Appropriations Committee Releases Fiscal Year 2017 Financial Services Bill

The House Appropriations Committee today released the fiscal year 2017 Financial Services and General Government Appropriations bill, which will be considered in subcommittee tomorrow. The bill provides annual funding for the Treasury Department, the Judiciary, the Small Business Administration, the Securities and Exchange Commission, and other related agencies.

The bill totals $21.7 billion in funding – $1.5 billion below the fiscal year 2016 enacted level and $2.7 billion below the President’s budget request. The legislation targets resources to programs that will help boost economic growth and opportunity, to protect consumers and investors, promote an efficient federal court system, and stop financial crime. To make these investments within a tight budget, the legislation reduces funding for lower-priority or underperforming programs and agencies. The IRS, which receives a reduction of $236 million in the bill, receives additional oversight and transparency requirements in the bill to ensure tax dollars are properly used and the agency is acting responsibly. Several other policy provisions are also included to promote good government and stop bureaucratic over-reach that can slow economic growth.

“The job of this bill is two-fold: to make wise investments with taxpayer dollars in the programs and agencies that we need to grow our economy and enforce our laws, and to tightly hold the reins on the over-spending and overreach within federal bureaucracies,” House Appropriations Chairman Hal Rogers said. “This bill makes great strides on all accounts – carefully investing taxpayer dollars in programs that promote opportunity, while keeping these agencies accountable to the American people.”

“Federal agencies have a duty and obligation to use hard-earned taxpayer dollars in the most effective and efficient manner. Americans work hard for the money they send to Washington and expect their legislators to make the same tough budget decisions that they have made. Our bill is the product of comprehensive hearings with input from both sides of the aisle with an emphasis on economic growth and job creation through small businesses, while bolstering law enforcement to protect our citizens. And, for the first time, funding to help individuals with disabilities overcome barriers to financial services is set aside within the Community Development Financial Institutions Fund,” said Financial Services Subcommittee Chairman Ander Crenshaw.

“In addition, our bill reduces funding for agencies that we believe can produce results with fewer dollars. And, where there is a history of inappropriate behavior, such as the Internal Revenue Service, cutbacks and reforms are recommended to hold them accountable,” he continued.

Bill Highlights:

Internal Revenue Service (IRS) – The bill provides $10.9 billion for the IRS – a cut of $236 million below the fiscal year 2016 enacted level and $1.3 billion below the President’s budget request. This holds the agency’s budget to below the 2008 level, but provides sufficient resources to perform its core duties.

For example, the bill maintains the current level – $2.1 billion – for Taxpayer Services. On top of this, the bill provides an additional $290 million to improve customer service – such as phone call and correspondence response times – fraud prevention, and cybersecurity.

The IRS has been plagued in recent years by the inappropriate actions of its employees and political leadership, resulting in the waste of taxpayer dollars and in unjust treatment and targeting of certain ideological groups. To address concerns related to these transgressions, the bill includes:

• A prohibition on a proposed regulation related to political activities and the tax-exempt status of 501(c)(4) organizations. The proposed regulation could jeopardize the tax-exempt status of many nonprofit organizations and inhibit citizens from exercising their right to freedom of speech;
• A prohibition on funds for bonuses or to rehire former employees unless employee conduct and tax compliance is given consideration;
• A prohibition on funds for the IRS to target groups for regulatory scrutiny based on their ideological beliefs;
• A prohibition on funds for the IRS to target individuals for exercising their First Amendment rights;
• A prohibition on funds for the production of inappropriate videos and conferences;
• A prohibition on funds for the White House to order the IRS to determine the tax-exempt status of an organization; and
• A requirement for extensive reporting on IRS spending.

Judiciary – Included in the bill is $7.0 billion for the federal courts – an increase of $177 million above the fiscal year 2016 enacted level. This includes operational funding for federal court activities, to improve public safety through the supervision of offenders and defendants, to bolster the security of courtrooms and facilities, and to improve the speed and efficiency of processing federal cases.

Small Business Administration (SBA) – The bill contains $883 million for the SBA to help promote opportunities for American small businesses to begin, grow, and thrive. This includes full funding – $157 million – to support $28.5 billion in 7(a) and $7.5 billion in 504small business loans.

Also included is full funding ($186 million) for disaster loan implementation to allow for quick loan processing turnaround when unexpected natural disasters strike, and full funding ($12.3 million) for veterans programs. In addition, the legislation provides funding above the President’s request for Small Business Development Centers ($125 million), State Trade and Export Promotion ($20 million), and Women’s Business Centers ($19 million).

General Services Administration (GSA) – The bill provides $9.2 billion out of the Federal Buildings Fund for the GSA, a reduction of $951 million below the fiscal year 2016 enacted level. Savings and reductions were made primarily within GSA’s new construction account. In addition, the bill helps to save taxpayer dollars and reduce the federal footprint by providing funds for space consolidation and property disposal.

The funding includes $200 million to continue the construction of a new Federal Bureau of Investigation headquarters.

In addition, the bill continues strong oversight measures over the GSA, including requiring the agency to provide reports on its spending and the status of GSA’s facilities portfolio.

Securities and Exchange Commission (SEC) – Included in the bill is $1.5 billion for the Securities and Exchange Commission (SEC), which is $50 million below the fiscal year 2016 enacted level and $226 million below the President’s budget request. The bill focuses this funding on critical information technology initiatives and its economics division to help the Commission better serve investors. The bill rescinds the unobligated balances of the SEC’s “reserve fund” – a slush fund created under Dodd-Frank from which the SEC can freely spend without congressional oversight.

In addition, the legislation contains policy provisions and reporting requirements to improve transparency, accountability, and fairness. For example, the bill requires the OMB to report to Congress on the cost and regulatory burdens of the Dodd-Frank Act, and prohibits the agency from requiring the disclosure of political contributions in SEC filings.

Consumer Financial Protection Bureau (CFPB) – The bill includes a provision to increase oversight over the CFPB by bringing funding for the agency under the annual congressional appropriations process, instead of direct funding from the Federal Reserve. This change will allow for increased accountability and transparency of the agency’s activities and use of tax dollars. The legislation also changes the leadership structure of the CFPB from a single Director to a five-member Commission, and requires the CFPB to study the use of pre-dispute arbitration prior to issuing regulations.

Federal Communications Commission (FCC) – The bill contains $315 million for the FCC – a cut of $69 million below the fiscal year 2016 enacted level and $43 million below the request. The legislation prohibits the FCC from implementing the net neutrality order until certain court cases are resolved, requires newly proposed regulations to be made publicly available for 21 days before the Commission votes on them, prohibits the FCC from regulating broadband rates, and requires the FCC to refrain from further activity of the recently proposed set-top box rule until a study is completed.

Executive Office of the President (EOP) – The legislation contains $ 692 million for the EOP, which is $171 thousand above the fiscal year 2016 enacted level. The bill denies the President’s proposed cuts of $70 million to drug control efforts, including the High-Intensity Drug Trafficking Areas (HIDTA) and Drug-Free Communities programs, and instead increases funding for these programs by $5 million above the fiscal year 2016 enacted level. The bill also includes a requirement that the Office of Management and Budget release information on the expected costs of Executive Orders and Presidential Memorandums.

District of Columbia – The bill contains a $725 million federal payment to the District of Columbia –which is $4.6 million below the fiscal year 2016 enacted level and $38 million below the request. Within this amount, the bill targets resources on public safety and security costs, and other essential services. It also includes $45 million for the Scholarships for Opportunity and Results Act (SOAR), which provides scholarships to low-income students in DC to attend private schools, and reauthorizes the program through 2021.

In addition, the legislation maintains provisions prohibiting federal and local funds from being used for abortion or to further marijuana legalization and it maintains a prohibition on federal funds from being used for needle exchanges in the District of Columbia. The bill also repeals the Local Budget Autonomy Amendment Act, and it continues to appropriate the District’s local funds.

Presidential Transition – The bill provides one-time funding increases for the presidential transition for the Executive Office of the President ($7.6 million), General Services Administration ($9.5 million), National Archives and Records Administration ($4.9 million), and Federal Payment for Emergency Planning and Security in the District of Columbia ($25 million).

ObamaCare – The bill also includes provisions to stop the IRS from further implementing ObamaCare, including a prohibition on any transfers of funding from the Department of Health and Human Services to the IRS for ObamaCare uses, and a prohibition on funding for the IRS to implement an individual insurance mandate on the American people.

Other Legislative Provisions – The legislation contains several policy provisions, including:

• A prohibition against the use of funds for abortion in the Federal Employee Health Benefits program;
• A prohibition on funding to require that entities applying for or conducting work under federal contracts disclose campaign contributions;
• Several prohibitions related to Cuba, including a prohibition on travel to Cuba for certain educational exchanges, a prohibition on the importation of property confiscated by the Cuban Government, a prohibition on financial transactions with the Cuban military or intelligence service, and a prohibition on funds to approve the licensing of a mark, trade name, or commercial name that was confiscated by the Cuban Government without express consent;
• A prohibition on funds for a pay increase for the Vice President and other senior political appointees; and
• A prohibition on funding to implement an Executive Order on flood management until certain conditions are met.

Other Provisions – The bill includes the SEC Small Business Advocate Act, which creates an office within the SEC and establishes an advisory committee to identify challenges that are unique to small businesses. The bill also includes the Financial Institution Bankruptcy Act, which makes changes to the U.S. bankruptcy code to facilitate the orderly and efficient resolution of a failing financial firm. Both were approved by the House on unanimous votes.

For the Subcommittee draft text of the legislation, please visit: /uploadedfiles/bills-114hr-sc-ap-fy2017-fservices-subcommitteedraft.pdf

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