January 22, 2019

Buried towards the back of the 1,301 page omnibus appropriations bill for fiscal 2019 that was released last night by Senate Republicans were two provisions that have long been of concern to Senate Appropriations Chairman Richard Shelby (R-AL). The second item (title VIII of Division I) forces an independent Inspector General on the Consumer Finance Protection Board, since Shelby has long resented the freedom that the CFPB has from Appropriations oversight. But the first item, title VII of Division I, would remove annual appropriations from the Harbor Maintenance Trust Fund from federal budget constraints (also a longtime Shelby priority), and by so doing, would also effectively increase the annual non-defense appropriations caps by up to $2 billion per year (which is nice for the appropriators all around).

Title VII (which begins at the bottom of page 1,219 of the Senate omnibus bill) is just one section, and is short and to the point:

Sec. 701. In subsequent fiscal years, any discretionary appropriation derived from the Harbor Maintenance Trust Fund (not to exceed the total amount deposited in the Harbor Maintenance Trust Fund in the prior fiscal year) shall be subtracted from the estimate of discretionary budget authority and outlays for any estimate of an appropriations Act under the Congressional Budget and Impoundment Control Act of 1974 or the Balanced Budget and Emergency Deficit Control Act of 1985.

Most of the annual HMTF appropriations for fiscal 2019 were enacted last year in the “minibus” appropriations bill signed in September (P.L. 115-244) that included the Army Corps of Engineers. Those appropriations totaled $1.55 billion. Another $39.3 million is appropriated for the HMTF in the pending omnibus ($36 million for the St. Lawrence Seaway and $3.3 million to Customs and Border Protection for the administrative cost of collecting the tax).

Section 701 says “subsequent fiscal years” so it won’t take effect until the FY 2020 budget cycle. But we don’t have spending numbers for FY20 yet, so let’s assume for the sake of argument that it were effective in FY19. If it were in effect now, then those $1.589 billion in FY19 appropriations from the HMTF would no longer count against the $597.0 billion Budget Control Act cap on non-defense discretionary appropriations. This would, ipso facto, give all other non-defense appropriations the opportunity to grow by a collective $1.589 billion without triggering another round of budget sequestration.

(Ed. Note: Yes, we realize that the language of 701 shown above does not reference the Budget Control Act of 2011. But the spending cap portion of the BCA was written as amendments to the 1985 BBEDCA law which is referenced in the language.)

The exception for HMTF appropriations in the new Senate bill is not limitless – the cap exemption is limited to the total amount deposited in the Trust Fund in the prior fiscal year (which means tax receipts plus interest). For FY18, those receipts and interest totaled $1.687 billion (see page 1018 here). So any FY19 appropriations above that amount would not be exempt from the spending cap.

The last Treasury Department forecast for HMTF receipts and interest was from the March 2018 Treasury Bulletin (page 93) and looked like this:

If these estimates are accurate, then about $1.85 billion in FY 2020 HMTF appropriations and about $2.0 billion in FY 2021 HMTF appropriations would be exempt from the spending caps, and those savings would then supplement the rest of the non-defense discretionary budget.

This is very similar to an amendment proposed last year by House Transportation and Infrastructure chairman Peter DeFazio (D-OR) and cosponsored by then-chairman Bill Shuster (R-PA) to the water resources bill, which House Republican leaders refused to allow because it invaded Budget Committee jurisdiction. The DeFazio-Shuster amendment would also have exempted new HMTF appropriations from the spending caps. The only differences are (a) that the DeFazio-Shuster amendment was phrased as an amendment to existing budget laws instead of as a new stand-alone provision, and (b) the DeFazio-Shuster bill tied the cap exemption to the level of HMTF deposits for “the fiscal year before the current year” which in budget-speak means that the FY20 exemption would equal the FY18 receipts and interest, not the FY19 receipts and interest.

The language in the new omnibus does not allow the “spending down” of the HMTF balance that has been allowed to build up for decades, which was about $9.4 billion at the start of FY19, as shown below. But it would allow the complete appropriation of every year’s complete tax receipts and interest in the following year, which has never happened before.