FY19 Appropriations Outlook: What Moves When and How
Congress returned from the July Fourth holiday this week for a sprint to the abbreviated August recess. As Fiscal Year 2018 (FY18) appropriations expire on September 30, Congress will need to pass some legislation to continue to fund the government before the midterm elections. In an election year, conventional wisdom is that we will most likely see a continuing resolution (CR) that punts an omnibus appropriations bill to the lame duck or later. However, we expect both the House and Senate to try to move as many appropriations measures as possible before then.
House
With just three weeks between when the House returned this week and when they depart again, we anticipate appropriations bills will claim most of the floor time in the lower chamber. House GOP leadership plans to advance more minibuses, in the same vein as the three-bill, Fiscal Year 2019 (FY19) Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs package (H.R. 5895) they and the Senate passed in June, which now awaits conference negotiations. Conferees were scheduled to meet yesterday to begin negotiations, but the meeting was delayed. Though scheduling conflicts were cited, disagreements over Veterans Affairs funding may need to be resolved at the leadership level before moving on. The question comes down to whether to break the budget caps, a likely non-starter for Republicans, or find payfors in other discretionary accounts, a potential problem for Democrats, depending on which account, to pay for additional veterans’ healthcare.
Key differences in the spending packages include a lack of poison pill riders in the Senate bills as well as significant funding level differences. Part of the House GOP leadership’s rush to get bills across the finish line before August is the fast clock between their September return and the end of the fiscal year. They will be in session only eleven days during that period.
As a reminder, House GOP leadership initially planned to move all twelve appropriations bills individually through the chamber before the July Fourth recess. With time running out, and after President Trump moved the option of an omnibus off the table and chastised Congress for what he views as excessive spending levels, congressional Republicans embraced the idea of moving several minibuses in an attempt to finish appropriations before the August recess, packaging bills “two by two.” Thus far, they have moved a three-bill minibus as well as the FY19 Defense Appropriations Bill (H.R. 6157) as a standalone measure. It is possible the House may ultimately decide to re-vote on the FY19 Defense Appropriations Bill, which has increasingly come to be viewed as must-pass legislation, so it can serve as the vehicle to carry other domestic spending measures.
We anticipate that the House will take up next week a second minibus, to include two bills, the FY19 Interior and Environment (H.R. 6147) and FY19 Financial Services and General Government (FSGG) Appropriations (H.R. 6258) bills. Amendments to both bills were due to the Rules Committee this past Wednesday. There was initially some thinking that the House would include its FY19 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill (H.R. 5961) as part of its next minibus, which is now only expected to include the FY19 Interior and FSGG appropriations bills. This could be a sign that House leadership thinks it could have a tough time passing this bill on the House floor.
Senate
On the other side of the Hill, Senate Majority Leader Mitch McConnell (R-KY) is considering the process for bringing up appropriations. Before the recess, the Senate Appropriations Committee officially sent all twelve of its spending bills to the floor in the quickest pace since 1988. Currently, Senate Appropriations Chair Richard Shelby (R-AL) is working successfully to keep poison pill riders and authorizing provisions out of any Senate appropriations legislation, consistent with an agreement he made with Ranking Member Patrick Leahy (D-VT). The two leaders contend that the agreement facilitated their return to regular order.
Some members of the Senate Appropriations Committee have indicated a desire to move the FY19 Transportation, Housing and Urban Development (THUD) appropriations bill (S. 3023, H.R. 6072) in the near future. This is in line with a general GOP desire to provide additional funding for infrastructure projects this year. Though any congressional effort at this point to bring up infrastructure legislation would pale in comparison to the Trump Administration blueprint, Senator McConnell has signaled an interest in moving infrastructure bills in July, an effort that could prove popular with voters before the November elections. Senator Shelby said earlier this week that the Senate would take up its next minibus, to include the FY19 Interior (S. 3073) and FY19 FSGG (S. 3107) bills, the week of July 23rd. There are also rumors that the package may also include some combination of the FY19 THUD and FY19 Ag (S. 2976) bills, with action possible as soon as next week.
In addition, Senator Shelby favors using the House-passed Defense spending bill to carry the Senate’s FY19 Defense (S. 3159) and FY19 Labor-Health and Human Services (HHS)-Education (S. 3158) bills. Unlike the House, which, in a surprise move passed the FY19 Defense appropriations solo, Senate GOP appropriators believe that coupling the two biggest spending measures together may prove to be the most successful approach for getting both through the chamber this summer. As a result, we continue to believe one of the next Senate minibuses, which may combine the FY19 Defense and Labor-HHS appropriations bills, could come to the floor later this month.
While the process continues to move along, we believe that between now and the end of September, appropriations negotiations are going to unravel. Despite whatever progress the House and Senate can make before then, Congress is likely to have to move to a CR that goes through Election Day, and even then, potentially a series of additional CRs that could take funding into next year. Despite a desire among some members to finalize all twelve bills before the end of the fiscal year, other issues necessarily on the agenda will require time, attention, and political capital, making a CR almost inevitable.
Other Items on the Agenda
Other issues on the agenda for the rest of the summer include:
Judicial confirmations and executive branch nominations, with President Trump’s newly announced Supreme Court nominee Brett Kavanaugh taking center stage, along with the need to attempt to confirm a new administrator for the Environmental Protection Agency (EPA)
Conferencing the National Defense Authorization Act (NDAA) for Fiscal Year 2019 (H.R. 5515)
Conferencing the Agriculture Improvement Act of 2018 (also known as the Farm Bill, H.R. 2, S. 3042) (September 30 deadline)
Reauthorizing the National Flood Insurance Program (NFIP) (the current deadline is July 31, although the Senate-passed Farm Bill, which awaits conference included a six-month extension for the NFIP)
Reauthorizing the Federal Aviation Administration (FAA) (September 30 deadline)
Updating the Water Resources Development Act (WRDA)
Other issues may garner some attention over the next few months, including opioids legislation, Dodd-Frank financial reform, Coast Guard reauthorization, net neutrality, immigration and border security, privacy and data security, postal reform, and pension reform, but these items are likely to wait until the fall or even into next Congress to see real legislative movement. Additionally, while the Administration continues to play point on a series of international issues, Congress will have a role in reacting to a wide range of foreign policies. Any addition of these or other issues onto the agenda may further complicate or delay FY19 appropriations, but we remain vigilant about issues of importance to you in each of them.