Appropriations Outlook

July 10, 2023

By Bill Viney, BGR Appropriations Practice Head

Congress has been on a two-week recess for Independence Day but is returning to Washington on Monday for three busy weeks before the August break. We anticipate much of the next few weeks and months will be spent on appropriations bill negotiations, which are already getting complicated.

In recent days, House Appropriations Chairwoman Kay Granger (R-TX) and other GOP leaders have discussed bringing a stopgap spending bill to the floor in July as a backup option in the event fiscal year 2024 appropriations bills don’t move forward. The bill would avoid a September 30th government shutdown, assuming the Senate also passes it and President Biden signs it into law.

Still, GOP leaders are hoping to muster enough support to pass the regular appropriations bills this year, with the understanding the 12 individual bills will likely go through many changes in order to get the support needed from nearly every Republican. The biggest roadblock is likely the party’s most conservative members of the House Freedom Caucus, who want major spending cuts.

GOP leadership has already made spending cuts to please the hard-right members. The House Appropriations Committee in mid-June voted (along party lines) to mark up spending bills at FY 2022 levels – lower than the toplines included in the debt limit deal, except for defense spending. The 302 (b) allocations are $119 billion less than the numbers in the debt limit bill and $131 billion less than the current FY 2023 funding. But some of the conservative Freedom Caucus members still expressed concerns about high spending in a late June meeting with House Speaker Kevin McCarthy (R-CA). Rep. Ralph Norman (R-SC), a Freedom Caucus member who attended the meeting, said, “I am very frustrated. I don’t know how we get off this train of continuous spending. To go to ’22 levels and use rescissions to just plus it back up is wrong.” Speaker McCarthy has since said he is happy to hear ideas to further decrease spending in FY 2024 bills.

The House Appropriations Committee held several markups in June and will resume them once the House is back in session. We anticipate that up to four appropriations bills could make it to the House floor before the August recess: Defense, Agriculture-FDA, Energy & Water, and Military-Construction-VA. As far as this week’s schedule, the House is expected to take up the NDAA bill on the floor and push any appropriations work to next week at the earliest. We expect the DOD and Agriculture-FDA bills to be their first focus. We would not be surprised if the House decides to use a structured rule to move along the appropriations process.

With the House GOP focused on cutting spending and the Senate yet to move on any bills, a path forward on appropriations seems murky at best. If Congress can’t pass appropriations bills or a stopgap bill, the last hope of preventing a shutdown is a full-year continuing resolution, which would keep funding the government at the existing fiscal year 2023 levels.

Senate Appropriations Committee markups for FY 2024 spending began in late June, when appropriators passed the FY 2024 Military Construction-VA bill and the Agriculture-FDA bill. Senate activity will resume on July 13th with plans to markup Commerce, Justice, & Science, Financial Services, and Legislative Branch bills. Before the July 4th recess, the full committee also voted to move forward with the 302 (b) allocations at the levels outlined in the debt limit law. The FY 2024 spending caps included in the debt limit bill would raise defense spending to $886 billion and lower nondefense spending to $704 billion, not including emergency spending.