The Congressional Wish List

Federal lawmakers are nearing the end of the year with many outstanding issues left on the congressional wish list. Priority centers around a spending bill to fund the federal government past mid-December. Other important issues being discussed include reforms to and reauthorizations of the No Child Left Behind Act, the Highway Trust Fund, Export-Import Bank and special tax credits and tax breaks, known as tax extenders, for certain groups and individuals.

Congressional leaders are working hard to pass legislation that will fund the federal government past a Dec. 11 deadline. A November Congressional Quarterly survey shows that large majorities of congressional staffers in both parties believe that Congress will pass a budget bill to prevent a government shutdown. However, several potential roadblocks remain unresolved, including congressional bickering over the refugee resettlement process, Planned Parenthood, environmental regulations and the Affordable Care Act.

As lawmakers haggle over these issues, the possibility of another short-term continuing resolution—or CR—becomes more likely, giving Congress more time to work out an omnibus spending package. “I’m hopeful to get it all done and voted on by the 11th (of December),” said House Majority Leader Kevin McCarthy of California at a recent roundtable event. “If not, we’re here until the 18th and it won’t make any difference that we will get that done.”

A short-term CR is nothing new to Congress or the White House. In fact, the federal government is currently funded by a CR and at least one federal agency has been operating under a short term measure for more than half the time President Obama has been in office. This new norm presents several challenges to states. Federal grants can be delayed and needed reforms or authorizations are prevented from taking place.

White House Press Secretary Josh Earnest told reporters that the president would support a short-term CR in order to pass a long-term omnibus spending package. The president would not support a long-term CR, however, as it would lock in federal funding for fiscal year 2016, preventing the president from following through on his plans to raise defense and non-defense spending as outlined in a previous CSG article that can be found here
In the midst of budget negations, Congress is also in the middle of reforming or reauthorizing several important programs for states.

Education: Lawmakers released the final text of the Every Student Succeeds Act, meant to replace the No Child Left Behind Act. The legislation would grant states much more authority in education policy by authorizing states to set their own performance goals on standardized testing and provide more flexibility for states to design programs to support the lowest performing 5 percent of schools. The text resembles more closely the bipartisan Senate bill that passed 81-17 in July than the more partisan House version, which earned no Democratic support as it passed through the chamber.

Transportation: Congress passed a five-year, $305 billion measure on Dec. 3 to reauthorize the Highway Trust Fund, or HTF, which was set to expire the very next day. The Fixing America’s Surface Transportation—or FAST—Act would give states in the first year of the program 5 percent more highway funding and 8 percent more transit funding, and would steadily grow to a 15 percent increase in highway funding and 18 percent in transit funding during the final year. The legislation would tap the Federal Reserve fund to offset some of the costs, and would rescind a provision in the two-year budget deal passed Nov. 2 that made significant cuts to crop insurance. This is the first five-year authorization for surface transportation and transit programs since 2005. Since 2008, the HTF has teetered on insolvency, needing more than 30 trust fund extensions and short-term funding patches.

Export-Import Bank: Commonly known as ExIm, the Export-Import Bank provides credit financing and loans to small businesses to export their goods and services abroad. Congress let the bank’s charter lapse in June after critics claimed it contributed to crony capitalism. After many failed attempts, congressional supporters were able to reauthorize ExIm for four years by attaching reauthorization language to the FAST Act that passed Dec. 3.
Tax Extenders:
 Congress extends a package of tax breaks for businesses and individuals nearly every year, and this latest iteration for the 2016 fiscal year may include deductions for state and local sales taxes, which expired in 2014. States without income taxes are at a disadvantage without this provision. Currently, tax filers may deduct from their federal tax returns certain state and local taxes, including real estate, income and personal property taxes. The state and local sales tax deduction allows filers to deduct non-federal sales taxes rather than income taxes. This is a popular practice within states that have no income taxes such as Washington State, where nearly a quarter of state residents claimed the deduction in 2013.

While Republicans and Democrats in Congress rarely reach consensus on such a wide array of important issues, Congress was able to reauthorize the Highway Trust Fund and ExIm on Dec. 3. Education reform and a tax extenders package have not earned a veto threat from the president, giving states some hope that lawmakers from both parties and the president can make some necessary reforms to these vital programs.