Fall congressional session: GFOA's federal priorities come into view.

• Author: McDonald, Dustin
• Position: Federal Focus

The fall legislative agenda will be shaped by the intense House, Senate, and White House negotiations over spending levels for fiscal 2014 appropriations, the need to increase the federal debt ceiling, and efforts to reduce the federal budget deficit.

Congress returned to Washington last month with a full budget and tax policy workload that will include discussions on the GFOA's priority federal issues in comprehensive tax reform and, possibly, the future of the Marketplace Fairness Act. Moving in tandem with this legislative agenda will be a robust regulatory program that includes ongoing consideration by the Securities and Exchange Commission of comments on its money market mutual fund reform proposal, as well as issuer reaction to the forthcoming release of the commission's revised interpretation of who qualifies as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

FEDERAL BUDGET AND TAX AGENDA

The fall legislative agenda will be shaped by the intense House, Senate, and White House negotiations over spending levels for fiscal 2014 appropriations, the need to increase the federal debt ceiling, and efforts to reduce the federal budget deficit. The $91 billion gap in discretionary spending levels between the House and the Senate fiscal 2014 budget plans remains the primary obstacle to appropriations progress. The Senate's discretionary spending proposal would provide $1.058 trillion for the new federal fiscal year, while the House is proposing $967 billion in spending for fiscal 2014. Both plans would violate the 2011 Budget Control Act's discretionary spending caps for 2014 and, absent a budget agreement, would trigger across-the-board cub (also known as sequestration) beginning in January 2014. For states and localities, another round of across-the-board spending cuts would continue to overwhelm programs in the areas of affordable housing, education, public safety, and environmental protection, already under pressure as a result of sequestration cuts made in fiscal 2013. Moreover, many states already have their fiscal 2014 budgets in place. As a result, any federal spending cuts will likely upend state spending plans in some way, creating uncertainty for local governments that rely on state assistance. Fiscal 2014 budget discussions are being linked to debate on raising the debt ceiling, which the U.S. Treasury Department has indicated must be done by mid-October 2013 to avoid any threat of default on the federal government's obligations.

As federal leaders work toward agreement on these issues, Congress will also unveil House and Senate proposals to reform the federal tax code, and those proposals will carry budget implications. For example, to achieve the House Ways and Means Committee's goal of reducing corporate and individual tax rates to a maximum of 25 percent, Committee Chairman Dave Camp's (R-Mich.) reform proposal must generate $5 trillion in budget savings over the next 10 years. As the House majority opposes any proposals to raise revenue, the cost of these rate reductions...