In what is shaping up to be an important year for intercity passenger rail, Amtrak President and CEO, David Gunn, detailed his FY 2004 Budget Request. Gunn indicated that Amtrak would get through the remainder of the fiscal year without service interruptions.

For FY 2004, Amtrak has submitted a grant request of $1.812 billion. Amtrak's grant request breaks down into two categories: capital and operating costs. Amtrak estimates that they will require $768 million in operating funds and $1.044 billion in capital funds to sustain intercity passenger rail service during FY 2004. While Congress has yet to pass reauthorization legislation for Amtrak, Mr. Gunn predicted that Amtrak will need just under $2 billion per year for the next 5 years. Gunn noted that equipment and infrastructure maintenance, repairs and upgrades can no longer deferred. According to Gunn, Amtrak must repair and maintain equipment or trains will no longer be able to run at top speeds and train service will suffer.

Gunn stated that the FY 2004 budget request would help Amtrak stabilize itself and allow the rail operator to continue to make needed reforms. Since the near shutdown of Amtrak service this past summer, Amtrak has already begun implementing various reforms. Already, Amtrak has eliminated a call center, streamlined its management, begun providing monthly financial reports, eliminated routes, reduced the workforce and repaired damaged equipment. In the coming months, Amtrak will renegotiate labor contracts which should provide some financial relief for the next few years.

In assessing the FY 2004 outlook, Gunn projects a decrease in passenger revenues because of a slowing economy. However, Gunn also projected substantial savings in expenses, due in part to reforms that have already been implemented and changes that will be undertaken. Some of Amtrak's goals for FY 2004 include: improving reliability and quality of existing service, reinvesting in deteriorating capital assets and not beginning any new service unless it pays for itself.

In terms of security matters, Gunn feels that the newly established Transportation Security Administration (TSA) must properly deal with Amtrak. Gunn is concerned that with the heightened threat of terrorism and only 400 Amtrak police officers, rail service is vulnerable to an attack. Gunn wants the TSA to provide, implement and pay for security measures for Amtrak.

Finally, Gunn reiterated his frustration with the administration for failing to contrive a viable national passenger rail policy. The administration, OMB and U.S. DOT continue to be vague on what they want to see from intercity passenger rail and Amtrak. DOT officials have made vague references to introducing competition in intercity passenger rail, but have provided little leadership on the issue, said Gunn. However, Gunn has repeatedly stated that "I am not a politician" and is mainly interested in stabilizing and improving Amtrak, while DOT officials and Congress decide the future of intercity passenger rail.

We've now got the fiscal year 2004 appropriation request deadlines for members posted over on the analysis portion of the website. The document itself is being updated on the fly, so check it out throughout the day to get the latest information.

Former U.S. Senator Carol Moseley-Braun (D-Illinois) and Congressman Dennis Kucinich (D-Ohio) both plan to file official papers today to form exploratory committees so their campaigns can begin raising money under federal election law. Candidates number 7 and 8 join the already large Democratic field which includes former Governor Howard Dean of Vermont, Senator John Edwards of North Carolina, Representative Richard A. Gephardt of Missouri, Senator John Kerry of Massaschusetts, Senator Joseph I. Lieberman of Connecticut and the Reverend Al Sharpton. Others are considering running including Senator Bob Graham of Florida, former Senator Gary Hart of Colorado and General Wesley K. Clark, retired.

Over on the analysis side, we've got a look at the top ten priorities for the GOP led Senate this year, under the guidance of Senator Bill Frist (R-Tennessee). The analysis is right here and details health care proposals, tax cuts and a new energy package push.

The mammoth Fiscal Year 2003 omnibus package has finally passed, now to await the President's signature. The total damage is $397.4 billion dollars, and was passed in the House 338 to 83 and by the Senate 76 to 20. Many lawmakers expressed dissastisfaction with the process that culminated in 11 of the 13 appropriations bills being lumped together into one giant omnibus spending bill. And with the prospect of a looming war, homeland security needs and the lack of any funds for ongoing Afghanistan work, additional monies are likely to be appropriated in a supplemental spending bill quickly on top of the existing spending and before the FY2004 budget debate swings into full gear. We'll have more on the full implications of the bill as we begin to parse through the voluminous text.

The House Committee on Transportation & Infrastructure today extended until March 14 the deadline for submitting projects for inclusion in the TEA-21 reauthorization bill (affectionately known as "TEA-3"). Please feel free to be in touch with us as you prepare for this new deadline.

The House is preparing to vote this evening on the newly completed omnibus spending bill for FY2003. (H J Res 2) Tomorrow the Senate will vote on the bill, bringing an end to one of the lengthiest budget years in recent history. We'll have more on the spending implications shortly.

In a hearing before the House Budget Committee on Wednesday, Department of Transportation Deputy Secretary Michael P. Jackson provided the Committee with testimony on the Administration’s proposed transportation budget for FY 2004.

The Secretary was questioned by Committee members on various issues related to the transportation budget proposal, but surface transportation matters dominated the discussion. With the current TEA 21 authorization ending this year, Committee members pressed Jackson on the Administration’s goals for reauthorization. In the FY 2004 Transportation Budget, the President’s six year surface transportation reauthorization proposal calls for a 19% increase in overall funding. The Deputy Secretary outlined six principals that will guide the Administration’s reauthorization proposal:

• Increasing funding flexibility for State and local authorities to make effective program investments
• Encouraging innovative financing tools to extend the reach of our transportation investments
• Expediting the environmental review processes - continuing to implement the President's streamlining Executive Order
• Improving efficiency for freight transportation networks - a crucial driver of our nation's economy
• Strengthening public transportation by simplifying transit programs and fostering a seamless transportation network
• Consolidating and expanding Federal safety programs

With regard to highway funding, Jackson told the Committee that the President is committed to retaining RABA (Revenue-Aligned-Budget-Authority), which maintains a nexus between highway trust fund revenues and highway expenditures. However, the Secretary stated that highway expenditures would actually exceed trust fund revenues in the President's proposed budget, but maintained that the President was not requesting the enactment of new user fees.

The Administration also proposes that all revenue from gasahol and ethanol taxes be deposited into the highway trust fund, which would add more than $600 million per year to the fund. However, the President strongly opposes an initiative by Rep. Don Young (R-Alaska), Chairman of the House Transportation and infrastructure Committee, to increase the gas tax by 2.5 cents. The Deputy Secretary believes in the short-term that DOT can distribute more highway funds than it collects without imposing new user fees.

Many Committee Members, especially Democrats, also questioned Jackson on the future of Amtrak. The national rail corporation is currently awaiting completion of the Omnibus Appropriations Bill so there funding level for FY 2003 is set. Amtrak President David Gunn had told lawmakers that if Amtrak does not receive at least $1.2 billion for FY 2003, it might have to shut down operations in the spring. The President's budget for FY 2004 requests $900 million for Amtrak and the Deputy Secretary stated that: "Amtrak had severe and persistent financial challenges and must undergo significant reform". Jackson added, "the Federal Government cannot afford business-as-usual at Amtrak and intercity passenger rail must be run like a business".

While the administration and Secretary of Transportation Mineta continue to finalize their rail passenger policy, Deputy Secretary Jackson suggested that one option that ought to be given serious consideration involves introducing some form of competition to intercity passenger rail. However, Jackson cautioned lawmakers that such an idea is a longer-term solution that cannot be applied to Amtrak's current financial situation.the Jackson added that the Administration looks forward to working with the House Transportation and Infrastructure Committee to address the issues pertaining to intercity passenger rail.

The Deputy Secretary also spoke of the robust demand by local communities for mass transit funds. According to Jackson, in the last year there has been an "explosion" in demand for grant money for rail projects, especially light rail. Jackson said that DOT has developed many good working relationships with many localities and looks forward to working with new cities in the future. In order to accommodate the increased demand for rail project funds, Secretary Mineta changed the federal-state match arrangement for the distribution of funds. Currently, the Federal Government provides 80% of funding, compared to a 20% contribution from the states. The DOT has changed the arrangement to a 50-50 match because of the heavy demand. Some Democrats on the Committee argued that such a change could inadvertently damage a lesser developed community's chance of receiving transportation assistance, but the Deputy Secretary insisted that DOT would continue to work successfully with all communities.

Although Democrats on the House Budget Committee were generally non-truculent with the Deputy Secretary, some on the Committee used the forum to assail the Bush economic stimulus package in favor of one that concentrates more on public works projects. Some Democrats, including Ranking Member John Spratt (D-South Carolina), thought that the President should have requested more money for DOT to spend on public works projects, which he thought could best reinvigorate the economy.

Budget Committee Chairman Jim Nussle (R-Iowa) and Deputy Secretary Jackson confirmed that this year will be a busy and exciting year for transportation.

One of the most contentious issues in the omnibus spending bill has been the fight over drought aid. According to House Appropriations Committee Chairman C.W. Bill Young (R-Florida), the issue appears to have finally been put to rest, with both sides agreeing to fund an additional $3.1 billion in drought aid by taking it out of spending programs contained within last year's farm bill.

With drought aid out of the picture, the only major remaing hurdle are a series of environmental riders inserted by House Transportation and Infrastructure Committee Chairman Don Young, (R-Alaska). Amtrak issues appear to have been settled at the levels we mentioned earlier, leaving the logging disputes as the last to be overcome.

In the FY03 Omnibus Spending bill, Medicare payments to physicians and rural and small urban hospitals would receive another $300 million. However, this is not final and could change based on other elements of the spending package which covers 11 fiscal 2003 spending bills.

The package also includes language that would give the Centers for Medicare and Medicaid Services (CMS), the agency that runs Medicare, the legal authority to change the formula that governs how physicians are paid.

The American Medical Association (AMA) has pressed Congress for months to stop a scheduled 4.1 percent payment cut set to begin March 1. Medicare doctors' payments were cut 5.4 percent in 2002, and the AMA had warned that physicians would leave the program unless the 2003 cut was rescinded.

While members of the House supported this increase, it did not have the same support in the Senate where members were concerned that doctors would get more money but other providers such as home health agencies and nursing homes still would face cuts. However, now that the omnibus includes another $300 million for rural hospitals that treat Medicare patients, Senate Finance Committee Chairman Charles Grassley has come out in support of the language.

This issue is controversial because increasing payments for Medicare providers can easily cost billions of dollars and provoke the anger of budget hawks.

The omnibus package also reauthorizes a program set to expire March 31 that pays Medicare Part B premiums for some low-income beneficiaries.

It came down to the wire last night, but disagreement over drought aid has indefinitely delayed the attempt to finally settle the omnibus spending bill in conference. A tentative agreement was laid out, however, with almost all other issues save the drought assistance resolved. The White House opposes drought assistance beyond the provisions of the 2002 farm bill and has threatened to veto the omnibus appropriations bill over this issue. Meanwhile, western Senators of both parties remain as firmly committed to ensuring that drought funding is included in the omnibus bill. This latest setback will push back the earliest possible completion date for the House to Thursday (assuming, of course, that the drought relief issue is settled quickly) and the Senate on Friday. Any minor delays could push the entire package back beyond the President's Day weekend.

Included in the package so far are a little more than $1 billion for Amtrak funding, along with an extension of the time required to payback the latest loan installment. Also the bill appears to increase highway construction non-discretionary funding to the Senate level of $31.8 billion this year, much higher than the administration wants or the House offered. Senate Committee Chairman Ted Stevens (R-Alaska) will meet today with Vice President Cheney to try to break the deadlock. Conferees still expect to complete work this week on the omnibus bill and have no plans to adopt another stop-gap continuing resolution. The existing spending authority expires February 14. We'll have more information as the day progresses.

Our sources on Capitol Hill indicate that the long delayed Fiscal Year 2003 Omnibus Spending Bill may finally be on the verge of completion. We expect the bill to be finalized in a conference session this evening, with votes occurring in the House on Wednesday and the Senate on Thursday. We'll be sure to keep our clients and friends updated as more progress becomes known to us.

We've just got the highlights from the latest U.S. Conference of Mayors Legislative Briefing.

Omnibus Bill

• Conferees hope to conclude work on the bill by Tuesday, have the bill on the House floor by Wednesday and on the President's desk by Friday
• Across-the-board-cut will most likely be around 1% after objection from House leaders and the President
• The compromise bill will likely not include the $3 billion in drought relief added by the Senate
• The bill will also fund the 'no child left behind program', election overhaul and Medicare adjustments at lower levels than the amounts specified in the Senate Omnibus bill

President's FY04 Budget

• Mayors are concerned about the administration discontinuing the new issuance of section 8 housing vouchers
• U.S.COM urges the administration to retain the HOPE VI Housing program, which demolishes distressed public housing units
• Mayors oppose President's proposed reduction of funding for after-school program by 40%
• Cities laud the increase in Brownfield Redevelopment funds administered by the EPA – 410 cities have applied for Brownfield funds
• U.S. COM feels that many components of the President's economic stimulus plan like the elimination of the dividend will not pass, even though the President's entire plan is included in his budget

Proposed Legislation

• Rep. John Sweeney (R-NY) and Rep. Anthony Weiner (D-NY) will introduce legislation providing fiscal relief to states and localities – follows the lead of Sen. Snowe (R-ME) and Sen. Schumer (D-NY)
• The plan will provide the states with $25 billion in unconditional fiscal relief and localities with $25 billion, but with a key provision attached- localities would be forced to distribute $12.5 billion of the $25 billion to residents in the form of property tax rebates – property tax hikes have been a major problem in many cities like N.Y.C. – The U.S.COM strongly opposes any plan that would force cities or municipalities to relinquish fiscal aid because of property tax rebate requirements – The Snowe-Schumer proposal provides $20 billion to both states and localities with no restrictions

Introduced Legislation

• S. 305 (Sen. Kerry and Sen. Hatch) This bill proposes withholding low-income housing tax credits from buildings that do not offer broadband service to their tenants – U.S. COM repudiates the intent of this bill.

Miscellaneous

Senator Judd Gregg (R-NH), Chairman of the Committee on Health, Education, Labor and Pensions, will began hearings on the reauthorization of the Workforce Investment Act on February 27th

• The Administration wants to restructure the way grants are distributed to states for optional Medicaid programs like long-term care and nursing care
• There is an internal battle among members of the National Governors Association (NGA) over whether to endorse fiscal assistance to state governments

Upon further analysis of the new FY2004 Budget Proposal, some lawmakers have expressed suprise that funds devoted to overhauling old voting systems have been budgeted at much lower levels than expected. Last year's law upgrading voting systems nationwide authorizes $3.9 billion over three years with the first year, FY 2003 at $1.5 billion in the pending omnibus spending bill.

But in the FY 2004 budget, President Bush spends only $500 million, one-third of what the law authorizes. The money would fund grants to help state and local governments replace outdated election gear and meet the standards of the law.

Democrats have complained that this doesn't meet the aims of the law. Republicans see it as a good start, even if not ideal.

The 1996 Welfare law is up for reauthorization this Thursday, February 13. The bill comes to the floor without markups in the three committees with jurisdiction over the issue. House leaders say they took the unusual step because of the more than 20 hearings on the issue that were held in the 107th Congress. They said they wanted to give the Senate, which did not act on a welfare bill last year, time to pass a measure and allow for a conference.

Republicans will test the notion of adding tougher work requirements at a time when the economy is struggling and jobs are less abundant. They believe that the only way to lead the poor out of poverty is through a job regardless of economic conditions. Democrats will stress that the weak economy suggests that the new welfare rules should avoid imposing new mandates on states or individuals while authorizing more money for child care, transportation and education for the 2 million families that receive cash assistance.

The bill on the House floor (HR 4) sponsored by Representative Deborah Pryce (R-Ohio), is essentially the same as a measured passed by the House last May. The Senate did not pass a corresponding bill, so lawmakers extended the 1996 law through the end of March. The bill would require by 2008, that participants work 40 hours a week, and that states have at least 70% of their adult recipients employed. The legislation would maintain funding at $16.6 billion and provide a $1 billion increase in mandatory child care grants to states.

Democrats will likely offer a bill similar to the one they offered last year. They believe the goal of reauthorization should be not only tho help welfare recipients find a job, but to provide them an education and job training. Their bill will likely adjust state grants for inflation, authorize an addition 11.3 billion in child care money and retain the 30-hour work week rule.

No Senate bill has yet been offered.

Congressional negotiators are near completion on the FY 2003 spending bill. A key hurdle was cleared when Congressional negotiators agreed to add $6.1 billion for U.S. military activities in Afghanistan. Republican aids were hopeful that the additional funds along with $3.9 billion added earlier for war-related intelligence activities would help expedite passage of the long-stalled spending measure. The measure covers all domestic departments and the U.S. foreign aid program through September.

One factor in the delay of passage of the spending bill is that Congress has balked at providing President Bush blanket authority to spend as much as $10 billion from a wartime reserve account. But under a deal brokered by Vice President Dick Cheney as Defense Secretary Donald Rumsfeld and senior members of the House and Senate appropriations committees, the $6.1 billion in military funds would be appropriated under more standard procedures.

Republican lawmakers want to bring the spending bill to the floor of both chambers for passage no later than Thursday. Lawmakers are backed up against the Presidents Day recess that begins this Friday, February 14.

Potential roadblocks do exist over funding and environmental provisions written into the bill. For example, environmentalists in both parties want to remove language that would allow Interior Department funds to be used for earlier studies of oil and gas development of the Artic National Wildlife Refuge in Alaska. Funds for federal and state land and water conservation programs would be reduced by $166 million. Funding for Medicare adjustments and drought assistance could also cause some hurdles.

Yet to be determined is how to pay for "add-ons" which could require government-wide cuts to keep the package within the limits set by the White House. An example of an add-on is that Senator Ted Stevens (R-Alaska) who chairs the Senate Appropriations Committee, has proposed $100 million to help fishermen, $35 million of which would go to fisherman in his state.

Mitchell Daniels, director of the Office of Management and Budget, threatened a veto of the billions unless it stays under $385.9 billion not including the aforementioned $3.9 billion for intelligence activities. The Senate-passed omnibus had a price tag of $391 billion. It also called for $2.9 percent across the board cut that would pay for increases in education spending, Medicare payments, election overhaul efforts and drought assistance for Western farmers.