OCTOBER 2015

 

FEDERAL UPDATE

 

House Speaker John Boehner Announces Retirement

Speaker John Boehner announced his retirement from Congress and from the Speakership on Friday, September 25. He initially stated that he would be stepping down in November. However, more recently Boehner agreed to stay in the role until a candidate is found who can get 218 votes from the Republican House Conference.  Currently, only two GOP members, Florida Representative Daniel Webster and Utah Representative Jason Chaffetz, are officially running to replace Boehner, but many more are considering a run or being pushed by others to do so. Many are working to convince Chair of the Ways and Means Committee, Paul Ryan, to run. The competition could grow larger by next week, when the House returns from a weeklong recess.  Rep. Kevin McCarthy’s surprising withdrawal from the race for speaker of the House, a race he seemed sure to win, came  without any warning as House Republicans were in a closed-door meeting to select their nominee for speaker.

 

Boehner has committed to move a number of significant pieces of legislation before he steps down including a long-term highway funding bill, an increase to the debt ceiling, and an extension of a number of expiring tax incentives. He will also put up a number of ACA repeal measures. He was also able to get a clean Continuing Resolution (that did not include Planned Parenthood defunding language) through the House with support from Democrats.

 

Government Shutdown Averted

Congress was able to pass a continuing resolution before the October 1 deadline, keeping government functions open through December 11. House Republicans voted 91 – 151 for the plan, relying on Democrats to get it through.  McCarthy, Scalise and McHenry voted yes while Webster, Price, Ross and Sessions voted no. Similarly, spending for Homeland Security was supported by only 75 Republicans, including McCarthy, Scalise and McHenry. Bicameral and bipartisan negotiations have begun in earnest to identify compromises on an omnibus budget bill.  

 

CMS Seeking Comments on Merit-based Incentive Payment System

On September 28, CMS published a Request for Information in the Federal Register, asking for comments on a newly created Merit-based Incentive Payment System (MIPS) for Physicians treating Medicare patients. Through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), MIPS replaces the sustainable growth rate formula. MIPS will replace the Physician Quality Reporting System, Value Based Payment Modifier, and the Medicare Electronic Health Record Incentive Program in 2019. The RFI will also seek opinions on participation in alternative payment models. Public comments for the RFI are due on November 2.

 

ACA Update

A group of bills are making their way through Congress that would repeal the least popular aspects of the ACA. Measures include a repeal of the individual and employer mandate, a repeal of the medical device tax, and a repeal of the “Cadillac Tax.” According to the Joint Committee on Taxation, while ending the Cadillac Tax would cost $91.1 billion, and repealing the device tax would cost $23.9 billion, repealing the mandates would raise $147.1 billion (as fewer people would be enticed to sign onto subsidized health care). Along with a few other expected increases, the JTC estimates an additional $44.2 billion over ten years from the measures. The House Ways and Means Committee marked up budget reconciliation legislative instructions on September 29, and the House Budget Committee approved the legislation on October 9. It was combined with measures out of the Energy & Commerce, and Education & Workforce Committees. Included is an effort to defund Planned Parenthood. Through reconciliation, only a simple majority is required in the Senate, meaning Democrats will be unable to block the bill. This will be the first time an effort to effectively repeal most of the ACA will reach the President’s desk. However, the President is certain to veto this measure, and there is not enough support in Congress to override it.

 

EX-IM Bank Supporters Push for Reauthorization Language in Highway Funding Bill

On October 9, a bipartisan group of House Representatives produced a rarely used discharge petition to force an EX-IM reauthorization vote by October 26. The bank’s charter expired for the first time on July 1, 2015. This maneuver is likely to be the best chance supporters of the bank have at reauthorization. A number of EX-IM bank supporters, including Senator Johnny Isakson, have been pushing for the inclusion of reauthorization language in any final long term surface transportation bill. The Senate’s DRIVE Act has a provision that would reauthorize the EX-IM bank. However, a vocal group of House Republicans, including some in leadership, remain generally opposed to the bank and its charter. Transportation Chair Bill Shuster, Ways and Means Chair Paul Ryan and Democratic Senator Chuck Schumer are in talks on an international tax proposal introduced by Senators Schumer and Portman this summer to keep the Highway Trust Fund Solvent. Majority Leader, Kevin McCarthy has focused on tackling corporate inversions through wider tax reform efforts as a possible funding solution.

 

Obama Signs Six-Month FAA Bill

On September 30, President Obama signed into a law a bill to extend federal aviation funding, which had been set to expire, until March 2016.  The measure was approved by the House on September 28 and the Senate the following day in an effort to prevent an interruption in the FAA’s funding.  The short extension is meant to give Congress time to work on more significant reform efforts. Chair of the Transportation Committee, Bill Shuster, intends to move air traffic control responsibilities to a non-profit corporation, modeled off of Canada. NAV Canada is a private corporation, funded by fees paid by airlines and aviation system users. The President of the National Air Traffic Controllers Association, Paul Rinaldi, has said he will consider a proposal to move air traffic control responsibilities out of the FAA.

 

Build America Transportation Investment Center Launched

The Department of Transportation has officially launched its Build America Transportation Investment Center. Its main function is to pair states and local governments with private investors. The center is also meant to be a resource for people who need guidance throughout the federal transportation credit program process.

 

EPA and NHTSA Delay Proposed New Truck Emissions Rules

The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) are putting off new restrictions on emissions for heavy-duty vehicles to allow  more time for the public to comment on the proposed rules.   The August 31 deadline was pushed back to October 1.

 

The EPA’s plan calls for tighter carbon dioxide emission standards, while the NHTSA’s plan would impose fuel consumption measures. The proposed rule would affect four types of vehicles: combination tractors; trailers pulled by combination tractors; heavy-duty pickup trucks and vans; and vocational vehicles (buses, garbage trucks and concrete mixers.) Phase 1 of this effort began in 2011, when the EPA and NHTSA developed greenhouse gas emission and fuel efficiency standards for medium- and heavy-duty vehicles made from 2014 to 2018. The Phase 2 term runs through 2027.

 

Per the agencies, the proposed standards are expected to lower carbon dioxide emissions by about 1 billion metric tons, cut fuel costs by about $170 billion and reduce oil consumption by up to 1.8 billion barrels over the lifetime of the vehicles sold under the program.  The expected reductions are nearly equal to the greenhouse gas emissions associated with energy use by all U.S. residences in one year, and the total oil savings under the program would be greater than a year’s worth of U.S. imports from OPEC.

 

 

 

 

 

 

 

NEW JERSEY UPDATE

 

Upcoming Voting Session on Gun Control Bill

State Senate President Stephen Sweeney (D-Gloucester) relayed there will be a second attempt to override Governor Christie's veto of a gun control bill on October 22, and that he would utilize the NJ State Police to locate senators who are absent from the statehouse for the voting session.  In order to override the veto, two-thirds of the Senate must vote yes. Democrats seeking the override were two votes short last month.

 

The bill, S2360, sponsored by Democrats and Republicans, would have required police to be alerted when people seeking a gun permit in New Jersey ask a judge to expunge their commitment to a psychiatric hospital from their record. Judges and law enforcement officials requested the measure so judges can make more informed choices about people who claim they have recovered and want to own a gun.   Gun retailers are required to check the National Instant Criminal Background Check System before selling a firearm, and since 2013, the state has been required to report psychiatric commitments to this system. Having a record of psychiatric commitment would disqualify a potential buyer.

 

State Senate Minority Leader Tom Kean Jr. (R-Union) said he plans to introduce a bill that could propose a compromise over the measure.  Kean relayed he would widen the measure so people with a history of psychiatric commitment who apply to get their record expunged would have to alert police not only for gun permits but for other reasons, such as applying for a job in a school, child care center, law enforcement or the security field.  Additionally, Kean proposes his legislation will also include nearly all of the changes to the mental health system the governor sought in his conditional veto message.

 

 

Legislative Hearings Planned on NJ Lottery Contract

The NJ Senate Legislative Oversight Committee will hold a hearing on October 19 to review New Jersey’s contract with Northstar New Jersey to address concerns raised about fees the company is collecting despite its failure to meet revenue targets. Northstar was budgeted to deliver $930 million back to the state on $3 billion in sales in the FY2015 that ended June 30, the lowest rate of return in forty years.

 

In 2013, Governor Chris Christie’s administration awarded a 15-year contract to Northstar, privatizing advertising and sales functions of the state lottery in order to improve efficiency while providing better value for taxpayers. The contract provided the Christie administration with a $120 million upfront payment and promised to maximize revenues back to the state for social service programs by at least $1.42 billion over the contract term. Many Democrats in the Legislature, as well as public-employee union officials, opposed the deal from the beginning.  An Assembly committee is also scheduling a similar hearing.

 

 

 

 

 

 

OHIO UPDATE

 

State Issue 3 Could Bring Millions to Ohio

The Ohio state budget office estimates legalized marijuana sales could produce nearly $300 million in new tax revenue, based on potential sales of approximately $2 billion a year.  New revenue, which would mostly go to municipalities, would come primarily from a special excise tax on marijuana sales.  

 

State Issue 3 is a proposed constitutional amendment by ResponsibleOhio to legalize the sale and use of recreational marijuana for those 21 and over and medical marijuana as prescribed by a physician.  State law requires the agency to estimate costs and revenue from proposed ballot issues.   The estimate said a new state agency, the Ohio Marijuana Control Commission with 86 employees, would cost about $17.7 million to operate annually, with funds coming from tax revenue from marijuana sales.   ResponsibleOhio calls the tax revenue a “wildly pessimistic projection, ” disputing accurate federal government figures for estimated marijuana consumption, and instead projecting  $554 million in tax revenue.  This is slated to appear on the November 3 Ohio ballot.

 

Ohio Initiative Monopolies Amendment on November Ballot

The Ohio Initiated Monopolies Amendment, Issue 2, introduced into the Ohio Legislature by Rep. Ryan Smith (R-93) and Rep. Michael F. Curtin (D-17), requires voters to approve two questions pertaining to citizen initiatives establishing economic monopolies.  Lawmakers crafted the Amendment in response to the Marijuana Legalization Initiative, which would create 10 facilities with exclusive rights to commercially grow the drug.  Currently, Ohioans are allowed to create monopolies or oligopolies in the state constitution if they are approved by voters.

 

The Initiated Monopolies Amendment would require the Ohio Ballot Board to determine whether an initiative would create an economic monopoly or special privilege for any nonpublic entity, including individuals, corporations and organizations. If the Ohio Ballot Board determines an initiative would create an economic monopoly or special privilege, then the board shall provide two separate ballot questions. "Should voters allow a monopoly in the constitution?" and "Should this particular monopoly be approved?" If both questions are approved, the amendment would take effect. If only one question is approved, the amendment would be defeated.   If voters approve the amendment, it would invalidate any initiatives voters approved on the November 3 ballot that establish economic monopolies (i.e., invalidating the Marijuana Legalization Initiative).

 

 

 

 

 

 

PENNSYLVANIA UPDATE

PA Budget Talks Continue

Budget-related meetings resumed in Harrisburg on October 13, nearly one week after Governor Tom Wolf’s latest $2.4 billion revenue-generating proposal was defeated in the House. The plan included both a half-a-percentage-point hike of the personal income tax (PIT), from 3.07 percent to 3.57 percent, and an increase of the state’s current tax on natural gas drilling. The Wolf administration projected the plan could raise a combined $3.7 billion in new tax revenue in 2015 and 2016.  Gov. Wolf relayed that he won't cave on his demand that lawmakers agree to resolve the long-term deficit and increase funding to public schools for operations and instructional expenses.  Republicans are pushing for concessions on benefit cuts in the state public employee pension systems, privatizing the state-controlled wine and liquor system, and expanding internet gaming to brick and mortar casinos.

 

For more than 100 days, Pennsylvania's government has been in a partial shutdown as the Republican-controlled Legislature battles the Governor’s proposal.  This has resulted in layoffs and millions in borrowing costs for school districts, counties and social service organizations.

Governor Wolf Signs Bill Allowing Fracking with Mine Water

On October 8, Senate Bill 875 that allows the use of coal mine water to frack natural gas wells, was signed into law by PA Governor Tom Wolf.   The bill, sponsored by Sen. Camera Bartolotta, (R-Monongahela), clarifies liabilities for when oil and gas companies use coal companies’ treated mine water as an alternative to fresh water in hydraulic fracturing and other stages of oil and gas well development.

 

Sponsors say the new law defines the point when liability for treated water from active or closed mines is passed from the coal company to the oil and gas company that uses the mine water to develop its wells. It protects coal companies from responsibility for costs or damages associated with the offsite use of the water, and oil and gas companies from responsibility for treating the mine drainage before they get it.

 

 

 

 

 

 

 

 

 

Duane Morris Government Strategies, LLC will continue to monitor these and other
important issues. Contact us at info@dmgs.com if you have an issue you would like
additional information on, or to be removed from the Legislative Updates distribution list
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