Post-Election Congressional Agenda Remains Fluid
As some votes are still being tallied, GFOA's Federal Liaison Center is monitoring the federal election results given their implication for public finance priorities in Congress. With a likely divided congress – as Democrats will retain the Senate and Republicans are expected to take control of the House of Representatives - we expect legislative action slowing down in the 118th Congress which gavels in on January 3. Conversely, we anticipate legislative action ramping up over the final weeks of the year given a number of outstanding initiatives that must pass before the end of 2022.
One of the primary matters the FLC is monitoring is for any movement of the National Defense Authorization Act (the NDAA), and not necessarily due to any defense spending priorities. The NDAA, like other appropriations and spending legislation, is often referred to as must-pass legislation that can carry a variety of amendments. Unfortunately for the current pending NDAA, one of the amendments is the Financial Data Transparency Act (the FDTA). As currently drafted, Section 203 of the FDTA has the potential to be costly and burdensome to state and local governments. You may recall the previous GFOA Member Alert here: New Financial Reporting Requirements for Governments Proposed in U.S. Senate: A Costly and Burdensome Unfunded Mandate). With substantial support on both sides of the aisle to advance the NDAA, as well as for advancing the FDTA, it's likely this bill will ultimately pass. However, what is less clear is if the Senate’s version of the NDAA will pass with amendments to match the House which already included a similar bill as the FDTA. Outreach is more important now than ever to your Senators on the impact of enacting Section 203 of the FDTA.
Second, we are also keeping an eye on continuation of the Build America Bonds (BABs) subsidy payment. In June of this year, GFOA led a coalition letter on behalf of the Public Finance Network, asking the chairmen of each chamber’s budget committee to ensure continuation of BABs subsidy payments to issuers of these securities. As it stands BABs subsidy payments remain vulnerable unless Congress ensures their continuation via a procedural vote known as "waiving PAYGO." BABs subsidy payments are not the only matter wrapped up in the PAYGO issue since it affects other major industries receiving subsidies like healthcare and farming. GFOA will soon call on BABs issuers to urge Congress to waive PAYGO, thereby protecting future subsidy payments to issuers.
Finally, the current Continuing Resolution (CR) that is funding the federal government expires on December 16. Before it expires, in order to keep the federal government open Congress must either 1) pass an omnibus spending package to provide funding for the rest of the current federal fiscal year or 2) vote to extend the CR again and provide more time to hash out an omnibus spending deal. As part of previous spending package bills, the federal debt ceiling has been addressed through temporary suspensions of the limit. Currently, the debt ceiling is slightly below $31.4 trillion. That limit is expected to cover federal borrowing needs until the early part of 2023, with the precise date depending on actual federal spending and revenue levels over the coming year. Treasury will be able to use "extraordinary measures" to continue normal operations for some period after that. We concentrate on that expiration for a number of reasons but primarily for watching the Treasury's purchase of State and Local Government Securities (SLGS) for purposes of some current refundings.
The final weeks of 2022 will certainly be interesting to watch, given that the mid-term election results did not exactly pan out the way many thought it would. It remains unclear how much it will motivate both sides of the aisle to clear the deck of all matters before the session ends. If you or your organization is interested in outreach on any of these fronts, do not hesitate to give us a call. We are very happy to provide assistance!