Busy legislative agenda includes key state, local issues: GFOA will continue to monitor key issues of importance to state and local finance during a busy legislative agenda complicated by election-year politics.(Federal Focus)

The second session of the 108th Congress promises to be a hectic and eventful one. Lawmakers achieved several noteworthy accomplishments during the first session, including the first-ever spending bill for the new Homeland Security Department, additional funding for election reform, and an overhaul of the country's Medicare program. However, many of the appropriations bills for fiscal 2004, which began October 1, 2003, have yet to be passed, straining an already full legislative agenda. Of course, the dynamics of the November election will only add to the drama by imposing extra care into the decisions of both the White House and congressional leaders. This article reviews the key issues of importance to GFOA and its members during the second session of the 108th Congress.

MEDICARE REFORM

The White House won a major victory with the passage of the Medicare Prescription Drug, Improvement, and Modernization Act. While some have criticized the bill, it achieved one of the president's primary goals-the addition of a prescription drug benefit to the Medicare program. The 415-page bill also included changes to the dual eligibility program (Medicare/Medicaid), funding ($25 billion over 10 years) for rural health care programs, enhancement of health care savings accounts, and a federal subsidy for employer-sponsored prescription drug benefits for retirees. Because many of these provisions do not take effect until 2006, the next two years will be important as the administration issues guidance on implementation of the bill. Some in Congress are calling for new votes on specific issues (e.g., immigrant care, negotiating drug costs with the pharmaceutical companies) that could alter some of the provisions. A detailed outline of the bill is available on the federal government relations section of GFOA's Web site.

SAVINGS AND RETIREMENT PLANT ENHANCEMENTS

As of press time, it is believed that the president will submit his fiscal 2005 budget with a call for tax-free savings plans, the idea being to simplify savings opportunities and improve America's savings rate. The president proposed tax-free savings and retirement plans in his last budget, but the initiative received little traction thanks to the Medicare bill and other priorities. However, many observers believe this could be a centerpiece of the president's domestic agenda in 2004. Three separate bills (dubbed "the three sisters"), covering savings opportunities, retirement plans, and employer-retirement savings, will likely be brought forward. As the budget is unveiled in early February, look to the GFOA Newsletter and Web site for information about the impact of these measures on public retirement systems, the municipal bond market, and college savings plans.

INTERNET ACCESS TAXES

Last fall, state and local governments dodged a bullet when legislation to permanently prohibit taxation of Internet access failed to be called for a vote on the Senate floor. On November 1, the temporary ban on Internet access taxation expired and Congress was unable to act either to extend the moratorium or to adopt new legislation concerning this issue. The proposed bill (S. 150) expands the definition of ...