***Weekly Update***
From Legislative Committee Chair: Todd Kolden, Aberdeen Central Office
Week of February 5, 2007
HOUSE APPROVES FAST TRACKED FY 2007 SPENDING BILL TO FUND MOST WORKFORCE PROGRAMS AT FY 2006 LEVELS
• The House on January 30 approved (286-140) its fiscal year 2007 appropriations bill (H.J. Res. 20) to fund federal government operations for the remainder of the fiscal year through September 30, 2007. The Senate is expected to begin consideration of the bill next week. The bill would fund workforce programs including the Workforce Investment Act (WIA), Unemployment Insurance (UI), Employment Services (ES), One-Stop/Labor Market Information (LMI) and Veterans' Employment and Training Services (VETS). The federal government currently operates on a continuing resolution (CR) through February 15. Leaders of the House and Senate Majorities have expressed a strong interest in approving spending for the remainder of fiscal year 2007 as soon as possible because the process of considering fiscal year 2008 spending effectively begins next Monday when the President's fiscal year 2008 Budget is released (See article below.).
• Most programs under the House bill including WIA and ES would be funded at their fiscal year 2006 levels, a victory for the workforce system considering bills approved by the House and Senate Appropriations Committees during the 109th Congress had proposed significant reductions, including a $325 million rescission to WIA programs. It appears the most significant reduction included in the bill is to the One-Stop/LMI line-item, which would receive approximately $64 million under the bill, or about $18 million less than was appropriated in fiscal year 2006. The $64 million amount is the level approved by the Senate Appropriations Committee last Congress; the House Appropriations Committee had proposed a $42 million cut. Most of the $18 million cut to the One-Stop/LMI line-item may be a result of a zeroing out of the America's Job Bank, which operates on approximately $15 million annually. However, how funding is allocated to the states is ultimately determined by the U.S. Department of Labor (USDOL).
• The base funding level for UI state administration under the House bill would be the same as appropriated in fiscal year 2006. This appropriation would ensure that the planning targets released by the USDOL on June 1, 2006, will be the amounts distributed for the fiscal year. Appropriations for the administration of the UI program are supposed to be based on projected economic conditions, as an improving or declining economy can affect the number of individuals filing for UI benefits and thus the cost of administration. But more recently, Congress has taken a rear view mirror approach at appropriating for UI program operations, basing future levels on the prior year appropriations. This method of appropriating while neither accounting for the fluid operational environment of the UI system nor factoring in the requests of states through the Resource Justification Model (RJM) may appropriate adequate funding for fiscal year 2007 as economic activity between 2006 and 2007 is not expected to change much. Levels in the House spending bill will permit the USDOL to continue funding for Reemployment and Eligibility Assessment (REA) initiatives funded in fiscal year 2006 through fiscal year 2007. The funding level in the House bill would not support the $30 million increase the Administration requested to expand REAs to additional states in fiscal year 2007.
• In addition to establishing funding levels for the remainder of fiscal year 2007, the appropriations bill includes language (page 56) that would restrict any funding under the bill be available to "finalize or implement any proposed regulation under the Workforce Investment Act of 1998, Wagner-Peyser Act of 1933, or the Trade Adjustment Assistance Reform Act of 2002 until such time as legislation reauthorizing the Workforce Investment Act of 1998 and the Trade Adjustment Assistance Reform Act of 2002 is enacted." This language is intended to block the effort undertaken by the U.S. Department of Labor to effect workforce system policy through the regulatory process begun on December 20, 2006, via the Notice of Proposed Rulemaking (NPRM). Many Senators have expressed concern with the USDOL effort to alter policy in advance of the approval of reauthorizing legislation - Senators Kennedy (D-MA) and Murray (D-WA) sent a recent letter to Senate Appropriators requesting language restricting future USDOL regulatory effort in the spending bill.
• The Bush Administration expressed concern with the language in the House bill restricting the USDOL from moving forward on its proposed regulatory changes to the WIA and ES programs. In its Statement of Administration Policy, the Administration noted that it "strongly opposes the legislative rider" because the regulations proposed by the USDOL would "reduce bureaucracy, give workers more flexible training options, and better integrate the TAA program with the One-Stop Career Center network - helping American workers remain competitive in the global economy."
• Also included in the spending bill is language that appears to ease the transfer of federal equity in state employment security real property to the states. According to the provision (page 60), "the portion of any real property that is attributable to the Federal equity transferred under this section shall be used to carry out activities authorized under this Act, the Wagner-Peyser Act, or title III of the Social Security Act." Members of the workgroup responded with a mixed reaction to the provision noting its intent appears to be to allow states to sell a SESA-owned building, and use the proceeds for ES/UI administrative purposes generally. Under current law, such a sale would require that the proceeds be used only to acquire or improve SESA real property. While it appears most states would desire increased flexibility to spend sale proceeds, one member noted the provision would prohibit the use of UI/ES facilities by WIA Title I operators, Workforce Investment Boards and other members of the one-stop system. This may be an unintended consequence of the way the provision was drafted. NASWA is continuing to investigate the provision and identify the Member of Congress who sponsored it to assess the intent.
MINIMUM WAGE BILL STALLED OVER HOW TO HANDLE TAX PROVISIONS ADDED BY THE SENATE
• The Senate on February 1 approved legislation (S. 2) to increase the minimum wage but has yet to transmit it to the House to begin conference negotiations because of uncertainty over how to reach an agreement on differences between House and Senate versions. Negotiations between the House and Senate are reportedly ongoing and conference negotiations could begin as early as next week. Both the House and Senate bills include identical language to increase the minimum wage over a 26-month period from $5.15 to $7.25 an hour. Both bills 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. But the Senate bill includes a number of tax provisions the House bill (H.R. 2) does not, clouding the path to enactment because Members on both sides of the aisle have expressed strong opinions over content to be included in final agreed to legislation. Chairman of the House Committee on Ways and Means, Charles Rangel (D-NY) has in recent days said he might consider allowing some of the Senate's tax provisions be included in the final bill. Members of the Senate Minority have said they expect all of the tax provisions to be included in the bill because they were approved on a bi-partisan basis in the Senate and represent significantly less than what the Minority party wanted included in the bill.
• Included in the Senate's bill 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. 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.
• The Senate's legislation includes a provision to amend the relationship of certified professional employment organizations (PEO) for purposes of employment taxes. The Senate provision would treat certified PEOs as the employer of "any work site employee performing services for any customer of the certified professional employer organization, but only with respect to remuneration remitted to the work site employee by the certified PEO." NASWA is seeking input from its UI Committee on this issue to determine appropriate next steps in consultation with its Legislative Committee. Many states have struggled over how to effectively regulate the PEO industry to enable the industry to operate while ensuring the health of the UI program.
• An amendment sponsored by Senator John Cornyn (R-TX) to repeal the FUTA 0.2 percent surtax was defeated on budgetary grounds as it did not include a corresponding offset to the decline in federal revenues it would create. 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 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.
PRESIDENT'S FY 2008 BUDGET REQUEST SET FOR RELEASE ON FEBRUARY 5
• The President's fiscal year 2008 Budget is scheduled for release on Monday, February 5 and will be available online at www.omb.gov at approximately 12:00 p.m. Details on the Administration's Budget are closely held until the Office of Management and Budget (OMB) convenes its annual press conference the first Monday in February. However, the Washington Post reported today than an internal memorandum circulated among high-level USDOL officials disclosed one detail on the Department's request - a desire to "consolidate and streamline" four training programs. The Administration's Budget is expected to largely reflect its fiscal year 2007 request, which requested a consolidation of the Workforce Investment Act Adult, Dislocated Worker, Youth and Employment Service programs.
WIA REAUTHORIZATION'S SLOW START EXPECTED TO PICK-UP SOON IN THE HOUSE
• The House Education and Labor Committee (formerly Education and the Workforce Committee) is expected to convene hearings over the next two months on reauthorization of the Workforce Investment Act (WIA). Given the change in party control in the chamber, legislation to reauthorize WIA is expected to be similar to current law than the legislation approved by the House last Congress. Some on Capitol Hill believe the House and Senate must approve legislation to reauthorize WIA before the summer recess begins in August or risk going another two years without new law. Staff members to the Senate's Health, Education, Labor and Pensions Committee, the panel responsible for approving legislation to reauthorize WIA have said its bill will closely resemble the bill (S. 1021) it approved last Congress. It will become increasingly difficult for Congress to approve legislation as it approaches the Presidential elections in November 2008.
|
|