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Provisions to boost federal Medicare payments in rural hospitals were removed from a federal tax cut bill before it was approved Friday.

Despite the loss, Wyoming Republicans Sens. Craig Thomas and Mike Enzi applauded the passage of the $350 billion package of tax cuts and aid to states.

They said the legislation would help Wyoming residents. The provision that would have equalized Medicare payments for rural states was included in the Senate version, but was dropped from the measure when the House and Senate compromised.

Under the new measure, the maximum tax rate on capital gains and dividends paid to individuals would be temporarily reduced to 15 percent.

The maximum capital gains tax rate is 20 percent, while dividends are taxed as ordinary income at rates as high as 38.6 percent. President Bush had called for an elimination of the tax on dividends and insisted on a least a reduction. Dividends are company payments to shareholders. Bush has noted that companies get taxed on the income that is the source of the dividends and then shareholders get taxed on the actual dividend payments that they receive.

"The dividend thing is probably not the biggest thing for Wyoming," Thomas said. "But I am always happy to put money back into people's pockets, and there are more and more people who are getting dividends. It's not just about the rich."

Enzi was also optimistic that Wyoming residents would share in the benefits of the reduction of the tax on dividends.

"I think a number of companies in Wyoming will give money out as dividends to kids and the kids will go ahead and start new businesses, and we'll have new jobs in Wyoming," he said.

Another provision in the bill would provide $20 billion in aid to the states. Wyoming would receive a total of $52 million. The state government would receive $14 million for Medicaid and $30 million for grants, while local governments would receive the remaining $8 million in grants.

Enzi noted that Wyoming falls within a category of low population states defined as "small states." These small states receive at least a minimum amount of aid.

Wyoming has the smallest population of any state in the nation and is one of only a handful of states not currently struggling with a state budget shortfall.

"The small state minimum helps us more than other because we are the smallest," Enzi said.

Both Enzi and Thomas promised to continue pushing for the equalization of Medicare payments to rural states.

President Bush sent a letter to Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, on Thursday — before the rural Medicare measure had been dropped — in which he promised to support the effort.

Rural senators included a provision equalizing payments in a massive spending bill that was signed into law early this year. That law only equalized payments until the fiscal 2003 year ends on Sept. 30, 2003. If legislation permanently equalizing payments is not passed, then Medicare will revert to a system in which hospitals in Wyoming receive 1.6 percent less than urban hospitals.

"That's one we'll fight another day," Enzi said. "We'll keep pushing that. It would have been nice to have it out of the way."

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