President George W. Bush and the GOP congressional leadership met at the White House on April 20th and have decided that they would first agree to an overall spending level for the highway and transit reauthorization and then attempt to appoint conferees. It has been reported that the President is holding firm on his veto threat of any bill over the $256 billion level proposed by the Administration. Congressional leaders are pushing for a significantly higher number. The Senate-passed bill (S. 1072) carries a price-tag of about $318 billion, while the House-passed bill would cost about $284 billion (H.R. 3550).

Some in Washington believe that lawmakers would settle on a $300 billion bill but that if the White House is involved in the final decision and is willing to compromise, the ultimate spending level might be around $270 billion to $275 billion. Resolution of the funding level is at least a week away.

In an April 6 letter to Senate Majority Leader Bill Frist (R-Tennessee), Senate Environment and Public Works Committee Chairman James M. Inhofe (R-Oklahoma) and Senate Transportation and Infrastructure Subcommittee Chairman Christopher S. Bond (R-Missouri) wrote that the Senate funding levels "are the minimum that should be included" in the final product. This is viewed as a sign that they will continue to fight all attempts to lower the Senate level.

Although there was no official word on whether Democrats or even the GOP authors of the reauthorization bills would be included in the final decision-making process, neither group was invited to the White House meeting and both groups are pushing the Senate's $318 billion funding level.

White House involvement is viewed as an assurance that Congressional Republicans will not put the President in the potentially difficult position of having to veto the bill and then watch as Congress overrides it in an election year. It is possible that the GOP leadership could insist that a provision from the House bill known as a "reopener" be included in the final product. White House officials object to the reopener provision because they do not believe it makes the bill a six-year bill. Under the provision, all apportioned highway program dollars would be cut off at the end of fiscal year 2005 unless Congress has written a new law that increases the minimum guarantee of funds going back to the states above the 90.5 percent included in the underlying bill.

The agreement between the White House and GOP leaders is also a move that presumably would allow some negotiating to continue despite Senate Minority Leader Tom Daschle's (D-South Dakota) refusal to allow conferees to be appointed until he is guaranteed Democratic participation and that Senate conferees will support the $318 billion funding level. He would like conferees to “pre-conference” the bill to ensure Democratic participation, but has held short of insisting on such. Senator Frist has indicated they would not pre-conference the bill.

Short Term Extension

The current extension of the transportation programs expires on April 30, and even if conferees were appointed this week, staffers did little reconciling over the recess, saying they could not get the bill to Bush by then. Both chambers are expected to consider another two-month extension of TEA 21 during the week of April 26, although some lawmakers said the length of the extension might still be up in the air as a number of Senators are seeking only a 30-day extension.

Senator Daschle has said he could support another extension only if ongoing discussions among House and Senate staffers to reconcile their two bills are "becoming productive." It is commonly thought that Daschle, who is in the middle of a tight re-election campaign, would never allow the program to shut down, as it would result in the furlough of thousands and thousands of jobs and could put future projects into disarray.

The Centers for Medicare and Medicaid Services (CMS) has announced that state pharmacy assistance programs can enroll low-income Medicare beneficiaries automatically into the transitional assistance benefit of the Medicare Modernization Act. States that have the authority to act as an “authorized representative” of a beneficiary (as defined by state law) would be permitted to enroll beneficiaries in drug cards on the beneficiary’s behalf. This step will make it easier for low-income beneficiaries in states with pharmacy assistance programs to get $600 in additional help.

Secondly, Medicare will issue a standard enrollment form that will be accepted by all Medicare Approved Discount card programs. This standard form will make it easier for community based organizations, health professionals, and consumer groups to assist beneficiaries with the enrollment process.

CMS will soon provide a standard enrollment form for the Medicare-approved drug discount card program for use by State Health Insurance Programs (SHIPs), and other partners and organizations that assist beneficiaries with their health care decisions.

The automatic enrollment policy will help many states coordinate their own drug benefits for low-income Medicare beneficiaries with the new Medicare drug benefit by making enrollment easier for the states and beneficiaries.

Twenty states have large programs that already provide drug benefits to these beneficiaries. Many of these beneficiaries will be eligible for the new transitional assistance benefit under the new Medicare Modernization Act. Individuals may be enrolled in both types of programs at the same time.

Beneficiaries who are signed up for the transitional assistance get $600 to pay for drug costs. Depending upon how the State plan is organized, this could mean state programs would not have to pay the first $600 for each of these beneficiaries, thus freeing up money to help states pay for their own program.

States that are able to automatically enroll Medicare beneficiaries into the new program will be able to identify which card a beneficiary is enrolled in so that the individual can return to the state program after the $600 is used without losing any coverage.

Today, the Bush administration announced scaled-back rules to change eligibility for overtime pay. These revised regulations were made after the administration issued a preliminary rule last March seeking to change the criteria for determining which employees not covered by collective bargaining agreements are eligible for premium pay when they work more than 40 hours in a week.

Included in the revised regulations was a proposal that workers making less than $23.660 per year will be guaranteed overtime, a change from the original proposal's $22,100 cutoff. Another proposal includes a guarantee police and firefighters retain their right to keep overtime benefits.

These changes, however, are unlikely to diminish Democratic criticism that any changes are an attack on working Americans.

The House Select Committee on Homeland Security has unanimously approved H.R. 3266, Faster and Smarter Funding for First Responders Act of 2004. Citing concern for the almost $9 billion that has been appropriated or budgeted since 2001 but not yet expended by state and local governments, the committee endorsed this legislation to change the criteria for distributing funds for two existing grant programs: the State Homeland Security and the Urban Area Security Initiative; and authorize $3.4 billion for first responder grants in fiscal year 2006. Grant programs from agencies other than the Department of Homeland Security (DHS) and firefighter assistance grants are not affected by this legislation.

The existing State Homeland Security grant program distributes three-quarters of one percent of the amount appropriated to each state. Remaining funds are distributed according to state population. The Urban Area Security Initiative program provides grants to high threat areas of the country, initially seven municipalities, now expanding to 50. Under H.R. 3266 these two programs would be consolidated and funds would be distributed based on threats, vulnerabilities, and risk assessments. States would be required to disburse 80 percent of the grant money to local governments within 45 days of receiving funds from the federal government or face penalties as well as pay 25 percent of the grant activities. Federal funds could be provided directly to local recipients if states fail to perform.

Eligible grant recipients are states or regions, defined as any area consisting of 2 or more contiguous states, counties, municipalities, or other local government that have a combined population of at least 1,650,000 or have an area of not less than 20,000 square miles, or any other combination of local government units recognized by DHS as a region.

Grant funds may be used for a wide range of service and equipment costs. However, grants funds may not be used for buildings and other physical facilities, land acquisition, or to supplant traditional services of law enforcement, firefighting, emergency medical, or public health. Additional personnel costs for responding to terrorism alerts are specifically cited as an eligible grant activity. A 25% non-federal match is required and may be satisfied with in-kind contributions.

The House bill has been referred to three other committees, which share jurisdiction with the Homeland Security Committee. Those committees must complete their consideration of the bill by June 7th. When the legislation goes to the floor for a vote later this summer, expect to see an amendment to authorize grants directly to local governments. Some members remain convinced that is the only way to ensure timely implementation of grants.

A similar Senate bill, S. 930, the Emergency Preparedness and Response Act, was reported out of the Senate Environment and Public Works Committee in February. The Senate bill guarantees the same basic level of funding as existing law and sets aside at least 10 percent of the appropriated funds for direct assistance to local governments recommended by the governor. The 28 existing Urban Search and Rescue teams are guaranteed $1.5 million annually, and no additional teams may be established until all existing teams are trained and equipped for two teams to be deployed simultaneously. The bill is ready for floor consideration in the Senate.

Congress is returning to work on April 20 after a one-week recess for the Senate and a two-week break for the House. We thought this would be a good time to take a snapshot of where things stand on some issues of interest and look ahead to how they may be dealt with the in weeks ahead.

Appropriations

Lawmakers are expected to adopt a budget resolution shortly after they return from Easter break on April 19. Discretionary spending will likely be targeted at $821 billion. Meanwhile, the appropriations subcommittees continue hearings through May on the President’s budget requests and will receive their budget allocations in preparation for writing the 13 appropriations bills. Leaders of the House and Senate Appropriations Committees have been advising a slow mark-up process, predicting that most--if not all the bills--will be wrapped into an omnibus appropriation to be enacted sometime after the November election.

The VA, HUD bill and the Labor, HHS, Education bill are considered most likely to feel the budget pinch. Education initiatives will fare better than Labor programs. HUD and EPA are also predicted to experience restrained spending. Despite harsh criticism of Congressional earmarks for specific projects and programs, Congress is expected to include earmarks in the final bills, although competition will be fierce as the demand for earmarks continues to grow and budget constraints tighten. Don’t expect final action on earmarks until the end of the process—November at the earliest.

Transportation

With both Houses of Congress in spring recess, staffs are not doing any work to reconcile the House and Senate surface transportation reauthorization bills. In fact, House Transportation and Infrastructure Chairman Don Young (R-Alaska) has told his committee staff that they are not to meet with Senate staff until his return to Washington, D.C. on or after April 26. Senate Minority Leader Tom Daschle (D-South Dakota) favors a pre-conference on the reauthorization bill, which he feels will ensure minority participation. Recently, Senator Daschle has been dismayed at what many Democrats feel are attempts by Republicans to exclude them from all conference committees. For months, Daschle has fought attempts by Republicans to shut out Democrats in conference and has even issued threats to block certain conference committees from considering legislation. Senate Majority Leader Bill Frist (R-Tennessee) opposes a pre-conference on the basis that Democrats would only use such an occasion to stall negotiations until their demands were met. However, Daschle maintains that a pre-conference is the only mechanism to guarantee Democrats a voice in the entire process.

The current extension of the program runs through April 30, and it is certain that another extension will be required. Another extension will again drop the bills' costs, but almost certainly not enough to appease the Administration, which has threatened to veto any bill larger than $256 billion.

Welfare Reauthorization

The prospects for passage of welfare reauthorization this year looks slim. The administration and its congressional allies had hoped to use the reauthorization of welfare law to impose tougher work rules on welfare recipients and implement a new marriage initiative. Instead, Republican leaders suspended debate on the reauthorization package after their motion to invoke cloture on the measure was nine votes short of the 60 needed to proceed.

During consideration of the welfare bill, Democrats refused to allow a final vote unless Republicans agreed to a voice vote on an amendment to increase the minimum wage. Democrats also attempted to attach other amendments that would extend supplemental federal unemployment benefits, and an overtime proposal.

An amendment to provide $6 billion in additional child care funding over the next five years was adopted during Senate floor consideration. This amendment offered by Sen. Olympia Snowe (R-Maine) gave senators from both parties a chance to make a statement in favor of children and families in an election year.

Congress has extended the existing program through June 30 and a further extension is beginning to look like a likelihood.

Workforce Investment Act

It looks like the reauthorization of the Workforce Investment Act (WIA) is in permanent limbo. Congress is near the end of the rewriting and reauthorizing of the 1998 law which consolidated more than 60 programs into block grants allocated to the states. It also allowed workers to use vouchers for training and education and established one-stop career centers.

Senate Democrats have not allowed the legislation to go to Conference with the House because they fear that they will not have any input on the final bill. So while the Senate and the House have passed their respective versions of the reauthorization bills, but it appears that larger issues are preventing conferees from being names. Last Monday, President Bush, in a speech in North Carolina and Senate Majority Leader Bill Frist (R-Tennessee) called for conference to proceed.

Special Education (IDEA)

Senate Majority Leader Frist has announced that the Individuals with Disabilities Education Act (IDEA) reauthorization should be coming to the Senate floor in early May. The reauthorization has passed the House and out of the Senate Committee on Health, Education, Labor and Pensions last year. In the Senate, the legislation has been developed in a bipartisan manner - but there still may be some contentious issues on the disciplining of an IDEA student and funding levels. Senate majority staff is commited to getting to conference as that's where they are going to iron out these issues. But the House has indicated that if the Hagel-Harkin amendment which calls for mandatory full funding is in play - they will not name conferees.

This is one piece of major legislation that appears ready for enactment this year.

Reconsideration of Medicare Prescription Drug Bill

Congress is facing increased pressure on two fronts to reconsider the recently passed Medicare prescription drug law. First, because of rising drug costs, lawmakers are being asked to take a second look at allowing the importation of drugs from other countries into the U.S. Second, lawmakers are demanding answers from the Administration over reports that the Administration purposefully withheld the true costs of the prescription drug benefit to Medicare.

Lawmakers are looking at legislation to allow consumers to import U.S. approved prescription drugs from other countries. Still undecided is whether to allow imports from Canada only. Senate Majority Leader Frist (R-Tennessee) has said that the Senate would begin a process for developing proposals to permit the safe importation of drugs if they were approved by the FDA.

Democratic lawmakers were also upset over recent revelations that an administration’s actuary’s job was threatened if he revealed the estimates of the costs of adding a prescription drug benefit to Medicare. Senate Democrats have asked President Bush what information he had about the costs of the bill before Congress voted.

The cost of the Medicare bill – estimated originally by the Congressional Budget Office at $400 billion over 10 years when it passed has sparked an outcry from both conservative Republicans and Democrats when the administration released new estimates that the overhaul would cost $139 billion more than congressional estimates.

While this issue will generate a lot of talk in the coming weeks, it is unlikely it will be the subject of serious legislation this year.

Auto-Enrollment for Prescription Drug Card

In order to enroll Medicare beneficiaries quickly in the new discount drug card program, the Centers for Medicare and Medicaid Services (CMS) is working with states that have pharmaceutical assistance programs for seniors to possibly enroll participants automatically. CMS is also looking at ways to enroll individuals in the low-income assistance portion of the prescription drug card program. Beneficiaries who meet income and other eligibility standards receive $600 in drug assistance on their cards in both 2004 and 2005.

Enrollment in the program begins in May 2004 and use of the cards begins in June.

Higher Ed

There is a remote possibility that Higher Education Act may come up for reauthorization this year. The House has already taken action on Higher Ed. They divided the Act into separate bills by title. Most of the titles have been passed except for the more contentious one - Title 4 which relates to Pell Grants and Student Aid. A bill has not been introduced in the Senate Committee on Health, Education, Labor and Pensions as of yet. There is a move to have the Committee introduce a bipartisan bill. With the President proposing a time limit for eligibility for Pell Grants, there may encourage to take action.

Water Resources Development Act (WRDA)

The Senate Environment and Public Works Committee expects to markup amendments to the WRDA in May. WRDA authorizes the water resource projects and programs conducted by the U.S. Army Corps of Engineers, including flood control, environmental restoration, harbors, and certain types of infrastructure. The schedule will be determined by the reauthorization of the surface transportation bill (TEA 21 reauthorization), which will be in a conference committee involving many of the same staffers over the next several weeks. The House passed its version of the bill (H.R. 2557) last year. WRDA amendments are usually adopted every two years, but the last reauthorization was in 2000.

Other issues will be popping up from time to time and we will keep our friends and clients posted on developments as they do.

In an effort to enroll Medicare beneficiaries quickly in the new Medicare discount drug card program, the Centers for Medicare and Medicaid Services is considering working with states that have pharmaceutical assistance programs for seniors to possibly enroll participants automatically.

CMS is also looking into ways to get beneficiaries enrolled in the new low-income assistance program. Beneficiaries who meet income and other eligibility standards receive $600 in drug assistance on their cards in both 2004 and 2005.

No final decision has been made yet, however, on the auto enrollment and the interaction with state programs. CMS has said that there are legal issues involved with coordinating between federal and state laws.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (Public Law No. 108-173), which created the program was signed by the president in December 2003. On March 25 the Department of Health and Human Services approved 71 sponsors to offer the drug discount cards. Beneficiaries will be able to enroll in the program in May and begin using the card in June.

Senator John McCain (R-Arizona) introduced legislation on April 8 to restructure, reform and reauthorize Amtrak at a cost of around $2 billion per year. S. 2036 would begin to take effect 180 days after enactment, splitting up the existing National Railroad Passenger Corporation by creating a new American Passenger Railway Corporation which would take the Amtrak name, and use it to take control of passenger rail services. NRPC would continue to supervise freight rail.

The bill would also alter the way short-corridors (sub 750 mile routes) are funded. Currently some states pay a percentage share for certain corridors within their borders, while others pay nothing. S. 2306 would require all states to pay 70% of the operating losses of short corridors by 2010. The problem of long-distance corridors would be addressed by a new commission which would seek solutions on a train-by-train basis, rather than a more broad measure. The profitable Northeast corridor would also be turned over to a multistate compact, allowing states to manage the corridor services.

Finally, the legislation creates a new rail development program modelled on New Starts, providing up to $3.25 billion for projects to introduce rail into new corridors, including high-speed rail.