Federal Government Passes Debt Limit Deal, Cuts Spending Levels, with Implications for CDFIs
Mary Scott Balys, Vice President of Public Policy, Opportunity Finance Network
Now that debt negotiations are over, the appropriations process kicks into gear
On June 3, President Biden signed a bill to suspend the debt ceiling until 2025, just days before the federal government was set to breach the debt limit. The bill included a number of provisions designed to limit government spending.
The bill establishes two-year caps for overall non-defense domestic discretionary spending. This means that many government programs, including the CDFI Fund, are likely to see cuts to their funding level. For fiscal year 2024, the overall spending cap will be rolled back to last year’s spending levels and fiscal year 2025 will be a 1% increase over that level.
Additionally, the bill will claw back $28 billion in unspent funds that were appropriated under previous legislation including COVID relief packages, American Rescue Plan, and Inflation Reduction Act. This includes unobligated balances from the Emergency Capital Investment Program, $150 million from the State Small Business Credit Initiative; unobligated balances from Emergency Water Assistance Program, HUD public and Indian Housing Accounts, SBA disaster and restaurant assistance programs, and $1.4 billion from the Internal Revenue Service. The bill also expands work requirements for the supplemental nutritional assistance program (SNAP).
Finally, the bill provides an incentive for Congress to finish its work on the annual appropriations bills on time, something that has not happened since 1997. Rather than allowing Congress to keep the government funded at the same levels through continuing resolutions, it will now impose a 1% cut if the final spending bills have not been enacted by January 1, 2024.
With the debt ceiling negotiations completed, the appropriations process will swing into gear in the coming weeks. In this tight spending environment, OFN needs your help to make sure Congress understands the importance of the CDFI Fund.
Go to our Policy Action Center to learn how to make your voice heard and support $341 million for the CDFI Fund in fiscal year 2024.
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