Federal Update 04/26/2013
Still smarting from the Senate’s recent defeat of President
Obama’s gun control agenda, Senate Majority Leader Harry Reid
(D-NV) opted to turn the chamber’s attention this past week to
legislation that would give states the ability to collect sales
taxes from out-of-state Internet retailers. The measure, known as
the Marketplace Fairness Act, has been endorsed by CSAC and
is cosponsored by 29 members of the Senate, including Senator
Dianne Feinstein (D-CA).
Among other things, the legislation (S 743) would require online merchants to collect the full destination rate – the applicable state and local tax rate – on each sale made over the Internet. In order to benefit from the Act, however, states would be required to streamline their sales tax administration. It should be noted that retailers with less than $1 million in remote sales annually would be exempt from any collection requirements.
Opponents in the Senate, including lawmakers from Alaska, Montana, New Hampshire and Oregon (states that do not have a sales tax), have countered that S 743 would be burdensome for businesses that would be responsible for complying with numerous state and local tax laws. They also argue that the measure would violate state sovereignty. Meanwhile, supporters of the legislation counter that it would simply enable the collection of taxes that are already owed to state and local governments.
On April 25, the Senate voted to end debate, but final action on the bill will be delayed until the chamber returns from its scheduled weeklong recess. When lawmakers reconvene, there will be two votes on the measure: one on a manager’s amendment that would delay implementation of the bill for six months and one on final passage.
While the Marketplace Fairness Act is expected to clear the Senate, it could face challenges in the House. For his part, Judiciary Committee Chairman Bob Goodlatte (R-VA) has indicated that he is open to considering the legislation but is concerned about the challenges faced by businesses in collecting and remitting sales taxes for various states, counties, and municipalities.
With the Senate unable to complete action on the Internet tax bill, Senate Majority Leader Reid took procedural steps on April 25 to ready the chamber’s Water Resources Development Act (WRDA) reauthorization package. The Senate will consider the WRDA legislation (S 601) after finishing work on the remote sales tax measure.
In other news, the bipartisan Senate “Gang of Eight” introduced their long-awaited immigration reform bill on April 17. Since that time, the Senate Judiciary Committee has held three hearings to examine various components of the 844-page reform package.
Among other things, the legislation (S 744) would provide a way for most of the roughly 11 million people living in the country illegally to become citizens. The measure also would create an employee verification system and includes a number of border-protection and enforcement provisions.
Included in the measure’s Border Security title is a reauthorization of the State Criminal Alien Assistance Program (SCAAP). Under the legislation, SCAAP would be reauthorized at $950 million in fiscal year 2014 and 2015.
The legislation also includes a section that would require the Attorney General to reimburse state, county, tribal and municipal governments for the costs associated with the prosecution and pre-trial detention of Federally-initiated criminal cases declined by local offices of the United States Attorneys. The program, entitled the Southwest Border Region Prosecution Initiative, would be authorized from fiscal years 2014 through 2018.
Looking ahead, the Senate Judiciary Committee is expected to markup S 744 in early May, with floor action expected later in the month.
In other developments, the House Transportation and Infrastructure Committee’s Highways and Transit Subcommittee held a hearing on April 25 entitled “Implementing MAP-21: The State and Local Perspective.” The panel heard testimony from a number of key stakeholder organizations, including representatives from various national associations whose members are state and local elected officials. The committee also received testimony from Edward Reiskin, the director of Transportation for the San Francisco Municipal Transportation Agency. To access the witnesses’ testimony, as well as Highway and Transit Subcommittee Chairman Tom Petri’s (R-WI) opening statement, please click on the following link: House T&I Hearing – MAP-21 – State & Local Perspective.
On a related matter, the House Budget Committee held a hearing this past week entitled “State of the Highway Trust Fund: Long-term Solutions for Solvency.” The Highway Trust Fund (HTF), which finances highway and transit programs under the purview of MAP-21, has been bailed out by Congress several times over the course of the past several years due to insufficient revenues. According to the Congressional Budget Office, the HTF will go bankrupt sometime in 2015.
The Budget Committee hearing featured testimony from the U.S. Chamber of Commerce, Cornell University, and the Reason Foundation. Testimony from the hearing, as well as Budget Committee Chairman Paul Ryan’s (R-WI) opening statement, can be viewed via the following link: House Budget Hearing – HTF Solvency.
Finally, the U.S. Department of Transportation announced earlier this week the availability of nearly $475 million in fiscal year 2013 TIGER grant funds. As with previous TIGER rounds, funds for the fiscal year 2013 cycle will be awarded on a competitive basis for infrastructure projects that will have a significant impact on the nation, a metropolitan area, or a region. Pursuant to the fiscal year 2013 Appropriations Act, not less than $120 million of the grant funds will be awarded for projects in rural areas.
The Grants.gov website will begin accepting applications on April 29. Final grant applications are due by June 3.