Congress Adjourns without Passing Budget for NEA or Other Agencies; CR Likely

August 5 marked the beginning of a five-week break for members of Congress. The annual recess comes at a particularly challenging time, as Congress adjourned last week without reaching an agreement on several significant spending bills that will require action this fall. Among the bills Congress has failed to pass to date is a federal budget for fiscal year 2014. As a result, when it returns in September, Congress will likely have to pass another short-term spending bill, known as a continuing resolution (CR), to keep the government operating beyond September 30. Below is an update on the status of the FY2014 appropriations bills as well as what we might expect when Congress returns to work on September 9.

FY2014 Appropriations Delayed

As we reported last week, efforts to pass legislation funding the National Endowment for the Arts (NEA) for FY2014 failed when Republican leadership, sensing that they did not have the support of their caucus, pulled the bill from consideration. The House’s FY2014 Interior Appropriations bill, which has jurisdiction over the NEA’s budget, proposed reducing the agency’s funding level by 49% (from $146 million to $75 million). That bill was very controversial, not only for the severe cuts in funding for the arts endowment, but also due to the reductions it imposed on the Environmental Protection Agency and the Department of the Interior. The bill was introduced in early July and appeared to be heading for passage in the House after the House Appropriations Interior Subcommittee approved the measure on July 24, but a week later, Republican leadership announced that they would not bring the bill up for consideration in the House. Not only was there uniform opposition to the measure by Democrats, but a sizable contingent of Republicans in the House opposed the measure as well, some voicing the sentiment that the cuts imposed were too severe, while others expressed disappointment that the bill did not reduce spending enough.

In the aftermath of the House’s decision to delay a vote on the appropriations bill until September, it is looking more likely that the president and Congress will have to agree to a continuing resolution to keep the government funded beyond September 30. While the House has been stalled in its efforts, the Senate has yet to begin its process for considering an FY2014 budget for the NEA. The day before adjourning for the August recess, Senate Appropriations Subcommittee Chairman Jack Reed (D-RI) released a draft bill which called for the NEA’s budget to be increased to $154.5 million for FY2014. While we are pleased that the Senate is recommending an increase in funding, the chances of this legislation advancing are extremely low given the short amount of time remaining before the end of the fiscal year, not to mention the substantial gulf that exists between the two chambers.

Although the inability of the House and Senate to pass a budget is disappointing, I am pleased to report that the House Appropriations Committee chose to reiterate its message to the NEA that the agency must work with state arts agencies as it develops its arts education agenda. We hope that this consistent emphasis from Congress will lead to a more productive dialogue with the NEA in the coming year.

Fiscal Cliff Looms

In addition to addressing the FY2014 budget, there is another obstacle awaiting Congress and the president in September. Sometime this fall, the Treasury Department is expected to announce that it has reached its borrowing limit. When that time comes, the administration will no longer be able to borrow money to finance government spending without Congress approving an increase in the federal debt limit. You may recall that a similar standoff occurred in 2011, when the House of Representatives refused to approve the Obama administration’s request for an increase. What emerged from that debate was the Budget Control Act of 2011, which permitted the Obama administration to increase its debt limit in return for a series of across-the-board cuts known as sequestration. As another stand-off looms, both sides appear to be standing firm: the Obama administration has said it will not agree to further reduce spending, while Speaker of the House of Representatives John Boehner (R-OH) has said that his chamber will not approve an increase without such reductions.

We will continue to monitor this situation as well as negotiations over the FY2014 budget during the August recess and will let you know if any developments occur. In the meantime, have a great summer!