Federal Legislative Update: June 2017
Posted Thursday June 01, 2017
The CEO Council for Growth (CEO Council) leads our region forward by envisioning a stronger, more competitive community, convening decision-makers, taking action, and advocating for policies and practices that strengthen our regional economy. The CEO Council is committed to enhancing economic growth and prosperity in our region through regional and national policy. This update summarizes recent congressional activity as it relates to the identified priorities of the CEO Council.
CEO Council Meeting with Congressional Delegation
Last March, members of the CEO Council and College and University Presidents’ Alliance met with eleven Members of our congressional delegation to discuss the ways to collectively improve the economic vitality of our region. The meeting centered on a growth agenda that will place Greater Philadelphia as a top 25 global region. Specific discussion areas included funding for research, improvements to infrastructure, leveraging regional health assets, and supporting our strengths in digital manufacturing, advanced composites, and biopharmaceutical manufacturing.
The meeting also presented an investment portfolio, “Connecting Our Region,” which applies accepted regional principles to a benefit analysis in order to identify nine key infrastructure investments that are the most likely to transform our community. These nine projects share common themes such as global connectivity and regional significance, with a focus on investment in innovative hotbeds that represent our future economy. Using this strategic package, we will work together with our elected leaders to secure funding and implementation of projects that will achieve Greater Philadelphia’s vision of becoming a truly global region.
Omnibus Appropriations Bill
On May 3, 2017, the House, in a 309-118 vote, passed the FY 2017 Omnibus Appropriations bill, followed the next day by the Senate with a vote of 79-18. The $1.1 trillion omnibus spending bill funds the government through September 30, 2017. The spending bill includes the following key appropriations requests of the CEO Council:
- The National Institutes of Health (NIH) receives a total of $34.1 billion, a $2 billion increase from the FY 2016 enacted level. This is good news for research activity in our region after the Administration’s FY18 “skinny” Budget Proposal released in March which called for a $5.8 billion cut to NIH. This increase in NIH sends a clear message that lawmakers intend to protect federal funding for medical research and honor spending levels laid out in the 21st Century Cures Act.
- After advocating for passage of the 21st Century Cures Act (Cures Act), the CEO Council works to ensure that investments authorized by its passage in December 2016 are appropriated, particularly, the Precision Medicine Initiative, the Cancer Moonshot program, and the BRAIN Initiative.
- The omnibus bill delivers $352 million to the innovation fund at NIH that was enacted through the Cures Act, which includes:
- $300 million for the Cancer Moonshot
- $40 million for the Precision Medicine Initiative
- $10 million for the BRAIN Initiative
- The spending bill restores year-round Pell grant eligibility, often called “Summer Pell.” Year-round Pell Grants are said to provide 1 million students with an additional average award of $1,650. The maximum Pell grant award will also increase $105 to $5,920 starting in the coming 2017-18 school year. The CEO Council supports increases to the maximum Pell grant, which provides need-based grants to low-income undergraduates and certain postbaccalaureate students to promote access to postsecondary education.
- The Delaware River Main Channel Deepening Project receives $33.125 million, the necessary amount of funding that would bring the dredging project to its completion. The Project deepens the main channel from 40 to 45 feet and will allow the Delaware River ports to accommodate larger ships carrying more cargo. Currently, the Delaware River remains one of the few shipping channels on the East Coast with depths of less than 42 feet. The project is on track for completion, allowing our ports system to accommodate larger vessels and ensure that our region remains competitive.
Unfortunately, funding was reduced for the Department of Energy’s Clean Cities Program which promotes fleets implementing alternative and renewable fuels, idle-reduction measures, fuel economy improvements, and emerging transportation technologies. The FY17 Omnibus agreement provides $42.5 million in Energy & Water Appropriations – down from $48.4 million in FY16 – for “Outreach, Deployment, and Analysis,” which deploys the Clean Cities Program. Greater Philadelphia falls within a non-attainment area which challenges our region to implement a plan to meet air quality standards. The CEO Council will continue to push for this program because it provides the economic incentive for private and public sectors to build partnerships to reduce emissions from fleets that currently contribute to carbon emissions.
Amtrak’s Northeast Corridor
The FY17 Omnibus Appropriations bill provided $1.5 billion for Amtrak (an increase of $103 million over FY16), which includes $328 million for the Northeast Corridor (NEC). The spending bill allocated $25 million for capital projects under the Federal-State Partnership for State of Good Repair Grants. The NEC needs approximately $500 million ( the same amount that the TIGER program receives annually).
The CEO Council is a founding member of the Coalition for the Northeast Corridor (CNEC), which represents the spectrum of transportation and business community stakeholders whose employees rely on the corridor to conduct commerce, create jobs, and drive the U.S. economy forward. The coalition is a regional and national advocacy effort led by market participants that benefit most from a strong and vibrant NEC.
CNEC continues to advocate for federal infrastructure investment to protect the NEC’s future and encourages Congress to appropriate the authorized funding for the NEC in order to ensure its future vibrancy. Specific priorities include:
- Increasing congressional appropriations for recently authorized rail infrastructure grant program—The FAST Act authorized a new Federal-State Partnership for State of Good Repair (Sec. 11302); and
- Including significant Rail funding in upcoming Infrastructure Package.
Since passage of the spending package, the Administration issued its FY18 Budget Proposal, which keeps the Federal-State Partnership for State of Good Repair at relatively the same levels as appropriated by the FY17 omnibus package. The $25.945 million proposal for the program is equal to 0.068 percent of the identified $38 billion NEC capital backlog.
Air Traffic Control Reform
President Trump endorsed a proposal this week that outlines the principles of his plan to privatize the nation’s air traffic control system. The move comes as part of the President’s broader $1 trillion initiative to rebuild the nation’s crumbling infrastructure. As part of a weeklong focus on infrastructure, the President will make stops in Ohio on inland waterways and another on railroads in Washington, D.C. The CEO Council supports Federal Aviation Administration reforms to the antiquated Air Traffic Control system that will improve airspace congestion, safety, efficiency, and emissions.
Last month, the House Committee on Education and the Workforce approved with unanimous support bipartisan legislation to reauthorize the Carl D. Perkins Career and Technical Education Act (Perkins Act). The “Strengthening Career and Technical Education for the 21st Century Act” updates federal Career and Technical Education (CTE) policies to help more students gain the knowledge and skills they need to compete for in-demand jobs. In 2016, the House passed similar legislation with overwhelming support by a vote of 405-5, but the bill did not receive Senate consideration.
The CEO Council is focused on creating clear pathways for the alignment between job seekers and employers. One important way to assure that the region benefits from an educated and skilled workforce is the reauthorization of the Perkins Act. High-quality CTE programs, supported by the Perkins Act, are an effective tool for improving student outcomes and help prepare both secondary and postsecondary students with the necessary academic, technical and employability skills required for successful entry into the workforce. CTE prepares students both for college and careers and are critical to meeting the needs of the 21st century economy.
The CEO Council has joined businesses, associations, and other chambers nationwide in a letter to House and Senate leaders pushing for Perkins Act reauthorization as a way to help ensure a quality employee pipeline for employers and access to in-demand and high paying jobs for America’s workforce. New legislation should focus on areas where improvements can be made to current law, such as:
- Align CTE programs to the needs of the regional, state, and local labor market;
- Support effective and meaningful collaboration between secondary and postsecondary institutions and employers;
- Increase student participation in work-based learning opportunities; and
- Promote the use of industry recognized credentials and other recognized postsecondary credentials.
Federal Energy Regulatory Commission
The CEO Council supports the Administration’s nomination of Commissioner Robert F. Powelson to the Federal Energy Regulatory Commission (FERC), which would help reestablish the required quorum for normal operations. Powelson is the current commissioner at the Pennsylvania Public Utility Commission, current president of the National Association of Regulatory Utility Commissioners, and former President of the Chester County Chamber of Business and Industry.
The Senate Committee on Energy & Natural Resources advanced the FERC nominees out of committee to the full Senate for consideration by a vote of 20-3. FERC is a five member commission that currently lacks the required three members to keep a quorum. Once a quorum is restored, it will allow FERC to conduct meetings and issue project certifications so as to limit delays to interstate pipeline projects.
The CEO Council and Greater Philadelphia Energy Action Team work to support and develop projects that will increase the supply of natural gas into the region and increase the amount of natural gas consumed. One of the group’s priority projects includes the PennEast Pipeline, currently under review by FERC.
Comprehensive Tax Reform
The Trump Administration released its framework for revamping the federal tax code at the end of April. The plan would reduce the corporate tax rate from 35% to 15% and bring tax parity to pass-through companies that are taxed at the individual tax rate. The plan eliminates the alternative minimum tax, estate tax, and most all tax deductions except for the mortgage interest deduction and charitable deduction. President Trump’s plan also calls for doubling the standard deduction which will drive down the amount itemized tax returns.
The framework provides little in the way of details and serves only to spark the tax debate. The key detail will be cost. To reduce the corporate tax rate by 20% alone, it is estimated to cost the government $3 to $7 trillion over a decade. Although the plan intends impose a one-time unspecified tax rate on repatriated income to act as revenue offset to corporate tax reduction, it will hardly go far enough. The plan does not address the House Republican’s controversial border adjustment proposal which reconfigures corporate taxation for all goods from anywhere outside the U.S.
The CEO Council continues to be strong advocates for comprehensive tax reform as a means to improving competitiveness, economic development, and job creation in Greater Philadelphia. We have stated before that responsible tax reform must include tax parity for both the individual and corporate income tax rates. Comprehensive tax reform must also include an international tax system that will help companies compete globally, grow domestically, and increase repatriated income.