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February 9, 2018
In the early hours of Friday, February 9, Congress sent to the President the Bipartisan Budget Act of 2018 (H.R. 1892), which includes both a short-term spending package that funds the federal government through March 23 and sets top-level budgetary numbers for defense and non-defense spending for the next two years. This gives appropriators some breathing room as they work to finalize an omnibus appropriations bill for both FY 2018 and FY 2019 (currently, we’re into month five of FY2018).
Under H.R. 1892, defense gets an increase of $80 billion for FY 2018 to $700 billion and non-defense spending gets a $63 billion bump for FY 2018 to $591 billion. The White House is also expected to release the President’s FY 2019 budgetary request on Monday.
Budget hawks are concerned with how the package adds significantly to the national deficit as it requires no offsets – some estimates put the annual deficit at a baseline of $1.4 trillion starting in 2019, due to a combination of the new tax law and the two year spending package. However, the package still sets non-defense spending 11 percent below 2010 levels, when adjusted for inflation and population, according to the Center on Budget and Policy Priorities.
Bill Clears Way for 2018 Reauthorization of Farm Bill
Contained within the package are a number of one-time appropriations, including an $89 billion disaster relief package for Puerto Rico, Florida and Texas. For Farm Bill watchers, provisions long-sought by the cotton and dairy industries were included, which provide stronger protections for both commodities. Lawmakers agreed that the fix was needed, but it would have significantly eroded the budget available for the 2018 Farm Bill. By including it in the disaster relief package, it will instead be added to the 2018 Farm Bill baseline. This will free up needed dollars for the legislation, which is already facing an extremely tight budget. Without these additions to the baseline, there would have been little appetite to act on a Farm Bill in 2018.
Now that these changes have occurred, the likelihood that the Farm Bill will get air time on Capitol Hill increases. The 2014 Farm Bill will expire September 30. House Agriculture Chairman Mike Conaway (R-TX), commented on the impact of the disaster funding for farmers and ranchers, stating: “we have more work to do on their behalf in the farm bill, but today was an important step forward.”
Measure Gives One-Year Retroactive Tax Credit Extension to Orphaned Renewables, Biofuels
Orphaned technologies, which includes electricity generated from biomass, geothermal, municipal solid waste, qualified hydropower facilities, as well as marine and hydrokinetic facilities, were left out of the last production tax credit (PTC) extension in 2015 and continue to be at a disadvantage compared to other forms of energy generation. This is particularly troubling since those renewable resources all provide reliable, baseload power. In the budget bill, these orphaned technologies, along with biodiesel and cellulosic fuel credits were given a one-year, retroactive extension.
In the bill, energy tax credits extended include:
In response to H.R. 1892’s treatment of renewables, the American Council on Renewable Energy’s (ACORE) President and CEO Greg Wetstone released a statement that comments, “We still have a long way to go before our tax code reflects a level playing field for renewable energy … renewable credits are phasing-down and out even as a panoply of century-old fossil fuel incentives remain enshrined in permanent law.” According to the National Hydropower Association, the one-year retroactive expansion of the credits “will not provide any future certainty for project developers who are seeking to finance their projects right now.”
Rep. Vern Buchanan (R-FL), chairman of the House Ways and Means Tax Policy Subcommittee, has expressed his intention to hold hearings on the tax extenders this year.
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