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 September 23, 2019

FY 2020 BUDGET UPDATE - 9/23 

 

 by Tony Wilkinson, NAGGL President & CEO

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One more week left to go in the fiscal year, and we have good news…and bad.

Let’s start with the good. Last week the House passed their version of a Continuing Resolution* (CR), and it passed by a wide margin in a bi-partisan vote. The Administration has indicated its support for continued availability of the 7(a) program by providing language requesting that a $99 million funding anomaly for the program be included in the CR, and that language was incorporated into the House version. Given the wide margin of passage in the House and the expression of support by the White House, we would be surprised to see any effort in the Senate to remove this provision from the CR. If the CR passes as expected, the 7(a) program would be funded until the CR expires (currently, 11/21) or until a full-year appropriations bill for SBA is signed into law, whichever comes first.

Previously, the House version of the Financial Services and General Government (FSGG) Appropriations bill also provided full year funding for the program at a $30.5 billion program level. Now for the bad news.

Last Thursday, the Senate Appropriations Committee voted unanimously to advance the FSGG appropriations bill to the floor without including full-year funding for the 7(a) programThe report language of the FSGG bill made it clear that the chosen path of the Committee was to raise fees on program users, regardless of the flawed subsidy calculation. Rather than hold deep-state bureaucrats accountable for unnecessarily overcharging borrowers, Senate appropriators apparently would prefer to drive program user’s costs even higher. The Senate appropriators chose this path even though OMB has acknowledged in annual budget documents that program users have been overcharged some $3.2 billion in the last decade.

So, what happens next?  The CR must pass by 9/30 to keep the Federal Government open. We believe that will happen and that short-term funding for the 7(a) program will be available during the CR.  Contrary to some “Breaking News” reports last week, it is not yet possible to breathe a sigh of relief about funding for the full year. However, recent national media coverage speculates that the CR gets extended a time or two, maybe even for the entire year if government-wide funding negotiations break down over other issues.  If we are funded in the initial CR as expected, a full-year extension of the CR as currently written would provide full-year funding for the 7(a) program.

Meanwhile, the Senate seems interested in continuing to work on individual appropriation bills, but it is not possible to predict whether that will occur or the timing of any progress. If the FSGG bill somehow passes the full Senate as is, it would set up a conference with the House. House leadership has made it clear that they will not support an unnecessary fee increase. How that difference of opinion might be resolved with the Senate is still unknown.

Until then, we will continue encouraging Senators to understand that appropriating an amount for FY 2020 sufficient to fund the 7(a) program is far preferable to imposing a burdensome fee increase on a loan program that is already paying excessive fees or refusing to accept the House funding of the program in a conference or omnibus bill.

The NAGGL GR team will be in Washington this week, continuing our work on these issues. While the immediate fear of a program shutdown at 9/30 seems to have abated, the longer-term FY ’20 solution still has to be worked out. More to come…

 (*Continuing Resolution/continuing appropriations - Legislation in the form of a joint resolution enacted by Congress, when the new fiscal year is about to begin or has begun, to provide budget authority for Federal agencies and programs to continue in operation until the regular appropriations acts are enacted.)

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