Authored Articles & Publications Aug 30, 2017

August 2017 Federal Report: Infrastructure, Debt Ceiling and Budget

By John Freshman and Ana Schwab

With the August work period coming to an end for Congress, there are the looming questions of the federal budget, and the debt ceiling hanging over the halls of the Capitol.

To date, the House of Representatives successfully passed four of the 12 appropriations bills out of the chamber. Speaker Paul Ryan initially indicated that the remaining eight bills will be rolled into an omnibus bill to be voted on by the House in the first couple weeks of September when Congress returns to Washington, D.C. However, Ryan is now calling for a continuing resolution to allow the House time to reach a bipartisan deal on the appropriation bills and raising the spending caps for FY18.

President Trump stated that he would veto any appropriations that do not fund a border wall. Although the House has passed legislation that would provide funds to begin construction on the wall, there is little to no chance of the legislation passing the Senate, raising the question of how much Trump is willing to compromise on this specific point. If the President vetoes the appropriations, a government shutdown would take place until the White House and Congress can come up with a compromise to fund the government. The hope, and our expectation, is that a continuing resolution would allow the lawmakers the time they need to reach a deal without a government shutdown; however, it is not out of the question that the President will veto a continuing resolution if it does not fund the border wall.

Despite the discrepancies in the details of a border wall, there is mutual understanding that there needs to be continued and strong support for local infrastructure projects. While there is not going to be the grand infrastructure package included with this appropriations cycle, we expect that a continuing resolution and potential omnibus package will maintain, if not increase, funding for local infrastructure projects. This projection is made based on historical data of federal funding opportunities, in which the trend line continues to grow in favor of local infrastructure projects.

In addition to the federal budget deadline Sept.30, Congress also needs to address the debt ceiling. Secretary Steve Mnuchin and Office of Management and Budget Director Mick Mulvaney have disagreed publicly on the deadline for the debt ceiling. Since reaching the debt limit in March, the Treasury Department has used extraordinary measures to pay the government’s bills. Mnuchin estimated the deadline for Congress to raise the debt ceiling is this upcoming October. To avoid a default, Congress will have to vote to raise the debt ceiling.

Conservatives in the House and the Senate have historically objected to raising the debt ceiling without coupling the raise with a spending decrease. Senate Majority Leader Mitch McConnell has called for clean spending limit increase legislation without any cut in future spending, but this is likely to face backlash from the conservatives in the Senate and will require McConnell to work with Senate Minority Leader Chuck Schumer to reach a bipartisan solution.

With Congress’s return upon us – we expect that September will be a tumultuous — however productive — month. While a shutdown could occur, it is not a guarantee. Should one occur, it will not be long-term. Once a solution is reached on the debt limit and the federal appropriations, lawmakers will turn their attention to tax reform and an infrastructure package. Earlier this year, Congress failed to repeal and replace the Affordable Care Act. Since there seems to be no pathway to bring this back up, it should provide a clear path for lawmakers to successfully tackle both tax reform and an implementation of an infrastructure package.

The House of Representatives may be hesitant to take the lead on an Infrastructure package and may instead wait for President Trump to draft one for Congress to work with. Although this has been shared, the House is still proceeding with hearings on a potential infrastructure package in multiple committees. Simultaneously, the House Ways and Means Committee will continue to pursue an overhaul of the tax system. While both initiatives have received wide media attention, there has been little in the way of any actual proposals for either initiative.

Despite the public division between Trump, McConnell and Ryan, there is a strong desire among lawmakers and administrative policy staff to see action take place. For example, this was made clear when the House of Representatives passed Rep. David Valadao’s Gaining Reasonability on Water Act of 2017 and when the EPA awarded its Water Infrastructure Finance and Innovation Act Loans. Additionally, this fall it is expected that Brenda Burman will be confirmed by the Senate as head of the Bureau of Reclamation and David Ross will be confirmed by the Senate to be the Assistant Administrator for the Office of Water at the EPA.

Note: This article originally appeared on the now-defunct BBKnowledge blog, where Best Best & Krieger authors shared their knowledge on emerging issues in public agency law.

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