniform information on driver's licenses an other verification documents.

The Senate passed its version of intelligence reform legislation (S. 2845) on Wednesday, October 6. The two differing versions of the bill now need to be resolved in conference. It remains unclear whether Congress could be called back to vote on a conference agreement before the November 2 election or whether it will deal with the measure during a lame-duck session, scheduled to begin sometime after the election.

Internet Access Tax Moratorium

Over the weekend, proponents of a bill to extend the Internet access tax moratorium sought to attach the Senate-passed measure (S. 150) to numerous appropriations vehicles. In the end, however, new provisions that would have limited the scope of the exemption for Voice over Internet Protocol (VoIP) services, shortened the grandfather exception for Wisconsin, and clarified the bill's applicability to certain fees collected by local governments in Texas raised too many questions. House and Senate leaders are expected to try and add the bill to the omnibus appropriations measure scheduled for consideration in November.

House/Senate Pass Higher Education Bills

This weekend the Senate followed the House in passing the Taxpayer-Protection Act of 2004 (H.R. 5186) which would temporarily close the 9.5 percent rate or return loophole for student loan providers and reinvest the revenue into expanded loan forgiveness for teachers. The bill would almost triple student loan forgiveness for math, science, and special education teachers working in low-income schools from $5,000 to up to $17,500 for five years of service. According to the U.S. Department of Education, the average student loan debt for students in these three fields is $15,000. In addition, the Senate approved a measure (H.R.5185) also passed by the House that provides a one-year extension of the programs authorized under the Higher Education Act.

Census Bureau Releases Reports on Federal Domestic Spending

On Thursday, October 7, the U.S. Census Bureau released two reports on federal domestic spending, which topped $2 trillion in 2003, a 6 percent increase over 2002. Consolidated Federal Funds Report for Fiscal Year 2003 (State and County Areas) covers benefits, subsidies, grants, goods/services, and salaries/wages. A companion report, Federal Aid to States for FY 2003, contains federal agency and program level data on grants to state and local governments. Both reports are available on the Census Bureau website: www.census.gov/govs/www/cffr.html

The House and Senate have adjourned and will return after the election.