Wendell Ford

Mr. FORD

Mr. FORD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. FORD. I suggest the absence of a quorum.

Mr. FORD. Since I objected, I will use some of my time. I was hoping that the proposer of this amendment would be here on the floor so we could discuss it a little bit more. I have been here, now, for about 30 minutes--I guess, a little better--trying to discuss my side, and I don't want to lose my time on the basis that the opposition or the proponent is not here. I am more than willing to let the time come off of the time of the managers of the bill but I prefer the time not come off of mine. If the chairman of the committee and the manager of the bill would like to do that, I would have no objection. If he prefers not to do that, I hope he will encourage the Senators from Tennessee to come to the floor. The only problem I have here before I suggest a quorum is, I would not want to be preempted from taking the quorum off--which I could--and then we would have to go through the process. Would the Senator give me the assurance he would not object if I want to take the quorum off?

Mr. FORD. I object, Mr. President.

Mr. FORD. I reserve the remainder of my time and I yield the floor.

Mr. FORD. Mr. President, had this conference report been on a Senate bill, I would have offered a motion to recommit the bill to conference to strip this special State tax preemption provision from the bill. It is quite unfair, and I think everybody understands that. They are doing a political favor, because the Senators who represent that State are from another party. I do not understand why my colleague, who is a member of that party, would allow this to happen to his State. I thought we were here representing our constituents, not our party. I think it is disappointing that both my colleagues here in the Senate and the Congressman from the First District in my State allowed this to happen without at least raising their voice in objection. However, I understand the option is no longer mine to offer any kind of amendment or any kind of motion to recommit. Since this is a House bill and it has already been approved by the House, thereby dissolving the conference, I understand the rules. I think I know the rules reasonably well here--not quite as well as Senator Byrd or, hopefully, the Parliamentarian, but I have no illusions about what the outcome of that vote might have been. After all, a sweetheart deal is a sweetheart deal. I did want to draw attention to this provision. It is patently unfair. It has no place in this bill. The committees that put this bill together have no jurisdiction over the issue whatever. I think it is a dark mark on this piece of legislation as it relates to States rights, going outside the jurisdiction of the committee. I think it leaves a black mark and a black cloud over this piece of legislation. This special tax preemption provision is terrible policy. We should not be dictating to States how to administer their own tax laws. We should not be imposing our will on the States in matters that have nothing to do with the Federal law and are traditionally and constitutionally left to the States to resolve. We hear a lot of rhetoric from the other side of the aisle that is never matched by the actions we see around this place. They say ``lower taxes,'' but fail to say how they will offset them without causing more deficits. They say ``less government,'' without saying where they will cut. They say ``no more unfunded mandates,'' but continue to impose unfunded mandates on the States. And this is, in the strictest interpretation, an unfunded mandate. They say ``States rights,'' but continue to pass special proposals like this one, which preempt State law, even in the areas that have been left to the States for the last 200 years. Once again, Mr. President, we see that the rhetoric does not match the reality. When my friends on the other side see that expanding the role of Federal law fits their purposes, the rhetoric about States rights goes out the window. When they create a special tax exemption by imposing a $4 million cost onto another State, the unfunded mandates rhetoric goes out the window. Mr. President, I am very disappointed we have seen this issue, the preemption of State tax law, legislated this way on a defense authorization bill. It is bitterly opposed by my State and it ought to be bitterly opposed by every other Senator on this floor. I say to my colleagues, you have created a broad precedent here that I believe will come back to haunt you. I will not be here on the floor to see it play out but I can see it coming. The next time, it won't be Kentucky that will be hit. It very well may be the State of one of the Members who sat on the conference. How much time remains?

Mr. FORD. Mr. President, the proponents of this special deal suggest that Tennessee employees receive no services from the State of Kentucky and, therefore, should be entitled to their special exemption. Mr. President, this is simply not the case. Let me read from a July 11, 1997, letter from the Kentucky Revenue Cabinet outlining the services the State of Kentucky provides to those workers. Again, I remind my colleagues that these are Federal and private sector workers who perform their work within the borders of the State of Kentucky. Roads--Fort Campbell is accessible from both the Kentucky side and the Tennessee side. Most workers enter the base at the gate nearest their work station. This means, for example, that most hospital workers enter on the Tennessee side . . . and most school workers enter on the Kentucky side using Kentucky maintained roads (the school is in Kentucky). Water and sewer services-- . . . Electrical service--Most is supplied directly to the base by the Tennessee Valley Authority. One housing area, however, is supplied by the Pennyrile Electric Cooperative, a Kentucky-based electric company. Cooperative Fire Protection [is there]. . . . Schools--The school system on the Fort Campbell base is fully self-contained and federally funded. It is limited [however] to the children of active duty military personnel . . . Police Protection--. . . . Unemployment Benefits--. . . . Mr. President, we talk about exempting the Tennessee employees from paying Kentucky tax, but the Federal civilian workers who become unemployed can apply for benefits from the State where they work or the State where they live. If a Tennessee resident working in Kentucky becomes unemployed and applies in Tennessee, a transfer is made from the Kentucky fund to the Tennessee fund to pay that worker's unemployment claim. What is wrong with that agreement? I don't think anything. The result is that wherever the claim is filed, Kentucky funds pay the claim. Mr. President, I ask unanimous consent a letter from Alex W. Rose, commissioner, Department of Law, Kentucky Revenue Cabinet, be printed in the Record.

Mr. FORD. Mr. President, I also want to make clear to my colleagues that this special tax preemption provision in the bill is a clear violation of the spirit of the Unfunded Mandates Act. I have said that before, but I want to make it clear. This provision will cost my State $4 million in lost revenue. What are we doing to offset the loss from the special tax preemption provision in this bill? Nothing. Absolutely nothing. Not a thing. Mr. President, if this special provision had been offered on the Senate floor, I would have offered a second-degree amendment requiring us to at least study the broad scope of the precedent we were setting here before we acted. I am not sure a great deal of thought has been given to the far-reaching effect of this one little amendment in the defense authorization bill. It was a special political decision, and that special political decision will have ripples that will turn into waves in the future. Mr. President, had this special provision been offered on the Senate floor, I would have asked for a study. Let's think through this one. We are preempting the States; we are telling the States how they can tax and how they cannot tax. This is not a Federal tax. This is a State tax. I think my colleagues would have been shocked at how broad this precedent is by applying this sweetheart deal at Federal facilities across the country. They would be embarrassed to find out the extent to which we are meddling in State tax law matters on a defense authorization bill--all to create a special State tax status for a select group of Federal and private sector workers. I think my colleagues would want to know this information. Mr. President, I ask unanimous consent that a copy of the amendment I would have offered be printed in the Record.

Mr. FORD. Mr. President, apparently all of these requests to the Republican conferees to keep this State preemption provision out of the defense bill fell on deaf ears. The conferees either did not listen or did not care. One way or another, this was a done deal, a sweetheart deal, a special tax provision which favors one set of workers over another for the same work performed, at the same location, despite State law. We are sitting at the same table. We are both working for the same employer. We are both doing the same job. We are both drawing the same pay, but you do not pay any taxes because you are a resident of Tennessee. I am a resident of Kentucky, and I pay my taxes. Mr. President, all of the requests to the Republican conferees to keep this State tax provision out of the defense bill fell on deaf ears. I wanted to repeat that. It is a special tax provision which favors one set of workers over another. It also gives the employers, or the companies, an advantage when they bid, because they don't have to pay the tax under this. As I said earlier, the next bill ought to be exempting Kentucky residents from the sales tax in Tennessee. Just show your driver's license and your address and place of employment, and you don't pay the taxes, one of the highest sales tax States in the Nation because their income comes from the sales tax. I hope my colleagues understand the precedent that is being set here. We are preempting State law--preempting State law--and establishing a special tax status for a group of not just Federal employees, but private sector workers who perform their work entirely within one State's borders. It is a very broad precedent. There is no stated policy rationale for this special preemption and special tax status we are granting. It is a precedent that will haunt my colleagues. I want my colleagues to understand how many other Federal facilities are in similar situations. When the workers at these facilities, not just the Federal workers, but the private sector workers as well, when these workers find out about the sweetheart deal at Fort Campbell, they are going to be asking their Senators, ``Why can't we get a good deal as well?'' I have asked the Federal Tax Administrators just how many other Federal facilities are similarly situated. We have a preliminary list, but it is only preliminary. It probably does not include everything. The partial list we have shows there are 240 Federal facilities around the country that are on or near the borders of two or more States with significantly different income tax structures. We talk about how hard it was to work out this bill, how many issues came before the committee. In the future, if this is the precedent that is being set, the Armed Services Committee will be in the tax business; they will be in the finance business; they will be preempting State laws and will not be looking after the right thing they should be doing, and that is the defense of this great country of ours. I want to share this with my colleagues because more than 20 other States are affected. I think about 20 other States. That is 40 Senators--pretty good bunch of Senators. In other words, Senators from at least 20 other States are in jeopardy of having to face this same issue. What have you done to the future of the military bill, the defense authorization bill? What have you done to it? You have turned it into a finance bill, not a defense bill. And I say to my colleagues, if they are from one of these States, you might be standing up here next year. Once the private sector employees find out about the special tax preemption, they may be lobbying their Senators next year to exempt them from the State tax laws in your State. Let me read a list, and this is only a partial list: Arkansas has 7 installations. Arizona has 7. California has 50--50 installations similar to the one in Kentucky. Think about that when the two Senators from California will have to say--it goes all the way from military facilities, such as Fort Irwin Naval Weapons Center, Sierra Army Depot, the Grand Mesa National Forest. Connecticut has 2. Georgia has 1. Maine has 1. Oh, I remember the argument here between Maine and New Hampshire. They are left out of this bill. They are left out of this bill because both of them apparently are on the other side. I was for Maine. Massachusetts has 1. Mississippi has 8. Mississippi is probably the most vulnerable State of all of them because of their border situation. Can you imagine what would happen if all of these employees went to the two Senators in Mississippi and said, ``Right across the line here in Tennessee they receive tax exemptions. What about us? What about us? What's fair for the goose is fair for the gander.'' Missouri has 6. Montana has 10. They are not in this bill. Nebraska has 1. New Jersey has 20--New Jersey has 20. New Mexico has 6. New York has only 1. I was surprised at that. But North Carolina has 13--North Carolina has 13. Oregon has 20. Pennsylvania has 1. I heard a lot about the Philadelphia Naval Yard last year. South Carolina has 1. South Dakota has 3. Tennessee has 3. Utah has 37. Think about that. Utah has 37 installations similar to the situation in this bill. What about those employees--Federal employees, private sector employees--who were not exempt? Can you imagine what the two Senators from Utah are going to face when they understand that other States were preempted and created a special tax group? Vermont has 2. The State of Washington has 37. What about the Indian reservations? Oh, we get into a good one there--Indian reservations. What about State workers at Indian casinos located on tribal lands? I do not understand. Why, the little leak in the dike here is beginning to take away the whole dike; and it could. Mr. President, I ask unanimous consent that the list of these locations in the various States be printed in the Record.

Mr. FORD. Mr. President, the National Conference of State Legislatures also strongly oppose the State tax preemption provided in the defense authorization bill. Let me read from an August 7, 1998, letter to the conferees. This was written to the chairman of the Senate Armed Services Committee, the Senator from South Carolina, Senator Thurmond. ``Federal preemption of legitimate State taxing authority.'' The National Conference of State Legislatures wrote to the chairman and said this is wrong: On behalf of the National Conference of State Legislatures, I am writing in opposition to Section 1045 of the House version of the National Defense Authorization bill (H.R. 3616). NCSL opposes federal action that preempts the states' constitutional authority to tax income earned within their borders . . . We urge you to preserve the States' sovereignty-- Preserve the States' sovereignty. I ask unanimous consent that the letter from the National Conference of State Legislatures be printed in the Record.

Mr. FORD. The State preemption provision in this bill is also strongly opposed by the Federation of Tax Administrators. Let me read from a June 24, 1998 letter from Mr. Harley T. Duncan, the executive director of the Federation of Tax Administrators: I am writing concerning amendments to the defense appropriations bills (S. 2057) which would preempt Oregon, Kentucky and Nebraska from applying their income tax to certain federal employees (and in some cases, contractors) who work in those states, but reside in bordering states with no income taxes. . . . These amendments have been separately considered earlier in the 105th Congress as H.R. 1953. The Federation of Tax Administrators is an association of the principal tax administration agencies in the 50 States, the District of Columbia, and New York City. The Federation has adopted a policy which urges that the Senate reject H.R. 1953 and any similar language which may be offered as an amendment to other bills. We ask the Senate to recognize that, throughout the history of income taxation, both federal and state, workers are taxed by the jurisdiction where the work is performed. This system represents the keystone of taxation. State lawmakers make exceptions to this system to address individual circumstances where strict adherence to the principle leads to undesirable results. In particular, in those instances where sound fiscal and government policy permit, a State may enter into a reciprocal agreement with a bordering State to permit taxpayers to file a single return in the state of residency. Kentucky is at the forefront of such policy refinements. They are complimenting my State for being in the forefront of these policy refinements. --it has a reciprocal agreement with every border state that has a broad-based individual income tax. The U.S. Constitution imposes substantive constraints on the manner in which such states may structure their tax systems. These constraints ensure that the tax imposed meets fundamental tests of fairness in dealing with all citizens. The Constitution further ensures that state taxes do not impose undue burdens on interstate commerce or the federal government. The taxes imposed by these states meet these requirements and should not be preempted. There is no question that states have the legal authority to tax the income of nonresidents working in Oregon, Kentucky or Nebraska. It goes on, Mr. President: Further, the language exempts from taxation wages paid to Federal workers . . . but it exempts from tax income paid to all individuals who work in Fort Campbell in Kentucky. A special group is set out here. This encompasses not only contract employees who work directly for the military . . . but also includes employees of private companies who run businesses or perform services on the bases, including such businesses as restaurants and road maintenance firms. These are clearly private business people, not federal workers. But they are exempt. They are exempt under this particular bill. Finally, and most importantly, if change is necessary, it is within the power of the states involved to do so. This is an issue for state lawmakers, not federal lawmakers. Lawmakers in Kentucky and Tennessee are seeking an equitable solution that would not impose an unfair burden on either state. . . The Senate is faced with an opportunity to demonstrate good faith to the principles contained in the Unfunded Mandates Act of 1995. And we are not doing that. If Congress feels that the impact of federal workers employed on installations crossing the borders of two states--one of which imposes an income tax and another which does not--should be offset, it should provide the funding necessary to offset the costs imposed on the states affected. This is signed Harley T. Duncan, executive director, Federation of Tax Administrators. Mr. President, I ask unanimous consent that the letter from Mr. Duncan be printed in the Record.

Mr. FORD. I ask the Chair, how much time do I have left?

Mr. FORD. Glad to.

Mr. FORD. Mr. President, I appreciate the Senator's flattery, but in this case, it won't get him anywhere. Let me correct one thing, if I can. The Senator said we were exempt from sales tax. That is not true. We checked this morning. You pay tax at restaurants, dry cleaners--all that--you pay the sales tax on the base. On the base, you pay it. We called down there this morning. Now, if you want to call again, that is fine. I know where it is. I have been there. They have trooped out the troops for me. They jumped with parachutes and all that. It is obvious my name won't be on any building down there, however, but that is all right. I don't really worry about that. What I worry about is what is being done here and the precedent that is being set. They talk about they are all similar. The two other locations are dams. They are dams. They go across a river. They connect the States. That is a very small area. This is 105,000 acres that we are talking about here. This is a different facility, different situation, different problem altogether. One is a hydro; the other one is a dam. I say to my friend, in those two cases he is defending here, it is limited to Federal employees. In the Tennessee-Kentucky problem, it is not. You did not limit it to Federal employees. You went to private sector contractors and their employees. That is the reason the $4 million is there and there is no unfunded mandate help for my State. It is quite different. This is as broad as broad can be, with a capital B. It is not only Federal employees. The others are very small--35 employees. They are hydroelectric and dams, both of them. This is 105,000 acres. We pay sales tax, as Kentucky residents, on the base. You exempt private contractors and their employees, and it costs us plenty. People will say, ``Ford, this is fair.'' Fair to whom? I can bring the document--I don't have it here with me--but tuition was part of the negotiations. I wouldn't negotiate either if it was going to be settled here and you know what is going to happen. But the rights of the minority should be protected. I can't change the vote. Mine is the only one that I can handle, that I can guarantee, but we ought to be protected. I have seen a lot of debate here in a little over 24 years. The distinguished Senator from South Carolina has seen a lot more. But most of the time, almost without exception, both sides have wanted to protect the minority, and here there is no protection. Mr. President, as we are being stampeded here, I think it is highly unfair, it is uncalled for, and this is very one-sided. We pay the unemployment, reimburse Tennessee, we help with electricity, we help with roads--we do all those things. You act like we don't do anything. But if you have unemployment benefits and Kentucky pays a Tennessee resident and reimburses the State--Kentucky doesn't do anything. It is very difficult for me to understand when they start talking about precedents set here. That is for active duty military. They pay the tax, if any, in the State in which they are a resident. The Senator brought up Amtrak employees. You can get on a train in New York and wind up in California. Do you pay in each one of the States you go through? Of course not. That is just common sense. You can have a construction worker who is building interstate highways and can go through several States. You wouldn't expect him to pay tax in every State. So common sense says pay the tax in the State in which he is a resident. Here it is different. If you are a resident of Tennessee and work in Kentucky, you don't pay any tax. If you are a private sector employee and you are at a Federal facility, you don't pay any tax. The Tennessee contractor who would offer a bid at Fort Campbell has a sweetheart deal because a Kentucky contractor, or any other contractor, will have to pay the taxes, but Tennessee will not. Big Brother says we are going to settle State taxes, not Federal taxes, State taxes, and put it on the defense authorization bill. It has never been to the Finance Committee, which has jurisdiction. And the testimony that was received in the House was something that I think we should go back to. The Senate Governmental Affairs Committee held a hearing on October 24th of last year. The House held a hearing on April 17th of last year. To my knowledge, the Senate Armed Services Committee held no hearings on this issue in either session of this Congress. The reason is obvious: because the Armed Services Committee had absolutely no jurisdiction over this issue--none. The conferees on the defense authorization bill, in my judgment, have no business attaching language which preempts State tax as part of the defense authorization bill. Let's go back to the House hearing of last April. What kind of testimony did that committee hear? It heard that Kentucky's tax structure met all appropriate constitutional standards for fairness and nondiscrimination. That is the testimony. That committee was told that the ability of States to define their own tax structures within the bounds of the Constitution was ``one of the core elements of sovereignty preserved to the States under the Constitution.'' It may be constitutional, but it is ``one of the core elements of sovereignty preserved to the States under the Constitution.'' The committee was told that if Congress jumps in and preempts State laws in this case, ``it will by definition create a preferred class of taxpayer * * *. Currently all workers--public and private--in Kentucky * * * are subject to the same rules. This should not be disrupted by the Congress without a strong policy [mandate].'' The House committee was also told that the proposal to grant special status to Tennessee residents violated the spirit of the Unfunded Mandates Act of 1995. The committee was told, ``if Congress feels that the impact of federal workers employed on installations crossing the borders of two states * * * should be offset, it should provide the funding necessary to offset the costs imposed on the states affected and not just preempt legitimate taxing authority.'' That is the testimony. That is what the committee was told. Mr. President, the Senate Governmental Affairs Committee I believe heard similar testimony during the hearing last August. The Senate Armed Services Committee, however, heard no testimony--the Senate Armed Services Committee, however, heard no such testimony--because it held no such hearing and had no such jurisdiction over this piece of legislation. Nonetheless, without any floor debate, a provision was snuck into the House version of the defense authorization. So I ask where my Kentucky colleagues were.

Mr. FORD. Mr. President, I regret that I am here this morning making my remarks, because in this piece of legislation we have preempted the States and their ability to tax. Under the Buck Act, it gave that responsibility to the States. But in here we are preempting the States. The Presiding Officer understands the problem between Oregon and Washington. But Oregon has passed a law that exempts residents of Washington. So, therefore, the States have worked out their problem. Here, the Federal Government, Big Brother, has to tell the States what they can do. I think it is highly unfair. I think it is unprecedented where the Armed Services Committee has gone around the Finance Committee. Senators can't come to this floor and say that the chairman of the Finance Committee says this section is all right. It has to go before the Finance Committee. The Finance Committee is the committee of jurisdiction here--not the Armed Services Committee. The occupant of the Chair is one of the finest jurists in the Senate, having been, I believe, Attorney General of his State. The law says: No person shall be relieved from his liability for any income tax levied by any State, or by any duly constitutional taxing authority therein having jurisdiction to levy such a tax by reason of his residing within a Federal area, or receiving income from transactions occurring or services performed in such areas, and such State, or taxing authority, shall have full jurisdiction and power to levy and collect such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area. That is the Buck Act. The Armed Services Committee has altered or broken that statutory provision. They preempted the States. They went around the Finance Committee. Now they are altering the Buck Act. As I said, Mr. President, this is regrettable, for me to think that my colleagues would have such a sweetheart deal that when the State of Kentucky and the State of Tennessee were in the process of negotiation and working out their problems, they were told it would be worked out in Washington and not to worry about it; therefore, the negotiations were cut off, and the sweetheart deal was started. I want to call the attention of my colleagues to the provision in the defense authorization bill which I consider to be one of the most misplaced, misguided, and unfair proposals I have seen in my 24 years in the Senate. I am referring to a tax proposal in this defense authorization bill which preempts the State of Kentucky from administering its own tax laws. Let me repeat that. I am referring to a tax provision in the defense authorization bill. We are now establishing, Mr. President, the precedent that defense authorization bills can become vehicles for State tax provisions. The Finance Committee has jurisdiction over tax issues in the Senate. But the Finance Committee did not report this legislation. The Finance Committee did not report any other legislation with this tax proposal contained in this defense authorization bill. It is not even a Federal tax issue. This is not a Federal tax issue. This is a tax provision in this bill which dictates to States how they administer State income tax laws. The Republican Party has always been States rights. That is one of their long suits. I have heard in campaigns all my life, ``States rights.'' And now in this bill you are preempting States rights. We are preempting my State, the Commonwealth of Kentucky, from deciding for itself how to administer its own income tax laws on work performed within the State of Kentucky by private sector employees. It is an outrage that my colleagues who are conferees from the other side of the aisle agreed to include this provision in the final bill. Mr. President, Fort Campbell is a military facility which straddles the Kentucky-Tennessee border. It is located partially in Trigg County and Christian County in my State and partially in Tennessee. There are Federal employees working at Fort Campbell who reside in both Kentucky and Tennessee, and there are private sector employees working at Fort Campbell, some on a full-time basis, some on a contractual or part-time basis. How would you like to be sitting at the table having lunch, and the worker across the table from you, working for the same company, doing the same job as you, pays no tax, but you have to pay yours? For Kentucky employees, there is no exemption from the sales tax in Tennessee. That will be the next bill that will be in the Chamber, and I am going to encourage my colleagues to do that so all you have to do is show your driver's license and where your residence is and you are exempt from Tennessee sales tax, which is one of the highest in the Nation. According to groups such as the Federation of Tax Administrators, which is an organization comprised of the top revenue officials from all 50 States and the District of Columbia, it is a fundamental principle of taxation that workers are taxed where the work is performed. Workers are taxed where the work is performed. That is the basic rule. There are exceptions to the rule, of course, but the exceptions come from agreements negotiated between States--negotiated between States. States can agree to a variety of ways to treat income tax earned within one State's borders by out-of-State residents--States rights. And we recognized that a long time ago even in the Buck Act. But this is for the States to decide. Congress should keep its nose out of their business. But not this Congress, not this majority, and not this defense authorization bill. Do I want to be against the Strom Thurmond defense authorization bill? Of course, I do not. I do not want to be against the Wendell H. Ford aviation bill either. But what is in this bill is not right. That is my responsibility as a Senator, and I am surprised that my colleague on the other side, who is a major player with the Republican Party, did not defend his constituents rather than his party. We are losing $4 million a year. Not even the Congressman from the First District raised a peep about it. Who are you supposed to be representing up here in this body or in the other body? You are supposed to be representing your State and your constituency. A dispute arose when some Tennessee workers objected to paying income taxes on work performed within the borders of Kentucky. Legislation was introduced in the House to impose a Federal solution on the States. Hearings were held. The House Judiciary Committee held a hearing on April 17th of last year on this issue. The Senate Governmental Affairs Committee held hearings on October 24 of last year. To my knowledge, the Senate Armed Services Committee held no hearings. The Senate Armed Services Committee held no hearings on this issue during either session of this Congress. The reason is obvious. Because the Armed Services Committee has absolutely no jurisdiction over this issue--none. The conferees for this defense authorization bill have no business attaching language which preempts State tax laws as part of this defense authorization bill. It has no place in this piece of legislation. Let's go back now to the House hearing of last April. What kind of testimony did that committee hear? It heard that the Kentucky tax structure met all appropriate constitutional standards for fairness and nondiscrimination. The committee was told that the ability of States to define their own tax structure within the bounds of the Constitution was ``one of the core elements of sovereignty preserved to the States under the Constitution.'' That committee was told that if Congress jumped in and preempted State laws in this case, ``It will by definition create a preferred class of taxpayers that benefits at the expense of all other taxpayers. Currently, all workers, public and private, in Kentucky are subject to the same rules. This should not be disrupted by the Congress without a strong policy rationale.'' The House committee was also told that the proposal to grant special status to Tennessee residents violated the spirit of the Unfunded Mandate Act of 1995. I wonder how many colleagues on the other side in 1995 voted for the unfunded mandate bill. Are you going to fund this unfunded mandate? No. It breaks that law. You are taking away by mandate funds that belong to my State. It is under the unfunded mandate law of 1995. Do you think this bill is not going to go to court? You can bet your sweet bippy that once the President signs it, if he does, this portion of the bill will be in court. It is wrong. It is wrong from the start; it is wrong from the middle; it is wrong from the end. The House committee was also told that if Congress believes that the impact of Federal workers employed on installations crossing the borders of two States should be offset, it should provide the funding necessary to offset the cost imposed on the States affected and not just preempt legitimate taxing authorities. This is what the committee was told, but the committee didn't pay any attention to that--it is our way or nothing. What Kentucky is getting is nothing. I am not going to allow this bill to go forward without having an opportunity, which I am doing now, to express to my colleagues my outrage and what their outrage should be. Pretty soon, I will tell you, 240 installations that are subject to the same law--subject to the same law, 240 in this country--will want the same. So what are you going to look forward to next year? Are you going to preempt all these States? Be fair. Be fair. So, let me repeat one section of that sentence that the committee in the House was told: . . . if Congress feels the impact of federal workers employed on installations crossing the border of two states . . . should be offset, it should provide the funding necessary to offset the costs imposed on the states affected and not just preempt legitimate taxing authority. Mr. President, the Senate Governmental Affairs Committee heard similar testimony during its hearing last August. The Senate Armed Services Committee, however, heard no such testimony because it held no such hearings and has no jurisdiction over this issue. Nevertheless, without any floor debate, a provision was snuck into the House version of the defense authorization bill on the House floor. Where was my Congressman from the First District when that happened to his employees and to his State? I do not know where my House colleagues from Kentucky were on this issue when this issue arose. Maybe they did not notice. Maybe they were just asleep at the switch. But either way, not a finger was lifted by my colleagues on the other side of the aisle to stop it. Let me explain to my colleagues why this provision is so offensive. The provision preempts the State of Kentucky from applying its own tax laws to Federal workers at Fort Campbell. But it does not stop there, it is broader. It also exempts private sector employees, such as contractors, who perform work at Fort Campbell. Private contractors are exempt. This goes well beyond any precedent which exists anywhere else in Federal law. What it means is that when two contractors bid on work to be performed on the Kentucky side of Fort Campbell, a Tennessee contractor is going to have a built-in advantage over a Kentucky contractor because of the special exemption written into this defense authorization bill. Can you imagine what other Senators would be doing this morning if this had happened to them? Maybe, with this precedent, it will. Why don't we try to prevent it? The House language is overly broad and, in my opinion, extremely unfair. No such language is included in the Senate version of the bill. However, I was very concerned about the attempt to sneak this in. I informed my colleagues on the committee of my strong concerns with this tax proposal on June 25th, when the bill was debated on the floor. I should say at this point that the ranking member of the committee, the Senator from Michigan, acknowledged that tax issues had no place in a defense authorization bill, he shared my concern about the broad and misguided precedent set by this proposal to preempt State tax laws, and he fought to keep it out of the final bill. However, apparently among my colleagues on the other side of the aisle, this was a done deal. I do not believe the issue was even a matter of serious discussion by the Republican conferees. So here we are on the Senate floor with a sweetheart deal being cut on a tax provision which preempts State law. I thought I had seen it all. Mr. President, this tax provision raises serious constitutional questions. This provision raises serious constitutional questions. Back in June I inserted in the Record a legal memorandum from the Office of the Attorney General of Kentucky which raised serious constitutional questions about this tax preemption proposal. I am sure the issue of whether to challenge the constitutionality of this tax preemption proposal will be studied carefully, should this bill become law--and it will be. Let me also inform my colleagues that revenue officials in my State have had contact with those in the State of Tennessee. This is the right way to solve this problem. The States of Washington and Oregon did. But once the word was out that Congress will attempt to impose a Federal solution regarding this matter, the discussions between the two States became a moot point. Why should they spend the time and resources necessary to reach a compromise agreement when Congress was considering preempting State law and imposing a solution which favors just one side? What incentive was there to negotiate? Big Brother in Washington was acting to impose a solution on a matter which is normally left to the States to work out on their own. Mr. President, a sweetheart deal cut by the Republican conferees is going to cost my State about $4 million per year. Let there be no mistake about my Governor's opposition to this tax preemption provision. Let me read from his letter of June 25, 1998, from Governor Paul Patton of Kentucky. I am writing to express Kentucky's opposition to the Thompson amendment currently under consideration by the United States Senate. The issue addressed by this legislation is the tax imposed by the Commonwealth on income earned within Kentucky by non-resident federal workers. He went on to lay out why. We are attempting to resolve this issue through a joint effort with Tennessee Governor Sundquist's office. This matter is one to be settled at the State level, and not an issue for Congress to resolve. * * * * * In closing, I would like to reiterate the Kentucky taxation of non-residents working in Kentucky is fair in concept and in practice. To exempt all non-residents or a special group of non-residents who work in Kentucky would be unfair. If I may provide you with any other information on this issue, please feel free to contact me. Mr. President, I ask unanimous consent the letter from the Governor of Kentucky be printed in the Record.

Mr. FORD. Mr. President, I believe I have 90 minutes.

Mr. FORD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from Illinois (Ms. Moseley-Braun) are necessarily absent. I further announce that, if present and voting, the Senator from Illinois (Ms. Moseley-Braun) would vote ``no.''

Mr. FORD

Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the Senator from Illinois (Ms. Moseley-Braun) are necessarily absent.

Mr. FORD

Mr. FORD. I don't understand. They just tried to throw a wet blanket on it to say it was undoing welfare reform because, after we have had it in place for 2 years we found there was a kink in it? I didn't know that we were perfect.

Mr. FORD. May I say to my good friend, I found the same thing, too. We have several community colleges around the State. I have not talked to an employer yet who said he would not prefer to have an employee that was better educated. I have never talked to those from academia who would not tell me that at least, the minimum, 2 years of education would give, particularly a single-parent mother, the opportunity to secure the $10.91 per hour that was necessary to keep that family out of poverty. That is just a little over $19,000 a year to take care of three people. That does not sound like much. But you give them an opportunity to earn and compete. That is what this bill is all about, I thought, under welfare. So, somehow, some way, our colleagues are going to have to understand the employer wants a better educated employee; the single-parent mother particularly wants to be able to get out of poverty and get away from that cycle. Whatever you can do next year--you don't have to have a study to understand that.

Mr. FORD. I may give back some. I rise to speak about the conference report to H.R. 6, the Higher Education Amendments of 1998. I take this opportunity to commend my colleagues on the conference committee for the truly outstanding work they have done on behalf of our Nation's students and the higher education community. This legislation includes an important expansion of the Pell and work study programs, provides the lowest interest rates in 17 years for student borrowers, provides for loan forgiveness for teachers working in high poverty areas, and makes a continued commitment to improving our teacher preparation programs. I know that the passage of this bill will have a significant impact on students and colleges in my State. While I am pleased with many provisions in this bill, I am extremely disappointed that the conference committee did not include the text of the Wellstone amendment. This amendment allowed up to 24 months of postsecondary or vocational education, removed the 30-percent limitation on education as a work activity for teen parents, and clarified that participation in a Federal work study program is a permissible work activity. Instead, the conference report calls for a GAO study on this issue. I am personally aware of at least a half dozen studies--a half dozen studies--which already indicate that this is a problem for many low- income, single mothers. Why do you have to have a study to tell you that the more education you have the better job you can receive and the better the employer likes you? Instead of doing the right thing for these single mothers, trying to better themselves, our colleagues want to study the issue to death. What they ought to do is try living in the single mother's shoes for a day and see what it is to try to raise a family and attend school full time, while holding down a part-time job. As many of my colleagues know, I supported and voted for welfare reform. It has been almost 2 years since Congress rewrote our Federal welfare laws in the hopes of breaking the cycle of dependency that was trapping too many Americans in poverty and despair. Much good has come of that law, including substantial drops in the welfare rolls and saving States like Kentucky $14 million. But despite its good intentions, the new welfare law is penalizing parents, particularly single mothers trying to improve their chances at getting good jobs. Under the new law, a parent must work 20 hours to continue receiving aid. That might not seem particularly onerous, but the law also limits these single parents to just 1 year of education before requiring them to find work. As a result, too many promising, capable, nontraditional students are being forced out of postsecondary education due to the Federal restrictions. My State is not a wealthy State. There are many single mothers trapped in the cycle of poverty. Recently, the University of Kentucky released a study which demonstrated that higher education greatly increases a person's ability to earn a living. The study found that a parent living in rural Kentucky needs to earn at least $10.61 an hour working full time, or $19,708 a year, to support two children on a basic budget. The study found that only women with a college degree-- and let me repeat, only women with a college degree--earn above that threshold in Kentucky. This same study found that single mothers with a high school degree never, never reach that threshold. In fact, the average income for Kentucky women of any age with a high school degree is only 67 percent of that benchmark. My State wants to go forward and help these women help themselves. A bipartisan bill in the 1998 Kentucky general assembly to improve access to education for welfare recipients was ultimately scrapped. Why was it scrapped? Due to the fear of Federal penalties. The State wanted to extend the opportunity, particularly to single mothers, and they were fearful because of Federal penalties. I know the Wellstone amendment was perceived by some of my colleagues as an effort to undermine the welfare law and had little business being attached to a Higher Education Act. I am sorry that these colleagues decided to frame this issue in such a way. This was an amendment about education. This was an amendment about education. Education is the key to helping parents escape the low-paying jobs that only perpetuate the welfare wheel. If these single mothers have just a little more time to get an education, they will be able to compete for higher paying jobs which will help them keep their families from sinking. Although I will not be here next year, I am heartened by the fact that there will be joint hearings on this issue and that my colleague from Minnesota, Senator Paul Wellstone, will continue to advocate for this change. I urge my colleagues to learn more about this pressing problem, pay full attention to these hearings, and talk to people in your State. I believe that my colleagues will find that this is a commonsense fix that will improve the welfare law. As someone who voted for this bill, I reiterate the Wellstone amendment was not about trying to undo welfare reform, but an attempt to help single mothers caught in a Catch-22. The Wellstone amendment is about helping families help themselves. I hope my colleagues will look beyond party lines next year and do the right thing. I thank my friend from Minnesota and I yield the floor.

Mr. FORD. Up to 10 minutes.

Mr. FORD. I thank the Chair. Will the Senator from Minnesota give me 10 minutes?

Mr. FORD. Mr. President, what is the legislative schedule now?