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INDUSTRY MOVES FOR PLACE ON CONGRESS' AGENDA

WASHINGTON -- (FNS) The supermarket industry is working hard to place its priorities into the quickly forming and focused agendas of the new Congress.In a year expected to see big congressional momentum on the balanced budget debate, the supermarket industry is hoping that estate tax reform and capital gains tax rate reductions get a fair hearing. The industry is also looking to regulatory reform,

WASHINGTON -- (FNS) The supermarket industry is working hard to place its priorities into the quickly forming and focused agendas of the new Congress.

In a year expected to see big congressional momentum on the balanced budget debate, the supermarket industry is hoping that estate tax reform and capital gains tax rate reductions get a fair hearing. The industry is also looking to regulatory reform, on issues ranging from changes at the Food and Drug Administration to deregulation of the electrical industry, as an area for progress.

With the congressional legislative pace expected to pick up following the presidential inauguration, the nation's grocers have settled on an agenda of modest tax and regulatory reform and hope to enjoy a respite from organized labor's initiatives on the minimum wage and current labor law.

"It could be a busy Congress," said Tom Wenning, senior vice president and general counsel for the National Grocers Association, Reston, Va. "If the president and the Republican leadership start to work together and formulate actions on a balanced budget and tax issues, as well as on labor issues, they likely will try to build a consensus on these issues."

John Block, president of Food Distributors International, Falls Church, Va., confidently predicts the second consecutive Republican-dominated Congress in decades will continue to be pro-business in its outlook and may be more productive than the last. "We have a Congress in which Democrats won on conservative platforms and a president who toed a conservative line during his campaign. We're looking at interesting possibilities," Block said.

George Green, vice president and assistant general counsel at the Food Marketing Institute here, said, "The new Congress will be very finely balanced with the narrow Republican margin and it will be difficult for anything to get enacted without compromise or bipartisanship."

The balanced budget debate likely will dominate the agenda at both the White House and Capitol Hill. Both Republican members of Congress and President Clinton have said they want the federal government to stop spending more than it brings in, yet they have differed sharply on how they want to get to that point. Republicans are deferring to Clinton and are awaiting his fiscal 1998 budget proposal, which should land on Capitol Hill in early February. That's when the real debate will begin, and the tone of that debate could determine the rest of the congressional agenda.

Because practically everything costs money, every initiative will be gauged on its cost. Estate tax reform, urgently sought by the grocery industry in the past session of Congress, will be critically judged because the industry is proposing that inheritance taxes on firms be reduced, an ultimate reduction in federal revenue. Grocers have chaffed under current laws, which impose steep taxes on businesses that are handed down from one generation to the next.

Last year the industry got behind a plan that would change the personal tax exemption from $600,000 in business value to $750,000. In addition, the first $1 million of family-owned business would be exempt from estate taxes, and taxes on the next $1.5 million would be reduced by 50%. This year's plan hasn't been unveiled yet.

Clinton and Hill Republican leaders also have said they favor a reduction in the capital gains tax rate, another item on the industry's 1997 list. Business has long advocated a cut in the tax on investment gains on the grounds that it would free up more money in the economy. Yet the premium being put on achieving a balanced budget will detract from a plan to achieve overall tax reform or a rate change. Senate Majority Leader Trent Lott, R-Miss., has said any tax change would be incremental. Even House Ways and Means Chairman Bill Archer, R-Texas, one of the biggest champions on Capitol Hill for tax reform, who has drafted a plan that bases federal revenues on a consumption tax, has admitted that major reform won't happen this year.

"Congressional Republicans will be careful not to overreach in their tax reform," Block said. "I think everyone will move a little slower this year."

Because of the limits that balancing the budget will put on tax reform, competition will be fierce for tax reform proposals. Wenning said that industry already is making the case on Capitol Hill for its tax package to be addressed this year.

On the periphery of the balanced budget debate will be other issues critical to grocers. One measure sure to raise the ire of organized labor is a plan expected to be revised this year that would exempt inside salespeople from overtime pay requirements. The measure would extend an existing exemption to the overtime provisions of the Fair Labor Standards Act to all commissioned salespeople, including those dubbed "inside" salespeople. Inside sales workers are office-based and conduct their sales over the telephone or fax machine. It's been maintained that they need the overtime sales exemption because they do much of their paperwork after hours. Outside sales associates are exempt from overtime laws under the FLSA.

A similar bill, which would have permitted non-union employees to choose compensatory time off instead of overtime, passed the House July 30. Former Labor Secretary Robert Reich recommended that Clinton veto it but it never made it out of Congress.

Block rejected any suggestion that organized labor would prevail in advancing an agenda on Capitol Hill this year. "Labor lost," he said, referring to labor's $35 million-plus campaign to help the Democrats regain control of Congress. "They infuriated Republicans by their campaign to distort the truth. They won't get anything. All we will hear from labor this year is talk."

But one of labor's biggest champions on Capitol Hill, Sen. Edward Kennedy, D-Mass., has said that any attempt to ignore labor would be met with stiff resistance from Democrats.

Another legislative item likely to return in the 105th Congress will be a plan that would permit workers and management to form joint committees to address workplace issues such as safety and productivity. This is another initiative organized labor has strenuously objected to but that House Economic and Educational Opportunities Committee Chairman William Goodling, R-Pa., has vowed to revive.

With about 24% of the grocery industry unionized, the bill is viewed by grocers as permitting employers to resolve workplace problems through organized "teams." The National Labor Relations Board, however, ruled in 1992 that employer-employee cooperative boards violated the National Labor Relations Act because they fit the definition of a labor organization and were dominated by the employer.

Rep. Thomas Bliley Jr., R-Va., chairman of the House Commerce Committee, has outlined an extensive agenda for his powerful panel that includes continued efforts at regulatory reform, reform of the Food and Drug Administration and deregulation of the electrical industry.

A backer of the Delaney Clause reform, which became law last year, Bliley said this year's regulatory reform agenda will address FDA rules governing public release of new drugs. "There are some costs of the present regulatory and statutory scheme that can't be measured," Bliley said in a speech to the American Enterprise Institute in which he outlined his agenda. "Costs like the suffering of a patient whose life could be saved, except that the FDA won't allow a new breakthrough drug for the American market . . . Legislative reform of the FDA is still very much our goal, and legislative reform will happen this Congress."

Bliley called reform of the electrical industry "our most ambitious agenda item." A plan to reform electrical utilities introduced last year and expected to be returned this congressional session would give retail electricity consumers the right to choose among competitive suppliers and save on energy costs.

Calling for a Dec. 15, 2000, implementation date, the proposal is the first attempt to deregulate customer electrical usage on a national scale. Industry officials estimate a store occupying 30,000 to 40,000 square feet pays between $10,000 and $14,000 per month in electricity costs, making electricity its largest operating expense after labor.

"Competition in electric utility markets is inescapable," Bliley said. Praising utilities that already are embracing competition reforms, Bliley sent a message to others. "Rather than defending the indefensible, join us," he said. "Instead of using captive rate-payer dollars to resist what is inescapable, work with us. Help us identify the legitimate issues and let us hear your ideas for their resolution."

The FMI also is keeping its eye on food stamp reform implemented last year that requires states that employ electronic benefit transfer systems to make them compatible at no extra cost to the retailer. Green said that some problems are emerging on the state level that may need to be addressed legislatively.

Another issue important to the FMI is regulations governing tobacco sales to minors. A current recommendation would mandate retailers to require proof of age for anyone buying tobacco products who is less than 26 years old, even though the law permits sales to those 18 and older. The proposal is arbitrary and would place undue burdens on retailers, Green said, and if it is approved, may need legislative action to correct it.

In addition to closely watching Capitol Hill, the industry is focusing on grassroots efforts in the states to influence members of Congress. The Grocery Manufacturers of America and Food Distributors International have formed an alliance to work together on grassroots efforts. Under the effort, meetings with members of the House and Senate are being scheduled in their districts and states with local manufacturers or wholesalers so local business people can help educate members of Congress about their industry. In December, the FDI and the GMA met with Rep.-elect John Shimkus, R-Ill., in St. Elmo, Ill. About 20 more similar meetings are being planned across the country for this year.