Scant muni action during lame duck

Al Drago/Bloomberg News

Lawmakers will return to Capitol Hill next week to wrap up the 118th Congress with must-pass government funding and national defense authorization bills and fresh disaster funds on tap.

The lame-duck session ending Dec. 20  is not likely to touch on any top municipal market priorities, but "it will be telling in how much they clear the deck of must-pass legislation including government funding (and how long of an extension) allowing for a quick start on tax in 2025," said Brett Bolton, vice president of federal legislative and regulatory policy at the Bond Dealers of America, in an email.

The current government funding continuing resolution runs out on Dec. 20 and will need to be extended to avoid a partial shutdown. The structure of the next funding bill remains uncertain although a comprehensive fiscal 2025 spending bill before year-end appears unlikely as lawmakers lack agreement on a top-line spending number.

House Speaker Mike Johnson, R-La., has said he wants to pass a short-term continuing resolution that extends to February or March 2025, which would allow President-elect Donald Trump to shape spending. Trump's budget pick, Russell Vought, has also urged lawmakers to push the spending negotiations into next year. Lawmakers must hammer out a full fiscal budget by April or face automatic sequestration cuts.

Disaster aid may be included in the stop-gap funding bill, House Appropriations Chair Rep. Tom Cole, R-Okla., told reporters last week. Lawmakers expressed bipartisan support for a strong disaster funding bill during a Nov. 20 Senate Appropriations Committee hearing, and are likely to take the issue up before the end of December.

Congress also needs to pass a national defense reauthorization act as it has done annually for the past 60 years. The NDAA is not expected this year to include any major legislation, unlike the 2022 bill, which included the Financial Data Transparency Act that put new requirements on cities and states issuing municipal bonds. The text of the bill could be made public as soon as next week, according to reports.

As Republicans gear up for what they promise will be an aggressive first 100-day agenda after Trump takes office, one Republican senator offered a glimpse of potential infrastructure program cuts. Sen. Jodi Ernst, R-Iowa, who will take charge of a new Senate caucus focused on supporting the work of the so-called Department of Government Efficiency headed by Trump advisors Elon Musk and Vivek Ramaswamy, sent a letter Monday outlining more than $2 trillion proposed cuts.

Ernst recommended DOGE eliminate a pair of "boondoggles" included in the Infrastructure Investment and Jobs Act: The $7.5 billion program to build a nationwide network of electric vehicle charging stations and $42 billion to expand broadband. "Three years later, just 17 EV stations are completed and not a single person — not one — has been connected to the internet yet. It's time to pull the plug," Ernst said.

She also suggested cutting a trio of California rail projects she called "Golden state gravy trains taking taxpayers for a ride."

First on her list is California's $128 billion high-speed rail project, which has received federal grants under President Joe Biden and remains deeply unpopular with Republicans. Federal support for a $9.3 billion six-mile subway extension San Francisco to Silicon Valley and a $6.7 billion, 1.3-mile extension of San Francisco's Caltrain rail service should also be eliminated, she said.