Federal Issues Update 7/11/2014
Following their week-long Fourth of July break, lawmakers returned to the nation’s capital to tackle a number of pressing issues, including a plan to shore up the steadily depleting Highway Trust Fund (HTF). According to the Department of Transportation (DOT), revenues flowing into the HTF are expected to drop below a critical level by the end of July, severely limiting the federal government’s ability to reimburse states for construction projects this summer. Absent a congressional bailout, the trust fund is expected to be fully depleted by September 30, when the current fiscal year ends.
For its part, the House Ways and Means Committee on July 10 approved legislation (HR 5021) that would keep the fund stable through May, 2015. According to the Congressional Budget Office (CBO), the bill would raise $10 billion over 10 years through a combination of policy changes to pensions, customs user fees, etc. While some rank-and-file members – along with a number of conservative groups – oppose the idea of raising revenue over multiple years to pay for a 10-month extension, House leaders are prepared to bring the measure to the floor for a vote next week.
In the upper chamber, the Senate Finance Committee has drafted its own proposal that would raise $11 billion using similar means to support the fund through the middle of next year. The panel approved the bill on July 10 by voice vote.
The recent committee action in the House and Senate increases the likelihood that lawmakers will be able to advance a short-term HTF fix prior to leaving for their summer recess. The likely agreement also raises the prospects that Congress will approve a short-term extension of the nation’s highway and transit law (MAP-21), leaving the job of passing a new long-term transportation measure to the 114th Congress.
On the appropriations front, the lower chamber passed on July 10 its fiscal year 2015 Energy and Water Development spending bill. In total, the measure would provide $34 billion in discretionary funding, a $50 million reduction from the fiscal year 2014 enacted level. Among other things, the legislation would prevent the U.S. Army Corps of Engineers from funding any activities associated with implementing its controversial “Waters of the U.S.” rule. The proposed rule would likely significantly expand those waterways that would be subject to federal regulation under the Clean Water Act (CWA).
For its part, the White House has threatened to veto the measure, largely because of the aforementioned funding prohibition language. The administration also has expressed concerns regarding cuts to clean energy technology research spending.
In a related development, House appropriators on July 8 released the draft text of their fiscal year 2015 Interior and Environment spending bill. The legislation, which was approved by the subcommittee on July 9, would provide $30.2 billion in discretionary funding, an increase of $162 million above current levels. Similar to the House Energy and Water bill, the measure would prohibit the U.S. Environmental Protection Agency (EPA) from broadening the scope of waters covered under the CWA.
In a positive development for California’s counties, the Interior spending package also would provide an additional year of funding for the Payments-in-Lieu-of-Taxes (PILT) program. If enacted, a one-time payment of $442 million would be provided to local governments to help offset property tax losses due to nontaxable public lands located within their jurisdictions. Fiscal year 2014 is the last year that full funding is authorized for the PILT program.
Across Capitol Hill, Senate Majority Leader Harry Reid (D-NV) has omitted fiscal year 2015 spending bills from the chamber’s agenda, essentially putting the appropriations process on hold. Reid’s decision largely stems from his desire to insulate Senate Democrats from having to cast potentially controversial votes on spending bills and amendments during a mid-term election year. Moreover, legislators have shifted their focus toward the White House’s emergency supplemental appropriations request, which would pay for a variety of actions associated with managing the influx of child migrants at the Southwest border.
Given the lack of progress in the Senate and the focus on the administration’s supplemental appropriations request, it appears virtually certain that a government-wide continuing resolution (CR) will be needed this fall. Assuming lawmakers approve a CR, they will likely draft a catch-all omnibus appropriations package during a post-election lame duck session of Congress.
Finally, the House overwhelmingly approved on July 9 a long-awaited reauthorization of the Workforce Investment Act (WIA). The bill (HR 803), entitled the Workforce Investment and Opportunity Act (WIOA), represents a compromise between a previously passed House bill and a job-training measure (S 1356) that was cleared by the Senate Health, Education, Labor and Pensions Committee. The full Senate approved HR 803 last month.
While there were efforts aimed at reducing the local role in the employment and training arena, the final compromise bill preserves local and regional governance and provides additional flexibility in managing funding streams. The legislation also consolidates several WIA programs, while retaining the separate adult and youth employment and training programs and the dislocated worker program.
President Obama is expected to sign the workforce legislation into law in the coming days.