Updates from Washington, D.C.
July 25, 2019
Trump Administration and Congressional Leaders Reach Agreement on New Two-Year Budgetary Framework
Ahead of a six-week congressional recess, House lawmakers are set to approve legislation (HR 3877) today that provides the framework for a new two-year budget agreement. Under the terms of the long sought-after compromise, which was negotiated between the Trump administration and congressional leaders from both parties, nondefense discretionary spending is authorized to increase by roughly 4.5 percent over current spending levels (rising from $605 billion in fiscal year 2019 to $632 billion in fiscal year 2020). For FY 2021, funding for nondefense programs will be set at $634.5 billion.
The deal also provides for a boost in spending for the Department of Defense (DoD), albeit at a smaller percentage increase. Under the agreement, funding for the military will total $738 billion in FY 2020 (or a roughly three percent hike). DoD programs are slated to receive $740.5 billion in FY 2021.
Without the aforementioned adjustments to federal spending caps, discretionary funding for domestic and defense programs would have been in line for automatic cuts, known as sequestration, totaling roughly 10 percent beginning this January. Incidentally, the budget pact represents the latest bipartisan compromise in a long line of agreements to overturn the indiscriminate spending reductions imposed under the 2011 Budget Control Act.
As part of the budget deal, negotiators also agreed to suspend the debt ceiling until July 31, 2021. With recent estimates showing that the Treasury Department will be unable to keep the nation’s finances afloat beginning as early as this September, the need to restore the federal government’s borrowing authority became all the more pressing in recent weeks.
It should be noted that while the budgetary framework will grease the wheels for the fiscal year 2020 appropriations process to advance in earnest, there is no guarantee that Congress will pass all 12 spending bills by the start of the new fiscal year. In the House, lawmakers have cleared 10 of the annual funding measures, though adjustments will likely need to be made to reflect the terms of the new budget deal.
Across Capitol Hill, Senate appropriators have not yet approved – let alone written – a single FY 2020 spending measure. However, with this week’s budget agreement now in hand, committee staff has begun the process of drafting the Senate’s funding bills. Looking ahead, the chamber is expected to take a series of votes on the spending legislation once lawmakers return to the nation’s capital after Labor Day.
Key Senate Panel Discusses Cannabis Banking Legislation
On July 23, the Senate Banking Committee held a hearing to discuss the challenges that state-legal cannabis businesses face when attempting to access traditional banking services. Despite its legal status in California, one of the most significant hurdles for the cannabis industry continues to be access to financial services. Due to the conflict between state and federal law, banks have generally been reluctant to open accounts for such businesses out of fear that it may be perceived as a form of money laundering. This forces state-sanctioned cannabis businesses to deal in large amounts of cash, which creates a public safety hazard in the communities where they operate. It also makes it more difficult for state and local governments to track revenues for taxation purposes.
Senators Cory Gardner (R-CO) and Jeff Merkley (D-OR) spoke on the first panel and urged the committee to consider bipartisan legislation – the SAFE Banking Act (S 1200) – that they introduced earlier this year. Specifically, S 1200 would help provide cannabis-related businesses with legal access to banking services. The bill also would exempt depository institutions and their employees from federal prosecution or investigation solely for providing banking services to a state authorized cannabis-related business. This so-called “safe harbor” is intended to provide certainty for financial institutions to offer their products and services to well-regulated cannabis-related businesses. The House Financial Services Committee approved a companion bill (HR 1595) earlier this year.
In addition to Senators Gardner and Merkley, the committee heard from representatives of the Credit Union National Association (CUNA), the American Bankers Association (ABA), the Cannabis Trade Federation, and Smart Approaches to Marijuana. With the exception of Mr. Garth Van Meter, who testified on behalf of Smart Approaches to Marijuana, all of the witnesses expressed support for the SAFE Banking Act. Mr. Van Meter instead voiced concerns about efforts to legalize cannabis, including its public health ramifications and potential for addiction.
For his part, Committee Chairman Mike Crapo (R-ID) acknowledged that a strong case was made for approving safe harbor legislation, although he also indicated that this is a complex issue that Congress needs to get right. It should be noted that Senator Crapo has previously refused to consider such legislation, so long as cannabis remains illegal at the federal level. Therefore, his willingness to continue the conversation is considered a major development.
More information about the hearing, including testimony, additional background information, as well as an archived webcast, can be found here.
USDA Proposes to Cut CalFresh Eligibility
The U.S. Department of Agriculture (USDA) on July 24 published a proposed rule – Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program (SNAP) – that would tighten automatic eligibility requirements for SNAP/CalFresh. Under current law, states can automatically make people eligible for SNAP, if they qualify for similar federal benefits, such as the Temporary Assistance for Needy Families (TANF) program.
According to USDA, some states have expanded this categorical eligibility so that even those households receiving nominal, one-time benefits or services, would qualify for SNAP. USDA Secretary Sonny Perdue contends that this has resulted in individuals receiving benefits who would not typically qualify under regular program rules. Therefore, the administration’s proposal seeks to limit categorical eligibility to those who receive “ongoing and substantial benefits” from TANF. Specifically, a household would have to receive a TANF benefit of at least $50 per month for a minimum of six months to qualify for automatic SNAP eligibility.
USDA estimates that eliminating the state option would reduce Federal spending by nearly $9.4 billion over the next five years, although it would also substantially increase administrative costs. It should be noted that the proposal indicates that the rule may negatively impact food security, pushing 3.1 million individuals off the SNAP program, including approximately 13.2 percent of all SNAP households with elderly individuals. If the rule is finalized, it’s projected to impact over 120,000 Californians.
Interested parties are encouraged to submit written comments to the agency within 60 days. For its part, CSAC is in the process of reviewing the proposal and expects to respond before the September 23 deadline. The proposed rule, which includes information on how to submit comments, can be found here.
Supervisor Lovingood Testifies Before Natural Resources Subcommittee
The House Natural Resources Committee’s Subcommittee on Energy and Mineral Resources held a hearing this week on bipartisan legislation – the Public Land Renewable Energy Development Act (HR 3794) – that would streamline the permitting process for renewable energy projects on federal lands. Specifically, the measure would limit National Environmental Policy Act (NEPA) reviews for such projects through the use of programmatic environmental impact statements. The bill also would establish a revenue-sharing structure to ensure that local governments receive fair value for the energy produced.
Pursuant to HR 3794, funds generated by energy development would be distributed to states, counties, and various conservation efforts. Specifically, 25 percent of revenues would go to the state where development takes place, 25 percent would go to the county of origin, and 15 percent would be directed to the U.S. Treasury. The remaining 35 percent would be deposited into a fund that would be used for conservation purposes and to enhance recreational opportunities in nearby communities. The measure also ensures that counties would not experience a corresponding reduction in their federal Payments-in-Lieu-of-Taxes (PILT) as a result of the additional revenue generated.
At the hearing, lawmakers heard from four witnesses, including San Bernardino County Supervisor Robert Lovingood, who testified on behalf of NACo. He was joined on the panel by representatives from the Solar Energy Industries Association, Trout Unlimited, and the Nevada Governor’s Office of Energy. Notably, each witness spoke in strong support of the measure and encouraged its swift consideration and passage. The bill, which the Natural Resources Committee approved in the previous Congress, is likely to be marked up later this year.
An archived webcast of the hearing is available here.