As 2013 draws to a close, we are pleased to send you this end-of-year update to provide a quick snapshot of where federal policy stands in light of various December congressional agreements—and what to anticipate up ahead as it impacts arts and culture.
Congress successfully forged a groundbreaking 2-year agreement on federal spending levels. Under the agreement, discretionary spending for FY2014 will increase to $1.012 trillion, above the otherwise sequester-imposed level of $967 billion.
Congress will now work to advance appropriations bills under the higher spending level by January 15—the date the federal government will otherwise shut down, unless there is another Continuing Resolution (CR) in place. The current Continuing Resolution funding the federal government expires on January 15.
Given that the budget agreement is an increase to the spending levels from the funding bills advanced this spring and summer in the U.S. House of Representatives, we can assume the bill that funds the NEA (Interior-EPA) would see addition funding; however, given the policy controversy surrounding the bill (read: EPA), most expectations are for this bill to see only CR funding. In that scenario, we would anticipate NEA funding to fall somewhere between FY2012 funding of $146.255 million and the FY2013 sequester level of approximately $138.4 million. In sum, it is still a very fluid situation. Decisions on how Congress will try to finalize FY2014 funding are likely unknown until after the new year. But note, even in a case that final FY2014 funding to the NEA is carried at current levels, that level is still a higher level than the scenario under the sequester—recall that the House advanced 2014 sequester-compliant bills with a proposed a 49% cut to NEA! So, the current “worst” case is still better than a situation without the budget agreement.
Further, even better good news is that the agreement also “locks-in” spending for FY2015 at an increased level. As you know, Congress traditionally begins hearings in March and can now move forward with that work with a budget agreement already in place. With your help, we will be working to increase funding to the NEA to the President’s requested level (and Arts Advocacy Day 2013 requested level) of $155 million.
Both the NEA and NEH continue to operate without a confirmed chair to lead the agencies. Some of the new rules in how the Senate considers Administration nominees may help accelerate this sluggish process – and there is some renewed hope for some news in the new year – but we have not heard more yet here either. We continue to press for this leadership and look forward to welcoming new Chairs hopefully soon. See our CEO’s comments on this topic in a recent Washington Post article.
Tax reform status largely remains unchanged. There are no new legislative developments and all the promises for a draft House bill in the Fall didn’t transpire, although the Senate did publicly release three discussion drafts on less controversial provisions (international tax reform, tax administration, and tax accounting rules). A deadline for comment on those has been set for January 17th, so expect no new Senate news until at least after then.
In terms of prospects going forward for tax changes, there are three driving factors: First, given that no tax changes were included in the budget agreement (and thus no bargaining chips or “low fruit” taken), there is an expectation that tax reform advancement may be possible early next year. Rep. Paul Ryan, a leader on the budget compromise and member on the House Ways and Means Committee, has been giving credence to that possibility in his recent public remarks.
Second, another factor that may aid reform is that Congress didn’t renew more than 50 temporary tax provisions that expire on December 31, including the IRA charitable rollover. These could be extended retroactively next year, possibly in a reform package. Extending them all would cost more than $938 billion over a decade, according to the Congressional Budget Office, so there is still much negotiating to be done.
Third, Sen. Max Baucus, Chair of the Senate Finance Committee, is expected to be nominated by the White House to serve as the next U.S. ambassador to China. Sen. Baucus already announced his retirement beginning at the end of 2014, but there is speculation that this news may further truncate timelines to make an agreement less likely—or more likely, depending on your perspective!
Final funding levels for FY2014 (and beginning work on FY2015 appropriations!) and possible tax changes potentially impacting charitable giving are the two main congressional issues impacting arts and culture that will immediately meet us in the new year. The State of the Union is scheduled for Tuesday, January 28th with an Administration’s FY 2015 budget proposal expected as soon as the following week. Happily, Congress is expected to begin appropriations hearings in March and as you know, Arts Advocacy Day is timed to coincide during those appropriations activities.
We will provide you with an update after the new year on developments and latest movements in Washington. Until then, thank you for your tremendous work and advocacy, and