U.S. Congress begins work on budget reconciliation process: What this means for counties

Key Takeaways

On February 12, the U.S. House of Representatives unveiled a draft Fiscal Year (FY) 2025 budget resolution with budget reconciliation instructions to various House committees to officially begin the process of drafting legislation that the U.S. Congress will look to pass through budget reconciliation. The House Budget Committee marked up the resolution on February 13 and voted by party lines to send it to the floor a vote. The U.S. Senate unveiled their version of a FY 2025 budget resolution on February 10 and on February 12 the Senate Budget Committee marked up their reconciliation instructions and also voted along party lines to advance the resolution to the Senate floor.   

Currently the two chambers differ in their approaches to budget reconciliation, as detailed below, with the U.S. Senate taking a two-bill approach and the U.S. House looking to enact a wide range of policy priorities in one, sweeping bill. 

What is the budget reconciliation process? 

Budget reconciliation is a process that allows priority legislation to be expedited so long as the provisions in the bill have a direct fiscal impact on the federal government. Budget reconciliation bills are not subject to filibuster rules in the U.S. Senate and therefore allows the Majority to enact legislation without garnering bipartisan votes often needed to reach the 60-votes needed to end debate and move to a final vote. Both major political parties have traditionally used the budget reconciliation process to enact priority legislation over the past decade when they held majorities in both the U.S. House and U.S. Senate. 

What are the reconciliation steps? 

1. U.S. House and Senate Budget Committees draft and markup a budget resolution instructing congressional committees to raise federal revenues or increase federal spending by a certain amount 
2. Congressional committees draft legislation in accordance with their instructions before sending draft text back to the Budget Committee to be packaged together as one bill
3. The U.S. House and Senate debate and vote on budget reconciliation legislation
   1. Note: In the Senate, debate is limited to 20 hours although Senators can make motions and offer amendments after debate has expired 
4. Differences between the two bills are resolved and the reconciliation bill is signed into law by the President 
   1. Note: The U.S. House and Senate must pass two identical bills before legislation can be signed into law

What is in the House and Senate resolutions?

Detailed information on reconciliation instructions to committees included in both the U.S. House and Senate budget resolutions is available below. 

U.S. House Budget Resolution 

As referenced above, the U.S. House is moving forward with one budget reconciliation bill that will include a broad range of policy priorities for the U.S. Congress and the Administration. The budget resolution marked up by the House Budget Committee would: 

• provide no more than $4.5 trillion to extend expiring provisions of the 2017 Tax Cuts and Jobs Act 
• raise the national debt limit by $4 trillion 
• increase spending by $300 billion over 10 years for defense and immigration priorities
• require at least $1.5 trillion in mandatory spending cuts, with $2 trillion as the target, over the next decade that could include cuts and/or reforms to: 
  • Supplemental Nutrition Assistance Program (SNAP)
  • Social Services Block Grant (SSBG)
  • Temporary Assistance for Needy Families (TANF)
  • Inflation Reduction Act (IRA) clean energy tax credits

Of note to counties the budget resolution directs the House Committee on Energy & Commerce to draft legislation reducing spending by $880 billion over the next decade representing the largest reduction mandate amongst the committees. While specific cuts remain uncertain, the bulk of health-related reductions will likely target the Medicaid program and could include FMAP adjustments, per-capita caps and work requirements. Medicaid provides coverage to over 70 million Americans and accounts for over half of all federal funds to states. These cuts would reduce eligibility, shift financial burdens to states and counties and jeopardize access to essential healthcare services—leading to higher uncompensated care costs and straining county budgets.

Additionally, if the U.S. House cannot reduce mandatory spending to this target level over the next decade, the Ways & Means committee’s spending allowance would be lowered to $3.5 trillion to extend the 2017 tax law. This could ultimately require the Ways & Means committee to find additional revenue generators to offset the cost of tax reform that could include limiting or eliminating the municipal bond tax-exemption. Learn more about county tax priorities here and NACo advocacy efforts here.

U.S. Senate Budget Resolution

The U.S. Senate is moving forward with a bifurcated approach to budget reconciliation, marking up a budget resolution instructing U.S. House and Senate committees to draft legislation limited to defense and immigration related policy priorities of Congress and the Administration. Under this strategy, Congress would save extending the 2017 tax law for a second reconciliation bill later in the year.  

According to the Senate Budget Committee, this first reconciliation bill would provide $342 billion in funding for defense and immigration over the next four years and the projected annual spending increase of $85.5 billion would be fully offset each year by spending reductions of the same amount. Of note to counties, the resolution instructs the Senate Finance Committee to reduce spending by $1 billion over 4 years and while specific cuts are uncertain health-related reductions will likely target the Medicaid program. 

What are the next steps? 

The U.S. House and U.S. Senate will consider and vote on the respective budget resolution in the coming weeks. Following passage of the budget resolutions in the respective chambers, congressional committees will be required to draft legislation in accordance with reconciliation instructions. 

NACo staff will keep members apprised of updates. County leaders are encouraged to contact their members of Congress to advocate for county priorities in reconciliation. 

Contact your Representatives 

Contact your Senators