The Ferguson Group Blog

House Passes Highway Trust Fund Patch & Authorization Extension

Yesterday, the House of Representatives passed legislation providing an $11 billion bailout to the Highway Trust Fund (HTF) and steady state funding for highway and transit projects and programs through May 2015.  Only 45 Republicans and 10 Democrats voted against H.R. 5021.  

The bill now moves to the Senate where Majority Leader Harry Reid wants to have the bill on the Senate floor before the August recess.  Environment & Public Works Committee Chairman Barbara Boxer wants the authorization portion of H.R. 5021 to end five months earlier to force additional consideration prior to the end of 2014 and is likely to offer an amendment on the floor. 

The House bill sources the $11 billion by way of customs fees, redirecting funds set aside for leaking underground storage tanks, and  “pension smoothing,” which allows companies to pay in less pension benefits and report higher taxable profits.  According to the Congressional Budget Office (CBO), allowing pension plans to use higher interest rates when calculating their future liabilities would reduce the minimum contributions that employers are required to make to such plans, leading to increases in offsetting receipts, direct spending, and revenues. The CBO report also noted its expectation that H.R. 5021 would increase the amount of underfunding in pension plans.  A Senate Finance Committee amendment with a slightly different plan to provide the $11 billion HTF bailout waits in the wings.  The Senate plan relies less on pension smoothing and more on tax law compliance enforcement.

Congress Gets in the Spirit of the Olympics

It is no secret that medalists in past Olympics have had to pay taxes for their winnings. The Americans for Tax Reform group has estimated that a gold medal could result in a $9,000 tax burden.  That is why lawmakers in the U.S. House of Representatives have introduced the Tax Exemptions for American Medalists (TEAM) Act (H.R. 3987), which would exempt Olympic winners from paying taxes on their awards, including medals and cash rewards given to winners by the U.S. Olympic Committee.

Not all countries give their Olympians cash awards for earning medals. The U.S. Olympic Committee awards athletes $25,000 for gold, $15,000 for silver, and $10,000 for bronze.  Modest earnings compared to top payer Russia, who gives their athletes $135,000 for gold, $81,000 for silver, and $54,000 for bronze. One would think that smaller countries are the ones that don’t receive cash awards, but no, that is not always the case.  Interestingly enough, British athletes don’t receive a cent. Even more interesting, the highest paid gold medal athletes will come from Georgia, receiving $1.2 million for their earned gold medal.  

The United States is not the only country working on changing their tax code to provide an exemption for their athletes. Just last week, lawmakers in the Philippines introduced a bill that would provide a tax exemption for prizes and awards earned by Filipino athletes in any internally-sanctioned sporting event. Their bill, however, provides an exemption for all prizes and awards for winning athletes in the last 10 years. The U.S. TEAM Act would provide the tax exemption to athletes starting this year.

The H.R. 3987 is the second attempt in the past few years to provide a tax exemption to winning athletes. In 2012, Senator Marco Rubio (R-FL) and Representative Blake Farenthold (R-TX²⁷) (the 2014 bill sponsor) introduced the TEAM Act without success. Currently, there is no companion bill to the TEAM Act in the Senate. 

Senate Passes Flood Insurance Delay Bill

After weeks of floor debate and herculean efforts by a handful of determined Senators, on Thursday afternoon, the Senate passed the Homeowners Flood Insurance Affordability Act (S. 1926) by a strong vote of 67-32.  The bill now heads to the House, where the legislation will face a tough journey towards final passage, unarguably more difficult than its Senate run.

The homestretch for S. 1926 began Monday evening when the Senate agreed to end debate, allowing them to proceed on voting up or down on seven amendments. On Wednesday afternoon, however, Senator Tom Coburn (R-OK) brought a budget point of order to the floor, saying that the bill violated the Budget Act of 1974 because bill activities added to the deficit.  A motion to waive all applicable budgetary discipline was quickly launched. The motion to waive any violations to the Budget Act of 1974 was agreed to after a couple short hours of debate. Later that evening, the amendments offered by Senators Reed, Whitehouse and Gillibrand were quickly passed by voice vote. On Thursday morning, the Senate shot down the Toomey, Coburn, and Heller amendments. Senator Merkley withdrew his amendment from consideration. After a short lunch recess, Senators reconvened in the chamber at 1:50PM, strongly passing the bill a short time later.  

In general, S. 1926 calls to delay the implementation of certain parts of Biggert-Waters Flood Insurance Reauthorization Act of 2012 for four years to allow for FEMA to address affordability and mapping issues before rate premium changes are implemented.  Although the “as amended” text version of S. 1926 (S. 1926 including the Reed, Whitehouse, and Gillibrand amendments) will not be available for a couple of days, the bill can be found at Congress.gov here, which will be updated as soon as the amended version is available. 

Congress Approves $1.1 Trillion Omnibus

On Thursday evening, the Senate easily passed the massive Omnibus spending bill by a vote of 72-26. The 1,582-page bill, which packages all 12 appropriations bills into one, rings in with a price tag of $1.1 trillion dollars.  Although the bill boosts spending by $26 billion over FY 2013 levels, the total budget is about $30 billion below pre-sequester levels.  It provides $63 billion in sequester relief and $85 billion in total savings over the next two years, resulting in about $23 billion in deficit reduction.

This is how the budget adds up:

   $520 for defense

+$491 million non-defense

=$1.012 trillion

+

$98 billion not subject to spending cap (mostly war spending and disaster relief)

=$1.1 trillion

 

Here are some highlights of the omnibus:

• Restores $20 billion for domestic programs that would have been cut by the sequester
• Cuts daily agency operations by $79 billion
• Increases civilian federal workers pay by 1%, the first pay increase in 4 years
• Blocks the U.S. Postal Service from ending Saturday mail delivery
• Increases TIGER funds to $600 million, a 20% increase
• Provides an additional $636 million to fight forest fires
• Decreases funding for CDBG by $278 million
• Decreases Defense Appropriations by $8 billion

The Omnibus was introduced on Monday, and sailed through the House Wednesday afternoon by a vote of 357-64.  The House and Senate had to approve a three-day extension of the current Continuing Resolution to keep the government running while they considered the massive spending package.  The three-day extension will keep the government running until 11:59PM on January 18^th, where after the new Omnibus will take effect at midnight. The Omnibus has been sent to the President for final approval. Read More…

House Passes 3 Day CR

Today the House passed a three-day extension of the current stopgap spending measure. Instead of federal funding authority running out Wednesday night, Congress now has until midnight on January 18th to pass the massive FY 2014 omnibus spending bill introduced yesterday. The House took less than five minutes to the pass the extension and the Senate is expected to vote on the CR tomorrow at noon.

As the House gears up to vote on the omnibus bill Wednesday morning, spirits are high that the measure will get the support is needs to quickly move onto the Senate. Senate Majority Lead Harry Reid said he is ready to call up the bill Wednesday after House passage. The Senate will then consider the measure until Thursday or Friday until a cloture vote is called. After the 60-vote threshold is obtained for cloture, the Senate will then bring the omnibus to the floor for a final vote. The goal is to have the bill to the President for his signature by Saturday before the new CR expires.

USDA Promoting Farm Bill Benefits

The USDA is ramping up its social media campaign to tout the benefits of Farm Bill-authorized programs, especially as they promote job growth and retention and advance agricultural research around the nation. They are inviting stakeholders to help drive this social media campaign by using the hashtag #MyFarmBill and asking them to share stories of how the #MyFarmBill impacts them.  Twitter, Facebook,, Instagram, YouTube, and others. A guide to suggested methods can be gleaned from videos, photos and tweets that you can view here. The current Farm Bill expired in September but it's impact has been staggered. Dairy farmers have raised the ire of impending increases in mike prices, what they call the "dairy cliff."  USDA programs will slowly shut down in the absence of a Farm Bill exptension or full scale reauthorization.  

Furlough Freebies

Lawmakers have yet to pass a bill to fund U.S. government operations for the fiscal year that started October 1 that President Obama will sign, and that means that nearly 800,000 government workers throughout the country are at home without pay. As both the House and Senate chambers are eyeing weekend sessions, there are no real signs that a deal will be made. Businesses however – both inside and outside the Beltway – are luring customers and media attention by offering discounts or freebies to federal workers who just need to show their government ID. Offerings include free cups of coffee, sandwiches, movies passes, oil changes, and haircuts. The Hyundai Motor Company is allowing federal employees who own Hyundais to defer their car payments for as long as the shutdown keeps them out of work and in Hawaii, a skydiving company is offering free jumps to furloughed federal workers. It is only the beginning of the government shutdown and for at least one D.C. area business the goodwill proved too costly and they had to end their program due to overwhelming demand.  

Online Sales Tax Collection: The House Principles

When the Senate passed the Marketplace Fairness Act in May by a vote of 69 to 27, a major point of contention was language exempting some small businesses from collecting sales tax on out-of-state transactions. The legislation said businesses with more than $1 million in annual revenue would have to collect tax for online transactions. Now the House of Representative is getting ready to take up its own Internet sales tax legislation.

Last week, the House Judiciary Committee released Basic Principles on Remote Sales Tax outlining concerns and priorities for a bill that would allow online retailers to collect sales tax. The Committee received input from taxpayers, industry groups, and representatives of state and local governments to develop these seven basic principles. Chairman Bob Goodlatte (R-Va.) developed the principles to promote public debate on the issue with hopes that it will create innovative solutions.

The “Basic Principles on Remote Sales Tax” are:

1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.

2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.

3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.

4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.

 5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.

6. States' Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.

7. Privacy Rights – Sensitive customer data must be protected.

 

Time to Feed the Tigers

Congressman Rick Larsen (D-WA) recently introduced a new twist on the Transportation Investment Generating Economic Recovery (TIGER) grant program. Ever since Congress established TIGER as part of the American Recovery and Reinvestment Act, about three-quarters of funds have gone to large cities and statewide projects and the remaining quarter has been set aside for rural cities. As a result, small and medium-sized cities, with small and medium-sized projects really haven’t had a seat at the TIGER table. Congressman Larsen’s new bill, “The Transportation Investment Generating Economic Recovery for Cities Underfunded Because Of Size” (TIGER CUBS) Act of 2013 proposes to change all that by setting aside 20 percent of special transportation infrastructure funding specifically for smaller cities. Under the bill, small and medium-sized cities will get a dedicated piece of the pie. The bill would ensure that communities with a population between 10,000 and 50,000 can compete for TIGER CUBS grants for projects as small as $2 million.

While this bill is a great new vehicle for small and medium-sized cities to get smaller road, bridge and highway projects funded, it won’t go far without a lot of support. If you are interested in seeing the TIGER CUBS program feed a dedicated stream of federal dollars to small and medium sized cities, contact me to learn how your community can support this new legislation.

Slow Going in the 113th Congress

As the 113^th Congress approaches the final four months of its first session, only twenty-two bills have become laws as of August 1. These bills include disaster relief for Hurricane Sandy, the reauthorization of the Violence Against Women Act, awarding a congressional gold medal and a measure regarding commemorative coins. In total, the U.S. House of Representatives has introduced 2,899 bills while the U.S. Senate has introduced 1,416 for this year, according to the House Clerk’s Office.  A summary of the twenty-two bills signed into law thus far can be found at: http://www.congress-summary.com/C-113th-Congress/Laws_Passed_113th_Congress_Seq.html.

 

Additionally, none of the fiscal year (FY) 2014 annual spending bills have been passed. Only four of the twelve annual spending bills have been completed by the House, all defense and security-related. The Senate has completed none. With the House and Senate far apart on total spending levels, a government shutdown is possible on October 1, when the current spending law expires. It is increasingly likely Congress will have to pass a short term funding measure, especially since Congress is in session for only nine days in September. The debt ceiling debate will also be a key issue faced by Congress upon its return. The federal government is expected to run out of borrowing authority later this fall and will default on its obligations unless Congress extends that authority.

When lawmakers return on September 9th, it will certainly be interesting to see what is accomplished in the months ahead.