The House late Wednesday approved an FY22 spending bill that funds the government through September after dropping COVID relief that had sparked opposition from Democratic governors and lawmakers.
The 12-bill, $1.5 trillion package will enable $57.5 billion of transportation funding authorized under the Infrastructure Investment and Jobs Act to begin to flow to states.
The House also passed a stop-gap resolution that keeps the government funded until March 15 — past the current March 11 expiration — to give the Senate sufficient time to pass the omnibus bill.
The omnibus version that was released early Wednesday originally provided $15.6 billion of COVID aid for the White House, which had requested $22.5 billion in fresh pandemic funds. The appropriation was offset in part by $8 billion from unspent American Rescue Plan Act funds clawed back from states. The move would have affected about 30 states that had yet to receive the second tranche of their ARPA funds, and sparked widespread opposition from Democratic governors and lawmakers, who threatened to withhold their votes.
After several hours of meeting with lawmakers, House Speaker Nancy Pelosi agreed to strip the funding from the legislation.
“It was a little scary there for a moment,” said Emily Brock, lobbyist for the Government Finance Officers Association. “Luckily common sense prevailed.”
The House is now expected to take up stand alone COVID legislation next week.
Overall, the FY 22 budget bill, HB 2471, provides $730 billion for non-defense purposes — a 6.7% increase over the FY21 level — and $782 billion for defense, a 5.6% increase over last year, according to the Democratic summary. For the first time in a decade, the omnibus will include earmarks, a practice the Republicans had phased out. More than $4.2 billion is earmarked for various community projects identified by lawmakers.
A provision easing the phase-out of the London Inter-bank Offered Rate long sought by the financial services industry is also in the bill. LIBOR was used as the benchmark index for adjustable-rate contracts, including many held by muni issuers. The measure directs the Federal Reserve to determine replacement rates for contracts that don’t have a fallback and prohibits litigation tied to the issue, among other things. SIFMA said it would help prevent years of litigation, provide certainty and preserve market liquidity.
“There are currently trillions of dollars of existing contracts and instruments that, as a practical matter, cannot be amended to utilize an alternative rate and federal legislation is necessary to facilitate a smooth transition away from LIBOR to an alternative reference rate for these ‘tough legacy’ contracts,” SIFMA said in a statement. “This legislation will benefit all market participants including LIBOR’s end users, who range from investors to companies to consumers.”
A total of $103 billion is provided for the U.S. Department of Transportation, a $16.2 billion increase over FY21. That includes $57.5 billion for the Federal Highway Administration's formula funding to states that funds the IIJA.
The House is expected to take up the standalone COVID bill next week. It includes $10.6 billion for the Department of Health and Human Services and $5 billion for the State Department. The White House has warned that it's almost out of COVID funds. The new bill would only cover immediate needs and “additional resources will be needed soon to ensure we have enough treatments, vaccines, and tests for the American people and to prepare for any future variants,” Acting Office of Management and Budget Director Shalanda D. Young said in a statement.
The House Wednesday also passed a bill to ban Russian energy imports.
