All the groundwork we have been doing to prepare for a potential tax bill has finally come to fruition over the past few weeks. Shortly after the House and Senate returned from the holiday recess, Senate Finance Committee Chairman Ron Wyden (D-OR) and Ways and Means Chairman Jason Smith (R-MO) announced an agreement on a tax bill that, among other provisions, would provide around $6.3 billion for the LIHTC program. As you can see from the bill, if passed the states will receive three years of additional 9% allocation and the bond test will be reduced to 30% for 2024 & 2025. While we worked to include more of our priorities, we simply did not have enough revenue to get the basis boosts or the bond test down to 25%. I cannot begin to describe to you the work that went in to including the LIHTC in the bill as two weeks prior to this announcement, the LIHTC was not included in the package.
While there are a few people that directly influenced the outcome of these discussions, as someone that was personally involved from the beginning of talks, I cannot say enough about the tenacity and determination of Senator Maria Cantwell (D-WA). Her role in the talks led to commitments from both Senate Majority Leader Schumer and Finance Chairman Wyden stating that no bill would advance that did not include housing. I also want to call out our lead Republican sponsor in the House, Congressman Darin LaHood (R-IL), who rallied support for Chairman Smith to include the LIHTC. I should also mention the support of Democratic Leader Hakeem Jeffries. The House Democrats have been largely focused on the Child Tax Credit and benefiting low-income households with children. Nonetheless he too committed that no bill could proceed without housing being included.
Following introduction, the industry rallied support among our 212 House cosponsors in preparation for the bill mark-up in the Ways and Means Committee. The comments on the LIHTC were very positive and as we all know, the committee vote 40-3 to advance the package. As strong a bipartisan vote as we could have imagined.
As of the drafting of this update, the bill has been put on the House suspension calendar, meaning it could come up for a vote before the entire House as soon as January 31st. The House Leadership has not announced when the bill will hit the House floor, but we believe once it does, it will receive a strong bipartisan vote. To pass the House, as it is being considered under suspension, it must receive at least 290 votes in favor or 2/3 of the House present at the time of the vote. There are Currently 432 Members in the House.
Let’s assume everything we described above happens, then the intrigue turns to the Senate. It is possible the Senate majority leader, Chuck Schumer, will bring the bill up as a standalone tax bill, something that is incredibly rare. There is also talk of a Senate Finance Committee mark-up. Senate Republican’s, publicly, have been raising concerns about the bill, specifically the generosity of the Child Tax Credit and how the bill is being paid for (the elimination of the Employer Retention Tax Credit). They could raise a number of these points in a hearing and try to amend the bill, which could prove troublesome as any changes would send the bill back to the House for another vote. The reality is, if the bill passes the House overwhelmingly, it will be very difficult for Senator McConnell and the Republican conference not to endorse the bill. There are too many tax provisions in the bill they love and as significant, the business community wants the bill passed. To oppose the bill after House Republican’s endorsed it, would be politically fraught for Senate Republicans. In addition to the tax benefits of the bill for businesses, families and housing, it also sets a number of base lines for the 2025 tax bill, another significant point for proponents of tax policy.
So, while there are process points that are yet undecided, our focus will be on the House vote, when it occurs. If the bill gets over 290 votes it will be very interesting to see how the Senate reacts and proceeds.
As for the FY 2024 budget, the House and Senate once again punted. In votes before the January 19th CR ran out for 5 federal agencies, the House and Senate voted to extend funding for those agencies until March 1 with the remaining agencies funded through March 8. This staggard approach adopted by Speaker Mike Johnson (R-LA), gives the appropriations committees more time to negotiation funding levels for the government, hopefully averting shutdowns and of equal significance, an across the board 1% cut to all agencies if a budget is not passed by April 30th. This was part of the debt ceiling deal worked out by President Biden and then-Speaker Kevin McCarthy.
There is so much at play here. A compromise on budgets is possible but considering what House conservatives are insisting on for cuts, it is likely we may have another scenario where the House Speaker brings a vote to the House floor that would need Democratic support, and thus raise the possibility of a lone Member raising a motion to Vacate the Chair, meaning another episode of whack the Speaker. We will see what happens but for now, all eyes are on the pending House vote on the tax package.
Thank you for all your advocacy for as you can see, it does matter.
David Gasson