NAICU Washington Update

FY 2023 Appropriations Outlook

July 22, 2022

As the 2022 election cycle heats up and political tensions increase, it is increasingly clear that Congress will keep the government open after the federal fiscal year ends on September 30 through a temporary Continuing Resolution (CR).  This CR will extend through mid-November, with no final deal likely before Congress goes home for the Christmas break. 

Here is the likely scenario for how the appropriations process will playout the rest of this year.

This week, the House of Representatives passed a spending package that includes 6 of the 12 appropriations bills for FY 2023. This package of the least controversial bills includes funding for the Transportation-HUD, Agriculture, Energy and Water, Financial Services, Interior-Environment, and Military Construction-Veterans Affairs appropriations bills. 

Next week, the House plans to bring up a smaller package that includes education funding through the Labor, Health and Human Services, Education bill, along with the State-Foreign Operations, and Commerce-Justice-Science appropriations bills. The original goal was to have all 12 bills passed before the August recess, but with time getting short, the Defense, Homeland Security and the Legislative Branch appropriations packages will have to wait until September. 

In the House, bills are not expected to pass with any Republican support. Republicans oppose the increased levels of non-defense spending overall, even though these legislators may have non-defense funding priorities in some of the individual bills. Inflation rates and gas prices are another reason Republicans are cautioning against increased federal spending. 

In the Senate, bipartisan support for appropriations bills is necessary because passage of spending bills requires 60 votes. Appropriations Chairman Patrick Leahy (D-VT) and Ranking Member Richard Shelby (R-AL) have been talking for months but have hit a stalemate over setting a total spending level for FY 2023. With the clock running down toward the August recess, Sen. Leahy said he will release the Democrats’ version of subcommittee bills if no bipartisan agreement is reached by the end of July. This is how the process played out last year. 

The closer the mid-term elections get, the more difficult it will be to finalize funding. Even if the House can finalize its bills in September, a CR will be needed to keep the government funded through mid-November. After the elections, the pending retirement of Sen. Shelby and other appropriators, along with the billions of dollars in earmark projects nationwide, could provide the momentum to finish the bills before Friday, December 23, rather than punting the decision to the new year and new Congress. 

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