Urgent Federal Policy Matters

With the election cycle finally behind us, I thought it would be instructive to offer an overview of the many policy and political considerations NASAA is monitoring as we head into a new year. As always, please feel free to call me directly at 202-939-7906 to discuss any of these issues in more detail.

The Fiscal Cliff

As we have already discussed in this space, unless Congress acts, a series of major tax and spending policy changes is scheduled to occur on January 1 and 2, 2013. These changes include elimination of almost 50 different deductions in the tax code, including the deduction for charitable giving; increases in tax rates for all Americans; and across-the-board reductions in all federal spending. The combination of these changes, particularly the spending cuts that are mandated as a result of the Budget Control Act of 2011, are considered so severe that economists and politicians on both sides of the aisle agree that allowing them to be triggered would be catastrophic to America’s fragile economy and almost certainly would lead to another recession.

As Congress returned to work last week, there was a noticeable swell of support for a bipartisan compromise that avoids the across-the-board cuts known as sequestration. A bipartisan group of senators has already announced willingness to compromise on issues seen as the key to negotiating a deal. Many prominent Republicans, including Senator Lindsay Graham of South Carolina and House Majority Leader Eric Cantor of Virginia, have expressed a willingness to violate their pledge not to raise taxes; while Democrats, such as House Budget Committee Ranking Member Chris Van Hollen of Maryland, have said that entitlement reform has to be on the agenda.

Though there is no question that signs are pointing toward an agreement, negotiations of this nature almost always go until the last minute. It is very possible that we won’t know whether or how Congress plans to deal with sequestration until close to January 1.

It is not yet clear what role, if any, arts advocates should play in the negotiations. NASAA continues to monitor this situation closely and is prepared to engage should funding for the National Endowment for the Arts (NEA) be in jeopardy.

Leadership at the NEA

Last month, NEA Chair Rocco Landesman announced his intention to retire at the end of the calendar year. News of Landesman’s decision was not surprising, but nonetheless leaves the NEA without a figurehead as the government heads into one of the most difficult budget periods in recent memory. Although the administration has not yet selected a replacement, we expect them to do so shortly.

Congress Considers Reviving Budget for Remainder of FY2013

Despite the passage of a continuing resolution earlier this year that funds the government at current levels until April 1, 2013, shortly before the Thanksgiving recess, members of the House and Senate Appropriations committees announced their intention to try to pass a budget bill for the remainder of fiscal year 2013. Because time is limited, aides have told me that House Appropriations Chairman Harold Rogers (R-KY) will use the baseline funding levels set in the Senate bills (which are identical to the president’s request and higher than the figures proposed in the House), but individual program levels are yet to be determined. For example, the Interior bill, which includes the NEA, will use the president’s proposed number, but the level recommended for the NEA could be the president’s request ($154 million), the House request ($132 million) or the current funding level ($146 million).

Should House and Senate appropriators reach an agreement on a funding package for FY2013, they would then ask the leadership in each chamber for the opportunity to hold a vote. Since House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) negotiated the continuing resolution with the president, it is quite possible they will deny the appropriators’ request, choosing to wait until the next Congress is sworn in before working on a budget. Further complicating matters is the fact that this legislation would in no way alter the upcoming sequestration process. This makes the chances of Congress passing a budget before the end of the year even more unlikely.

At NASAA, we are preparing for the possibility that Congress does hold a vote on a budget for the remainder of FY2013, and we are asking key House and Senate members to include in the budget bill provisions favorable to state arts agencies that were included in the House bill. These provisions include language informing the NEA that Congress “values greatly the longstanding collaborative relationship between the NEA and the States. State Arts Agencies support the arts for communities at the grassroots level regardless of their geographic location, providing much of their funding to smaller organizations, community groups, and schools rather than well-established arts organizations. The Committee supports the continuation of this effective partnership and urges the NEA to work constructively with States in developing and implementing arts education programs and policies.”

Given the limited amount of time left before the end of the year, we should know very soon whether Congress plans to move forward with a budget bill. We will continue to monitor developments closely and keep you informed of any news.