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October 17
Congress Passes Measure Ending Federal Government Shutdown, Extending Debt Ceiling
Roughly two weeks after the federal government shut down as a result of Congress’s inability to agree on FY2014 funding, and just before the deadline to raise the debt ceiling to avoid a potentially disastrous default, Senate and House legislators passed a measure (H.R. 2775) that temporarily addresses both issues. The bipartisan measure, which was approved on October 16 by both the Senate (81-18) and the House (285-144), funds the government through January 15, 2014, and suspends the debt limit through February 7, 2014. The measure was immediately signed into law by President Obama. To read NACo’s statement on the deal to end the government shutdown, click here.

Under the measure, the federal government will be funded at the annualized level of $986.3 billion through mid-January, reflecting spending levels under sequestration. The following is a brief summary of the measure:

  • Shutdown: The measure immediately ends the federal government shutdown and provides a stopgap spending measure through January 15, 2014
  • Debt Limit: The measure authorizes President Obama to suspend the debt limit through February 7. However, this is subject to a “resolution of disapproval” by Congress – a procedural exercise through which one or both chambers can express disapproval for a measure without actually blocking it
  • Extraordinary Measures: The U.S. Department of Treasury retains its ability to use “extraordinary measures,” which are a series of money-management techniques used to avoid exceeding the debt ceiling
  • Reimbursement of State Government and Other Grantees: The measure clarifies that the federal government will reimburse states and grantees for the costs that states incurred during execution of federal programs that would normally be paid by federal appropriations.  This authority applies to any period in fiscal year 2014 in which a lapse in appropriations has occurred
  • Furloughed Workers: Federal government employees who were furloughed during the shutdown will be paid retroactively to October 1
  • ACA Income Verification: The measure includes a provision that will tighten requirements for verifying the income of individuals receiving health-insurance subsidies under the Affordable Care Act (ACA)
  • Low Income Heating Assistance Program (LIHEAP) Extended: The measure clarifies that the formula to distribute LIHEAP funds to states will remain unchanged so that the U.S. Department of Health and Human Services uses the same formula as in prior years. 
  • Interior and Forest Service Provided with Fire Suppression Funds: The measure provides $36 million for the U.S. Department of the Interior’s (DOI) wildland fire management activities and $600 million for the Forest Service’s fire suppression activities, which are available for fiscal year 2014 or to repay accounts from which the departments borrowed to pay for fire suppression in previous years
  • Law Authorizing Lands Access Fees Extended: The measure extends the authority for DOI to collect recreational fees. Under the Federal Lands Recreation Enhancement Act, fees for access to campgrounds or parks are authorized through December 8, 2014. However, DOI and the Forest Service sell annual passes lasting one year in duration to access National Parks, Refuges and Forests pursuant to this law.  Without the  extension, the Departments’ ability to sell annual passes would cease on December 8 of this year

  • Temporary Assistance for Needy Family Block Grant (TANF) and Child Care: TANF and the mandatory portion of the Child Care and Development Block Grant were reauthorized through January 15, 2014. 

Several other provisions that were mentioned as potential additions to the measure were not included in the final version:

  • A provision proposed by Sen. David Vitter (R-La.) that would have barred employer contributions to the health-insurance premiums of members of Congress and their staff
  • A delay or elimination of the ACA medical device tax

Looking Ahead: Potential Risks for Counties?

As part of the deal, Senate and House leaders must now name participants to a conference committee tasked with deciding final FY2014 funding levels by December 13. The differences between Senate Democrats and House Republicans have been so great this year (roughly a $90 billion gap between the House and Senate FY2014 budget measures—H.Con.Res. 25 and S.Con.Res. 8) that they have not been able to reach an agreement or meet in a conference to begin negotiations.

Although the measure to end the federal government shutdown will temporarily provide relief to government employees and restore normalcy to federal, state and local government operations, a long-term solution to FY2014 funding and debt ceiling issues is still needed. Reaching such a long-term solution will doubtlessly involve further talks of a “grand bargain” on entitlements, taxes and sequestration cuts that could prove harmful to counties. Specifically, a “grand bargain” could impact counties in the following ways:

  • Tax reform that could alter the tax treatment of municipal bonds, making it more expensive for counties to fund critical infrastructure.  Why do counties care about municipal bonds?  State and local governments financed more than $1.65 trillion of infrastructure investment using municipal bonds from 2003-2012, and 45 percent of long-term state and local tax-exempt bonds funded the building of schools, hospitals, roads and jails.  Further, 75 percent of all national infrastructure projects are completed using bond financing.  For additional information on municipal bonds click here.
  • Entitlement reform that could include Medicaid cuts that would shift healthcare costs to counties. In 22 states, counties put up part of the non-federal match for Medicaid and in 32 states, counties are required to provide health care for low income, uninsured or underinsured residents. For more information on counties and Medicaid, click here.
  • Ongoing challenges with the annual appropriations process and sequestration including federal aid cuts to state and local governments that undermine the ability of counties to serve their citizens.


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