8/12/2015 Washington D.C. Update

With official Washington currently enjoying the traditional August recess, we wanted to provide a government relations update as we prepare for the fall legislative session.

FY16 Funding State of Play

As you may recall, President Obama’s proposed FY16 budget proposed increasing federal spending by 7 percent, or $75 billion, but the congressional budget resolution provided only a $3 billion increase over the final FY15 enacted levels.  Both the House and Senate have now “marked-up,” or passed out of at least the Subcommittee stage, all 12 of the annual appropriations bills that fund the government.  

All of the draft bills would adhere to the sequestration caps from the 2011 Budget Control Act and provide less funding for FY16 than the President has requested.  Some agencies (State Dept., Interior, Agriculture, financial regulators) would see cuts below the FY15 enacted level.  In particular, the House and Senate draft Labor-HHS-Education bills (which fund the NIH and the Education Department) would cut between $2-$3.6 billion from these agencies.  However, both draft bills would increase funding for the NIH between $1-$2 billion.  

As a result, the President has threatened to veto all of the appropriations bills that have passed the House to date.  

Fall Budget Outlook

With only a handful of legislative days remaining until the October 1st start of the fiscal year, leaders in both parties have pledged to avoid a government shutdown.  When Congress returns in September, it will likely enact a continuing resolution (CR), or series of CRs, keeping the budget at current levels, while negotiators work to achieve a budget agreement to lift the sequester.  One possible source of funds to replace the sequester is a tax reform bill that would generate $125 billion in revenue by changing international tax rules.

Harold Rogers (R-KY), chairman of the House Appropriations Committee, has said his preference is for an Omnibus Appropriations Bill, which includes all the funding agencies. That would likely be enacted in November or December.  If a budget agreement cannot be reached, Congress will be forced to enact a year-long CR, which would tie the hands of agencies to start new research programs, but maintain current funding levels.

We have worked successfully with our congressional delegation to include funding and language directing federal agencies to prioritize cybersecurity, strategic materials, antibiotic drug discovery, and urban coastal resilience in several of the bills, so we are eager to see an Omnibus bill as well.

21st Century Cures Bill

Separate from the annual appropriations bill, in July, the House passed the “21st Century Cures Bill,” that would provide $9.3 billion over 5 years in new mandatory funding for the NIH and the FDA.  The Senate is likely to take up the bill in the fall.  While this would be a helpful new source of NIH funding, some wonder how that will impact the regular appropriations funding. 

Tax Extenders and Highway Bill

In late July, the Senate Finance Committee approved a $95 billion bill extending certain tax provisions for two more years.  Among the provisions included in the bill that are of interest to the university community were the research and development tax credit, the higher education expenses deduction, and the IRA charitable rollover.  

Some have suggested that the “tax extenders” may be attached to a bill to “offset” the international tax changes mentioned above, and partially pay for a highway reauthorization bill.  The Senate passed a 6-year highway funding bill in late July and the House is likely to take up a companion measure in the fall.

Higher Education Act

Over the last few months, the Senate Health, Education, Labor, and Pensions (HELP) Committee, led by Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA), have held several hearings on issues related to reauthorizing the Higher Education Act.  Recently, Sen. Alexander announced his intention to release a draft HEA bill by Thanksgiving.  We have been working with staff for both Senators for many months on issues related to co-op, financial literacy, and innovation, which we are urging be included in the bill.