LGN Federal Relations Policy Brief: Federal Budget

Congressional leaders and the White House announced a budget deal at the end of July to raise federal spending limits for fiscal years 2020 and 2021 and outlined an informal agreement to avoid partisan policy riders, clearing a path for action on fiscal 2020 appropriations this fall. The Senate passed the budget bill by a vote of 67-28 after the House passed the same measure by a vote of 284-149. The two-year budget deal sets top-line spending levels, but Congress still needs to approve a package of 12 appropriations bills, or pass a temporary funding extension, to avoid a government shutdown when current funding expires at the end of this month.

Lawmakers will be returning on Monday, September 9^th from their annual summer recess and will be turning immediately to the formidable task of funding the government by the end of the month. This leaves just three full legislative workweeks for lawmakers to reach an agreement over the various discretionary spending bills for the entire government before the September 30^th deadline. This process will include the House having to reduce their previously passed spending bills by $15 billion to reflect the bicameral spending agreement. Congress generally has three avenues to enact these funding bills into law: they can either pass the 12 appropriations bills individually, combine the bills into various packages referred to as a “minibus,” or pass them all as one massive bill referred to as an “omnibus” bill.

The Minnesota delegation has two Members who sit on the two relevant committees: Congresswoman Betty McCollum (D-MN-04), a member of the House Appropriations Committee and the chair of its Interior-Environment subcommittee, as well as Congresswoman Ilhan Omar (D-MN-05), who sits on the House Budget Committee. As one of the 12 subcommittee chairs, Congresswoman McCollum in particular will play an important role in the coming negotiations, advocating both for her own environmental priorities and for spending from the other 11 bills that impact Minnesotans, including transportation, housing, and health and human services funding.

Given the limited time frame to reconcile both chambers’ appropriations bills, lawmakers are preparing for the possibility of a short-term spending extension to avoid a government shutdown next month. This extension, known as a continuing resolution, would extend the same funding levels from the last fiscal year to give more time for an agreement to be reached on setting new funding levels.

Please see below for a full analysis by Vince Spinner and Robert Sherman of the budget and appropriations process. Mr. Spinner and Mr. Sherman both provide LGN’s Federal Relations Group clients with a depth of experience in the federal budget, appropriations, and the legislative process.

2020 Budget and Appropriations

In a normal budget and appropriations calendar year, the budget would have been finished in the early spring and lawmakers would set about allocating funding to various agencies of the government. Even though the budget had not yet been agreed to, the House of Representatives passed their versions of 10 out of the 12 appropriations bills in June. Senate appropriators decided to wait for the budget agreement between the White House and Congress to be completed before working to advance their spending measures and have yet to take up any spending bills.

Congressional leaders and the White House reached a deal on the budget in July. This agreement also included a provision to raise the discretionary spending caps imposed by the Budget Control Act of 2011 (Public Law 112-25) over the next two years, clearing a path for action on fiscal 2020 appropriation bills this fall. The House passed the budget measure (H.R. 3877), which also suspended the debt limit through July 31, 2021, by a vote of 284-149 on July 25^th. The Senate followed shortly, passing the legislation by a vote of 67-28 before leaving for the August recess. This measure sets out topline levels for defense and nondefense discretionary spending in fiscal years 2020 and 2021 and permits $324 billion in additional domestic and defense spending above the previous spending cap levels.

Congress, upon returning from the August recess, needs to pass spending bills in September adhering to the new $1.3 trillion spending cap to avoid a government shutdown when the next fiscal year begins on October 1^st. This means the House and Senate need to both produce and agree to funding levels for the 12 appropriation bills. While the budget deal that the President signed into law raises spending by approximately $324 billion and suspends the debt ceiling through July 2021, House appropriators now need to adjust their spending bills to adhere to the bipartisan budget levels agreed to in July. Because the House passed the majority of their spending bills before the budget deal was reached, they used topline numbers which were greater than was included in the final budget agreement. The House will now need to rework several of their spending bills to reduce nondefense spending by $15 billion to reflect the bicameral spending agreement.

As for the upper chamber, Senate Appropriations Chairman Richard Shelby (R-AL) issued funding allocations to the various subcommittee chairs and ranking members so they could develop bill text during the August recess, allowing his committee to start voting on spending bills when the Senate returns next week. The Senate Appropriations Committee is now expected to hold its first committee markups of spending bills on Thursday, September 12, the chamber’s first week back from the summer recess.

Lawmakers may seek to pass some of the bills, such as Defense and Labor-HHS-Education, similar to last year, when they return in September before the fiscal year ends. Members of the Senate majority have been discussing combining three spending bills: Defense, Health and Human Services, and Energy and Water Development, into one ‘minibus’ package to be brought to the floor for a vote in September since together it would make up over 70 percent of discretionary spending. A stopgap spending measure is expected for a least some of the 12 appropriation bills to temporarily fund part of the government after the September 30^th deadline and avoid a government shutdown.

One of the top challenges ahead lies in the informal handshake agreement made among top negotiators in the budget deal to avoid any “poison pill” policy riders in the final appropriations bills. When the agreement was announced, House aides indicated that no exact provisions had been specifically ruled out and that the agreement simply acknowledged the fact that any bill will need bipartisan support to become law. With limited time to draft, mark up, and pass the bills, lawmakers are on a very limited timetable for negotiations.

Chairman Shelby, as part of the subcommittee allocations, reserved $5 billion for border wall funding, a move seen as certain to set off a new fight over domestic spending. These funds were reallocated from the Labor-HHS-Education bill and shifted into the Homeland Security funding bill. According to reporting by Roll Call, the Chairman intends to use this to negotiate a lower Labor-HHS-Education funding number out of conference with the House and allow him to negotiate a higher funding level for the final Homeland Security bill. The House-passed Labor-HHS-Education bill (H.R. 2740) would provide $190 billion, or an increase of $12 billion from fiscal 2019. However, this move has the potential to set off a protracted battle and make it more difficult to finish any of the 12 annual appropriations bills before September 30^th.

The House’s appropriations bills also include measures, pre-dating the agreement reached by those in leadership, that Members of the Senate majority would likely call poison pills. These include: the Homeland Security bill’s language that would block the Administration from using any funds to build a border wall in fiscal 2020 and limit Immigration and Customs Enforcement’s ability to carry out immigration raids; the Labor-HHS-Education bill’s provision that would block an Administration rule banning Title X family planning funds from going to groups such as Planned Parenthood that recommend abortions; and the State-Foreign Operations bill language that would block the “Mexico City policy” which bars support for foreign organizations that perform or promote abortions.

Senator Steve Daines (R-MT), a member of the Senate Appropriations Committee, said that Congress is expecting to prepare a Continuing Resolution (CR) stopgap bill as a backup plan to ensure there is no government shutdown when the current funds lapse at the end of September. Chairman Richard Shelby will likely prepare a new continuing resolution to cover spending while the 12 bills for fiscal year 2020 are being finalized. While there is no firm timeline for how long a CR would last, aides on the Committee say a number of dates including November 22^nd and December 6^th have been discussed. Congress is currently scheduled to adjourn for the year on at the end of the week of December 9^th.

Although both parties have previously made promises not to insert any ‘poison pill’ provisions in spending bills, a dispute over funding the President’s request for a border wall funding led to a 35-day government shutdown at the beginning of this year. The President ultimately signed bills without the full amount he sought for the wall and invoked executive authority to take the money from military accounts instead.

Overview of House Bills

While the dollar amounts specified in the House’s current appropriations bills are unlikely to exactly match the bills sent to the president’s desk later this year, they do provide crucial insights into the priorities of the House majority. For domestic spending, the final bills that are enacted are unlikely to be larger than those passed by the House or smaller than the spending approved for fiscal year 2019. Below is a brief summary of where each of the 12 House Appropriations Committee bills stands going into the final month of the current fiscal year.

• R. 2740 was passed by the House on June 19^th and contained the following:
  • $690 billion for the Department of Defense, a $16 billion increase over FY19.
  • $192 billion for the Departments of Labor, Health and Human Services, and Education, a $12 billion increase over FY19.
  • $56 billion for the State Department and Foreign Operations, a $2 billion increase over FY19.
  • $46 billion for Energy and Water spending, a $2 billion increase over FY19.
• R. 3055 was passed by the House on June 25^th and contained the following:
  • $24 billion for the Department of Agriculture, a $1 billion increase over FY19.
  • $74 billion for the Departments of Commerce, Justice, and for scientific research, a $10 billion increase over FY19.
  • $37 billion for the Department of the Interior and the EPA, a $1.6 billion increase over FY19.
  • $108 billion for military construction and the Department of Veterans Affairs, a $10 billion increase over FY19.
  • $76 billion for the Departments of Transportation and Housing and Urban Development, an increase of $5 billion over FY19.
• R. 3351, the Financial Services and General Government Appropriations Act, was passed on June 25^th.
  • The bill includes $24.5 billion in discretionary funds to the Department of the Treasury and other agencies, a $1.4 billion increase over FY19.
• Two bills were approved by their respective subcommittees but have not yet been voted on by the full chamber:
  • The Homeland Security bill would provide $64 billion to DHS, a $2 increase over FY19.
    • The bill remains controversial due to the inclusion of language limiting ICE deportation powers and blocking funding for a border wall.
  • The Legislative Branch bill would provide $4 billion for the operations of Congress and the Capitol Police, a $135 million increase over FY19.
    • The bill remains controversial due to a proposed pay-raise for Members of Congress and a provision allowing DACA recipients to be employed by the Legislative branch.

As the fight over domestic spending levels looms, there are a number of areas where both parties are expected to favor higher spending, including transportation and infrastructure investments and veterans’ affairs.