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Washington Partner Perspectives For January 10, 2007

Today’s questions are answered by Ellin J. Nolan, president of the firm:

The House has enacted new rules on how appropriations and tax earmarks are handled. How will those new procedures impact how non-profits seek appropriations earmarks?

Nolan: I think these new rules will have little impact on how non-profits proceed initially but they will influence the response of legislators. Most Members take pride in helping constituents get special consideration for federal funding. They are very willing to stand up and take credit for directing resources to their states or districts. If anything I see these rules encouraging more groups to seek earmark support as they become better informed about the possibility. Members may ultimately feel so much pressure to produce in the earmark game that they are the ones who back off, not their constituents.

Are earmarks as we know then going disappear or become rare?

Nolan: I don’t see them disappearing at all because of pressure from sunshine rules. The pressure that might reduce or eliminate earmarks is in the budget process. For instance, for two years running the Committee on Labor, Health and Human Services and Education has said no to earmarks in the appropriations bill funding those agencies. The sky hasn’t fallen so this may become a more common occurrence. Prior to Republican Senator Arlen Specter taking the Chair of that Subcommittee, earmarks were rarely included for those agencies. Now that he has stepped aside as Chair the future growth of earmarks in the LHHS bill is anyone’s guess.

The House also enacted major changes to ethics provisions, including a travel ban and greater restrictions on gifts. How do you think these new rules will impact the non-profit and education sectors?

Nolan: The notion of a gift prohibition is of little concern to non-profit or education groups. Regarding the ban, there are specific exceptions carved out for non-profit higher education institutions and certain other education groups so it is hard to say how firm a ban has actually been enacted. It has been noted by many that what the rules actually say in effect is you can travel on my plane, play in my golf tournament or eat lunch on my tab if at the same time I am presenting you with a campaign contribution—not exactly the kind of reform the public was asking for.

Finally, let me ask you to speculate a minute about what the FY 2008 budget process might look like. What are education groups hoping for in terms of how the budget process goes this year and what types of resources are budgeted for education?

Nolan: At his first meeting with education advocates, incoming Chair of the Subcommittee on Labor, Health and Human Services and Education, Senator Tom Harkin (D-IA) announced his intention to ask for a significant increase in the allocation for his subcommittee in FY 2008. He indicated his commitment to growing the federal investment in critical health, education and workforce programs that he believes have been starved in recent years. He also commented that he thought his friend Arlen Specter (R-PA) would actually be happier with the bill the Subcommittee produces under his Chairmanship. This was all music to the ears of the audience. Time will tell whether or not the Democrats as able to free up more funding for domestic discretionary accounts in the budget. It will require either reduced spending on Defense or tax increases—neither of which very popular alternatives are.