The Many Hurdles Facing the FY 2018 Budget

The federal fiscal year ends on September 30, which means a new budget - any budget- should go into effect on October 1. But before that can happen, it has many hurdles to clear. Even if the budget doesn’t get passed, the hurdles it faces provides opportunities for the nonprofit community to speak together about what we are collaboratively building.

With only 16 weeks until the new fiscal year, Congress now has the job of deciding how to consider the White House's proposal, and come up with their own spending priorities.  So, what considerations are coming up? Let’s take a look at some of the things that are presenting challenges to the budget, and what our community can do to strategically engage at the federal level.

Behind schedule before it even started

mic copy.jpg

In an ideal world, the president sends the annual budget request in February, and Congress gets to work discussing and deciding what it wants to spend money on.  The White House released their budget request on May 24th. While that seems very late, it is not entirely uncommon when there is a change in the administration. But it still does put the process significantly behind schedule. Suffice it to say, there will have to be many, many late nights for Congress to get this thing done, even without the upcoming August recess. 

Speaking of the August recess, it’s a great time to talk to your congressperson about your priorities while they are working in district! Here are some tips we have for meeting with members of Congress!

Next steps in Health Care

Health care programs like Medicare and Medicaid fall are considered mandatory spending. Mandatory spending is spending that is determined by legislation, and does not go through the appropriations process. Programs that fall under the umbrella of mandatory spending have their cost determined by what’s in the legislation, which says who is eligible for the programs, and what they are eligible for.  

Currently, a large portion of mandatory spending is governed by the Affordable Care Act, whose fate is uncertain. We can’t get a budget until we know how much any new health care bills will cost. We won’t know how much it costs until a bill gets drafted, and the Congressional Budget Office gets a chance to take a look.

Are we close to getting a health care bill?

The answer is a “yes, if…” or a “no, but…”  

Earlier in the year, the House of Representatives narrowly passed a version of a bill, which means the Senate has the ball in their court.

Typically, a bill like this would need to get 60 votes in the Senate in order to avoid a filibuster. However, the Senate can use a process called budget reconciliation that allows them to make revisions to existing legislation (i.e. the ACA) that impacts mandatory spending, without drafting an entirely new bill.  The Congressional Research Office explains the existence of the process like this: “The purpose of reconciliation is to change substantive law so that revenue and mandatory spending levels are brought into line with budget resolution policies.”

The reconciliation process allows a bill to pass with only 50 votes. Currently, there are 52 Republicans and 48 Democrats in the Senate, so it is conceivable that a reconciliation bill could pass the Senate, but finding a way to reconcile the bill so it suits at least 50 Senators is going to take a while.

But budget reconciliation doesn’t allow the Senate to do whatever it wants to the ACA. Reconciliation also has to comply with a special budget rule, called the Byrd Rule.

Among other things, the Byrd Rule says that any substantive changes made to legislation cannot be made in order to achieve non-fiscal policy aims. This means that any provisions in a reconciliation must be actually targeted towards increasing revenue or reducing the deficit, and not a roundabout way to achieve another policy aim.

The Senate parliamentarian, who specializes in procedures and rules of order, will ultimately decide if a reconciliation process that does that.

Either way, knowing how much healthcare will cost is an important step to getting a federal budget in place.

If you have questions about the specifics of the House Republican Bill, MCN’s Minnesota Budget Project dives into it. Read it here.

Tax Reform

Enough on spending, what about revenue?

House Speaker Paul Ryan has stated that tax reform is a large part of his policy priorities. How much the Treasury receives in taxes each year is obviously crucial to know how to create a balanced budget.

Changes to the tax code introduce even more significant unanswered questions for considerations for a 2018 budget.

Want to learn about what changes to tax code that will affect to nonprofits? Click here to read our analysis on the charitable tax deduction as well as the Johnson Amendment.

The Federal Budget has a lot of moving parts that all need to come together in order get put into place. It requires quite a bit of work and thoughtful consideration. And remember, it is not the only thing that Congress has to accomplish this summer. With all these balls in the air, it will be a challenge to get a budget passed by the October 1st deadline.

If Congress doesn’t approve a budget in time, current spending levels might be maintained through what’s called a continuing resolution, or through dizzying omnibus bills.  A post that explains what happens if a budget doesn’t passed will be up shortly!

In parting, we hope this information is helpful for you as we work together towards a thriving interconnected community.  And remember, you do not have to be an expert in the budget process to be a strong, decisive and informed advocate. The most powerful thing you can do is tell your story.

Are you fascinated by the inner workings of the budget process? Maybe you just want to know more? Don’t forget to register for upcoming training on the Federal Budget! Register here!