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Category: Budget

A budget deal on the horizon before a shutdown?

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As expected, the House agreed to yesterday by a vote of 245 to 182 the next short-term continuing resolution (CR) that would keep the government funded through March 23.  The current CR expires Friday morning at midnight.  The House-passed CR would fund the Department of Defense for the rest of the year at $30 billion over what the budget cap allows for while keeping the majority of the non-defense discretionary programs funded only through the length of the CR.  Senate Democrats, not surprisingly, have rejected the House approach.

One of the biggest reasons why the government has had to function through a series of short-term CRs is because of Congress’ lack of agreement on how much money should be available overall for FY2019.  It appears that the two parties and the two chambers might be reaching an understanding on the “top line” for this year and next.  While details have not yet been confirmed– with reports in the neighborhood of an increase for both defense and non-defense programs of $300 billion for two years– the Senate could very well strike the defense-only parts of the House-adopted CR and replace them with those that would set the new overall spending levels in its version of the CR.

Regardless of what the Senate does, unless it accepts the exact same legislative package as the House’s, the Senate language would need to return to the House for its consideration and adoption before the end of tomorrow in order to avoid a shutdown.

Still unresolved in all of this is the Dreamers situation.  To end the shutdown back in January, Senate Majority Leader Mitch McConnell (R-KY) committed to allowing the Senate to debate possible ways to address Dreamers if no solution was found before the expiration of the current CR.

Debt Ceiling and Appropriations

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Late yesterday, the Congressional Budget Office (CBO) said the Department of Treasury might make it into the first half of March before running out of cash to pay its bills, or a little later than Treasury’s latest update earlier in the day.

In November, CBO had projected that the statutory debt limit would not be reached until late March or early April. But because of legislation signed into law since the last estimate, most notably the tax code overhaul projected to lose at least $1 trillion in 10-year revenue, CBO is bumping up their time frame by a few weeks. Treasury’s own estimates, updated Wednesday, project borrowing can continue through Feb. 28, or slightly earlier.

Meanwhile, House and Senate Republicans are meeting for their three-day policy retreat in West Virginia. Republican leadership is confident they will avert another government shutdown. Currently, the House is preparing to pass a 6 week continuing resolution, which would keep the federal government open until March 22, 2018. Congress has yet to pass a long-term spending bill for fiscal year 2018, and lawmakers have relied on a series of short-term patches to keep the government open.

The House is expected to take up the measure early next week before the Democrats attend their annual retreat. Meanwhile, there appears to be little progress on spending caps and immigration. House and Senate leaders from both parties are negotiating a possible two-year spending deal that could include nearly $300 billion in additional appropriations, but the two sides remain apart on the distribution between defense and nondefense funds.

Meanwhile, discussions over both spending and immigration have halted virtually all other legislation moving and that could prevent Congress from advancing the Administration’s infrastructure proposal or proceeding to other legislative priorities for 2018.

OMB Targets Feb 12

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The Office of Management and Budget (OMB) announced the intent to release the Administration’s FY 2019 President’s Budget Request to Congress on February 12. Incidentally, that date is the Monday following the date set for the the expiration of recent CR passed earlier this week.

The release was slightly delayed because of time lost during the recent three-day government shutdown. The budget is legally required the first Monday of February, but this and past Administrations have missed the deadline. This will be the second budget by the Trump Administration.

Shut Down Likely

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At midnight tonight, the Continuing Resolution passed in December 2017 will expire. Presently, it does not look like Congress will be able to agree on a short or long term funding solution, and a shutdown is highly likely.

Agencies are circulating memos advising staff how to proceed in the high likelihood there is a shutdown and nonessential federal employees will be furloughed without pay.

OMB has just released a memorandum – Planning for Agency Operations during a Potential Lapse in Appropriations – that includes FAQs regarding grants and contracts (Section II, pages 3-9).

The University of Washington leadership has developed information as to impacts of a shutdown, which will occur in three major areas: research funding, student aid, and Medicare and Medicaid payments. Those impacts can be found here. 

If the federal government does shut down, significant impacts will not be immediately felt by the UW community. Initial impacts will be felt by those in the research community needing to communicate with the federal enterprise such as researchers needing engagement or approval from program managers or researchers applying for grants.  Impacts will be magnified if a shut down is prolonged and goes for multiple weeks.

The University does a plan in place to have adequate cash on hand from existing accounts to cover anticipated expenditures in the event of delayed federal reimbursement. We estimate that we could go at least one month, possibly more, before layoffs or contract suspensions would be initiated.

To follow developments on budget negotiations minute to minute, the Washington Post is counting down the time to midnight.

The Federal Relations team is continuing to monitor the situation and will continue to provide updates.

Shutdown Averted… For Now

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Both chambers of Congress cleared yesterday another short-term spending package that would keep the government funded through December 22.  The old spending agreement ends at midnight Saturday.

Although the government remains funded for another two weeks, there still is no agreement on many of the unresolved issues that will need to be addressed before a final package for FY2018 can be adopted.  These include questions about whether to break the budget caps, and if so, how much and for which sets of programs.  Questions also remain on whether or how to address the DACA/”Dreamers” situation, which must be dealt with by March.

It appears at this point that another short-term extension will be needed beyond the 22nd.