It will be a busy year for congressional budget and appropriations work. Currently, the FY16 appropriations remain in effect under a continuing resolution (CR). Additionally, the FY18 budget and appropriations cycles are looming and will likely include a budget reconciliation measure aimed at tax reform. Furthermore, two FY17 supplemental appropriations packages related to defense and homeland security are likely.
FY17 Appropriations: In the lead up to the 2016 election, Congress passed a CR extending existing FY16 spending levels until after the election. The CR was passed as part of a larger legislative compromise that saw passage of the FY17 Military Construction-Veterans Affairs Appropriations Act, the only one of 12 appropriations bills that has passed so far. Congress had initially expected to return in December and move forward with an omnibus spending bill, but this plan was scrapped when the Trump transition team asked congressional Republicans to pass another CR extending spending authority until April 28, 2017, to give the new Administration a greater say in the FY17 appropriations process.
The task of shepherding appropriations legislation in the House now falls to newly appointed Appropriations Committee Chair Rodney Frelinghuysen (R-NJ), who is trying to thread the needle between conservative budget hawks who want to see the previously agreed sequestration budget caps imposed, moderate Republicans who want to raise the budget caps enshrined in the Fall 2015 budget deal (particularly for defense spending) and Democrats who seek to increase domestic discretionary spending in line with any increase for defense spending. Chairman Frelinghuysen has said he hopes to move forward first with the FY17 Defense and Homeland Security appropriations bills and then turn the Committee's attention to domestic spending. Congress may be able to complete work on the FY17 budget sometime this spring, but given complications caused by the timing of the FY16 CR and start of the FY18 process, it is possible that Republicans may elect to simply pass another CR through the end of the fiscal year.
FY18 Budget and Appropriations: The FY18 budget and appropriations process has not yet received any significant attention given the presidential transition and the focus on the ongoing FY17 process. However, Senate Majority Leader Mitch McConnell (R-KY) said he expects to take up a FY18 budget resolution this year that would allow the Senate to consider some sort of tax reform under reconciliation procedures that do not require Democratic support for passage in the Senate.
The Trump Administration is reportedly planning to propose an FY18 budget that includes major reductions in federal discretionary spending. Media outlets are reporting the proposal is expected to significantly cut funding for the Departments of Commerce, Energy, Transportation, Justice and State. It may also seek to privatize the Corporation for Public Broadcasting and eliminate the National Endowment for the Arts and the National Endowment for the Humanities. Overall, it is believed the proposal, which would reduce spending by $10.5 trillion over ten years, is very similar to the past proposals adopted by the conservative Republican Study Committee (RSC), a caucus that represents the majority of House Republicans. Director Mulvaney has not yet commented on the proposals, but he voted for the RSC budget offered as a more conservative alternative to the House Republican budget in 2015.
FY17 Supplemental Appropriations: Republican congressional leaders indicate that, in addition to an expected FY17 defense supplemental appropriations bill, they may consider a supplemental appropriation to pay for President Trump's proposed border security wall. The cost is expected to be roughly $21 billion, but it remains unknown whether that spending would be offset by cuts elsewhere or whether President Trump will pursue his campaign promise to seek other ways to pay for the project. For the defense supplemental, Defense Secretary Mattis plans to submit his recommendations to the White House by March 1, 2017.
Takeaway: 2017 will be a very busy year for congressional budget and appropriations watchers as House and Senate Republicans look to use the budget process to repeal and replace of the ACA, enact tax reform, and address FY17 and FY18 appropriations.
