Spending bill features disaster funds, PAYGO waiver, $5 billion of earmarks

The proposed $1.66 trillion fiscal 2023 spending plan released early Tuesday morning features a crucial waiver that will allow federal subsidies to continue to flow to direct-pay securities like Build America Bonds.

The Senate is poised Tuesday afternoon to take up a procedural vote on a legislative vehicle, HR 2617. Congress needs to pass the package, and President Joe Biden needs to sign it, by midnight Friday to avoid a government shutdown. The 2023 fiscal year began Oct. 1.

Senate Majority Leader Chuck Schumer, D-N.Y., said the spending bill was "overflowing with very good news" and urged passage "well before" the Friday deadline.

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"Nobody wants a shutdown, nobody benefits from a shutdown, so I hope nobody will stand in the way of funding the government ASAP," Schumer said.

Senate Minority Leader Mitch McConnell indicated Tuesday he was in favor of passing the bill.

The $1.7 trillion includes $858 billion for defense and $772.5 billion for domestic spending, a 5.5% increase over fiscal 2022.

The omnibus includes a waiver of the so-called pay-as-you-go budget rule, which means more than $100 billion will continue to flow to various programs, including an estimated $14 billion to muni issuers who floated tax subsidy bonds like Build America Bonds. The waiver was a "key lame duck priority" for the Bond Dealers of America, the group noted Tuesday morning, adding that no PAYGO cuts have actually occurred since the rule was enacted in 2010.

The omnibus would send roughly $40 billion to states, local governments and territories for disaster recovery and drought. Puerto Rico would receive $1 billion to rebuild its electric grid. Jackson, Mississippi would see $600 million in EPA funding to address its drinking water crisis.

The government would allocate $4.4 billion — $550 million more than last year's figure — for wildfire management, mitigation and suppression efforts.

The Department of Transportation would get $106.3 billion, a $3.4 billion hike over fiscal 2022 levels. USDOT funding has increased 85% in the last six years due to a boost in contract authority, advance appropriations from the Infrastructure and Investment Act and regular appropriations increases, Eno Transportation's Jeff Davis said in a tweet.

As part of the DOT budget, the Federal Highway Administration would receive just under $63 billion in FY23, an increase of $2.3 billion from FY22. The money includes $59 billion from the highway trust fund, as allocated under the IIJA, and $3.4 billion from the general fund, including $1.145 billion to address structurally deficit bridges, according to the text.

The FHWA will also get $803 million under its emergency relief program to reimburse states for the costs of repairing roads and bridges damaged by natural disasters, and $3 billion for the Community Development Block Grant Disaster Recovery Program to help various communities recover from wildfires and Hurricane Ian.

"As communities across the country work to rebuild after unprecedented natural disasters, this bill provides the urgently needed support to help families, small businesses, and entire towns and cities get back on their feet and repair damaged infrastructure," said Rep. Rosa DeLauro, D-Conn., chairwoman of the House Appropriations Committee.

There are more than $5 billion in earmarks that will fund 3,200 state and local projects. That includes $2.6 billion in the transportation bill, of which $1.8 billion will go to highway projects.

The only tax measure in the bill is the so-called Secure Act 2.0, which aims to boost retirement security for American workers.