In the wake of a record-length government shutdown, a divided Congress and President Donald Trump are attempting to resolve a budget impasse and disputes over border-wall funding before the next deadline: Feb. 15.
The political fallout is likely to impact the entire 2019 legislative agenda. On the regulatory front, the effect of shuttered agencies will be felt for months to come—from setting back the rulemaking process to hindrances in federal grant and research timetables.
Federal Budget Concerns
On Capitol Hill, Congress will need to address the debt limit and spending caps this year. According to estimates, the federal government is expected to breach (after the use of “extraordinary measures” by the Treasury Department) the debt ceiling late this summer. Without legislative action, the Treasury would likely be forced to miss or delay making debt payments, which many predict would roil the economy.
Looking forward to FY20 and FY21, enacted spending caps would force federal discretionary spending to be cut significantly—$125 billion lower than current levels. For colleges and universities, this would mean steep cuts to programs like Title IV federal student aid, and to research funding at agencies such as the National Institutes of Health, the National Science Foundation, and the Department of Energy. Congressional lawmakers will need to find a resolution, at the very least, on FY20 spending by Sept. 30, 2019, or face another shutdown.
Despite these challenges, lawmakers continue to talk about plans for a major infusion of infrastructure spending. Without agreement on the aforementioned concerns (not to mention lingering disaster relief needs), few Washington insiders expect a bipartisan deal on infrastructure investments anytime soon. While Trump pledged action in this area, and Democrats have proposed plans for more than $1 trillion, a credible way to pay for such legislation remains elusive.
The Joint Committee on Taxation recently identified more than 70 potential fixes that are needed to the Tax Cuts and Jobs Act (TCJA). Party politics, however, have stymied progress as Democrats are reticent to fix problems with a bill that was passed by Republicans on a party line. Further, 26 tax provisions expired at the end of 2017, and others will expire at the end of this year. Tax writers, on a bipartisan basis, seem more enthusiastic about finding a way forward to address extenders, but the path forward will remain unclear until the dust settles on the border wall impasse.
At the IRS and Treasury, the month-long government shutdown significantly slowed the rulemaking process and the public awaits notices, guidance, and regulations on a number of fronts. For NACUBO members: Some guidance has been published, but questions remain on several new TCJA provisions, from the new transportation fringe benefit tax to the new unrelated business income “basketing” rules.
Higher Education Act
Last month, Sen. Lamar Alexander (R-TN), chairman of the Senate education committee, and Rep. Bobby Scott (D-VA), chairman of the House education committee, spoke optimistically about completing a reauthorization of the Higher Education Act (HEA) this year. Alexander’s chief of staff told a group of journalists that it is the retiring senator’s top priority; today the Senator will share his objectives for the legislation in an event at the American Enterprise Institute.
Lawmakers on both committees, on a bipartisan basis, appear eager to get to work. However, some skeptics have pointed out that mistrust of the Trump administration may prevent any work done on Capitol Hill from ultimately being sent to the White House for enactment.
NACUBO continues to monitor HEA reauthorization developments and, in the last Congress, focused on proposals to disburse “aid like a paycheck,” a new schedule for return of Title IV funds, risk sharing, and the principles that a broader group of higher education associations submitted jointly to Alexander last year. More information can be found here.
NACUBO encourages you, as a business officer, to discuss the issues confronting your campus business office with lawmakers. The level of uncertainty in Washington this year makes this a critical exercise for your institution and for the higher education sector.