Today the House passed the fiscal year 2022 budget resolution  with instructions to draft a $3.5 trillion infrastructure reconciliation by a vote of 220-212, after a day of negotiations and discussions among House Democrats. The House also agreed to schedule a Sept. 27 vote on the bipartisan infrastructure bill, now titled the Infrastructure Investment and Jobs Act (IIJA), H.R. 3684, passed Aug. 10 in the Senate. The $1 trillion infrastructure proposal includes $550 billion in new spending in addition to spending already authorized under current law. The investment in the Senate-passed infrastructure bill represents the most significant investment in American infrastructure in decades and focuses on the nation’s roads, bridges and other hard infrastructure projects. The forthcoming $3.5 trillion reconciliation bill includes many of the “human” infrastructure proposals Democrats and the Biden administration have expressed support for this year as part of the Build Back Better Plan, including a set of community development and clean energy tax incentives.

The budget resolution provides a framework and fiscal year (FY) 2022 budget reconciliation instructions for the Senate and House committees detailed below; all of the provisions are effective over FY2022-31. The development of reconciliation legislation will begin in earnest in September. However, a Senate Democrats’ memo summarizes the spending instructions provided to each committee. Budget instructions to House and Senate committees are as follows:

Reconciliation in the Senate

• Committee on Banking, Housing and Urban Affairs: $332 billion
• Agriculture, Nutrition and Forestry: $135 billion
• Commerce, Science and Transportation: $83 billion
• Energy and Natural Resources: $198 billion
• Environment and Public Works: $67 billion
• Health, Education, Labor and Pensions (HELP): $726 billion
• Homeland Security and Governmental Affairs (HSGAC): $37 billion
• Judiciary: $107.5 billion
• Indian Affairs: $20.5 billion
• Small Business and Entrepreneurship: $25 billion
• Veterans Affairs: $18 billion
• Finance: This committee is required to report changes in laws within its jurisdiction that reduce the deficit by at least $1 billion over FY 2022 through 2031.  

Reconciliation in the House

• Agriculture: $89.1 billion
• Education and Labor: $779.5 billion
• Energy and Commerce: $486.5 billion
• Financial Services: $339 billion
• Homeland Security: $500 million
• Judiciary: $107.5 billion
• Natural Resources: $25.6 billion
• Oversight and Reform: $7.5 billion
• Science, Space and Technology: $45.51 billion
• Small Business: $17.5 billion
• Transportation and Infrastructure: $60 billion
• Veterans’ Affairs: $18 billion
• Ways and Means: This committee is required to report changes in laws within its jurisdiction that reduce the deficit by at least $1 billion over FY 2022 through 2031

Housing and community development advocates, particularly those invested in the various tax credits, should take particular note of the instructions to the Senate Finance Committee and the House Ways & Means Committee, which are the tax-writing committees in Congress. The Senate Banking Housing and Urban Affairs Committee has primary oversight over the U.S. Department of Housing and Urban Development (HUD) and transportation, while the House Financial Services Committee oversees all components of the nation’s housing and financial services, including the review of laws pertaining to HUD, Fannie Mae and Freddie Mac, making these two committees particularly important to housing stakeholders.

Following the vote on the budget resolution, as noted above, the House plans to take up the infrastructure bill in September. The Bipartisan Infrastructure Framework was announced in June by a group of 10 moderate Republican and Democratic senators, as a compromise in response to the American Jobs Plan. This gave way to the IIJA; bill text and an updated White House fact sheet were released Aug. 2. The IIJA would provide $550 billion in new funding for traditional infrastructure priorities. Highlights include:

• $110 billion in funding for bridges, roads and major projects
• $73 billion for power infrastructure
• $66 billion for Amtrak and other rail infrastructure
• $65 billion for broadband internet
• $65 billion in improvements to power infrastructure and the electrical grid
• $50 billion for Western water infrastructure and climate resilience
• $39 billion to modernize public transit
• $25 billion to improve airports
• $21 billion for environmental remediation
• $17 billion to improve ports
• $11 billion for transportation safety programs
• $7.5 billion for a national network of electric vehicle chargers
• $7.5 billion for clean and zero emissions buses and ferries
• $1 billion to reconnect communities divided by transportation infrastructure

On Aug. 10, 19 Senate Republicans, including Senate Minority Leader Mitch McConnell, R-Kentucky, joined 48 Democrats and 2 Independents (who typically voted with Democrats) voting in favor of the bill. The bill would largely be financed by unused funds from pandemic-related economic relief programs, along with funds from other potential sources. Proposed new spending pay-fors includes:

• $205 billion in unused coronavirus aid funds
• $67 billion from proceeds of the February 2021 c-brand auction
• $56 billion economic growth resulting from the return on investment in infrastructure projects
• $53 billion in unused unemployment benefits returned from state
• $50 recouped from fraudulently paid federal unemployment benefits
• $49 billion for delaying Medicare Part D rebate rule
• $20 billion from sales of future spectrum auctions
• $28 billion from applying information reporting requirements to cryptocurrency
• $21 billion from extending fees on government-sponsored enterprises
• $13 billion from reinstating certain Superfund fees
• $8.7 billion from continuing the mandatory sequester
• $6 billion from extending customs user fees 
• $6 billion from strategic Petroleum Reserve sales
• $3 billion in savings from reducing Medicare spending on discarded medications from large, single-use drug vials
• $2.9 billion from extending available interest rate smoothing options for defined benefit pension plans

There are no tax increases proposed to cover funding of the bill, which was a point of contention during early discussions and negotiations. Budgetary talks will surely consider the budget estimate released by the Congressional Budget Office (CBO). While the CBO estimates a $50 billion increase in revenues over 2021 to 2031, the agency found that the IIJA would add $256 billion to projected deficits over this period.  

The infrastructure bill will represent the largest investment in public transit and clean drinking water and wastewater infrastructure in American history. It will also bring the most significant investments to roads and bridges in decades, give everyone in the United States access to high speed internet, and significantly invest in programs to reduce the United States’ carbon footprint. All of this would be achieved with no tax increases, and would be inclusive of minority groups and rural communities, often excluded by inequitable policies.

The budget resolution set a deadline of Sep. 15 for each committee to submit its recommendations – in each chamber the Committee on Budget would provide reconciliation bills carrying out all such recommendations of their respective committees. As the reconciliation bill is the likely vehicle for numerous housing-related legislation, Novogradac will continue to monitor Congressional activity and provide updates in this space.