August 2023 Recess Toolkit
Engaging Congress During the August Recess: What You Need to Know
As we move further into the second half of 2023, members in both chambers have already returned to their respective home states for most of August and are not anticipated to return to DC until after Labor Day. As is generally the case, when they return there remains little time on the legislative calendar to move major initiatives. Although 2023 is not an election year, issues like gun control and reproductive rights have garnered the spotlight in recent months and will likely be front and center in 2024. But it remains to be seen whether issues like these will find their way into the congressional agenda before the end of the year.
Once Congress returns in September, the main priority of passing all appropriations bills before the start of the next fiscal year on October 1 looms large. If lawmakers fail to fund the federal government for the next fiscal year within the weeks that remain in the current fiscal year, we face a possible government shutdown. There are some signs of progress, as each chamber’s respective appropriations committees have advanced several of the funding bills already. But even if both chambers manage to pass all of them, it would not change the fact that they are far apart for total spending and major efforts to reconcile the differences will be needed.
The limited number of legislative vehicles with a chance of floor action provides few options to advance public finance priorities. Provisions to reinstate tax-exempt advance refunding and increasing the small issuer exception (a.k.a. bank qualified) still enjoy strong bipartisan support. Finding the right time and being in the right place will be key if these provisions are to advance. But that does not mean all hope is lost since we’re still well over a year away from the end of the 118th Congress.
At a minimum, raising public finance priorities now could lay the groundwork in 2024. With lawmakers back home, now is the time for GFOA members to be heard by contacting members of your congressional delegation. This is a powerful way to advocate to members of Congress and GFOA needs your support!
Ideas for Outreach
Invite your member on a tour (virtual or in-person) of a project
Set up a call with the member or staff in their district office
Engage your delegation on social media
Send a letter to your delegation members asking for support on an issue like BQ or advance refunding
Provide learning materials or present to your delegation members on an initiative or project
Share information from GFOA's advocacy resources
GFOA Priorities
While a bill addressing the bank qualified limit (aka small issuer exception) has yet to be introduced in the 118th, we anticipate that to happen soon. In the 117th Session, Congresswoman Terri Sewell (D-AL) introduced H.R. 2634, the Local Infrastructure Financing Tools (LIFT) Act that includes – among other bond provisions – an increase to the small issuer exception to $30M and permanently pegs future increases to inflation. A similar provision was included in the House-passed versions of the Build Back Better Act in 2021, as well as the Moving Forward Act in 2020.
We certainly want to continue building on the momentum from the 117th since that is a result of progress made in 2019, when Congresswoman Sewell and Congressman Tom Reed (R-NY) introduced H.R. 3967, the Municipal Bond Market Support Act of 2019, to expand access to financial resources for local governments, non-profits, and other public-serving entities that issue relatively smaller amounts of tax-exempt debt.
-Since bank-qualified bonds were created in 1986, the program’s $10 million cap has not kept pace with inflation or the cost of labor, land, and materials associated with most public infrastructure projects.
-Increasing the cap to $30 million not only brings the program into the modern age but also enables smaller governments to increase the amount of bank-qualified bonds they can issue and realize corresponding cost savings.
-Small issuers selling these bonds directly to banks decreases debt-issuance costs for governments by an estimated 25-40 basis points because smaller, less-frequent issuers do not have to pay higher yields to investors due to investor unfamiliarity with the issuer’s jurisdiction, and these small issuers do not have to pay transaction costs associated with traditional bond sales.
-By making the proposed changes more tax-exempt bonds can be deemed as “bank qualified,” allowing borrowers that issue less than $30 million per calendar year to forego traditional underwriting processes. These changes would expand access to resources for many public-serving infrastructure projects and services including schools, hospitals, roads, and more.
-Urge your Representatives to support the introduction of and cosponsor similar legislation, and to call on House leadership to advance this vital initiative. In conjunction, urge your Senators to introduce companion legislation.
Click here for GFOA’s Bank Qualified Debt resource page.
In the 118th session, we continue to see strong bipartisan support to restore tax-exempt advance refunding. Both chambers have their respective bills and GFOA is working to grow the number of cosponsors for each. In the Senate, S. 1453 (LOCAL Infrastructure Act) is led by Sens. Debbie Stabenow (D-MI) and Roger Wicker (R-MS). In the House, H.R. 1837 (Investing in Our Communities Act) is led by Reps. David Kustoff (R-TN-8) and Dutch Ruppersberger (D-MD-2).
Like the progress of the small issuer exception, the reinstatement of tax-exempt advance refunding had bipartisan bills in the 117th and was included in the House-passed versions of the Build Back Better Act in 2021, as well as the Moving Forward Act in 2020. This success is attributable to the substantial support and progress the issue witnessed in the last three Sessions of Congress.
-The 2017 Tax Cuts and Jobs Act (TCJA) repealed this critical cost-savings tool for state and local governments and has limited the options to refinance debt, which could free up capital and be put to immediate public works purposes.
-Having the option to refinance debt is a valuable financial management tool, especially since interest rates will certainly fluctuate over the lifetime of outstanding governmental bonds (which in many cases is 30 years). Without tax-exempt advance refunding bonds, state and local governments will pay more in interest, a cost that must be paid by state and local taxpayers.
-Urge your Senators/Representatives to cosponsor these important bills and to call on leadership of their respective chamber to include this in any must-pass legislation.
The FLC has produced multiple research and advocacy materials to inform Congress of the impact the loss of advance refunding has had on public finance officers and the communities they serve.
Click here for GFOA’s Advance Refunding resource page.
Aside from the COVID-19 pandemic, state and local governments continue utilizing resources to respond to a vast array of disasters and emergencies. A critical resource to help in that response has been the Federal Emergency Management Agency’s (FEMA) Public Assistance (PA) program. Unfortunately, for many state and local recipients of PA reimbursements, the process can be arduous and time consuming. Sometimes final payments are not received until years after the event, which means communities must borrow to cover the costs while awaiting reimbursement. H.R. 2672 and S. 1180, the FEMA Loan Interest Repayment Act seeks to mitigate this burden by requiring FEMA to provide reimbursement for interest on the loans taken out while the PA process is completed. There are currently two such initiatives in Congress (discussed below) that GFOA supports.
-Urge your Senators/Representatives to cosponsor these important bills and to call on leadership of their respective chamber to include this in any must-pass legislation.
With the passage of the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) in recent years, there has been an influx of new grant programs and federal funding available to address various needs at the local and regional levels. While these recent laws present new opportunities, many communities that are under-resourced find themselves at a disadvantage when trying to pursue some of the grants that could be most beneficial to their needs. S. 2286, the Streamlining Federal Grants Act of 2023 seeks to streamline and simplify federal grant administration. The proposal would require each grantmaking agency to implement a plan to streamline grants and coordinate grant administration reform across the federal government.
-Urge your Senators to cosponsor this legislation, and to call on Senate leadership to advance this vital initiative. In conjunction, urge your Representatives to support the introduction of and cosponsor similar initiatives.
Why Your Voice is Important
With members of Congress in their states and districts over the next few weeks, public finance officials have a great opportunity to draw attention and educate federal lawmakers on key policy issues that are impacting your jurisdiction now and in the future. GFOA members are urged to reach out during this critical time. YOU CAN HELP SHAPE THE FEDERAL LEGISLATIVE AGENDA when Congress returns in September. Please share any outreach you conduct with GFOA’s Federal Liaison Center and let us know if we can provide any follow up with member offices in Washington, DC.