Removing Barriers Blog

President Trump Releases Proposed Fiscal Year 2021 Federal Budget
Posted February 10, 2020 by CUNA Advocacy

Today, the President delivered his Fiscal Year 2021 budget to Congress.  The Administration’s budget is an explanation of its spending priorities and does not have the force of law.   

The president’s budget always has a section, as required by law, in which Treasury rescores all tax expenditures, including the ten-year cumulative “cost” of the credit union “tax expenditure.”  Basic scoring off the tax expenditure is the credit union movement’s retained earnings multiplied by the corporate income tax rate.  In the 2017 tax reform law, the corporate rate was lowered from 35% to 21%.  That likely accounts for the drop in the estimated “cost” of the credit union tax expenditure … $1.7 billion in 2020.

The budget sent to Congress recommends only $14 million to administer the current obligations of the Community Development Financial Institutions (CDFI) Fund in FY 2021.  This was the same recommendation for fiscal years 2019 and 2020. 

CUNA has worked with Congress and our system partners to restore and even increase CDFI funding during this Administration.  This fund makes capital grants, equity investments and awards for technical assistance to community development financial institutions (CDFIs).  Examples of CDFIs include community development banks, community development credit unions, community development loan and venture capital funds, and microenterprise loan funds.  CDFIs are required to provide a 1:1 match for most of the awarded funds, which are offered on a competitive basis.  CDFIs finance community development initiatives such as small businesses, community facilities, and low-income housing. 

CUNA is requesting $300 million for the CDFI Fund in FY 2021, an increase of $38 million over the enacted level in FY 2020. 

The president’s budget submission also requests no new funding for the NCUA’s Community Development Revolving Loan Fund (CDRLF) for FY 2021.  The President has attempted to eliminate funding for this program in his budgets for fiscal years 2017, 2018, 2019, and 2020.  CUNA has worked with Congress and our system partners to restore CDRLF funding during this Administration.  The NCUA successfully administers the Community Development Revolving Loan Fund program (CDRLF), which is used to provide low-interest loans and technical assistance grants to low income designated credit unions.  It was created in 1979 and transferred to NCUA administration in 1986.  The Community Development Revolving Loan Fund (CDRLF) was established by a $6 million appropriation to assist credit unions serving low-income communities to: 1) provide financial services to their communities; 2) stimulate economic activities in their communities, resulting in increased income and employment; and 3) operate more efficiently.  CDRLF funds a revolving loan program and a technical assistance program.  Since FY 2001, Congress has recognized the importance of CDRLF, and has provided annual appropriations for the program.  The CDRLF usually receives requests that greatly exceed available funds and CUNA is concerned that an elimination of this fund will result in fewer low-income credit unions having access to needed capital to provide critical services to low income credit union members. 

The CDRLF was initially established by a $6 million Congressional appropriation to assist credit unions serving low-income communities.  The CDRLF operates a revolving loan program and a technical assistance program.  For the revolving loan program, CDRLF had outstanding loans of $6.2 million as of November 30, 2019.  For the technical assistance program, the CDRLF made 165 technical assistance grants in 2019 to low-income credit unions to improve digital services and security, increase outreach to underserved communities, and train employees.  These grants totaled $1.7 million in 2019. 

CUNA is requesting $2 million for the CDRLF in FY 2021, an increase of $500,000 over FY 2020.  Please note that the CDRLF received an annual appropriation of $2 million in fiscal years 2015 through 2019. 

The Small Business Administration’s (SBA) 7(a) loan program allows the agency to guarantee up to 85% of a loan.  For credit unions, this means the SBA-guaranteed portion of a member business loan does not count against the statutory cap of 12.25% of assets.  The SBA’s 504 loan program provides long-term, fixed-rate financing for major fixed assets, such as equipment and real estate.  For FY 2021, the Administration’s budget proposes an SBA Section 7(a) loan program maximum loan limit of $30 billion.  The budget also proposes an SBA Section 504 Loan Program maximum loan limit of $7.5 billion. 

The Cooperative Development Program (CDP) is essential to furthering the worldwide development programs at the World Council of Credit Unions (WOCCU).  In FY 2020, the program received $17 million in funding.  In keeping with previous budget requests from this Administration, a comprehensive and itemized list of foreign assistance accounts is not included in its FY 2021 request. 

The FY 2021 Budget request proposes a restructure the Consumer Financial Protection Bureau.  The budget would limit its mandatory funding in FY 2020, and provide discretionary appropriations beginning in FY 2022.  The proposal would also cap transfers by the Federal Reserve Board to the CFPB during FY 2021 to $485 million. 

The Administration’s budget request proposes an increase and extension of guarantee fees charged by Government Sponsored Enterprises.  It proposes increasing the guarantee fee charged by Fannie Mae and Freddie Mac from 0.10 to 0.20 percentage points in 2021, and extending the 0.20 percentage point fee through 2025.  CUNA opposes this provision.