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Congress Takes Action on 3 Percent Withholding and Appropriations

November 3, 2011

On Thursday, October 27, the U.S. House of Representatives passed H.R. 674, legislation to repeal the 3 percent withholding requirement, by a vote of 405 to 16. The effort was championed by Congressmen Wally Herger (R-CA) and Earl Blumenauer (D-OR). NACUBO has been working with the Government Withholding Coalition, which includes government entities, businesses and other organizations, in opposing the 3 percent withholding requirement.

According to a rule adopted by the House, H.R. 674 has been combined with H.R. 2576, which was also approved by the House with bipartisan support, into one measure. H.R. 2576 would adjust the income qualifications for purposes of determining eligibility for certain healthcare-related programs, such as Medicaid. H.R. 2576 essentially provided the offset for the cost of repealing the 3 percent requirement, which the Joint Committee on Taxation estimated at $11 billion. The Obama Administration endorsed H.R. 674, as well as H.R. 2576.

The Senate is expected to vote today on the legislation to repeal the 3 percent withholding requirement. An earlier effort to repeal the requirement was thwarted in the Senate, but with a new offset approved by the Obama Administration, the legislative package is expected to garner enough support for passage. However, Senate Majority Leader Reid (D-NV) is expected to attempt to tie the legislation to a Democratic bill meant to provide jobs for veterans. Republicans are likely to try to thwart that effort, thus complicating the outlook.

Appropriations Progress

For the first time in two years, the House and Senate have been meeting to conference on annual appropriations legislation. A so-called “minibus” (as opposed to omnibus) was approved last week by the Senate and includes three of the 12 FY12 appropriations bills: Agriculture, Transportation-Housing, and Commerce-Justice-Science (CJS). The CJS bill includes funding for the National Science Foundation and NASA.

If conferees come to agreement on the minibus, they will likely add to it a new continuing resolution (CR) to the package to keep the government funded through mid-December, beyond the November 18 expiration of the current CR. This would provide Congress will additional time to work on more controversial spending measures, specifically the 2012 Department of Defense spending bill and the Labor-House and Human Services-Education spending bill, which includes the Department of Education’s budget.

Contact

Liz Clark
Director, Congressional Relations
202.861.2553
E-mail