House and Senate conferees on the TEA-21 Reauthorization will meet at 3pm today (July 15) to review the House response to the Senate's offer on the overall funding level for the six-year bill. Rumors are rampant and cover almost every potential outcome. It appears to us the House will offer a six-year funding package between $285 and $300 billion -- depending on how you count.(The difference being whether you count "guaranteed" funding or "contract authority.")

While reports differ on the participation of House and Senate leaders in developing this proposal, it appears clear the White House has not yet expressed a view. So, this would appear to be another iteration of the "trial ballon" strategy from Capitol Hill. If they don't get a "no" from the White House in short order, Congressional leaders may view that as tacit approval.

Some Democrats have been sticking with the $318 billion number as the minimum acceptable level. Their concern is that advancing the bill at a lower number without White House approval is part of a "trap" which would get Congress into a negotiation with the White House between the new congressional number and the White House number. This would yield a result well below the new number from the conferees. This would repeat a pattern established on other major legislation in this congress.

We will have news for you as soon as it is available.

Tuesday the Bush administration submitted a report to Congress showing how the Patriot Act has been used successfully to prosecute terrorists and other criminals as an effort to counter congressional criticism. Evidence of this criticism can be seen when the House barely rejected a measure last week that would have prevented the use of the section of the law (PL 107-56) that made bookstore and library records available during terrorism investigations. According to Attorney General John Ashcroft, the 29-page report, which outlines case studies of how the law has been enacted, provides “a mountain of evidence” of the law’s benefits. Ashcroft urged Congress to renew the law, which he said had been instrumental in terrorist investigations leading to charges against 310 people, of whom 179 were convicted. Several of its provisions will otherwise expire in 2005. Critics are suspect of the report, pointing out that the administration simply highlighted positive examples while ignoring the many civil rights abuses the law has allowed.

The House is expected to vote today on an amendment to the fiscal 2005 agriculture bill that would allow over-the-counter sales of the “morning after” pill, reversing a recent decision by the Food and Drug Administration. The FDA’s May 6th announcement that they would no longer allow non-prescription sales of the contraceptive Plan B after voting to allow it in December 2003 has caused Democrats to accuse the FDA of caving to political pressure from conservative groups. This amendment, offered by Democratic Representatives Carolyn B. Maloney of New York and Henry A. Waxman of California, faces opposition from Republicans who believe the drug could increase teen pregnancy.

Debate on the $83.7 billion agriculture appropriations bill began Monday and a vote is expected Tuesday. Democrats protested that the $16.8 billion in discretionary spending, which is below the fiscal 2004 level, will not be enough to fund essential programs.

The House-Senate Conference Committee on TEA-21 has postponed its meeting scheduled for tomorrow (July 13) amid signs the House may be preparing an offer that would improve prospects for movement on the legislation.

House GOP staffers are reporting that their side may be prepared to offer a funding package of $285 billion in obligation authority with $295 billion in contract authority over the six-years. Which number you choose to emphasize is really a matter of packaging. The offer would reportedly include bringing the highway program Minimum Allocation up to 93% of a state's contribution to the Highway Account of the highway trust fund. It is unclear how it would treat other elements of the House bill, such as Projects of National Significance and High Priority Projects.

This "offer" has all the hallmarks of a trial balloon being floated to see how various parties react. If the White House were to shoot it down in the next few days, deliberations would be back to square one. On the flip side, if the Senate were to indicate interest and the White House remains silent, it is possible some productive discussions could finally begin on the legislation.

We will -- as always -- stay on top of developments.

As Congress kicks off its workweek, here is a quick look at the what to expect on transportation issues.

Reauthorization of TEA-21

The House-Senate Conference is slated to meet tomorrow -- July 13 -- to discuss again the overall funding level for the program. Since last week's meeting, at which harsh words were exchanged, we have seen little sign of compromise between the three parties -- the House, the Senate and the Administration. Tuesday's meeting will be important in that it may determine whether or not conferees can find a way to move forward in the absence of an overarching agreement on funding. It will also potentially be a forum to discuss the extension of the programs, now due to expire on July 31. Congress departs for a five-week recess on July 23, so action on the extension will need to take place by then. Staff members have still not discussed any controversial issues.

Appropriations

The House Appropriations Committee Subcommittee on Transportation-Treasury is planning to mark-up on July 15 its version of a fiscal 2005 spending plan for agencies under its jurisdiction. Full committee action is slated for July 23. Because of the lack of an authorization bill, the funding levels for highway and transit to be included in this legislation are very much up for grabs. Chairman Ernest Istook (R-Oklahoma) is playing it close to the vest and very little is known about his intentions for key programs. We are hearing there is a strong potential that because of the uncertainty over the authorization process and, therefore, the final funding levels, project earmarks may NOT be included in either the subcommittee of full committee version of this legislation. This would leave the committee maximum flexibility to make adjustments in conference in the event a reauthorization bill is done by that time.

Over on the Senate side, it appears action will be delayed until September. However, we are keeping a close eye on the situation there as it seems to be quite fluid.

We will have updates throughout the week as developments unfold.

The Labor-HHS-Education appropriations bill was approved in subcommittee yesterday by a vote of 18-0, moving it to full committee next week. The $492.3 billion bill for fiscal year 2005 contains $142.5 billion in discretionary spending, a 2.2% increase from FY04. A Democratic amendment from ranking member David Obey (Wisconsin) to provide an additional $7.4 billion to programs was defeated along party lines. The increases to individual programs were mostly in line with what the administration requested, with the bottom line for discretionary spending only $202 million higher. Mandatory spending in the bill totalled almost $350 billion.

Yesterday, House Republican leaders managed to stave off an attempt to modify sections of the 2002 USA Patriot Act in a nail-biting roll call vote prolonged over half an hour. The time was extended long enough to allow nine House members to switch their votes, killing the amendment by 210-210. Bernard Sanders (I-Vermont) had proposed that parts of the law dealing with libraries and bookstore patrons should be nullified, but the GOP leadership was able to persuade enough members such portions were necessary with the help of a Justice Department letter urging their protection.

The failed amendment was made during the debate over the Commerce-Justice-State appropriations bill. Two amendments were succesfully added to the measure, one directing the State Department to recognize Jerusalem as the capital of Israel, and the other blocking funding for anti-HIV/AIDS programs that do not explicitiy oppose "sex trafficking".

The House-Senate conference on reauthorization of TEA-21 met on July 7 and made no progress on the crucial issue before them -- the overall size of the six-year package. Senators came to the meeting hoping the House would bring a response to the formal "offer" they made on June 23 of a $ 318 billion price tag. The House, for which Rep. Don Young (R-Alaska) spoke, said they were not in a position to respond as yet to the Senate offer. This prompted a spirited exchange between Rep. Young and Sen. Harry Reid (D-Nevada), with Reid expressing the opinion that the conference would go nowhere and that Young had lost his "pizazz" on the bill. Following that brief flare-up conferees made statements about the importance of continuing to work to get an agreement on the overall number and lamented the White House's veto threat, given the special, trust-fund nature of these programs. Conferees agreed to a list of 32 non-controversial provisions in both the Highway and Transit titles.

A meeting of the conference is now scheduled to occur on July 13 at 11:00 am Eastern Time. Stay tuned for further updates.

Welfare programs around the country are currently in a holding pattern because of a stalemate in Congress that has prompted state officials to postpone new investments in child care, expansions in job training and other initiatives for welfare recipients and low-wage workers.

Republicans have insisted that stricter work requirements be part of any effort to renew the 1996 welfare law. Major provisions of the law were scheduled to expire in September 2002. However, since then Congress has passed seven bills extending the program.

If the stalemate persists states could lose money. Both the House and Senate have tentatively agreed to continue providing $16.5 billion a year for the main welfare program. However, with large budget deficits looming, Congress will be under pressure to cut this amount next year.

The 1996 welfare law eliminated the individual entitlement to cash assistance and gave each state a sum of money with vast discretion over how to use it. Now, uncertain about federal spending levels and the direction of federal policy, state officials have deferred major decisions. If Congress were to require welfare recipients to work longer hours, states may be forced to expand child care for welfare recipients, at the expense of child-care subsidies now paid to low-income workers who have left welfare.

State officials are also worried that Congress might cut grants to states under the main federal welfare program, given the sharp decline in welfare rolls. State officials want to expand the definition of work to include more vocational education and drug treatment, or to permit families on welfare to keep more of the child support that states collect on their behalf.

Governors and state legislators of both parties are asking Congress to reauthorize the welfare program for five years.

The House and Senate welfare bills differ in many ways, but both require that 70 percent of adult welfare recipients should be engaged in work activities by 2008, subject to certain adjustments.

Finance Committee Chairman Charles E. Grassley expects that the corporate tax cut bill will not be completed until after the August recess. The House bill (HR 4520) and the Senate bill (S 1637) both replace an export subsidy ruled illegal by the World Trade Organization with business tax breaks to force the European Union to lift its retaliatory trade sanctions. The EU’s duties, currently 9 percent for more than 1,600 US products, will otherwise continue to increase by 1 percent each month.

The Senate has still not appointed conferees, and Senate Majority Leader Bill Frist (R-Tennessee) blames the delays on demands from Democrats. Minority Leader Tom Daschle (D-South Dakota) is insisting upon establishing similar ground rules to those used on the highway reauthorization bill (HR 3550), which assured the inclusion of Senate Democrats in the drafting of the final bill. Other Democratic demands include requirements that the Food and Drug Administration regulate the tobacco buyout, preventing the administration from implementing new overtime pay rules, and including enough revenue increases to offset the cost of tax cuts. Grassley predicts that Congress will finish the bill before the November elections.

House conferees will respond to their Senate colleagues’ offer of $318 billion when the conference committee on HR 3550 meets on Wednesday. House Republican leaders have yet to decide what level of funding they are willing to support. One powerful conferee, Rep. Don Young (R-Alaska), has already announced his intentions, stating that “there will not be any less out of this than we passed in the House.” Earlier this session the House approved $283 billion in transportation funding. However, House Majority Leader Tom DeLay (R-Texas) publicly rebuked the Senate offer, as did House Ways and Means Chairman Bill Thomas (R-California). House Speaker Dennis Hastert (R-Illinois) sided with DeLay’s concerns through a spokesman.

Some Republicans believe that President Bush can be dragged into supporting a bill with higher spending than it desires given sufficient Republican pressure. Yet this may be a difficult task, given that both DeLay and Hastert have expressed their opposition towards any bill that president opposes. Wednesday will be the third meeting of the conference committee.

While House congressional appropriators will be busy during July’s three-week legislative session, the Senate does not have a similar schedule planned. For the House, each day will include action either on the floor or in the Appropriations Committee for the FY05 spending bills. This week floor debates are scheduled on legislation to finance the Commerce, Justice and State departments and committee action is expected on the military construction and foreign operations bills. According to this current schedule, 11 of 13 regular annual appropriations bills should have passed the House by the end of the month.

The Senate’s July agenda does not include appropriations, and there is no set plan on handling those bills awaiting action. By the end of the week, Senate Appropriations Chairman Ted Stevens (R-Alaska) plans to have bills approved from nine of his subcommittees, including Commerce-Justice-State, Energy and Water Development, Transportation-Treasury, and VA-HUD. A markup session has not been scheduled in the full committee, leading some to theorize that Stevens might be planning to assemble an omnibus measure using the Homeland Security Bill (S 2537) to wrap up the appropriations work before October. However, at the Senate’s current pace it is not likely that lawmakers will finish this year’s cycle before October.

On Thursday, June 17 the Task Force on State and Local Homeland Security Funding released a report containing findings and recommendations. The task force found that state governments met their statutory deadlines in distributing homeland security grants to county and local governments. However, various impediments to rapid distribution of funds were found. The procurement processes of state and local governments, DHS reimbursement procedures and guidelines, a lack of national standards and urgent security needs were all found to have unintentionally delayed the distribution of funds to local and municipal governments. The task force recommended several steps to streamline and speed-up the grant distribution process, including the alteration of state and local procurement processes, the establishment of national standards for grant tracking and management and more effective use of DHS grants for securing short-tem and urgent threats. Throughout the report, the consensus nature of the findings and recommendations were stressed by the task force, which included governors, mayors, county and tribal officials. Placing blame on any single government entity or agency was specifically avoided as unproductive.

Responding to complaints that states had withheld or delayed distributing DHS grants to local and municipal governments, the task force examined the funding process of the DHS to state, county, municipal and tribal governments. Secretary Ridge instructed the task force to look at funding for first responders, catalog best practices and produce recommendations to streamline the distribution of funds. The distribution of $3.3 billion awarded by the DHS Office of Domestic Preparedness (ODP) between the fiscal years 2002 and 2003 was examined.

The report made the following findings:

• DHS and state governments fulfilled their requirement to make grant funds available to local governments within 45 days.
• The reimbursement requirements proscribed by the Cash Management Act of 1990 and DHS and Department of Treasury guidelines were found to be problematic to state and local governments.
• The need for the rapid acquisition of homeland security related goods and services conflicted at times with procurement procedures that stress deliberation.
• A lack of national standards governing the distribution, tracking and oversight of DHS grants added to the delays experienced.
• There are urgent and short-term security needs of a different nature than long-term planning and preparation.

In response to these finding, the report issued these recommendations:

• Congress should exempt DHS grants from the Cash Management Act of 1990 and allow funds to be provided up to 120 days prior to expenditures by state and local governments.
• State and local governments should alter procurement guidelines so that homeland security-related items may be acquired more rapidly. In many states, homeland security-related expenditures could be acquired under emergency authority, which streamlines procurement laws. In addition, state legislatures should work to compose an expedited authorization and appropriations process for homeland security expenditures.
• DHS should work to establish multi-state cooperative purchasing consortia to allow greater access by state and local governments to equipment and expand access the federal procurement systems such as the GSA schedule.
• State and local governments should be allowed to “piggy-back” on existing bulk purchasing agreements and should establish bulk purchasing procedures consistent with the State and Urban Area Homeland Security Strategies.
• DHS, in coordination with state and local governments, should establish national standards for grant funding and develop an automated grant tracking system. Minimum staffing recommendations for grant management personnel should be established.
• Congress should establish deadlines for obligating funds from one level of local government to another.
• The approved uses of SHSGP funds should be altered to improve response to short term security threats. DHS, other federal agencies, state and local governments should create a method for comprehensive risk assessment, allowing high-risk events and critical infrastructure to be identified.