House and Senate Unveil Separate Budget Plan Strategies

As the Administration continues efforts to revamp federal agencies and programs, all eyes on Capitol Hill have been awaiting the release of each chamber’s respective budget resolutions. This is one of the first steps in the federal budget and appropriations process, but it is a step that Congress has routinely skipped in recent years. The significance of taking the step now is it would kick off the budget reconciliation process the Republican majority needs to use to advance the President’s top priorities. Those priorities include increasing funding for border security and defense, energy legislation, and tax reform. The reconciliation process is more important for the Senate because it allows them to advance bills with a simple majority (i.e., 51 votes) given Republicans lack the 60-vote threshold to overcome a Democratic filibuster.

Currently, the Senate and House are each laying the groundwork to take different approaches to enacting these priorities. Last week, Senate Budget Chair Lindsay Graham (R-SC) unveiled the text of his FY 2025 Budget Resolution. This draft essentially tracks the approach Senate Republican leadership has called for in a two-bill approach. The first bill would be used to address border security, military spending, and energy. The second bill to be taken up later in the year would tackle extending  and/or modifying the 2017 Tax Cuts and Jobs Act.

On the House side, Republican leadership has called for a one-bill approach, i.e., lumping all the priorities into one package. This is primarily due to the current House dynamic as Speaker Johnson has a very narrow margin and may not have many chances to move major pieces of legislation. This is further complicated by divisions within his caucus, a looming deadline of March 14 to fund the remainder of the current fiscal year and addressing the debt limit. Nonetheless, House Budget Chair Jodey Arrington (TX-19) announced the markup of his budget resolution on February 13 which tracks with the one-bill approach.

What all this means is that we are still several weeks away from a clear picture on which approach will succeed. Keep in mind, both chambers must pass identical resolutions to unlock the budget reconciliation process. Furthermore, should the House one-bill approach be the ultimate path chosen, we’re still weeks away from seeing any draft text of a tax reform bill.

For GFOA and the broader state and local finance community, we are on alert for the provisions that may be included in any tax legislation. As previously reported, repealing the tax-exemption for municipal bonds is among a menu of provisions that could be used to pay for the new tax bill. We sincerely appreciate members who have already added projects to our #BuiltByBonds map, but if you have not done so, we encourage you to add your project and access our other municipal bond resources at www.builtbybonds.com. Additionally, feel free to review and utilize our resources on ways you can take action as the tax reform debate ramps up.