Housing Advisory Group Legislative Update
To say it has been frenetic in Washington, DC, would be an understatement. The Trump Administration's “shock and awe” campaign has overwhelmed Congress, transformed the shape and size of the federal workforce, and raised concerns about how agencies may be able to fulfill their missions and keep vital programs operating efficiently, or in some cases, at all.
We just completed a round of meetings on Capitol Hill with key staff and legislators, and they, too, are dizzy from the moves of the administration and unsure of how to react and plan for what’s ahead. They know they need to address the current budget plan with the continuing resolution expiring on March 14th and the FY 2026 budget. Let’s get up to speed.
Budget
As we mentioned, Congress must reach an agreement on funding for the current fiscal year by March 14th, when the current continuing resolution expires at midnight. The Republicans and Democrats are negotiating on the budget, but there is pushback from the Democratic side on the cuts the Trump administration is making to federal staff and programs and, more significantly, whether the Trump administration will allocate the funds Congress is appropriating. To be fair, this is a concern of all parties, and some Republicans are pushing back against the Trump administration on impoundment or the executive branch's efforts to not allocate funds Congress has appropriated. It is our opinion that this is one of the issues the administration would like to see the Supreme Court decide, hoping they will side with President Trump and allow him to decide how to spend the money Congress appropriates. This debate is also affecting the FY 2026 appropriations, as well as expected significant cuts to federal budgets, exclusive of military, homeland security, and immigration budgets.
Because Republicans will have to get Democratic votes for the spending bills, and the Democrats’ skepticism noted above, it is now anticipated that we will have a fiscal year continuing resolution for the remainder of 2025. This is less than ideal as it will result in stagnate funding for HUD and other agencies. In addition, we would not be surprised if the administration allowed the government to shut down on March 15th before reaching an agreement on a CR.
Reconciliation
The back and forth continues between the House and the Senate on how best to proceed with reconciliation. The House is banking on its Big Beautiful Bill approach. They made some progress last week when the Budget Committee passed a budget resolution calling for a tax bill of $4.5 trillion and spending cuts of $1.5 trillion. While these numbers are significant by any standards, they are less than what is needed to just permanently renew the tax cuts from President Trump's Tax Cuts and Jobs Act of 2017, let alone include other provisions President Trump and Republicans want to be included (raising the SALT cap, eliminate tax on tips, lessen tax on overtime, housing, etc…). The House will have to vote on the budget resolution for it to be the blueprint for the House reconciliation bill and that is not assured. It is acknowledged the House will need to find further cost savings to allow for the tax bill President Trump wants. But the more that is cut, the more doubt is raised that the razor-thin House majority can get the votes to pass the bill.
The Senate is moving on its two-bill reconciliation strategy. The Senate Budget Committee passed a budget resolution for a bill that would address immigration, the border, and energy policy. This relatively small bill (around $350 billion) would allow Republicans to log a win for the President and then have the Senate move on to the tax bill. The thinking in the Senate is if the House is unable to move on its one bill strategy, they could pass the Senate bill and then work on a tax bill. For the record, tax bills must originate in the House, so the Senate needs the House to move first on tax. Majority Leader Thune has not announced when or if he will bring the Senate budget resolution to the floor for a vote. The President has recently indicated he supports the House strategy so this may play into Senator Thune’s calculation. Either way, as we predicted, the reconciliation process is going to prove tricky for both sides of the Hill.
AHCIA Reintroduction
As we previously reported, the AHCIA leads are working toward a reintroduction of the AHCIA for some time in early March. We, along with our industry colleagues, have been busy meeting with Members of Congress and their staff to build up the list of original cosponsors who would be on the bill on the day it is introduced. We need this number to be significant so that the tax writers see the support that exists for the LIHTC and thus, why it needs to be included in the reconciliation tax bill. We cannot urge you enough to speak with your elected representatives and ask them to be an original cosponsor of the bill. There will likely be no changes to the resource provisions of the bill so it would be the same bill they cosponsored in the last congress. If a new Member of Congress, this would be their chance to get on board with the most popular tax bill in Congress and show their support for affordable housing production. House Members should contact Greg Warren in Congressman LaHood’s office and Senators can reach out to Jessica Helmers in Senator Young’s office to sign onto the bill.
Regulatory Reform
We have had some good meetings on the Hill and within the industry on regulatory issues. We met with House and Senate Republican appropriators and leadership staff regarding Davis Bacon and BABA and received very favorable feedback. We are also part of an industry group that will formulate a letter to the administration and Congress on these issues and work with them on what can be done through the regulatory process and what, if anything, must go through Congress.
There is so much going on, and we are addressing issues with staffing at HUD, the freezing of funds, and a myriad of other issues. We appreciate your input and updates on what you are confronting as well. Thank you, and stay tuned for more updates.