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2018 Farm Bill Reauthorization 

 

April 20

The current Farm Bill (Public Law 113-79) expires September 30, 2018. The measure authorizes various commodity, trade, rural development, agricultural research, and food and nutrition programs. Some programs are assured mandatory funding while others require annual appropriations. Because the mandatory funding would expire September 30, Congress must either pass a new Farm Bill or a simple reauthorization without changes by the deadline. So, this is one of the few “must-pass” bills this year, prior to the election.

Congressional hearings have been held and now it is time for the House and Senate Agriculture Committees to consider their bills. On Wednesday, April 18, the House Agriculture Committee approved its Farm Bill, the Agriculture and Nutrition Act (H.R. 2), along partisan lines by a vote of 26 to 20. Representative David Rouzer (NC-7), chairman of the Livestock and Foreign Agriculture Subcommittee, supported the bill. Representative Alma Adams (NC-12), a senior member of the Nutrition Subcommittee, opposed the measure. The House Agriculture Committee bill reauthorizes $867 billion for Department of Agriculture programs thru 2023.

Senate Agriculture Committee leadership has promised a bipartisan farm bill and is currently working on their draft. The NC Rural Center delivered this letter to the NC Congressional Delegation highlighting our priorities. 

SNAP

The House Agriculture Committee bill proposes changes to the Supplemental Nutrition Assistance Program (SNAP/Food Stamps) by shifting funds from benefits toward job training. It proposes to make 20 hours per week job training mandatory for “work capable” adult recipients age 18 to 59, and eliminate a method for deciding eligibility based on a recipient’s participation in other federal benefit programs. The measure would exclude seniors, those caring for children younger than six years old, or those who are pregnant. It does not exclude the disabled; this is likely to change when the bill goes to the floor. After 2025, the work requirement hours would rise from 20 to 25. The training mandate would be administered on a state-by-state basis and states would be given two years to execute the program. Currently, requiring work training for SNAP eligibility is voluntary for states. The measure does expand the EBT program and increases to $60 million funding for food banks and pantries and allows collaboration with local farmers to offer fresh produce.

Rural Broadband

The bill reauthorizes the Rural Utility Service Broadband Loans and Grants program, authorizes substantial funding for the expansion of rural broadband, and requires USDA to establish forward-looking broadband standards. The Committee also adopted an amendment to require the Rural Utility Service to set a minimum high-speed internet defined as 25 Megabits per second or Mbps download speed, similar to the Federal Communications Commission (FCC), for federal investment and to expand access to loan guarantees.

Rural Development

The House bill reaffirms USDA’s role in rural community and business development, and subsidizes water and wastewater infrastructure in rural communities. It would extend programs that offer grants and loans to small water utilities to upgrade their drinking water and wastewater treatment facilities. The bill also would continue a program that pays for experts to travel to small utilities to assist with highly technical problems. The inclusion of this reauthorization sends a message to the Trump Administration, which has twice proposed eliminating it outright on the grounds that it duplicates similar programs at the Environmental Protection Agency. To date, Congress has included funding for these programs through the appropriations process. In addition to the community facilities and water and wastewater programs, the rural business development programs are reauthorized as well as the Southeast Crescent Regional Authority and the National Rural Development Partnership. The bill incentivizes regional infrastructure and economic development projects by giving the USDA Secretary new tools to prioritize projects for those communities that commit to working together on shared development goals. The House bill does propose significant reductions in bio-refinery assistance and the Rural Energy for America Program, which will set up a confrontation with the Senate. The House bill also reduces the authorization level for the rural microentrepreneur assistance program.   

Rural Healthcare

The House bill provides the USDA Secretary the authority to prioritize projects that help communities meet the challenges of the opioid crisis, including projects that provide access to telehealth services and build medical facilities in rural communities. It also provides significant funding increases, an additional $25 million, for critical telehealth grants under the Distance Learning and Telehealth Program. The bill does establish a new loan and grant program to assist in the establishment of agricultural association health plans, a priority of the Administration.    

Conservation

Spending on conservation programs is reduced by consolidating programs, and eliminating the Conservation Stewardship Program, which provides funding to farmers who change daily operations to become more environmentally sustainable. A portion of those funds and purpose areas are folded into the Environmental Quality Incentives Program (EQIP), which reimburses farmers for capital investments in cover crops, fertilizer storage, and other environmental projects. 

Farm Transitions

The House bill establishes the “Commission on Farm Transitions – Needs for 2050” to examine additional policy changes needed to ensure the U.S. maintains the safest, most abundant, and most affordable food and fiber supply in the word.

Next, the bill will go to the full House of Representatives for consideration.

 

Overview of Federal Broadband Initiatives

March 22

As Congress finally concludes the FY 2018 appropriations process by approving the Omnibus Appropriations Bill, now the federal agencies can move forward with policy and spending. This overview provides a status update of various broadband initiatives.

FY 2018 Federal Funding

Omnibus Appropriations (H.R. 1625, H. Rept. 115-66) (Enacted March 22-23)

USDA: The appropriations bill includes $600 million for a new USDA rural broadband pilot program in the Office of the Secretary to assist in further closing the digital divide. The agreement reiterates that funding should be prioritized to areas currently lacking access to broadband service and should be neutral in terms of types of technology utilized. Lastly, the agreement restates the importance of coordination among federal agencies in expanding broadband deployment and adoption and expects the Department to take caution to maximize these limited resources and not overbuild or duplicate existing broadband capable infrastructure. Separately, this bill also provides $67 million for the USDA Distance Learning, Telemedicine, and Broadband Program.

For more information on loans and grants offered for broadband by the USDA Rural Utilities Service, please see this recently released report.

Commerce Department: Economic Development Administration (EDA) funding provided under Public Works, Economic Adjustment Assistance, and other programs may be used to support broadband infrastructure projects. EDA is encouraged to prioritize unserved areas.

The National Telecommunications and Information Administration (NTIA) budget includes $8.2 million for broadband programs. NTIA also received $7.5 million to update the national broadband availability map in coordination with the FCC. NTIA should use this funding to acquire and display available third-party data sets to the extent it is able to negotiate its inclusion in existing efforts to augment data from the FCC and other federal and state agencies and the private sector. NTIA shall not duplicate FCC efforts; the updated may will help identify regions with insufficient service, especially in rural areas. NTIA also is encouraged to place equal priority on the rural development of the Nationwide Public Safety Broadband Network (FirstNet) to that of urban communities.

Budget Agreement (H.R. 1892, P.L. 115-123)

The bipartisan Budget Agreement enacted in February 2018 included $20 billion over the next two fiscal years for rural infrastructure programs, including funds for expansion of rural broadband. The RUS/USDA houses two assistance programs exclusively created and dedicated to financing broadband deployment: the Rural Broadband Access Loan and Loan Guarantee Program and the Community Connect Grant Program. Additionally, the Telecommunications Infrastructure Loan and Loan Guarantee Program (previously the Telephone Loan Program) funds broadband deployment in rural areas. Distance Learning and Telemedicine (DLT) grants, while not supporting connectivity, fund equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning applications.

White House Infrastructure Proposal

While the White House has included significant funding recommended for rural broadband deployment in its Infrastructure Package, the debate becomes which federal entity should administer such funds and which congressional committees shall have oversight over such funding. Options include USDA Rural Utilities Service, FCC’s Universal Service Fund High-Cost program or a state grant program, and Department of Commerce’s NTIA to support broadband deployment in unserved rural areas. In addition to specifically earmarking funds for broadband deployment, the ITAA industry association recommended in hearings that Congress should set parameters for such programs that include: defining unserved and underserved areas; setting criteria for selecting projects that included cost per location to deploy, economic impact, matching funds, and network scalability; awarding projects that are technology neutral and not duplicative; and setting the technical, managerial and financial capabilities that private and public entities must possess in order to be eligible to receive funding.   

Broadband is one of a number of categories, along with transportation, water and wastewater, power and electric, and water resources, that would be eligible for the proposed $50 billion grants. Only rural areas with populations of less than 50,000 would be eligible to apply for the grants. Even without dedicated funding, telecom industry officials, wireless carrier trade groups, and cable companies are supportive siting the recognition of the issues and need to ease permitting.

Many congressional hearings will be held on the proposed Infrastructure Package. How to pay for the package has not been determined. Some speculate that there will not be movement on the legislation until after the November elections, especially if raising taxes and fees are needed to fund the initiatives.   

Federal Communications Commission (FCC)

FCC Reauthorization: The Omnibus Appropriations Bill includes the reauthorization of the FCC, the first in more than 20 years, and is combined with provisions to expand spectrum access. In addition, negotiators agreed to include the Cloud Act (H.R. 4943) which gives law enforcement access to consumer data stored across borders.  

For more information about the debate surrounding the FCC’s recent decision on net neutrality, please see this report, issued earlier this year.

Telemedicine Impacted by Proposed FCC Rural Health Care Program Changes: The FCC has embarked on a rulemaking process to significantly alter its Rural Health Care Program, the smallest of the four programs that comprise the Universal Service Fund (USF). The USF provides nearly $10 billion annually in federal subsidies for telecommunications services to rural and low-income consumers and to schools and libraries. To date, over 1/3 of the funds of the Rural Health Care Program have gone to Alaska. The FCC is re-evaluating the Healthcare Connect Fund which provides a flat 65 % subsidy for broadband services and equipment to rural healthcare providers and majority-rural healthcare consortium, and the Telecom Program which discounts the rural rate for telecom services to match the urban rate.

In its ongoing efforts to modernize the “Lifeline” program for low-income consumers, the FCC has expressed a desire to require greater cost-sharing or co-pays by USF beneficiaries. The proposed Rural Health Care Program changes appear to have the same goal to curb its escalating costs, increasing the amount of funding available while also increasing customer costs and program restraints.         

The FCC administered Universal Service Fund High-Cost program has a proven track record of success in turning funds earmarked for broadband into broadband networks.

Congressional Action

On March 2, leadership from the Senate Commerce, Science, and Transportation Committee and the House Energy and Commerce Committee announced bipartisan agreement to combine the House’s FCC reauthorization bill (H.R. 4986) with the MOBILE NOW Act (S. 19) and other important reforms to enhance and reform telecommunications policy. The Omnibus Appropriations Bill included the bipartisan agreement.

MOBILE NOW Act (S. 19): The bill boosts the development of next-generation gigabit wireless broadband services, including 5G, by ensuring more spectrum is identified for private sector use and by reducing the red tape associated with building broadband networks. It requires that 255 megahertz of spectrum be identified for fixed and mobile wireless broadband use by 2022 – at least 100 megahertz for unlicensed use and at least 100 megahertz for licensed use.  Further, it identifies mid-band and high-band spectrum to be studied for possible commercial use.  The bill also reflects efforts to speed the deployment of broadband facilities on federal lands by streamlining the application process and requiring timely action on applications; encouragement to create a national policy and national plan on unlicensed spectrum; and the availability of unlicensed spectrum to meet consumer demands for telecommunications services. The bill promotes rural wireless service by requiring the FCC to craft rules to offer incentives to spectrum licensees to make portions of their spectrum available to small businesses for deployment in rural areas.  

The bill creates new opportunities for state Departments of Transportation and broadband providers to coordinate excavations to ease the installation of broadband infrastructure alongside highway projects (so-called Dig Once). The measure also directs the federal government to study ways it can provide additional incentives (or facilitate such incentives from the private sector) to federal entities to make spectrum available for commercial use.

The measure requires a study on the availability of unlicensed spectrum and wireless networks in low-income neighborhoods around the country.  The report would include recommendations on how to overcome barriers to deployment of networks in those neighborhoods, and how to encourage greater broadband adoption there as well. The NTIA is instructed to create a national spectrum challenge prize competition to encourage new technologies for spectrum efficiency. States and localities are encouraged to participate in the National Broadband Facilities Asset Database. And, the FCC is required, in making determinations regarding spectrum use, to consider the importance of the deployment of wireless broadband services in rural America.

Hearing – Rebuilding Infrastructure in America: Investing in Next Generation Broadband: On March 13, the Senate Commerce Subcommittee on Communications, Technology, Innovation, and the Internet held a hearing titled “Rebuilding Infrastructure in America: Investing in Next Generation Broadband.” Chairman Roger Wicker (R-MS) noted that the process should start with collecting standardized and accurate data about where reliable fixed and mobile broadband already exists and where it does not. And, as we seek to close the broadband gap in rural America, we should also plan for the next generation of broadband, such as 5G with projected capacity, speed and reliability.

The NTCA Rural Broadband Association stressed key principals in shaping public policy should include: making the business case for rural broadband is job one – the economics of deploying and sustaining broadband are difficult, if not impossible, in many rural markets. The FCC High-Cost Universal Service Fund helps providers to keep rates more affordable and to justify either use of a provider’s own cash or financing from lenders serving rural areas including USDA Rural Utilities Service, Rural Telephone Finance Cooperative, CoBank, and some community banks. It is critically important to seek a proven track record of delivering real results in rural areas. It is important to ensure that any entity wishing to leverage federal resources to deploy a rural broadband network is technically capable of delivering on its promise.

The FCC’s new Connect America Fund Phase II USF auction program, for example, includes a “screen” that will aim to test technical assumptions of applicants prior to providing any funding; the State of New York’s broadband grant program seems to have gone even further in ensuring that those claiming to have solutions for rural broadband can in fact deliver on their promise from a technical perspective.

Where such business case exists, removing barriers to deployment through streamlining of governmental permitting procedures can in turn drive more rapid rural broadband deployment at relatively lower costs. But, these must be made on a “technology neutral” basis. The FCC Broadband Deployment Advisory Committee’s Streamlining Federal Siting Working Group that put forth recommendations will hopefully be implemented to further accelerate the broadband deployment permitting process. Those recommendations included: standardize and publish fee schedules, and utilize revenue in a way that promotes expediting federal siting processes; harmonize permitting processes across agencies to the extent feasible and ensure the process is uniformly applied across regional and state offices; recognize and accept existing completed studies in previously disturbed areas; harmonize environmental assessments across federal landholding or managing agencies; further streamline National Environmental Protection Act and National Historic Preservation Act exclusions; eliminate duplicative environmental studies; and make current environmental and historic review streamlining mechanisms mandatory for all agencies.

Senator Wicker has introduced the Streamlining Permitting to Enable Efficient Deployment of Broadband Infrastructure, SPEED Act, to modernize outdated rules that delay and add unnecessary cost to broadband infrastructure deployment. A number of sensitive issues have been raised – from historic preservation and environmental concerns to state and local land use policies, tribal sovereignty, and national security.  S. 1988 would modernize the National Environmental Policy Act (NEPA) and the National Historic Preservation Act (NHPA) review process for wireless facilities to allow antennas in public rights-of-way and where new facilities simply replace existing ones or do not significantly expand existing ones. The bill also recognizes that a small cell should not face the same requirements as 250-foot tower.

House Hearings: On March 22, the House Energy and Commerce Committee held a hearing on H.R. 2903, Rural Reasonable and Comparable Wireless Access Act, introduced by Rep. David B. McKinley (R-WV) on June 15, 2017. The bill would direct the FCC to promulgate rules that establish a national standard for determining whether rural areas have reasonably comparable wireless and broadband services to services provided in urban areas. To determine whether rural areas have reasonably comparable coverage, H.R. 2903 directs the Commission to gather data on the average signal strengths and speeds of commercial mobile service and commercial mobile data service, and broadband Internet access services in the 20 most populous metropolitan statistical areas. The Competitive Carriers Association testified in support of the bill. Testimony of industry leaders can be found on the committee’s website.

 

 

Overview of President Trump’s Infrastructure Package
February 21

On February 12, the White House released its FY 2019 budget proposal and more detail on its Infrastructure Package. The proposals now go to Congress for consideration. The infrastructure package’s stated goals are to increase state and local authority in funding decisions, eliminate regulatory barriers, streamline permitting, and invest in our communities.

If anything, a bipartisan infrastructure deal will be harder in 2018 than it would have been in 2017, now that funding is tighter due to the tax cuts and the midterm elections in November could stall any major legislative effort. Therefore, major business leaders working to move freight quickly, efficiently, and safely are the most active proponents calling on Congress to act.

The infrastructure package is actually a set of principles and relies heavily on state and local governments to produce much of the funding. The $1.5 trillion infrastructure plan is centered on utilizing $200 billion in federal funds over 10 years for infrastructure in the hopes of spurring a total of $1.3 – $1.5 trillion in investments including state, local, and private funds. States and local government entities would apply for federal funds, with preference given to those that raise taxes, tolls or other revenue for the projects. Federal funding would be available for projects that can’t secure private financing, such as those in rural areas. The White House is recommending at least $21 billion in FY 2019 to initiate key elements of the infrastructure package.  

The Trump package also proposes to use executive action to shorten permitting processes on projects to 2 years. An example of such action would be letting a single agency render the final yes-or-no verdict on a project. The plan recommends eliminating the section of the Clean Air Act that requires the Environmental Protection Agency (EPA) to review other agencies’ environmental impact statements, and it recommends revoking the EPA’s power to veto Clean Water Act permits issued by the Army Corps of Engineers.

The Trump plan targets investment in rural infrastructure such as broadband internet service with $50 billion in block grants to states, and recommends improving workforce training and apprenticeships, including expanding Pell Grant eligibility to students pursuing certification or credentials for in-demand trade fields.

Congressional leadership has responded by pronouncing that any infrastructure legislation needs to bipartisan and fiscally responsible in order to make real long-term investments in our nation.

The American Society of Civil Engineers has said the infrastructure backlog comes to $4.59 trillion in needed investments by 2025. The Trump package does not identify a new source of funding. The U.S. Chamber of Commerce endorsed a 25 cent federal gasoline tax increase to support the Highway Trust Fund; the current gas tax rate is 18.4 cents per gallon and 24.4 cents per gallon of diesel. Recently, President Trump indicated his interest in an increase, but congressional leaders are not onboard. A report by the conservative groups that oppose a tax increase, Americans for Prosperity and Freedom Partners, highlight that the burden of gas tax is borne by those Americans in rural communities who must drive every day. They also predict a drain on the overall economy because such a tax would drive up the cost of transporting goods and services on our nation’s roadways. The report estimates that North Carolina’s percentage of increase (adding 25 cents) over the current burden of state and federal taxes and fees per gallon would be 47 percent.       

The White House proposed infrastructure package includes:

  • $50 billion for rural infrastructure: 80% of funds would go to Governors of each state via formula; 20% would be for performance grants; aid for transportation, broadband, water and waste water, power and electric, and water resources; 
  • Allowing private activity bonds to be used for projects currently not allowed, including rural broadband, hydroelectric power, flood control, storm water, and brownfields and superfund site environmental remediation;
  • Current uses of PABs for airports, water ports, mass transit, water and sewer, and transportation facilities would be expanded to allow more privately financed infrastructure projects to benefit from tax-exemption;
  • Lift private activity bond state volume caps on debt sales based on population and PABs would no longer be subject to the alternative minimum tax in an effort to lower borrowing costs and increase their use;
  • Prevent tax-exempt bonds from becoming taxable if infrastructure is privatized;
  • $100 billion for an incentive program to attract non-federal funds, administered by the Department of Transportation, the Army Corps of Engineers, and the EPA. Aid targeted for roads, airports, passenger rail, ports, waterways flood control, water supply, hydropower, drinking water facilities, wastewater treatment, storm water, and brownfields and superfund site cleanup; 
  • $20 billion for projects which would “fundamentally transform the way infrastructure is delivered or operated;” projects must be ambitious, exploratory and ground-breaking and the funds would be administered by the Commerce Department;
  • $20 billion set aside to “advance major, complex infrastructure projects” by expanding existing federal credit programs, such as: the Transportation Infrastructure Finance and Innovation Act, the Railroad Rehabilitation and Improvement Financing, the Water Infrastructure Finance and Innovation Act, the Rural Utilities Service lending program, and Private Activity Bonds; and
  • $10 billion for a federal capital budget financing fund for federal agencies to finance large-dollar real property purchases and repay the fund in 15 equal amounts using discretionary appropriations from Congress.   

The proposals now go to Congress for consideration.

 


Disaster Long-term Recovery
February 15

On February 9, Congress approved a bipartisan budget agreement that included additional funding for long-term recovery from natural disasters. In addition to providing funds for Puerto Rico, U.S. Virgin Islands, Texas, Florida, and California the measure included federal funds for North Carolina. We thank the North Carolina Congressional Delegation for this effort and especially want to acknowledge the leadership of Senator Thom Tillis.  

The budget agreement will allow North Carolina to be eligible for more than $125 million in additional federal assistance for North Carolina’s long-term Hurricane Matthew recovery efforts. The Governor’s Office must submit a plan to secure these funds.  

  • North Carolina is eligible for roughly $100 million in Community Development Block Grant Disaster Recovery (CDBG-DR) funding, which supports family and community needs, including housing, infrastructure, and jobs. The funding is critical for Eastern North Carolina’s long-term recovery efforts. 
  • North Carolina will receive roughly $25.5 million in additional Federal Highway Administration funds for the repair and reconstruction of roads that were damaged by Hurricane Matthew and the subsequent flooding.

This additional CDBG-DR funding adds to the $236,500,000 that the NC Congressional Delegation has secured in past spending bills. Immediately following Hurricane Matthew, $198.5 million was allocated in the December 9, 2016, Continuing Resolution and the remaining $37.96 million was authorized in the May 5, 2017, Continuing Resolution. These federal funds were allocated in two separate tranches: $6,114,000 in May 2017 and $31,862,000 in July 2017.

 

The Big Budget Deal (H.R. 1892, Public Law 115-123)
February 15

In an attempt to resolve differences and bring to a close the FY 2018 appropriations process, Congress approved a bipartisan budget agreement on February 9, setting spending caps for two years (FY 2018 and FY 2019), and providing almost $300 billion in additional funding. The measure also suspends the federal debt ceiling until March 2019.

The current Continuing Resolution, providing funds to federal programs at existing FY 2017 levels, expires March 23. Next, the House and Senate appropriators will get their new subcommittee allocations and hammer out the final details of an omnibus spending package for the remainder of FY 2018. This package should be enacted before March 23.

Because the Continuing Resolution approved February 9 was must-pass legislation, it became a legislative vehicle to resolve many additional issues. The bipartisan agreement:

  • Provides $84 billion for disaster relief for 2017 hurricanes and wildfires; North Carolina is eligible for an additional $125 million community development and transportation long-term recovery funds;
  • Extends expired energy tax credit provisions;
  • Extends the National Flood Insurance Program;
  • Renews through 2017 the designation of certain areas as “empowerment zones,” which provide area businesses with tax incentives;
  • Grants a seven-year recovery period for motorsports entertainment complexes;
  • Provides an option for companies to deduct as much as $15 million in certain film, television, and theater expenses, and up to $20 million in certain economically disadvantaged areas;
  • Increases support for cotton and dairy producers by modifying agriculture programs; and
  • Extends USDA’s Environmental Quality Incentives Program through FY 2019 at the FY 2018 rate of $1.75 billion.

Health Care Specific Provisions Included in the Package:

  • Extends the Children’s Health Insurance Program (CHIP) through FY 2027;
  • Extends Community Health Centers for two years;
  • Extends Maternal, Infant, and Early Childhood Visiting Program through FY 2022, without requiring matching funds as included in an earlier House bill;
  • Extends for two years the National Health Service Corps, the Teaching Health Center Graduate Medical Education Program, Special Diabetes Program funding research for Type 1 diabetes, the Family-to-Family Health Information Centers for children with special health-care needs, the Sexual Risk Avoidance Education Program, and the Personal Responsibility Education Program;
  • Extends for two years the demonstration projects that provide low-income individuals with training or jobs in the health-care field with a labor shortage or that’s in high-demand;
  • Extends and makes improvements in HHS foster care programs, including the Promoting Safe and Stable Families Program, the Stephanie Tubbs Jones Child Welfare Services Program, the Administration for Children and Families discretionary and targeted grant programs, and incentive payments for adoption and legal guardians through FY 2021;
  • Repeals Medicare outpatient therapy caps for services deemed medically necessary;
  • Extends for five years the three percent increase in payments for home health services provided in rural areas;
  • Increased payment rates for five years for ambulance services in rural areas and areas that aren’t covered by Medicare Part A;
  • Extends for five years the low-volume hospital adjustment that provides additional payments to hospitals with fewer than 1,600 Medicare patient discharges each year;
  • Extends for five years the Medicare Dependent Hospital Program, which provides higher reimbursements to small rural hospitals where at least 60 percent of patients are Medicare beneficiaries;
  • Extends for two years the geographic work adjustments that prevent physician service payments from being reduced based on geographic location;
  • Extends for two years funding for outreach, counseling, and other assistance programs for Medicare beneficiaries;
  • Extends for two years the Independence at Home Demonstration program and increases the limit on the number of participants;
  • Expands the use of telehealth services for end-stage renal disease treatments, stroke evaluations, accountable care organizations (ACOs), and Medicare Advantage plans;
  • Directs HHS to modify payments for home health services beginning in 2020, and include medical records of home health providers for determining eligibility;
  • Continues for calendar year 2017 the exemption for critical access and rural hospitals from physician “direct supervision” requirements for outpatient treatments;
  • Removes a requirement that “meaningful use” standards under Medicare and Medicaid incentive programs become more stringent over time, thus easing requirements for electronic medical records;
  • Allows physician assistants to serve hospice patients, in addition to doctors and nurses;
  • Allows physician assistants and nurses to supervise cardiac rehab programs, intensive cardiac rehab programs, and pulmonary rehab programs beginning in 2024;
  • Repeals cuts to Medicaid disproportionate share hospitals (DSHs) for FY 2018 and FY 2019, but increases the reductions in FY 2021-2023; and
  • Includes various provisions to get savings to offset the costs of these health-care programs such as increasing means testing of Medicare premiums for beneficiaries making more than $500,000, making CHIP the payer of last resort, altering payment rates and fee schedules, and closes the gap in Medicare prescription drug coverage, so called “donut hole,” one year earlier than scheduled by requiring drug companies to cover more of the cost.           


White House’s FY 2019 Proposed Budget – Just the Starting Point

February 14

The first steps of the FY 2019 budget process began with the President’s State of the Union address delivered January 30, and the White House submitting its FY 2019 budget to Congress on February 12.

Unfortunately, the FY 2018 appropriations bills are not yet completed; these bills create the baseline for the FY 2019 funding discussions. The White House package does not include the new FY 2019 spending limits for defense and non-defense federal programs that were enacted by Congress and signed by the President February 9 (H.R. 1892, Public Law 115-123), nor does it project a balanced budget in 10 years, which is the standard goal.

Next steps: Congress must complete the FY 2018 appropriations bills before March 23, when the current Continuing Resolution expires. This omnibus appropriations bill will fund the federal government through September 30, 2018.

FY 2019: Trump Administration officials are currently testifying before House and Senate committees to present their budget recommendations. The 12 appropriations subcommittees in the House and the Senate will begin preparing their bills for consideration. In theory, the process will go more smoothly this year because the Congress and the White House already have agreed upon overall spending limits for FY 2019, although the debate on priorities will be intense as the November 6 Election Day approaches.        

What to Watch for North Carolina (not a complete list)

  • Deficit & Debt – Trump budget documents project a federal deficit of $984 billion in FY 2019 and the long-term debt to rise to $23.7 trillion over 10 years;
  • Defense – strong Defense and Veterans Affairs budgets positively impact the military bases, large veteran population and the local community economies in NC;
  • Community & Economic Development – Trump budget proposes to eliminate several critical programs utilized heavily for community and economic development including: HUD Community Development Block Grants (CDBG); USDA Rural Economic Development Loan and Grant Program of which North Carolina is a leader in making investments; the Economic Development Administration; the Manufacturing Extension Partnerships (MEP) program; Transportation’s TIGER Grants; Treasury’s Community Development Financial Institutions (CDFI) Fund’s discretionary grant and direct loan programs; Education Department’s Public Service Loan Forgiveness Program; Weatherization Assistance Program; Legal Services Corp; National Endowment for the Humanities; and National Endowment for the Arts, among others;
  • Agriculture – Trump budget seeks a 16 percent cut to USDA including reducing funds for broadband development and distance learning, reforms SNAP nutrition assistance, and eliminates the Rural Economic Development Loan and Grant Program;
  • EPA – Trump budget seeks a 25 percent cut at the Environmental Protection Agency; drastic reductions in research and development programs at our universities; cost-cutting overhauls to Medicare and other social safety-net programs;
  • Opioids – Trump budget requests $13 billion in new funding to combat the opioid epidemic including $50 million for an anti-opioid media campaign; $50 million for overdose reversal drugs to be distributed to emergency workers; $100 million for prevention activities including a state-based program to monitor painkiller prescriptions; a $100 million public-private partnership between NIH and the pharmaceutical industry to develop treatments for addiction, overdose reversal, and non-addictive painkillers;
  • Medicaid – Trump budget proposes to change Medicaid financing to give states a choice between a per-person cap on federal payments or a block grant; allows up to five states to create Medicaid closed drug formularies to select less costly drugs and set prices directly with manufacturers; cuts to home-health agencies and nursing homes; reduced payments to hospital-owned doctors’ offices; and calls for rewarding hospitals which provide charity care and reduce payments to hospitals that provide little or no charity care;
  • FDA – Trump budget proposed big increase to FDA to secure the talented scientists needed;
  • Affordable Care Act – HHS budget continues to call for repealing and replacing Obamacare, but would appropriate funds to cover the cost-sharing reductions for FY 2018 through calendar year 2019 to stabilize the insurance market and lower 2019 premiums;
  • Amtrak – Transportation budget cuts funding for Amtrak passenger service and recommends state financing to meet the need; and
  • Appalachian Regional Commission – Trump budget requests level funding, $158 million, for the Appalachian Regional Commission and assumes no major policy or programmatic changes. ARC is authorized through 2020.

Many say the President’s budget is dead-on-arrival, but the recommendations to eliminate programs and entire agencies must be given serious consideration and are not to be taken lightly. It is most important to demonstrate the need and the accomplishments of these programs at the local level to justify continuation. The completion of the FY 2018 appropriations process will better define the intentions of Congress which has the responsibility to appropriate federal funds.

Debby Bryant

Federal Consultant

Announcement: Thread Capital activates Hurricane Florence Rapid Recovery Loan Program to assist North Carolina businesses affected by the storm. To learn more, click here.