[House Document 105-115]
[From the U.S. Government Publishing Office]



105th Congress, 1st Session  - - - - - - - - - - House Document 105-115


 
              CANCELLATION OF ITEM OF NEW DIRECT SPENDING

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

  A CANCELLATION OF ONE ITEM OF NEW DIRECT SPENDING CONTAINED IN THE 
  BALANCED BUDGET ACT OF 1997, PURSUANT TO PUB. L. 104-130, SEC. 2(a)





  September 3, 1997.--Message and accompanying papers referred to the 
           Committee on the Budget and ordered to be printed


                                           The White House,
                                       Washington, August 11, 1997.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: In accordance with the Line Item Veto 
Act, I hereby cancel one item of new direct spending, as 
specified in the attached report, contained in the ``Balanced 
Budget Act of 1997'' (Public Law 105-33; H.R. 2015). I have 
determined that this cancellation will reduce the Federal 
budget deficit, will not impair any essential Government 
functions, and will not harm the national interest. This 
letter, together with its attachment, constitutes a special 
message under section 1022 of the Congressional Budget and 
Impoundment Control Act of 1974, as amended.
            Sincerely,
                                                William J. Clinton.


                        [Cancellation No. 97-3]

              Cancellation of Item of New Direct Spending

        Report Pursuant to the Line Item Veto Act, P.L. 104-130

Bill Citation: ``Balanced Budget Act of 1997'' (H.R. 2015)
    1(A). Item of New Direct Spending: Section 4722(c). 
Subsection (c), ``Waiver of Certain Provider Tax Provisions'', 
of Section 4722, ``Treatment of State Taxes Imposed on Certain 
Hospitals'', is canceled in its entirety. The remainder of 
Section 4722 is not canceled.
    1(B). Determinations: This cancellation will reduce the 
Federal budget deficit, will not impair any essential 
Government functions, and will not harm the national interest.
    1(C), (E). Reasons for Cancellation; Facts, Circumstances, 
and Considerations Relating to or Bearing upon the 
Cancellation; and Estimated Effect of Cancellation on Objects, 
Purposes, and Programs: In the past, Federal Medicaid spending 
increased dramatically because some States used 
disproportionate share hospital payments and related special 
financing mechanisms such as levying taxes on health care 
providers to effectively lower their share of Medicaid 
spending. Lowering a State's share of Medicaid spending allows 
the State to generate additional revenues that can potentially 
be used for non-Medicaid purposes. In 1991, Congress limited 
the growth in Medicaid spending by enacting legislation to 
restrict the ability of States to use certain types of provider 
taxes as their share of Medicaid spending. See Section 1903(w) 
of the Social Security Act, 42 U.S.C. 1396b(w). Congress 
required that provider taxes be uniform and broad-based in 
order to qualify as a State's ``matching'' funds. The canceled 
item would have deemed taxes, fees, or assessments that were 
collected by the State of New York from a health care provider 
before June 1, 1997, and for which a waiver has been applied 
for, to be permissible health care related taxes in compliance 
with the requirements of Medicaid law. The canceled item, which 
would have constituted new direct spending, would have given 
preferential treatment to only one State (New York), by 
allowing that State to continue relying upon impermissible 
provider taxes to finance its Medicaid program. This 
preferential treatment would have increased Medicaid costs, 
would have treated New York differently from all other States, 
and would have established a costly precedent for other States 
to request comparable treatment. The legislative history and 
purposes of this provision were considered, but did not 
outweigh the foregoing reasons for cancellation.
    1(D). Estimated Fiscal, Economic, and Budgetary Effect of 
Cancellation: As a result of the cancellation, Federal outlays 
will not increase, as specified below. This will have a 
commensurate effect on the Federal budget deficit and, to that 
extent, will have a beneficial effect on the economy.

Outlay Changes

Fiscal year:          [In billions of dollars] \1\
    1998......................................................     -$0.2
    1999......................................................         0
    2000......................................................         0
    2001......................................................         0
    2002......................................................         0
                    --------------------------------------------------------------
                    ____________________________________________________

      Total...................................................     -$0.2

\1\ Based on CBO estimates. Final Administration scoring may vary.

    1(F). Adjustments to Discretionary Spending Limits: Not 
applicable.
    2(A). Agency: Department of Health and Human Services.
    2(A). Bureau: Health Care Financing Administration.
    2(A). Governmental Function (Account): Medicaid (Grants to 
States for Medicaid).
    2(B). States and Congressional Districts Affected: New York 
and all Congressional Districts in New York.
    2(C). Total Number of Cancellations (inclusive) in Current 
Session in each State and District identified above: One.

                                
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