Vote to Politicize Houses of Worship Expected in House Committee
The House Appropriations Committee is expected to vote as early as this week on a spending bill that contains an extraneous provision (rider) that would significantly weaken enforcement of aspects of Section 501(c)(3), in particular the provision of law sometimes called the Johnson Amendment that protects against partisanship. The rider, Section 116 of the House Financial Services and General Government FY2018 Appropriations bill, would prevent the Internal Revenue Service from spending any funds to make a final determination that a house of worship or its affiliate has violated the Johnson Amendment
unless the IRS meets three conditions: (1) the IRS Commissioner personally consents to a determination of unlawful conduct; (2) politicians on the House and Senate tax committees are given 30-days' notice of the law-enforcement determination; and (3) an additional 90-days' notice is provided before enforcement can commence.
According to Newsweek, Section 116 "would make it exponentially more difficult to enforce" even the most blatant violations of the Johnson Amendment. While aimed at houses of worships, most charitable nonprofits as well as faith-based organizations strongly oppose legislative efforts to politicize entities that currently are dedicated to their missions in communities and are above the partisan fray. In an article in Nonprofit Quarterly, Tim Delaney, President &
CEO of the National Council of Nonprofits, explains why this attack on nonpartisanship matters to everyone and what’s at stake. See the National Council of Nonprofits News Release for more background.
Call to Action: All individuals committed to preserving the nonpartisanship of the nonprofit community need to take action. Contact your Representatives on the House Appropriations Committee and urge them to strip the Johnson Amendment rider (Section 116) from the Financial Services and General Government appropriations bill. Find your Representative’s contact information and call or email right away. A simple message is best: “I’m your
constituent and I ask that you act to strip Section 116 from the Financial Services appropriations bill.” Check out the Three-Step Guide to Taking Action on the Appropriations Rider for more information.
Senate Healthcare Reform Efforts Remain Behind Closed Doors
Starting today, the Senate has three weeks to fulfill the Republican goal of repealing and replacing the Affordable Care Act (“ACA” or “Obamacare”) before the scheduled start of the August recess. Pressure is intense to get this action item completed because the agenda for September is overloaded with completing 12 spending bills and raising the debt ceiling, both to avoid a federal government shutdown, plus action on many pieces of must-pass legislation.
The initial draft of the Senate health care bill, the Better Care Reconciliation Act of 2017 (BCRA), was met with vocal opposition from enough Republican Senators to ensure its defeat if brought to the floor for a vote. That version called for eliminating enhanced funding for Medicaid expansion after a three-year phase out, imposing a cap on federal Medicaid funding for many beneficiaries and services, and making other changes to Medicaid. The legislation, if enacted as written, would shift significant financial liabilities to the states, costing the 31 expansion states $154.2 billion and the remaining non-expansion states $53.3 billion by 2026, according to an analysis by the Manatt Health Group and the Robert Wood Johnson Foundation. The study also found that total funding to states would decline by nearly $700 billion if states drop expansion coverage in 2021 when federal subsidies would end. Governors in many states, such as Arizona and Ohio, have indicated their states cannot handle the resulting financial burdens.
Senators have been exploring whether consensus could emerge around a revised bill, but none has yet been reached. Moderate Senators, such as Lisa Murkowski (R-AK), are expressing frustration over the closed-door process that created the initial discussion draft, and possibly a second draft that few have seen in advance. To further lower insurance costs, conservative Senators may be rallying around a proposal to allow insurance companies to offer stripped down plans that do not cover all of the services mandated under the Affordable Care Act, on the condition that they also offer at least one ACA-compliant plan as well. This approach reportedly is opposed by moderates who express concern about higher costs for individuals
with pre-existing conditions.
There also appears to be disarray on what a back-up plan would be if the larger repeal and replace effort fails; President Trump is calling for an outright repeal of Obamacare, while Majority Leader McConnell (R-KY) has suggested working with Democrats to stabilize the insurance markets. This latter approach could suit moderate Republicans just fine, as Democrats reportedly are waiting for the repeal/replace efforts to fail before being willing to negotiate. See the June 26 edition of Nonprofit Advocacy Matters for more background on the health policy debate.
Budget Process Continues to Falter
No clear path has emerged for passing a federal budget resolution less than three months remaining before the October 1 beginning date for fiscal year 2018. A budget resolution sets the total amount that appropriations committees can spend for the year and permits the majority party to provide instructions on controversial legislation, such as comprehensive tax reform, that can pass the Senate with a simple majority vote rather than the usual supermajority of 60 votes needed to avoid a filibuster. House Budget Committee Chair Diane Black (R-TN) had told constituents that she planned to pass a House budget resolution this week. That action has now slipped at least one week as negotiations continue on a final package. It has been
reported that the Committee will propose increasing defense spending by $73 billion in the coming year and reduce non-defense spending by $5 billion. The dispute delaying action reportedly is over how much the resolution will require in mandatory spending cuts for programs such as Medicaid and Medicare - $200 billion over ten years as insisted by some conservative Representatives or $150 billion in cuts as preferred by moderates. The amount in spending cuts will influence how much Congress can “afford” to cut taxes when attempting to enact comprehensive tax reform later in the year.
- DOL Overtime Rule: The Labor Department has opted not to defend an overtime rule that was scheduled to go into effect on December 1 last year, but that was enjoined by a federal district court in Texas. The Overtime Final Rule promulgated by the Obama Administration would have raised the “white collar” threshold to $47,476 from the current $23,660, under
which employees must receive overtime pay. The Labor Department did not defend the higher threshold in a recent court filing, but it did ask the appellate court to “not address the validity of the specific salary level set by the 2016 final rule ($913 per week),” because it “intends to undertake further rulemaking to determine what the salary level should be.” The Department also asked the appellate court to both “reverse the judgment of the district court because it was premised on an erroneous legal conclusion, and reaffirm the Department’s statutory authority to establish a salary level test” for overtime eligibility using a worker’s salary.
- CBO Deficit Projections: The Congressional Budget Office increased its deficit projections to $693 billion for fiscal year 2017, which is $154 billion higher than January estimates. Due to lower-than-expected tax collections, CBO also projects the Treasury will run out of money by mid-October if the statutory debt ceiling is not raised by then. The cumulative deficit is projected to increase an additional $686 billion more than previous estimates over the next ten years for a total of $10.11 trillion by 2027. It projects that temporary tax cuts will add another $539 billion to
the deficit should they be made permanent by Congress.
- Reminder - Contribute Tax Reform Ideas: The Senate Finance Committee is asking experts and stakeholders “to provide ideas, proposals, and feedback on how to improve the American tax system.” In a statement inviting public comment, Committee Chairman Orrin Hatch (R-UT) said, “Members from both parties have acknowledged the shortcomings of our current tax system and the need for meaningful reforms to encourage economic growth and alleviate many of the burdens imposed on hardworking taxpayers…. As we work to achieve those goals, it is essential
that Congress has the best possible advice and insight from experts and stakeholders.” Specifically, Hatch seeks advice and recommendations in any of four key issue areas: middle-class tax relief; strengthening businesses; removing impediments to savings and investments; and updating the international tax system. Submissions may be made to the Senate Finance Committee at email@example.com. The deadline for input is next Monday, July 17, 2017.
Governors Stepping Up Advocacy in Support of Medicaid
Thirteen governors have taken action through the Governors’ Bipartisan Health Reform Learning Network to raise concerns about health reform and its impact on state governments. The shared priorities of the seven Republicans and six Democrats include state-based ideas on improving the health care system through strengthening the state-federal partnership and stabilizing private health insurance markets. Supporting vulnerable populations is a shared responsibility between the federal government and states, the group acknowledges. The 13 governors stressed, “It is critical that Congress continue to maintain a
meaningful federal role in this partnership and not shift costs to states.” They observed that significant “cuts to Medicaid will impact coverage for millions of low-income individuals and could impede state efforts to address the underlying factors driving health care costs, such as pharmaceuticals, long-term care and the social determinants of health, financing and flexibility for Medicaid, and providing essential funding for public health crises.” The Alliance for Strong Families and Communities supports this statement on cost-shifting and is urging nonprofit human service providers to encourage policymakers to
adopt the statement.
Winners and Losers in Budget Showdowns
Budget showdowns continue as several states began their 2018 fiscal year on July 1 without resolution of spending and revenue plans for the year. After more than two years of a political stalemate between the executive and legislative branches and missed payments totaling $15 billion in overdue bills, Illinois finally passed a budget and ended the longest state budget impasse in the nation’s history. The impasse ended when 10 Republican House members joined with the majority to override the Governor’s veto of the spending plan despite the inclusion of $5 billion in tax increases. Forefront, the state association of nonprofits and regional association of grantmakers in Illinois, applauded the resolution of the fiscal crisis, stating that nonprofit “resilience and commitment under such trying circumstances are beyond inspiring.”
In a reverse of the Illinois experience, the North Carolina legislature, which is controlled by Republicans, voted to override the veto of Democratic Governor Cooper of the $22.9 billion state budget, allowing the plan to go into effect on July 1. In Delaware, the Governor signed a $4.11 billion budget that includes Grant-in-Aid at 80 percent of the previous year’s funding levels (up from zero in the previous draft of the budget) and left the state charitable gift deduction
intact. The Delaware Alliance for Nonprofit Advancement, along with a strong nonprofit coalition in the state, fought hard to keep charitable giving a priority.
After three days of partial government shutdowns, New Jersey and Maine Governors signed budget bills in time for the Fourth of July holiday. Governor Christie of New Jersey had demanded that the state be able to seize the “excess surplus” resources of Horizon Blue Cross nonprofit health insurer to fund various government health programs. The budget ultimately was approved as policymakers agreed to cap the insurer’s surplus, but set up a ratepayer refund system
rather than allow the state to use the funds.
Meanwhile, Connecticut nonprofits are preparing to close as the state started the fiscal year without a budget and a recently announced Executive Order Resource Allocation Plan makes $187 million in cuts to community nonprofits and conversions of state-operated services to the nonprofit sector. The CT Community Nonprofit Alliance is leading an advocacy campaign (#ForAllofUS) urging nonprofit supporters to tell policymakers about the real impacts of this plan. Finally, in déjà vu of last year’s 10-month budget impasse, Pennsylvania still doesn’t have a budget, with legislators hung up on whether to permit video poker machines in bars and restaurants.
Taxes, Fees, PILOTs
- Sales Taxes. Denver, Colorado extended its sales tax exemption to all 501(c)(3) organizations in an ordinance signed by the Mayor last week. The Colorado Nonprofit Association worked with city officials in support of the measure that is estimated to benefit 2,000 eligible nonprofits in Denver.
- Hospital Taxes: Hospitals in Connecticut paid more in state taxes than they received in operating surplus this year. A state hospital tax on health care providers started in 2012 and amounted to $438 million for the year. Comparatively, the hospitals had $353 million in gains from operations. This comes as Governor Malloy is calling for even higher taxes on hospitals during the state’s budget crisis as well as looming threats of Medicaid cuts.
Government-Nonprofit Contracting Reform Update
California Nonprofits Object to Burdensome Contracting Legislation
Legislation in California would require counties to adhere to additional bureaucratic processing standards when seeking to outsource public services, including when contracting with nonprofits. Among other things, the bill would require a county, before contracting with nonprofits and others, to clearly demonstrate that the proposed contract would result in actual overall costs savings to the county and also show that the contract would not cause the displacement of county workers. CalNonprofits, the
state association of nonprofits, issued a letter in opposition to the bill stating: “AB 1250’s provisions are far too onerous for our members, as they will drive up unfunded overhead and compliance costs. And that’s the best-case scenario. The worst is that contracts will come to a halt altogether, a prospect the counties are saying unequivocally will occur, or be so delayed that they cause serious adversity to the low-income and marginalized Californians our members serve.” CalNonprofits CEO Jan Masaoka has said, “There are some things best done by government and some best done by nonprofits. We need government-led, nonprofit-delivered services that are streamlined, efficient, culturally accessible, and
cost-effective. We do not need a lot of expensive red tape at the beginning and end of every contract.”
Effective Calls to Action
There is no formula for crafting an effective call to action. What matters is results: motivating readers to make the call, write the letter, tweet the tweet, or take other actions needed to advance good public policy. Different people respond to different writing styles. Here is a case study in style.
The topic of a recent string of Action Alerts is the rider intended to politicize part of the nonprofit community that was attached to a House Appropriations bill in late June. The needed action is getting lawmakers to strip Section 116 from the bill either when the full Committee takes action or before/when the measure is debated on the House floor in the coming weeks.
- Center for Non-Profits (NJ) on Friday, July 7, issued an URGENT ALERT - Johnson Amendment Challenge. Considering that New Jersey is the home of House Appropriations Committee Chair Rodney Frelinghuysen, the bold statement in red is understandable. And a longer-than-usual Action Alert also makes sense since the Chairman’s staff will likely get dozens of inquiries from Committee members who weren’t aware that a controversial rider was included in the bill that would politicize the nonprofit community, starting with houses of worship. The
member message provides background on nonprofit nonpartisanship, the Johnson Amendment, and the extraneous rider (Section 116), and lays out the data on public opposition to the proposed change in law. The Alert asks New Jerseyans to contact the Chairman by phone or email and urge him to strip the provision from his bill. It goes farther and urges readers to take the extra step of forwarding the appeal to any and all other colleagues in the Chairman’s district to encourage them to take similar action.
- North Carolina Center for Nonprofits issued a special edition of its Public Policy Update immediately upon learning that full Appropriations Committee consideration was looming. The message got quickly to the point:
“Congressman David Price (D-NC) serves on the House Appropriations Committee. If you live in the NC-4 congressional district, we encourage you to call (202-225-1784) or email Congressman Price by Tuesday with the simple message that "I'm your constituent, and I ask that you act to strip the Johnson Amendment language in Section 116 from the Financial Services appropriations bill.”
- Utah Nonprofits Association (UNA) is taking the casual and friendly approach: “You've seen our letters and emails in support of nonprofit nonpartisanship and maybe even signed onto the national letter. The issue has now reached a critical point-- we need the support of all Utah's nonprofits to protect ourselves from partisan politics!” UNA briefly reminds readers of the substance of the issue and provides follow up resources. The Action Alert informs members that “UNA's CEO Kate Rubalcava has already called the Congressman's office to state UNA's position on
this matter and to tell them to be expecting your call!” It makes the ask, “We now need your help to drive the message home!” And our favorite detail: the message ends with the encouragement, “Feel free to tell them UNA sent you.”
Asking nonprofits to take action on important policy developments is the thing – it’s vital to advancing their missions and need to know when challenges and opportunities arise. As these examples show, how you say it can vary widely based on the needs of the audience and the policymakers you are seeking to motivate. Good luck.