Washington Snapshot

Washington Snapshot: Senate Votes on States Efforts to Address Tax Law Caps; Congress Must Approve Budget Extension Before Nov. 21

Friday, October 25, 2019 - 4:00 pm EDT

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In This Week's Edition of Snapshot...

Congress IconNews from the Hill

Senate Vote on States Efforts to Address Tax Law Caps

The Senate rejected a Democratic effort on Thursday to roll back Treasury and IRS rules cracking down on state efforts to address the tax law's $10,000 cap on state and local (“SALT”) deductions. Lawmakers voted mostly along party lines to reject a proposal to reinstate workarounds that were blocked by the IRS.

The cap was one of the ways Republicans partially defrayed the cost of the Tax Cuts and Jobs Act, H.R. 1 (115). In the wake of the law, some states devised ways for their constituents to duck the cap by construing their state and local tax payments as charitable contributions, which currently remain uncapped. Though the specifics varied, they generally allowed people to contribute to state-run charities. The plan was that the government would then use that money to finance its operations while the taxpayer could call the payment a charitable contribution on his or her federal tax return. The IRS counteracted this plan in June with rules specifically aimed at gutting the workarounds.

Many Democratic Senators reminded their Republican colleagues that charities in their states are being hurt by the rules.

Of note, on the House side, there may also be a vote on the IRS regulations. Rep. Bill Pascrell (D-NJ) said Wednesday that Democrats are working on legislative language for that measure, which he expects to get released next month.

Another Government Funding Countdown?

Although Congress is supposed to pass appropriation bills for Fiscal Year 2020 by October 1, 2019, they instead passed a short-term extension of funding until November 21, 2019. Congress must now either pass funding legislation for the rest of the fiscal year or pass another short-term extension -- which seems very likely at this point. 

Top appropriators in both chambers are preparing to pass another temporary stopgap before the current patch, H.R. 4378 (116), runs out on November 21. While the length of that second continuing resolution has yet to be decided, spending leaders acknowledge that funding might be extended beyond the December holidays and into 2020.

Funding for President Trump’s Border Wall is an Obstacle 

POLITICO reports, money for Trump's border wall remains one of the most serious obstacles to bipartisan compromise on a dozen fiscal 2020 spending bills. The head of the Joint Chiefs of Staff Gen. Mark Milley and Rep. Kay Granger (R-Texas), the House’s top Republican appropriator, said Wednesday in a Pentagon press roundtable, that they fear Congress could be headed toward a full-year stopgap that hurts military morale, decreases readiness and jacks up contracting costs.

A Chill in the Air...

The reports that House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell have barely spoken about funding the government beyond November 21, illustrates the challenging dynamics in Congress.

Fixing FAFSA (“Free Application for Federal Student Aid,” if you didn’t already know...)

Sen. Lamar Alexander (R-TN), chairman of the Senate education committee, and Sen. Doug Jones (D-AL) are working together to advance a stand-alone bill to simplify how students apply for federal financial aid. Sen. Alexander hopes to push the FAFSA legislation through Congress apart from the many bills being proposed to overhaul the Higher Education Act.

Census Funding Advocacy

In a letter dated October 22, a bipartisan group of seven former Census Bureau directors urged congressional appropriators to provide "a full-year appropriation for the 2020 Census as soon as legislatively possible, to avoid disruptions in the launch and steady implementation of robust census operations."

Executive & Regulatory News IconExecutive & Regulatory News

Department of Energy

Energy Secretary Rick Perry announced he will leave office on December 1. President Trump intends to nominate the current Deputy Secretary of Energy Dan Brouillette to replace him.  

Department of Agriculture’s Handling of Climate Issues Investigated

USDA's inspector general is investigating the agency's handling of climate issues after POLITICO uncovered the agency's routine burial of its work on climate change, including taxpayer-funded research, as farmers and ranchers are increasingly dealing with its harmful effects.

Department of Agriculture’s Handling of Climate Issues Investigated

USDA's inspector general is investigating the agency's handling of climate issues after POLITICO uncovered the agency's routine burial of its work on climate change, including taxpayer-funded research, as farmers and ranchers are increasingly dealing with its harmful effects.

Department of Justice Awards School Safety Grants

The Department of Justice has awarded $85 million in school safety grants to jurisdictions across the nation through a program set up by Congress in response to the 2018 school shooting in Parkland, Fl. 

HUD Delays Disaster Aid for Puerto Rico

The Trump Administration continues to delay the release of congressionally-authorized disaster recovery money for Puerto Rico for the 2017 hurricanes. The Department of Housing and Urban Development (HUD) has delayed the allocation of funds until financial monitors are in place. The Senate passed a spending bill, S. 2520 (116), last month with a provision tying funding for the office of the Chief Financial Officer to the publication of disaster mitigation notices.

HUD missed the legal deadline to publish the notice last month after announcing in August it would delay giving Puerto Rico the money until stricter financial safeguards were put in place, pointing to political unrest in the commonwealth. Two HUD officials told a House appropriations subcommittee last week that they missed the September deadline on purpose. HUD Secretary Ben Carson spent time on Tuesday explaining the reasons before a House Financial Services Committee hearing. 

HUD’s inspector general is investigating whether aid was delayed because of political pressure from the White House.

The Administration on Children and Families Releases New Data on Foster Care and Adoption

Released by the Children’s Bureau at HHS’ Administration for Children and Families (ACF), data from the Adoption and Foster Care Analysis and Reporting System (AFCARS) reveal that the number of children in foster care, although still high, dropped for the first year since 2011. The number of children achieving permanency through adoption increased for the fourth year in a row to its highest level ever. 

The number of adoptions with U.S. child welfare agency involvement in 2018 is the largest since AFCARS began data collection in FY 1995.

Recently, the Children’s Bureau awarded nearly $25 million to nine community-based projects to help prevent child maltreatment and reduce entries into foster care. Through the Community Collaborations to Strengthen and Preserve Families grant, organizations will be able to develop, implement and evaluate primary prevention strategies.

Meanwhile at the Department of Homeland Security…still seeking a Secretary

President Trump was notified Monday by DHS staff that two popular figures, Ken Cuccinelli and Mark Morgan, are both ineligible under federal law for appointment as the new Homeland Security Secretary. A possible replacement may be DHS official Chad Wolf, a former chief of staff to the former DHS Secretary Kirstjen Nielsen who submitted her resignation last April.

State Policy IconHappening in the States

Exclusive from our colleagues at the National Council of Nonprofits.

National Council of Nonprofits

Charitable Giving Incentives

Nonprofits in multiple states are converting their concerns over the likely impact of the 2017 federal tax law on charitable giving by advocating for improved tax incentives at the state level. Earlier this year, Arizona lawmakers enacted a non-itemizer deduction for donations to charitable nonprofits and foundations that allows “taxpayers to increase standard deduction by 25 percent of the charitable donations that would have been claimed as an itemized deduction,” according to the Arizona Department of Revenue. A bill under active consideration in North Carolina would, among other things, extend the federal IRA charitable rollover to state taxes. The legislation would end state taxation of donations to nonprofits and foundations through individual retirement accounts, simplify the process for donors, and allow them to contribute more fully to nonprofits in their communities. Also active is a bill in New Jersey that would create a non-itemizer deduction to allow all taxpayers, regardless of whether they itemize or take the standard deduction, to claim charitable contributions on their tax forms. Specifically, the bill would permit a taxpayer to deduct from state income taxes the amount of charitable contributions made to a “qualified New Jersey-based charitable organization” equal to the amount that is allowable as a charitable deduction under federal income taxes. The NJ Center for Non-Profits is actively advocating for the giving incentive, pointing out, “Demand for the programs and services provided by charities continues to grow, while needed resources lag behind” (as outlined in the Center’s recent report).

Nonprofit Speech, Assembly Rights Protected

Federal judges in a pair of cases upheld the free speech and assembly rights of nonprofits in striking down recent state disclosure laws. The first cases involved a New York state law that mandated disclosure of certain donors to nonprofits and foundations. The statute required 501(c)(3) organizations to disclose when they provided financial or in-kind support to 501(c)(4) social welfare groups that happen to lobby or engage in partisan, election-related activities. The district court judge expressly recognized that charitable nonprofits are limited in the amount of lobbying they can do or pay for and are absolutely barred from engaging in partisan activities under 501(c)(3). Proponents of the law claimed an intent to reduce secret money and campaign finance violations, but the court found that the law would have forced donor disclosures when organizations had relationships that had nothing to do with lobbying or partisan campaign activities. The court ruled that the State did not have a sufficient reason for imposing the burdens on 501(c)(3) organizations.

Across the river in New Jersey, a separate federal judge stopped a newly enacted law requiring that 501(c)(4) social welfare groups and 527 political organizations publicly disclose the names of large donors. The law would have affected donations of more than $10,000 and organizations spending more than $3,000 on elections and political activity. Three social welfare nonprofits opposed the law arguing it violated the First Amendment. The law’s disclosure provisions would have been triggered by publication of advertisements on regulations, legislation, and ballot measures, which is broader than other state laws restricting secret money and applying only to election-related communications. “Most constitutionally troubling to the Court,” the judge wrote, “is the way in which … the Act brings communications of purely factual political information into a disclosure and financial-reporting regime historically limited to electioneering communications.”

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