In the last days before the holiday recess, federal lawmakers passed both a comprehensive spending bill and a tax extenders package that provides states with fiscal certainty, at least in the short-term, for the upcoming year. However, there remains an assortment of looming deadlines and policy initiatives in the 114th Congress, from addressing the federal budget and debt limit to funding the nation’s infrastructure.
OUT WITH THE OLD, IN WITH THE NEW. State-federal grant programs will be funded through Sept. 30, 2015, the end of the 2015 fiscal year, after last month’s enactment of the Consolidated and Further Continuing Appropriations Act (H.R. 83). Billed as a “cromnibus” (part omnibus and part continuing resolution), the appropriations package includes 11 of the 12 appropriations bills, with Homeland Security only funded until Feb. 27 in response to the president’s executive order on immigration. The top-line spending total will essentially be the same as FY 2014, with $521 billion for defense and $492 billion for non-defense discretionary spending. This reflects both the spending cap determined in the Budget Control Act and sequestration modifications approved in 2013’s budget deal. The cromnibus also extends the Internet Tax Freedom Act, which prohibits taxation on Internet access and Temporary Assistance for Needy Families (TANF) until Oct. 1, 2015. For additional information, please view NCSL’s detailed analysis of the legislation.
As for the medley of federal tax provisions, known as “tax extenders,” Congress approved a one-year retroactive extension at a cost of $41 billion. The Tax Increase Prevention Act (H.R. 5771) received bipartisan support in both the House and Senate, passing easily by votes of 378-46 and 76-16, respectively. Although this most recent extension expired on Dec. 31, it provides certainty for individuals and businesses in their tax filings for 2014. The Internal Revenue Service previously warned that a continued delay could cause the agency to delay tax-filing season and force taxpayers to file amended returns. The package extends the state and local deduction on sales taxes, which if not reinstated would have harmed states without a state income tax.
As for other deadline-driven legislation, Congress was unable to reauthorize the Terrorism Risk Insurance Act (TRIA) before it expired on Dec. 31. However, federal lawmakers hope to revive TRIA in early 2015 and may modify legislation that passed the House last month that extended TRIA for six years. TRIA was originally enacted in 2002 to provide a backstop for losses insured against terrorist attacks. Meanwhile, Congress approved and the president signed into law the National Defense Authorization Act, which prohibits reductions for active Army National Guard (ARNG) and establishes the National Commission on the Future of the Army to examine structural requirements of the ARNG.
DÉJÀ VU THIS YEAR TOO? As in recent years, the passage of appropriations and tax extenders is just a temporary fiscal impasse for numerous “cliffs” in 2015. Key upcoming deadlines include: 1) Feb. 27 when the continuing resolution ends for Homeland Security appropriations; 2) March 15 for reinstatement of the statutory debt limit; 3) March 31 when the Medicare “doc fix,” Transitional Medical Assistance (TMA) and Qualified Individual (QI) programs expire; 4) May 31 when the Highway Trust Fund will become insolvent and surface transportation programs will need to be reauthorized; and 5) June 30 when the current authorization for the Export-Import Bank expires.
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