Removing Barriers Blog

Credit Unions See Victories in Congressional Budget Resolution
Posted October 26, 2017 by CUNA Advocacy

Credit unions won several big victories this week in the obscure details of the Congressional Budget Resolution, as well as the emergency disaster supplemental funding legislation.  The Senate-passed budget resolution was passed by the full House of Representatives without amendment, in order to avoid Senate reconsideration of the budget outline which would have delayed the appropriations and tax reform efforts already underway on both sides of the Capitol.

The original House-passed budget resolution for fiscal year (FY) 2018 included some provisions that were of concern to credit unions.  Removed from the final text is a provision that would have required standing House and Senate committees to come up with $203 billion in savings over the budget resolution’s ten year window.  The Senate Banking and the House Financial Services Committees would have had to come up with $14 billion in cuts to programs under their jurisdiction.  The Senate Finance and House Ways and Means Committees would have had to come up with $52 billion in cuts to programs and tax provisions under their jurisdiction.  Both of these sets of instructions would most likely have resulted in cuts or eliminations of the Community Development Revolving Loan Fund and the Community Development Financial Institutions Fund.  In addition, these instructions could have forced the Congressional tax writers to eliminate the credit union tax status in their requirement to reach $52 billion in cuts.  Now that this scenario has been eliminated, we can refocus solely on possible threats and opportunities in the appropriations committees and in the tax writing committees to protect the credit union tax status as well as fully fund the programs that benefit low-income credit unions.


The original House budget also included this provision:


(a) FINDINGS.—The House finds the following:

(1) Many Federal agencies and organizations have permanent authority to collect and spend fees and other offsetting collections.

(2) The Office of Management and Budget estimates the total amount of offsetting fees and collections to be $513 billion in fiscal year 2017.

(3) Agency budget justifications are, in some cases, not fully transparent about the amount of program activity funded through offsetting collections or fees. This lack of transparency prevents effective and accountable Government.

(b) POLICY ON EXPENDITURES FROM AGENCY FEES AND SPENDING.—It is the policy of this concurrent resolution that the House should reassert its constitutional prerogative to control Federal spending and exercise rigorous oversight over Federal agencies. Congress should subject all fees paid by the public to Federal agencies to annual appropriations or authorizing legislation and a share of these proceeds should be reserved for taxpayers in the form of deficit reduction.

This provision, removed from the final budget framework, would have meant putting the NCUA, and other independent federal agencies, under the Congressional appropriations process and also having a portion of credit union assessments diverted to budget deficit reduction.  This is a battle we have already fought and won this year on the floor of the House of Representatives when that body considered the FY2018 Financial Services and General Government Appropriations Act.

On the plus side, the final budget includes a prohibition on use of Fannie Mae and Freddie Mac guarantee fees from being used as an offset to pay for other government spending.  In addition, the budget resolution provides for $1.5 trillion of tax relief/reform over the next ten years.

Tax Reform

Now that the budget has passed the House, the House Ways and Means Committee will release the text of the long-awaited tax reform legislation on Wednesday, November 1st.  Also on Wednesday, all House Republicans will be asked to attend a tax reform education session.  The multi-day markup of the tax bill will start on November 6th in the Ways and Means Committee.  The following week, the week of November 13th, the full House of Representatives will vote on the tax bill.

The Senate Finance Committee is expected to act a bit slower in its consideration of its own version of tax reform.  The Committee is expected to markup its tax reform bill the week of November 13th with Senate floor consideration the week of November 20th.  Once passed out of the Senate, both House and Senate negotiators will attempt to reconcile their differing tax bills.  During the week of December 18th, we expect House and Senate passage of the tax reform conference report.  They plan to have the legislation signed into law by the president before Christmas.

It is also important to remember that government funding expires on December 8th.  This deadline will necessitate separate legislative action to avoid a government shutdown.  This may interfere with tax reform plans.

Emergency Disaster Relief

As previously mentioned, the Senate yesterday cleared H.R.2266, Additional Supplemental Appropriations for Disaster Relief Requirements Act of 2017.  President Trump is expected to sign the bill into law shortly.  The bill includes $18.7 billion for FEMA, $16 billion for National Flood Insurance Program (NFIP) debt relief (which CUNA supports), and $576.5 million for wildfire assistance.  The NFIP now needs additional funds to make necessary insurance claims payments to individuals.

The National Flood Insurance Program (NFIP), administered by the Federal Emergency Management Agency (FEMA), was established in 1968.  Prior to its existence, many homeowners, renters, and businesses were unable to insure against flood losses because private insurers did not offer such coverage or because it was unaffordable.  Adequate funding for the program is important to ensure that people living in flood plains are able to obtain mandatory coverage for their homes.  Also, flood insurance is often required by law in certain areas and thus becomes a necessary purchase by prospective homeowners before credit unions can offer mortgages and other related products to homebuyers in flood prone areas.

This emergency legislation is a big victory for credit unions because it maintains the viability of the NFIP, and by extension, allows credit unions to continue to make mortgages to its members who live in areas where flood insurance is required.