2011 Funding Decisions Delayed; IMLS Reauthorization Approved by Congress; IRA Charitable Rollover Extended

Congress Kicks FY2011 Funding Decisions into 2011

On December 21, President Obama signed yet another continuing resolution—the fourth so far in this new fiscal year—carrying appropriations for all federal programs through March 4, 2011, essentially at 2010 funding levels. An effort to move ahead with an omnibus appropriations measure for the entire year that included enhanced funding for several priorities dear to the outgoing Democratic majority in the House—including an increase in the budget for the National Endowment for the Arts—was scuttled in the Senate. The final spending levels for fiscal year 2011 will be set by the next Congress, a process likely to reveal fissures between the Democratic majority in the Senate and the new Republican majority in the House.

Because Republicans would like to take control over the spending issues when they assume the majority control in the House in January, these short-term funding measures have served as an expedient stopgap and an alternative to closing down the government—which no one seems to want to do after the backlash Republicans suffered when that was tried during the Clinton administration.

The appropriations process hardly moved forward at all on FY2011 funding for the National Endowment for the Arts. In the House, action never moved beyond the Interior Appropriations Subcommittee, which drafted a bill proposing a budget of $170 million for the arts endowment in 2011. The Senate subcommittee never drafted its own bill, but when the Senate revealed its omnibus appropriations measure, it too included funding for the NEA at $170 million. Unfortunately, that legislation failed to gain momentum. The House Republicans have expressed an intention to return all nondefense discretionary spending to the 2008 levels. For the NEA, that would mean a cut from the current level of $167 million back to $144.7 million.

Already, a number of budgetary rules changes have been announced by the House Republican leadership that will be formally adopted when the 112th Congress convenes in January. Included is a new budgetary mechanism to be known as the “cut-go” rule, mandating that any legislation creating a new spending program must also include the elimination of an existing program of equal or greater value. It serves as an opposite strategy to the “pay-as-you-go rule” now in effect, because it would not allow spending increases to be offset with new taxes or fees. What’s more, tax cuts would not have to be offset with spending reductions.

In addition, Rep. Harold Rogers (R-KY), who will chair the House Appropriations Committee, has made it known that the annual allocation of spending ceilings handed out to the House appropriations subcommittees, known as the 302(b) numbers, will be replaced by “reverse 302(b)” figures, which will tell each subcommittee how much it has to cut.

Congress Votes Final Approval of IMLS Reauthorization

Legislation reauthorizing the Institute of Museum and Library Services (IMLS) for the next five years passed the House and Senate shortly before the end of the 2010 legislative calendar. The bill, S. 3984, the Museum and Library Services Act of 2010, was approved by unanimous consent in the Senate on December 7 and passed the House of Representatives by a voice vote on December 14.

S. 3984 was introduced in the Senate by Sen. Jack Reed (D-RI), with the cosponsorship of Senators Mike Enzi (R-WY), Tom Harkin (D-IA), Richard Burr (R-NC), Jon Tester (D-MT), Thad Cochran (R-MS) and Susan Collins (R-ME).

The bill contains a new provision designed to support “efforts at the state level to leverage museum resources, including statewide assessments of museum services and needs and development of state plans to improve and maximize museum services throughout the state.” This new grants activity would become available only when IMLS appropriations increased by more than $10 million. At that time, not less than 30% but not more than 50% of that increase would be used for the grants to statewide museum assessments and planning. New funds would be disbursed on a competitive, discretionary basis by IMLS. The bill sets the 2011 authorization level for the Office of Museum Services grants at the current amount of $38.6 million. In succeeding years, the funding level is expressed as “such sums as may be necessary.” The current appropriation is $35 million.

Tax Bill Extends IRA Rollover Charity Incentive

The tax bill brokered and signed in December by President Obama extends for another year the benefit to charitable donors age 70-1/2 and older who tap their individual retirement accounts to make charitable donations. The law, which was in place for 2009 but had not been extended for 2010, allows a taxpayer to contribute to charities up to $100,000 a year from individual retirement accounts without paying federal taxes on the withdrawal. Such a break was in place for 2009, but Congress had not acted to extend it for 2010.

The so-called IRA Charitable Rollover giving incentive has been a top tax policy priority for the nonprofit community. The giving incentive just enacted is retroactively reinstated for gifts made during 2010, and extends through 2011. In addition, gifts made by January 31, 2011, may be recognized as 2010 gifts for tax purposes.