Continuing Resolution – Kicking the Can Down a Bumpy Road

On December 21, 2024, President Biden signed H.R. 10545, the second continuing resolution (CR) for FY25, extending funding for the Federal government through March 14, 2025. Federal agencies will continue to operate at FY24 levels, without new starts, for nearly half of the fiscal year (October 1, 2024-March 14, 2025), delaying innovation and procurement decisions.

The continuing resolution includes:

• $100.5 billion of disaster assistance, $14 billion below the President’s request, responding to Hurricane Helene (a category 4), Hurricane Milton (a category 5), Typhoon Mawar in Guam, forest fires, the Baltimore bridge collapse, the Lahaina, Maui fire, and numerous other disasters. Significant funding is included for damage to Federal facilities;
• $10 billion of economic assistance for farmers and producers and a one-year extension of the Farm bill through September 30, 2025;
• $5.7 billion for Department of Defense (DOD) for the Virginia class submarine, additional spending authority for the Columbia class submarine, $913 million for DOD to conduct risk reduction and modification for certain National Security Systems; and
• Extensions through March 31, 2025, for certain Medicare, health care, public health, telehealth, fentanyl order, and child welfare authorities.

Congress rejected several of President Biden’s requests, punting their resolution to President Trump and the 119th Congress, including:

• $24 billion for assistance to Ukraine (including $16 billion for US industry to replenish weapons stocks);
• $6.6 billion of mandatory spending for VA Medical Care to cover the shortfall resulting from enactment of the PACT Act (providing care to veterans exposed to toxic materials);
• $1.6 billion refugee assistance, primarily related to refugees from Cuba and Ukraine.

The $100.5 billion disaster assistance package includes:

• $29 billion for the FEMA Disaster Relief Fund (water, food, fuel, debris removal, temporary housing, individual assistance, and long-term recovery efforts), $11 billion less than the FEMA estimates that the $29 billion is sufficient through at least March of 2025;
• $21 billion for USDA for crop and livestock losses resulting from 2023 and 2024 disasters;
• $2.5 billion for USDA, primarily for Emergency Watershed and Conservation (primarily debris removal);
• $12 billion for the HUD Community Development Block Grant Disaster program, for housing and other Twenty States and territories have eligible disasters, such as the recent hurricanes, the Maui fires, and tornados in Oklahoma, Mississippi, Kentucky, Iowa;
• $2.25 billion for SBA Disaster loans (including loans to individuals to rebuild homes). The fund was exhausted on October 15, and over 100,000 applications are pending the availability of funds;
• $8.1 billion for DOT for emergency highways and transit (over 40 States and territories have eligible disasters, including funding for the Baltimore Key Bridge replacement (with 100% Federal reimbursement);
• $3.27 billion for EPA for repairing clean water and sewage systems;
• $2.2 billion for Commerce, including $1.5 billion for economic development programs, $399 million for a hurricane tracker plane, $300 million for fisheries assistance;
• $1.5 billion for the Corps of Engineers for disaster response, including the recovery efforts following the collapse of the Baltimore Key Bridge;
• $1.5 billion for the Hermit’s Peak and Calf Canyon Fire Fund;
• $500 million for the Child Care Development Block Grant;
• $16.6 billion for repairs to Federal facilities damaged by natural disasters, including:
  • $5.2 billion for DOD, primarily for damage from Typhoon Mawar (Guam), Hurricanes Helene, Milton, Ian, and other disasters in Florida, Tennessee, North Carolina, Fort Sill, Fort Carson, West Point, and other locations;
  • $6.35 billion for the Forest Service to repair roads, buildings, and towers damaged by Hurricanes Helene, Milton, and other disasters;
  • $2.9 billion for the National Park Service, Fish and Wildlife Service, USGS, Bureau of Land Management, to repair roads, bridges, and facilities as a result of hurricanes, floods, snowstorms, fires, and other disasters;
  • $327 million for the Coast Guard and the Federal Law Enforcement Training Center to repair facilities damaged by recent disasters and for costs related to the Baltimore bridge collapse;
  • $740 million for NASA to repair damaged facilities in Guam, Florida, Texas, Mississippi, and California;
  • $1.1 billion for damage to NOAA, Strategic Petroleum Reserve, USDA, Federal prisons and US Marshals Service, NNSA Savannah River, Bureau of Indian Affairs, Bureau of Indian Education (New Mexico), VA, Bureau of Reclamation, the Judiciary, and the International Boundary Commission.

KICKING THE CAN DOWN A BUMPY ROAD

The Senate passed the CR 85-11 on Dec. 21 and the House cleared it Dec. 20 by a 366-34 margin but that isn’t a reflection of agreement on full year funding. The FY25 appropriations process has still not been completed with any full-year spending bills because of a dispute over the topline on discretionary spending. The Fiscal Responsibility Act of 2023 set a statutory cap on FY25 spending of $1.675 billion (including $69 billion of so-called side-bar adjustments). The Senate bills exceeded that ceiling by $34 billion. The House bills were $54 billion below the ceiling, leaving an $88 billion difference.

In order to complete the FY25 appropriations process by March 14, that $88 billion disconnect will need to be resolved by the end of January by President Trump and the 119th Congress. That would give the House and Senate Appropriations committees enough time to write the 12 bills by the deadline.

House and Senate Republicans and the President are expected to try to increase defense and border security funding, potentially through the reconciliation process in January and February. That may complicate efforts to complete the appropriations process by March 14 and risks a potential $38 billion Fiscal Responsibility Act sequester on defense spending, if any of the FY25 appropriations bills are not completed by April 30, 2025.