Jobs and Growth Tax Relief Reconciliation Act of 2003

JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003

Mr. SCHUMER. Madam President, I thank my colleague from Montana. I add my remarks to his. I agree with him completely. I am in full support of the Collins-Rockefeller-Nelson amendment. Our localities and States desperately need aid. It makes no sense to tell John Q. Citizen that he will get a $100 rebate from the Federal Government and then have his State and local taxes rise $100. That does not put money in his pocket and stimulate the economy.
    
Madam President, $20 billion is a decent sum, half going to FMAP and half to direct aid. I would like to see a little more going to localities. It is 60-40, as I understand it. My original proposal with Senator Collins and Senator Snowe was 50-50. That would be a little fairer because localities need help in property taxes a lot. But this is a good start. I am glad it is in the bill. I hope it will stay in the bill because our localities desperately need aid.
    
Property taxes are going through the roof, and the best property tax circuit breaker is local aid. I wish it was higher as well, and I am glad that in a few minutes, my colleague from Washington will be offering an amendment that doubles that amount.
    
The original legislation that Senator Snowe and I introduced was $40 billion. I know my friend from Montana originally proposed $75 billion. Even that would not be enough to do what we need to do. I hope we can raise the amount. Again, States and localities need it.
    
Cities and counties throughout my State are raising taxes. That is going to put a real damper not only on New York's economy but on America's economy. Local aid prevents some of that from happening.
    
This is one of the most important provisions in this bill. There are a lot of provisions in the bill that Senator Grassley has proposed with which I agree. There are some with which I disagree. But there is probably none that is more needed, more demanded by the Governors, mayors, county officials, town and village officials than the proposal the Senator from Maine, the Senator from West Virginia, and the Senator from Nebraska have brought before us.
    
I am going to support it rather enthusiastically, only tempered by the fact that I think it should be more. I hope it can be more. I hope it does not get any lower, I say to my good friend from Iowa, in conference and in other places. He is shaking his head yes, let the record show. I hope he is saying, yes, it should not get lower not, yes, it should get lower.
    
This is a very important amendment. I will fully support it. I was involved in helping to push this local aid issue. I hope we can increase the amount with the amendment of the Senator from Washington.
    
I yield back the remainder of my time.

Mr. SCHUMER. Madam President, I first thank my colleague, Senator MURRAY, for her sponsorship of this vital amendment. I also want to specifically recognize Senator GRASSLEY, the distinguished chairman of the Finance Committee, and Senator BAUCUS, the distinguished ranking member, for their leadership in putting State and local fiscal relief on the agenda. I should also note the bipartisan effort of Senators COLLINS, ROCKEFELLER, SMITH and NELSON which helped establish State aid in the budget debate. Finally, Senator SNOWE deserves special recognition for her early and steadfast support of this legislation.
    
The fiscal crisis in our States and cities is a national problem that requires bipartisan cooperation in the best spirit of the Senate, and I am proud to be working together with my esteemed colleagues.
    
I support the Murray amendment.
    
This amendment is critical to New York. It will help thousands of New Yorkers keep their jobs, maintain the State services they rely on, and most importantly avoid the burden of increasing taxes. I cannot state that more clearly—without this legislation the tax burden on citizens in my State will go up. That threatens to undo the very stimulus we all believe is necessary.
    
As we all know, New York is not alone. States are facing their worst fiscal crisis since World War II. The Governor of New York, George Pataki, stated the situation in all of our States and cities clearly, "We face a fiscal crisis today of a magnitude that we have not faced in our lifetime."
    
According to estimates provided by the National Conference of State Legislatures, the total budgetary shortfall for all States in fiscal year 2004 was in the range of $80 billion, and an approximate $22 billion gap still remains from fiscal 2003. Many believe these figures remain significantly understated.
    
Almost every State is running a significant, multi-hundred million dollar deficit. In many States, the figure runs into the multi-billions of dollars. In several States, the deficit's percentage of the total State budget is estimated to be in the range of 25 percent or more. New York State's budget shortfall alone is $12 billion dollars.
    
The situation at the local level is just as dire. According to the National Association of Counties, nearly 72 percent of counties are facing budget shortfalls, 37 percent are reducing services, and 17 percent are increasing taxes—all at a time when the demand for services and the need for tax cuts is rising given the sour economy.
    
This is not a regional issue. It is a national crisis.
    
Unlike the Federal Government, which has seen its fiscal position change from a budgetary surplus in 2000 to a newly estimated deficit of over $300 billion in fiscal 2003, almost every state is required by law to have a balanced budget. To achieve this the only options are to raise taxes and/or cut spending.
    
State taxes are increasing in three ways. First, state income tax rates are increasing. Second, property tax rates are skyrocketing. In New York City, Mayor Bloomberg was forced to raise property taxes over 18 percent to preserve vital services. Third, States are increasing sales taxes, excise taxes, and other fees. As the New York Times recently reported "at least 15 states have raised taxes, five of them by 5 percent or more."
    
This increasing tax burden falls heavily and squarely on the backs of our working families. It will make it harder for them to make ends meet in these already difficult economic times when every dollar counts.
    
State spending cuts follow 2 years of a deteriorating economic environment and fiscal outlook. During that time, States have cut the fat from their budgets and depleted reserves. They now are cutting muscle. To balance their budgets for fiscal 2004, States are in the process of eliminating thousands of jobs.
    
In many States, the jobs that will be lost are vital to our communities: policemen, firefighters, teachers, postal workers, and bus drivers. In New York these were the jobs of the everyday heroes that we celebrated after the tragedies of September 11.
    
States also are eliminating many critical programs and reducing funds available for those programs that remain.
    
Among the most vulnerable targets are those services that working families rely on, such as childcare and elementary and secondary education. Without funds, school improvements will not be made. Libraries will not be upgraded. Staff will be cut. Class sizes will dramatically increase.
    
All of this is happening today. As one school superintendent stated, "It is the worst thing that has happened in my thirty years in public education."
    
This comes at a time when, as a nation, we are striving to raise our children's test scores and improve overall school performance. In addition, in many states the cost of higher education is increasing. Tuition at some State colleges and universities has been raised over 20 percent. Also vulnerable are programs that help those most in need during difficult times.
    
States now bear the responsibility for numerous programs and services that provide the safety net that our citizens rely on. For example, as we know well, states fund a large percentage of the cost of Medicaid. During the current fiscal crisis, according to the Kaiser Commission on Medicaid and the Uninsured, Medicaid programs have been cut substantially. This will place an enormous burden on our society. States clearly need funding to pay for Medicaid.
    
In addition, programs such as job-training, housing subsidies, and other services for lower-income citizens are at risk.
    
Most importantly, states now face extraordinary demands to provide the protection citizens require in the new post-9/11 world. They face increased responsibilities to patrol ports, bridges and tunnels, to train emergency response personnel, and to put in place the infrastructure to protect their citizens.
    
In the current world, with threats on our home soil at high levels, and on the brink of a war with a nation accused of sponsoring international terrorism, we cannot abandon our States and cities. We must give them the funds they need to protect our citizens.
    
The solution is to provide direct Federal aid to the States and localities within the budget. We have had bipartisan agreement to provide $20 billion in direct Federal aid to the States and localities on a one-time basis. I commend Senator GRASSLEY for his leadership in getting this done. It is a very good start, but it not enough.

I have heard some argue that state aid is not good economic policy, but numerous reports indicate that a very large number of economists believe that aid to the States is, in fact, an extremely effective means of providing fiscal stimulus, as it quickly puts money in the hands of people who need it and will spend it.
    
State and local aid also alleviates the need for States to cut more jobs, cut more programs, and raise taxes, which acts as an "antistimulus" on the economy. Without any State aid, an individual's or family's decreased in Federal taxes could be surpassed by an increase in State and local taxes.
    
We should not support policies where, "What one hand giveth the other taketh away." We should not "rob Peter to pay Paul."
    
This modest increase in the amount of aid is a one-time shot in the arm for the States. It is not an enormous, multi-year change that threatens to build more deficits. It is a short-term proposal in response to a crisis that threatens to further drag down our economy and further increase the tax burden on our citizens.
    
Some argue that States and cities have dug their own fiscal graves, and should now lie in them. I could not disagree more. Our States and cities face the same economic forces as the Federal Government. As the economy has forced a dramatic reversal in fiscal health in our Federal budget, so has it wreaked havoc on local budgets.
    
Why should we hold States and localities to a different standard than we hold ourselves?
    
If we want to teach States a lesson, why should we force citizens to bear the brunt of that discipline through higher taxes on their income, bigger class sizes for their children, and less services for those in need?
    
The money we are discussing is not a bailout. Nowhere close. States and locals will still need to make painful cuts and possibly raise taxes. But we can help alleviate the pain which will fall not on lawmakers, as we all know, but on our citizens.
    
As President John Kennedy once said, "Let us seek not the Democratic solution or the Republican solution, but the right solution."
    
This is the right solution. I fully and enthusiastically support Senator MURRAY's amendment.