MENU

Pathways to FY25 Appropriations: Primer

Credit: Adobe Stock

The Continuing Resolution (CR) (P.L. 118-158) that allows the US government to expend funds, including paying its bills for ongoing contracts and depositing salaries for the military and federal employees, expires on March 14. That leaves the Trump Administration just seven weeks to work out a deal with Congress to fund the government for the remainder of FY25. The incoming White House and Republican Congressional leaders have, however, been more focused on planning a reconciliation bill (or two) to extend and expand tax cuts, provide defense and border funding, and change authorities and policies.

Meanwhile, the appropriations process is stuck. Negotiations cannot move forward until the total funding amounts for FY25 are set. This is the “topline” spending number, explained in a Congressional Research Service report. On January 14, the Chair of the House Appropriations Committee (HAC), Tom Cole (R-OK), reportedly “expressed frustration” that there is no decision on topline funding levels. A week later, Senate Appropriations Committee (SAC) Chair Susan Collins (R-ME) said that “the staffs have been meeting” and Republicans were poised to make a first offer to Democrats on topline numbers.

Congress has developed a formal process for granting the Appropriations Committees an overall “topline” spending limit, sometimes referred to as a 302(a) allocation…The Appropriations Committees subdivide the overall 302(a) amount among their subcommittees, effectively providing each subcommittee with its own ceiling, referred to as the 302(b) suballocations. The authority for making 302(b) suballocations belongs to the Appropriations Committee.

Congressional Research Service Report 48176, Revised January 16

To recap the state of play, the House marked up all 12 bills in committee and passed five on the floor, while the Senate reported 11 out of committee and considered none on the floor. The House marked to a topline of $1,621 billion, while the Senate allowed for additional spending, including emergency spending, totaling $1,709 billion (see FBIQ’s August 2024 Edition for details). The delta between the two bodies is about $88 billion; that will have to be resolved to set a conference topline. As Chart I on page 5 indicates, multiple scenarios could play out over the coming months.

Pathway 1: All appropriations bills for FY25 are enacted

What needs to happen.

  1. Agreement on topline numbers for defense and non-defense discretionary budget Last year, an agreement on topline numbers was announced January 7, and appropriations were enacted between 9-11 weeks later, on March 9 and March 23, 2024.
  2. Stemming from the topline numbers, House and Senate appropriators negotiate the allocation for each subcommittee (also call the 302(b) allocations). This process is challenging as the House and Senate, regardless of party, have different spending priorities within each Congressionally-directed funding, or earmarks, can total billions in the larger bills, and big-ticket items, such as courthouses or a Coast Guard icebreaker, need to be considered when conference allocations are made for each subcommittee.
  3. The Trump Administration will weigh in with its priorities for the FY25 The bills and reports from the 118th Congress were based on President Biden’s FY25 Budget.
  4. Each dollar amount and spending condition needs to be conferenced. This includes: program amount, purpose, and duration; supporting tables with line items; allowance of new starts; funding and policy directions and restrictions; and all earmarks (Congressionally directed spending/Community project funding).
  5. The Senate Majority Leader and the Speaker of the House need to have the votes to pass the agreement. The Senate will need 60 votes to proceed, which requires bipartisan cooperation. The House needs a simple majority. Because a small block of Republicans generally oppose federal funding bills, the Speaker may have to accommodate Democratic priorities to ensure House passage.
  6. The President needs to sign the bill. In December 2018, President Trump failed to support a final FY19 funding package of seven bills. That led to a two-month partial government shutdown.

Pathway 2: A Full Year Continuing Resolution (CR)

Why this might happen.

Lack of attention to federal appropriations, starting with failure to reach a topline number agreement; a focus on the reconciliation bills that will include popular Republican priorities, including tax cuts and more defense and border funding; narrow margins, meaning one or two votes could tank any bill; differing White House and House and Senate leadership priorities; and the incorrect assertion that CRs “save” money.

Under CRs, no new starts (new programs, acquisitions, construction) are allowed. Downsides of a full year CR include an inability to respond to emergent needs; inefficiency of operations as spending is based on prior year priorities; a retread of earmarks and Congressional direction from the prior year; and, politically for the new administration, spending would be based on the existing FY24 Biden budget, not a Trump budget. To tweak all of these issues requires writing a bill with so many exceptions (or “anomalies”) that CR text runs into hundreds of pages. Management of programs “by exception” is confusing, priorities become unclear, and oversight is challenging.

Pathway 3: A Hybrid of Appropriations and a CR

This has happened before.

In this messy scenario, Congress and the White House could reach agreement on FY25 funding bills for several federal Departments, but others that are more difficult to negotiate may be relegated to full-year CR status.

This occurred in 2011, when all of government excluding the Department of Defense was funded through a full-year CR. Similarly, in 2013 agencies funded by five of the twelve spending bills were under a full year CR (with numerous exceptions), while the other portion of government operated normally. In FY07 all federal departments except Defense and Homeland Security were in a full-year CR. For FY15, all bills but the Department of Homeland Security were completed in December. Congress finalized funding for DHS several months later.

Outlook

The road to completing FY25 appropriations is bumpy, but there are seasoned leaders in charge of both the House and Senate Appropriations Committees who are committed to making it happen. The biggest hurdle is getting those topline numbers for defense and non-defense spending, including any offsets or emergency spending. If the topline is not reached soon, getting final agency/account numbers nailed down and enacted by March 14 becomes more difficult. HAC Chairman Cole (R-OK) and Ranking Member DeLauro (D-CT) and SAC Chair Collins (R-ME) and Vice Chair Murray (D-WA) have navigated many challenging appropriations paths over decades of work, and each have close ties to (or are part of) their respective Leadership teams. The need to deal with the debt limit could help the appropriations outlook. A debt limit suspension is necessary but would not pass solo. Since legislation to suspend the debt limit, or, as President Trump advocated in December, eliminate it, needs a partner, pairing it with a bipartisan FY25 appropriations omnibus bill would be a strategic maneuver and provide momentum to both efforts.