fy2018

NARC Federal Budget Call Recap: Where We Are Now and What to Expect in the Fall

Senators and representatives may be home for recess, but the issues they left in Washington will be here when they return on September 5. Not only will the issues be here, but the urgency to address them will have increased significantly.

Top issues that await them include: the adoption of a federal budget, 12 appropriations bills, legislation to raise the debt ceiling, and tax reform. It is also possible that health care legislation may come up for consideration again.

This is why NARC felt it was important to host a conference call last Wednesday on the current status of the federal budget with Deborah Cox, legislative director at the National Association of Counties (NACo); Michael Wallace, program director of federal advocacy at the National League of Cities (NLC); and NARC staff. We wanted to provide you, our members, with an update on where these urgent issues stand so that you can better understand how these legislative items may impact your regions, counties, cities, and towns. We also wanted to provide you with information on how to educate your representatives and senators about the impact their decisions are likely to have on your regions and, especially, the people who live there.

Here is what you need to know:

  • Congress is faced with three important legislative deadlines in September.
  • Adoption of the 12 FY 2018 appropriations bills.
  • Passage of legislation that raises the debt ceiling.
  • Adoption of a FY 2018 budget that will pave the road for tax reform legislation.
  • The budget and appropriations process, as in years past, is behind schedule. Congressional leaders are scrambling to adopt some type of comprehensive appropriations bill by the end of September to keep the government open. More than likely, Congress will be forced to pass a temporary continuing resolution through mid-December.
  • The final appropriations bills will not be adopted until later this year or early next year. It is likely an omnibus bill incorporating all 12 appropriations bills into a single bill will be passed. The omnibus bill is expected to increase defense spending substantially while cutting some non-defense discretionary funding.
  • When appropriations legislation is bipartisan, cities, counties, and regions benefit much more. Right now, the process is very partisan and the impact on cities, counties, and regions is not likely to be positive. However, it is likely that Republicans will need Democrats to pass any omnibus appropriations bill. This will help the process become bipartisan, possibly yielding a positive outcome.
  • Legislation that permits the Treasury to borrow funds to pay the government’s bills (commonly referred to as “raising the debt ceiling”) must be passed by September 29, or there is the risk that the federal government will not be able to pay its bills. This may cause the United States to default on its debt, forcing the federal government to shut down.
  • If Congress is to move forward with tax reform, it will need to adopt a FY 2018 budget. This will provide direction on how to move forward and give the Senate authority to adopt tax reform legislation with a simple majority (51 votes) rather than a super majority (60 votes).
  • Senators and representatives drafting tax reform legislation are seriously considering eliminating the state and local tax deduction and the tax-exempt status for municipal bonds to pay for massive tax cuts.
Appropriations Specifics

NACo, NLC, and NARC staff shared that while the president proposed to eliminate funding for the weatherization assistance program, the House and Senate would fund the program at FY 2017 levels ($211.6 million). The Community Development Block Grant (CDBG), which the president zeroed out, would be funded by the Senate at current levels and by the House at $2.9 billion, just $100 million below current levels. For the HOME Investment Partnerships Program (HOME), which the president sought to eliminate, the House would cut funding by $100 million to $850 million. Transportation Investment Generating Economic Recovery (TIGER) grant program, which the president and the House wanted to eliminate, would be funded by the Senate at 10 percent over current levels to $550 million. Another program on the president’s list to cut drastically was New Starts, which would be funded by the House at $1.75 million and by the Senate by $2.13 billion. The Low-Income Home Energy Assistance Program (LIHEAP), which would have been eliminated had the president prevailed, would be maintained by the House at current levels ($3.4 billion). Finally, while the president would have reduced funding for workforce development programs by $1.3 billion, these programs would be cut by the House by only $300 million.

More specific funding information is provided in the table below.

[table id=2 /]

What Can Regions Do?

Speaking with your representatives and senators is critical. Underline the importance of these programs and how funding cuts would impact your programs and constituents. Another option that sends a strong message to congressional leadership is to send letters and op-eds to your local papers about the impact these cuts will have.

There are multiple ways you can educate your senators and representatives on federal budget issues:

  • Set up a meeting with your representative(s) while they are in their home district.
  • Invite your local representative(s) to attend one of your regional or coalition meetings.
  • Encourage them to visit a site financed by federal funds to highlight what is being achieved and why continuous funding is essential.
  • Bring stakeholders together and invite your representative(s) to see the faces of those impacted by programs funded by the federal budget.

Every effort you take to reach out to your representatives and senators while they are in your regions will have an impact, and ultimately, make a difference. And at a time like this, when programs are on the chopping block and Congress wants to cut domestic spending in favor of defense spending, there is no greater time to get involved.

NARC will release a larger, more expansive guide to educating your members of Congress, which we will share with membership.

Please note that NARC plans on holding these budget calls approximately once each month for as long as they are necessary. Look for emails announcing these calls as the details become available. If you have not yet joined us for one of these calls, now is your chance.

NARC would like to thank Deborah Cox, Legislative Director at NACo, and Michael Wallace, Program Director for Federal Advocacy at NLC, for their presentations during the call. For more information, please contact Maci Hurley at maci.hurley@narc.org or Neil Bomberg at neil@narc.org.

Additional Resources Mentioned on the Call include:

NARC’s Notes from the Appropriations Call

NARC’s Newsletter: eRegions

NARC’s Newsletter: Transportation Thursdays

NARC’s Blog: Regions Lead

NLC’s Fight the Cuts Advocacy Toolkit

NLC’s FY 2018 Budget Tracker

NACo’s Summer Advocacy Toolkit

NACo’s One Pager on State and Local Tax Deduction

NACo’s Municipal Bonds Toolkit

Governor Finance Officers Association’s Report: The Impact of Eliminating the State and Local Tax Deduction

The Federal Budget and Appropriations Process: in Limbo

It’s stuck because neither the House nor Senate has passed a budget plan that outlines spending for fiscal year (FY) 2018.

Why is it stuck?

Because the majorities in both chambers cannot agree on how much to spend on defense and non-defense programs. Moderate Republicans are concerned that a budget plan similar to the ones proposed by the president or the House speaker would make it very difficult for the House or Senate to maintain spending at current levels, let alone increase spending where consensus to increase spending existed. Conservative Republicans are pushing hard to substantially reduce spending for non-defense discretionary programs and substantially increase spending for defense discretionary programs, and want to break down the current spending caps that ensure that whatever gains or losses in spending occur are equally shared by defense and non-defense programs.

What does this mean?

It means that as we get closer to the September 30th deadline for passing a FY 2018 appropriations bills, the likelihood that Congress will yet again have to rely on a continuing resolution or omnibus appropriations bill to fund the federal government increases substantially. It also means that the chances of a government shutdown will increase.

Why is this happening?

This is happening because the Senate’s failure to pass legislation to repeal and replace the Affordable Care Act (ACA) has upended the carefully planned schedule that the Senate Majority Leader Mitch McConnell (R-KY) developed for passage of a broad range of bills, including a federal debt ceiling increase, tax reform, appropriations, and several reauthorization bills.

According to Bloomberg Government, Senator McConnell was hoping to bring up a measure to raise the federal debt limit, and push through a U.S. Department of Defense bill with large spending increases for the Pentagon in July. At the same time, McConnell was also hoping to use the work period to ensure the timely renewal of many expiring federal programs. Until the Senate adopts a budget resolution; however, it will not be able to move forward with tax reform legislation that relies on reconciliation. Under reconciliation the majority needs just 51 votes, rather than the usual 60 votes, to pass legislation. If the Senate cannot pass either health care or tax reform legislation sometime in July or early September (remember they are out for a break in August), the likelihood of passing any tax or health care legislation this calendar year will further diminish, and the series of major legislative promises made by the president will go unfulfilled.

So where do we go from here?

It is very hard to know. Certainly, Senator McConnell is a master of legislative rules and procedures, and if anyone can move things through the Senate it is he.  But the limited amount of time before the end of the fiscal year does not bode well for Republicans.

Senator John Cornyn (R-TX) acknowledged these difficulties when he told reporters that “it doesn’t get any better, it doesn’t get any easier. We’ve got other things we need to do, like the defense authorization bill. We need to get ready to pass another budget so we can get reconciliation instructions for tax reform.”

The next several months should prove interesting. Depending on how this all turns out, the losers and winners will be neither Republicans nor Democrats, not even Independents. It will be the American people. We will just have to stay tuned and hope that someone, somehow will develop a strategy for moving legislation forward.