The bill also contains a provision blocking the pay of House and Senate members if their respective chambers do not produce a budget resolution, as required by law.  House leaders included this provision because the Senate has failed to adopt a budget resolution for three years.  Budget resolutions, while not carrying the force of law, help both chambers set spending priorities and enable a more predictable and efficient appropriations process.  When the annual spending bills are not completed and the government relies on continuing resolutions, long-term planning for any agency or organization that receives federal funding is extremely difficult.  The Senate has indicated it will pass H.R. 325 and President Obama has indicated that he will sign the legislation. Click here to view the full text of H.R. 325.

While the White House is working on the FY2014 budget, lawmakers continue to discuss the imminent approach of the statutory debt ceiling.  Under current law, the U.S. Government is only authorized to borrow $16.4 trillion. Without increasing this cap, the Treasury Department would not be allowed to borrow money to pay current government debts, leading to a possible government shutdown or a default on the national debt.  Some Republicans in Congress are insisting on spending cuts or entitlement reforms to match an increase in the debt ceiling.  At a press conference on January 14, President Obama insisted that he would not negotiate with Republicans over including any additional items in the debt ceiling, instead demanding an outright increase.  The U.S. Treasury Department has indicated that the debt ceiling will be reached between late February and early March.

The Senate approved the American Taxpayer Relief Act early Monday morning by a vote of 89 to 8. The package was sent to the House of Representatives, which passed last night by a vote of 257 to 167. The bill now heads to President Obama, who is expected to sign the bill into law today.

Major Provisions:

• Permanent extension of the 2001 and 2003 Bush tax cuts for personal income tax rates below $400,000 per year and couples with incomes below $450,000
• Delays 8.2% sequester cuts to federal agencies for two months
• Extends 2008 Farm Bill provisions for one year
• Extends federal unemployment benefits

Click here to view a detailed summary of the American Taxpayer Relief Act.

What does this mean for RDOs and local governments?

With the passage of the fiscal cliff deal, federal spending on programs relevant to NADO remains the same for at least another two months. The U.S. Government is still operating under a Continuing Resolution or “CR” at FY2012 federal spending levels until March 27, 2013. In two months, the sequester cuts will take effect as scheduled unless Congress can pass an alternative debt savings measure. Congress still has to address the debt ceiling and continue work on the FY2014 federal budget. It is possible that Congress will pass another six-month CR to extend current federal spending levels for the remainder of FY2013. Click here to view NADO’s CR Federal Budget Chart.

Appropriators have made significant progress in working out differences between the House and Senate spending bills and they had hoped several bills could be rolled into a FY2013 spending omnibus. However, passage is unlikely because Congressional leaders are focused on a deal to avoid the fiscal cliff and emergency spending relief for states and communities affected by Hurricane Sandy. The new Congress is likely to focus attention on the FY2014 budget process come January.

In case you or your staff missed NADO’s December 11 webinar addressing the fiscal cliff and the potential impact on regional development organizations and local governments, a recording of the webinar and presentation slides are now available. View the slides here (PDF), or watch the recording above.

Shai Akabas, senior policy analyst from the Bipartisan Policy Center, a Washington, DC-based think tank that promotes bipartisanship and works to address key challenges facing the nation, provided an in-depth look at the fiscal cliff and the impact that it could have on the economy as a whole, as well as federal government spending and programs.

Additionally, a separate spending bill is underway to provide emergency aid for communities and individuals affected by Hurricane Sandy. Lawmakers from states damaged by the hurricane are working to build support for an emergency supplemental spending bill to pay for disaster relief and recovery. Supporters of an emergency supplemental are linking funding requests to formal cost estimates by the U.S. Army Corps of Engineers and other federal and state agencies. There has not been a decision on how the measure would move through Congress, but it has been proposed that the emergency spending measure could be passed as a stand-alone bill, attached to a possible omnibus spending bill, or be included in a deal to avoid the fiscal cliff.