***Weekly Update***
From Legislative Committee Chair: Todd Kolden, Aberdeen Central Office
Week of January 3, 2007
CONGRESS APPROVES STOPGAP SPENDING BILL TO FUND WORKFORCE PROGRAMS AT FY 2006 LEVELS THROUGH FEBRUARY 15
• The House and Senate approved a stopgap spending bill (H.J. Res. 102) to continue funding federal government operations including workforce programs through February 15, 2007. The short-term spending bill funds workforce programs at their fiscal year 2006 levels through mid-February. The Congress has had to approve stopgap spending bills to fund government operations because it has been unable to approve most of the spending bills it considers annually. The Labor, Health and Human Services and Education spending bill, which sets spending limits for Workforce Investment Act (WIA) programs, administration of the Unemployment Insurance (UI) system, Labor Market Information (LMI) and Veterans' Employment and Training Service (VETS) programs among others, has languished since it was approved by the House and Senate Appropriations Committees months ago.
CONGRESS EXTENDS AND AMENDS WOTC AND WtWTC PROGRAMS; SIGNED INTO LAW
• Congress approved a broad package of tax credits and trade-related legislation (H.R. 6111) including a provision to extend the Work Opportunity (WOTC) and Welfare-to-Work (WtWTC) tax credits before adjourning for the year. President Bush as expected signed the legislation into law before the New Year. The WOTC and WtWTC provision extends the credits for an additional two years, to include wages paid or incurred for individuals beginning work after December 31, 2005, and before January 1, 2008. For wages paid or incurred for individuals who begin work for the employer after December 31, 2006, the provision combines the two credits, expands eligibility for WOTC by raising the age ceiling for food stamp recipients from 25 to 40, eliminates the WOTC family income restrictions for ex-felons, and extends the paperwork filing deadline from 21 to 28 days. The estimated cost to the Federal Treasury, in terms of lost revenue, is $979 million over five years.
CONGRESS APPROVES LEGISLATION REQUIRING USDOL ESTABLISH REGULATIONS ON VETERANS' PRIORITY OF SERVICE
• Congress last week approved legislation to require the U.S. Secretary of Labor develop regulations spelling out the prioritized delivery of workforce system services for veterans as first required under the Jobs for Veterans' Act (P.L. 107-288) approved on November 7, 2002. The bill as expected was signed by President Bush before the beginning of the New Year. NASWA Veterans Affairs Committee has been involved extensively with both the House and Senate Veterans Affairs Committees in development of legislation improving workforce system service delivery for veterans. The approved legislation was pared significantly and does not include the minimum qualification requirements originally proposed. The approved legislation bears little resemblance from its original form as many of the changes made over the past year to the bill the result of input from NASWA members and the USDOL Veterans' Employment and Training Service (VETS).
• Included in the approved bill is language requiring training of DVOPs and LVERs by the National Veterans' Training Institute (NVTI) within three years of their assignment. It clarifies rules for part-time employment of DVOPs and LVERs to reflect the current interpretation of the Jobs for Veterans' Act. The bill authorizes the Assistant Secretary of VETS to permit incentive awards for employment service offices and individuals, potentially broadening availability of the awards in some states.
INCOMING CONGRESSIONAL MAJORITY SAYS THEY WILL FINISH LEFTOVER FY 2007 SPENDING BILLS THROUGH LEVEL FUNDING
• Incoming leaders of the new House and Senate Majorities said this week that they will likely complete eleven of the thirteen unfinished spending bills by approving the current continuing resolution (CR) through the remainder of fiscal year 2007. The current CR (see first article above) funds the workforce system at fiscal year 2006 levels through February 15, 2007 giving the new Congress a month and a half to determine funding levels for the remainder of the fiscal year ending on September 30, 2007. Level-funding at fiscal year 2006 levels for the workforce system would be a mild victory given the funding cuts proposed in the House and Senate spending bills, including the proposed $325 million rescission of Workforce Investment Act (WIA) funding and significant cuts to Labor Market Information (LMI) programs. Level funding for health and education programs would be viewed as a major defeat as they are accustomed to annual increases in most cases. Incoming leaders of the new 110th Congress said they would seek out ways to fund some programs at more than fiscal year 2006 levels where possible, but the budget caps established by the previous Congress will make it difficult to do much.
Week of January 8, 2007
110TH CONGRESS CONVENES - ESTABLISHES RULES AND PRIORITIES FOR TWO-YEAR SESSION
• The 110th Congress convened yesterday and took first steps by electing new leaders and approving many of the rules the Chambers will use during 2007-2008. Democrats needing 18 seats in the November 7 mid-term elections to take control of the House, gained 30 enabling them yesterday to elect Nancy Pelosi (D-CA) as the Chamber's new Speaker. The House composition currently stands at 202 Republicans and 233 Democrats for a total of 435 members. House Republicans elected John Boehner (R-OH) as the Minority Leader. The Senate is composed of 49 Republicans, 49 Democrats, and 2 Independents siding with Democrats. Senator Harry Reid (D-NV) was elected Majority Leader and Mitch McConnell (R-KY) Minority Leader.
• The new House Majority provided additional detail yesterday on its priorities for the 110th Congress and established its agenda for the "first 100 hours." Included in its short-term agenda is approval of legislation to increase the minimum wage by $2.10 per hour to $7.25 (see article below). Additionally, the House Majority will pursue new budget rules today, including a reinstatement of "pay-as-you-go" that would require any new spending be offset by cuts in other areas or increases to tax revenues to maintain a neutral impact on the federal budget deficit. The issue of deficit spending was prominent throughout 2006 campaigns and is likely to cause the first disagreement over how the rule will be executed. Some in the Minority have expressed concern already that the new Majority is unlikely to use the rules to limit spending and will instead use it to justify tax increases. In addition to the anticipated budgetary rule changes, it is likely the House will adopt new ethics standards to limit the influence of lobbyists. The House Majority has proposed a new rule to require Members names be attached to earmarked appropriations to clearly identify the individuals behind the spending provisions.
• Amid this flurry of prospective action to be taken by the House, the Senate is poised to play its customary role of slowing the progress of swiftly approved House legislation. Senate Majority Leader Reid noted that a number of his priorities differed from those in the House but did say unanimity exists among those in the Majority to increase the minimum wage. Appointments to House and Senate standing committees have been made (see article below) but membership on the Subcommittees in most cases will not be announced until next week. Some of the standing Committees could reorganize their subcommittees in the coming week. A number of House and Senate Committees will hold organizational meetings next week when they will determine their budgets and begin establishing legislative priorities for the year. The House and Senate Minority are expected to announce the chairs and members of their Appropriations Subcommittees following organizational meetings on January 10.
NEW MAJORITY ESTABLISHES MINIMUM WAGE INCREASE AS A TOP PRIORITY
• The House is scheduled on January 10 to consider and likely approve legislation that would increase over a two-year period the $5.15 per hour minimum wage to $7.25 per hour. The federal minimum wage was first established in 1938 with the latest $5.15 per hour wage effective on September 1, 1997. Estimates on the number of workers expected to have their hourly wage increased vary, but the latest statistics available from the U.S. Department of Labor (USDOL) released in 2005 reveal an estimated 479,000 individuals were paid the minimum wage. Advocacy groups and economists in support of a minimum wage increase often note that though relatively few individuals are paid the minimum wage, many who receive just a little more than the minimum wage would benefit. Groups opposed to the increase, including many in the small business community oppose the increase because they say it will limit the number of individuals they may hire and that it is ultimately the marketplace that should establish worker pay. Though the increase to the minimum wage will likely be approved next week by the House, the Senate may not be able to match its speed, given its closely divided chamber and a desire by some in the Senate Minority to add tax and other provisions helpful to small businesses.
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Week of January 16, 2007
HOUSE APPROVES LEGISLATION TO INCREASE THE MINIMUM WAGE
• The House approved (315-116) a bill (H.R. 2) last week entitled the Fair Minimum Wage Act of 2007 to increase the minimum wage over a 26 month period from $5.15 to $7.25 an hour. The bill would raise the minimum wage in three stages - to $5.85 an hour 60 days after signed into law by President Bush, to $6.55 a year later and to $7.25 a year after that. The Senate is likely to take up its minimum wage bill next week. Members of the House Minority were unsuccessful in their efforts to amend the wage increase by adding a variety of "sweeteners" for business, including a provision to repeal the 0.2 percent federal unemployment surtax. Amendments to the minimum wage increase favorable to business are likely to be approved in the Senate (see article below) because the chamber is more closely divided than the House and its rules often require 60 votes for passage.
SENATE MAY INCLUDE FUTA SURTAX REPEAL AND PERMANENT WOTC EXTENSION IN ITS MINIMUM WAGE BILL NEXT WEEK
• The Senate next week is expected to begin consideration of its legislation to increase the minimum wage and added to it could be provisions to repeal the 0.2 percent Federal Unemployment Tax Act (FUTA) surtax and make permanent the Work Opportunity Tax Credit (WOTC). The surtax is set to expire at the end of the 2007 calendar year, but the Administration requested in its fiscal year 2007 budget that it be extended through 2012. Repeal of the surtax along with other provisions favorable to business was proposed this week in the House by Congressmen McKeon (R-CA) and McCrery (R-LA), Ranking Members of the House Education and Labor and Ways and Means Committees, respectively, as a package of amendments to H.R. 2, but under floor rules was not considered.
• A bipartisan mix of Senators and President Bush has said they support adding provisions to the minimum wage increase to help small business. It is not yet clear if the surtax repeal will be added to the bill, but support exists among many in the business community including the UWC and National Federation of Independent Business (NFIB).
• The 0.2 percent FUTA surtax is a policy relic approved by Congress in 1976 as a temporary provision to re-establish the fiscal health of accounts comprising the federal Unemployment Trust Fund. The surtax served its purpose to restore the fiscal health of the Federal Unemployment Trust Fund with the combined balances of its accounts now projected by the U.S. Department of Labor to exceed $51 billion dollars by the end of 2011. A number of organizations support its repeal because they say it contributes to the growth of a fund unjustifiable in its size to meet the nearly nonexistent demand for federal loans to states with trust fund balances insufficient to cover benefits. Since 1976, the federal government and states have reformed the operation of the UI system to improve the health of the program making it unnecessary to hold large balances in a federal trust fund.
• Also added potentially to the Senate's bill to increase the minimum wage is a provision that would make WOTC permanent. The Congress late last year approved a retroactive extension of WOTC and the Welfare-to-Work tax credits before adjourning for the year. The tax credits have lapsed regularly due to Congressional inaction, leaving states in administrative limbo and businesses with uncertainty over the processing of their credit applications while Congress determines the duration of the credits next extension. A permanent extension would eliminate the periodic reauthorization process. Under the latest reauthorization, WOTC and WtWTC programs operate through December 31, 2007. For wages paid or incurred for individuals who begin work for the employer after December 31, 2006, the provision combines the two credits, expands eligibility for WOTC by raising the age ceiling for food stamp recipients from 25 to 40, eliminates the WOTC family income restrictions for ex-felons, and extends the paperwork filing deadline from 21 to 28 days.
WIA REAUTHORIZATION COULD BE ON FAST TRACK IN SENATE
• According to a high-level Senate staff person with the Senate Health, Education, Labor and Pensions (HELP Committee, the Senate will renew its efforts to collect information from workforce system stakeholders over the next few weeks with a goal of approving a bill to reauthorize the Workforce Investment Act (WIA) early in 2007. Hearings are not likely to be scheduled before consideration by the Committee. It is likely the bill considered this year will closely resemble S. 1021, considered bi-partisan by most, approved last year by the Senate.
• The HELP Committee staff person warned that the longer the bill to reauthorize WIA is pushed into 2007 the greater the risk the Senate will not have time to finish a bill this Congress (2007-2008) because of the multitude of other legislative priorities. Another factor motivating the Senate's desire to advance a WIA bill is the U.S. Department of Labor's recent announcement (see article below) it will reform WIA and the Wagner-Peyser Act through the regulatory process. The House panel with authority over WIA reauthorization, the Education and Labor Committee (formerly called the House Education and the Workforce Committee during the 109th Congress) has yet to indicate when it will consider its WIA reauthorization bill. The legislative approval process in the House authorizing committee has been less bi-partisan than in the Senate making it difficult to predict exactly what form the WIA reauthorization bill will take or when it might be first considered given the change in party leadership.
Week of January 22, 2007
SENATE SCHEDULED TO CONSIDER MINIMUM WAGE INCREASE THIS WEEK
• The Senate is scheduled THIS week to begin consideration of its legislation (S. 2) to increase the minimum wage. Like the House bill (H.R. 2) approved last week, the Senate bill would increase the minimum wage over a 26 month period from $5.15 to $7.25 an hour. The bill would raise the minimum wage in three stages - to $5.85 an hour 60 days after signed into law by President Bush, to $6.55 a year later and to $7.25 a year after that. However, unlike the House, the Senate is expected to add tax provisions favorable to business to its minimum wage bill. Earlier this week, the Senate Finance Committee approved by unanimous vote a package of tax provisions entitled the "Small Business and Work Opportunity Act of 2007" in anticipation of the minimum wage bill reaching the Senate floor next week. The provisions included in the Senate Finance Committee's package are expected to be approved by the Senate along with the bill to increase the minimum wage.
• Included in the Senate Finance Committee's approved legislative package is a five-year extension (through January 1, 2013) of the Work Opportunity Tax Credit (WOTC). The legislation also would expand eligibility to individuals under WOTC by more broadly defining qualifying veterans, first-year wage earners, high-risk youth and those workers referred through the vocational rehabilitation system. Some Senators have expressed concern over the cost of a five-year WOTC extension potentially forcing it to be scaled back to a shorter-term extension. The Congress late last year approved a retroactive extension of WOTC and the Welfare-to-Work tax credits before adjourning for the year. The tax credits have lapsed regularly due to Congressional inaction, leaving states in administrative limbo and businesses with uncertainty over the processing of their credit applications while Congress determines the duration of the credits next extension.
• There was hope last week that included in the Senate Finance Committee's legislative package would be a provision to repeal the FUTA 0.2 percent surtax as was proposed in the House last week by Congressmen McKeon (R-CA) and McCrery (R-LA). The surtax repeal was not included and it is not clear whether an opportunity will be available on the Senate floor to add it. One barrier to its consideration could be its impact on the federal budget deficit as repealing the surtax is estimated to reduce revenues to the federal treasury by $1.8 billion annually. However, because the repeal sought by Congressmen McKeon (R-CA) and McCrery (R-LA) would become effective on April 1, 2007, one quarter into the calendar year and after a majority of FUTA taxes are collected, its fiscal impact is estimated to be much less. Estimates on the impact to the federal budget deficit, or its "score" range from $900 to $450 million annually if the April 1 effective date remains.
• The 0.2 percent FUTA surtax is a policy relic approved by Congress in 1976 as a temporary provision to improve the fiscal health of the federal accounts of the Unemployment Trust Fund. The surtax served its purpose to restore the fiscal health of the Federal Unemployment Trust Fund with the combined balances of its accounts now projected by the U.S. Department of Labor to exceed $51 billion dollars by the end of 2011. A number of organizations support its repeal because they say it contributes to the growth of a fund unjustifiable in its size to meet the nearly nonexistent demand for federal loans to states with trust fund balances insufficient to cover benefits. Since 1976, the federal government and states have reformed the operation of the UI system to improve the health of the program making it unnecessary to hold large balances in federal trust fund accounts.
Week of January 30, 2007
APPROVAL OF MINIMUM WAGE INCREASE LIKELY THIS WEEK IN SENATE
• The Senate this week began consideration of legislation (S. 2) to increase the minimum wage and is expected to approve the bill on January 30. Like the House bill (H.R. 2) approved two weeks ago, the Senate bill would increase the minimum wage over a 26 month period from $5.15 to $7.25 an hour. The bill would raise the minimum wage in three stages - to $5.85 an hour 60 days after signed into law by President Bush, to $6.55 a year later and to $7.25 a year after that. However, unlike the House, the Senate is expected to add tax provisions favorable to business to its minimum wage bill. Provisions on tax matters approved last week by the Senate Finance Committee are expected to be added to the Senate's minimum wage bill early next week before a vote on cloture, to end debate and permit a final vote to approve the bill.
• Included in the Senate Finance Committee approved tax package is a five-year extension (through January 1, 2013) of the Work Opportunity Tax Credit (WOTC). The legislation also would expand eligibility to individuals under WOTC by more broadly defining qualifying veterans, first-year wage earners, high-risk youth and those workers referred through the vocational rehabilitation system. Some Senators have expressed concern over the cost of a five-year WOTC extension potentially forcing it to be scaled back to a shorter-term extension. The Congress late last year approved a retroactive extension of WOTC and the Welfare-to-Work tax credits before adjourning for the year. The tax credits have lapsed regularly due to Congressional inaction, leaving states in administrative limbo and businesses with uncertainty over the processing of their credit applications while Congress determines the duration of the next extension.
• An amendment sponsored by Senator John Cornyn (R-TX) to repeal the FUTA 0.2 percent surtax is expected to be considered early this week on the Senate floor. The amendment is likely to be defeated on a budget point of order because it would reduce revenues to the federal government without providing a corresponding programmatic cut or offset to make the provision budget neutral. Even if the amendment to repeal the surtax were approved in the Senate, it would almost certainly be removed in negotiations with the House as Charles Rangel (D-NY), Chairman of the House Committee on Ways and Means has said he will oppose any tax related provisions added by the Senate to the minimum wage legislation because legislation effecting taxes must originate in the House of Representatives.
• Repeal of the FUTA surtax is a policy of NASWA, the National Governors' Association (NGA) and many in the business community including the UWC and the National Federation of Independent Business (NFIB). The 0.2 percent FUTA surtax is a policy relic approved by Congress in 1976 as a temporary provision. The surtax served its purpose to repay general fund loans to the Federal Unemployment Trust Fund. Combined balances of its accounts now are projected by the U.S. Department of Labor to exceed $51 billion dollars by the end of 2011. A number of organizations support its repeal because they say it contributes to the growth of a fund unjustifiable in its size to meet the nearly nonexistent demand for federal loans to states with trust fund balances insufficient to cover benefits. Since 1976, the federal government and states have reformed the operation of the UI system to improve the health of the program making it unnecessary to hold large balances in federal trust fund accounts.
SENATORS WORKING TO PROHIBIT USDOL EFFORTS TO REFORM WIA AND ES THROUGH REGULATION
• Senators Edward Kennedy (D-MA) and Patty Murray (D-MA) expressed in a recent letter sent to Senators Tom Harkin (D-IA) and Arlen Specter (R-PA), the Chairman and Ranking Member of the Senate Labor, HHS and Education Appropriations Subcommittee respectively, their desire to halt the effort undertaken by the U.S. Department of Labor (USDOL) to amend Workforce Investment Act (WIA) and Employment Service (ES) regulations. The letter from Senators Kennedy and Murray requests the addition of language to the Senate's unfinished fiscal year 2007 Labor program spending bill that would prohibit the USDOL from issuing regulations on WIA until after Congress reauthorizes the Act. NASWA has learned that Senator Kennedy is not necessarily opposed to the USDOL's regulatory proposals, but he is concerned the Department is taking steps to change policy via the regulatory process in advance of legislation to reauthorize WIA. Senator Kennedy is Chairman of the Senate's Health, Education, Labor and Pensions (HELP) Committee, responsible for the approval of legislation to reauthorize WIA.
• The USDOL announced in the December 20 Federal Register its Notice of Proposed Rulemaking (NPRM) to implement several significant changes to the Workforce Investment Act (WIA) and Wagner-Peyser Act Regulations in volume 20 of the Code of Federal Regulations (CFR). Included in the USDOL proposed rulemaking are provisions to: require ES offices to be located at, and fully integrated into, each comprehensive One-Stop Center; Eliminate merit-system requirements for Wagner-Peyser staff; require Vocational Rehabilitation director representation on the state Board; focus the state Board on system-wide leadership; provide options on time-lines for state and local plans; clarify/eliminate the requirement for sequence of services; eliminate the time limits for Eligible Training Provider List (ETPL) eligibility, allow more flexibility for governors regarding ETPLs; allow youth (16-17) to use Individual Training Accounts; and seek input on what constitutes administrative costs.
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