The threat of another government shutdown looms

Congress may have been able to avert a government shutdown Saturday night that would have caused problems for state and local governments around the country. But many in Washington are skeptical that the House and Senate will be able to reach agreement on 12 federal funding bills—including a key one on funding for transportation and housing—in a little over a month to keep the nation from facing yet another shutdown.

The chances of reaching an agreement before the Nov. 17 deadline set in the continuing resolution that Congress passed this weekend is “low,” the National League of Cities said in a federal update to its members. “Fractious issues remain,” the update said, as House Republicans seek to reduce spending in an array of programs including funding for states and localities to build more affordable housing and for transit construction projects.

And that update was given before House Republicans voted Tuesday to oust House Speaker Kevin McCarthy. 

“We now find ourselves in a dangerous situation: With about 40 days to go before the government shuts down, the House has ground completely to a halt,” Senate Majority Leader Chuck Schumer said on Wednesday. “Until Republicans stop their infighting, the House can vote on no bills. No appropriations work can get done.”

Having to grapple with electing a new speaker could eat into the time needed to reach an agreement with the Senate before the November deadline, said Richard Stern, director of the conservative Heritage Foundation’s Grover M. Hermann Center for the Federal Budget. But after Republicans come together to find a new leader, he added, they could be better able to keep the caucus together and avoid a battle between the party’s factions that put the nation on the brink of a shutdown last weekend. 

Conservatives, whose opposition to a short-term spending bill brought the country close to a shutdown last week, may be willing to support another continuing resolution to buy more time. Republicans could say, Stern said, “We finally have a leader of the House that reflects the interests and values of the American people. And so we're comfortable with a CR to give this guy another month because this is our guy.”

But even should Congress be able to avoid a shutdown next month, “fractious” differences that the House and Senate will have to resolve include the so-called THUD spending bill, which funds the U.S. Department of Transportation and the Department of Housing and Urban Development. 

In general, House Republicans have been pushing to lower non-defense spending from around $703 billion to $585 billion. For transportation and HUD funding in particular, the House and Senate will have to bridge a $33 billion difference in what the two sides want to spend.

The Senate, for its part, is expected to keep THUD spending the same. 

But the House’s proposal, which was scheduled to be voted on late next week before Republicans ousted their speaker, would cut spending by $26 billion. That would mean a 28% cut, with transportation programs for transit and rail taking the brunt of the hit.

Funding for housing, meanwhile, would increase by $6.4 billion or by about 10%. According to an analysis by the National Low Income Housing Coalition, the proposal would ultimately provide adequate funding for rental assistance programs.

“It doesn't include the deep cuts that some other bills have been facing,” said Peggy Bailey, vice president for housing and income security at the Center on Budget and Policy Priorities.

But, she added, the House is proposing to eliminate the Choice Neighborhoods program, which replaces aging HUD-assisted housing with mixed-income housing, and to cut funding for the HOME Investment Partnerships Program, which provides money to state and local governments to build affordable housing. The program’s budget would be cut by two-thirds, from $1.5 billion to $500 million.

“It's concerning that they would cut the HOME program at a time when we know we need more housing stock,” Bailey said.

Oklahoma Rep. Tom Cole, the Republican chairman of the subcommittee that oversees transportation and housing funding, said when the proposal was passed by the appropriations committee in July that the GOP is pushing to “reduce spending and get our debt under control” by focusing on “our most critical transportation and housing needs.”

“To appease House Republicans’ demand for deep cuts in all spending bills, the Transportation section of the THUD Subcommittee bill appears to have borne the deepest overall cuts to programs,” the coalition’s analysis said. 

Specifically, funding for public transit and rail expansions are on the chopping block in the House proposal. It would cut funding for public transit by $2.3 billion, an 11% decrease even when combined with funding in the 2021 Infrastructure Investment and Jobs Act. 

Programs that would be affected include transit Capital Investment Grants, which fund projects like building a bus rapid transit line in Tucson and extending Minneapolis’ light rail blue line and Chicago’s Red Line. The House would cut $2.2 billion from the program, leaving it with the lowest amount of funding since 2010, according to the American Public Transportation Association, or APTA. The group said communities are requesting more than $49 billion in grants for 68 projects in 23 states.

The Senate, meanwhile, would increase spending by 6.3%, or $240 million, for the program.

The House’s proposal would also lower funding for bus facilities and reduce low-emission bus and ferry grants, according to APTA. The Senate’s version would increase funding for those grants by $169 million.

For rail service, the Senate would keep Amtrak funding roughly the same, and the House would cut it two-thirds, or $1.6 billion. The train system’s Northeast Corridor would take a particularly big hit and have its funding slashed by 92%.

A bipartisan group of 77 House members, though, are opposing those reductions. In a letter to House leaders, they said the proposal would be a “devastating cut to our national passenger rail service” and “shortsighted.”

The same bipartisan group also said they are opposed to a proposal to eliminate funding for a program establishing passenger service on routes outside of Amtrak’s Northeast Corridor. 

Cutting funding “would negatively impact jobs related to rail construction, manufacturing, and the supply chain in addition to harming local and national businesses that rely on major rail corridors, such as the NEC, and other intercity passenger rail routes,” the letter said. “Because there is greater demand for rail funding in the Northeast—in addition to growing demand nationwide—it is crucial that funding for the Federal-State Partnership for Intercity Passenger Rail Program not be eliminated.”

“I think that's one of the areas where we sort of had the most concerns,” said Susan Howard, director of policy and government relations at the American Association of State Highway and Transportation Officials, or AASHTO. Hopefully, lawmakers from both parties will “come to a resolution that everybody gets what they want. But we're starting off from a place where there are quite a bit of differences.” 

Both proposals would increase highway funding for states.

And the Senate would spend $800 million on so-called RAISE grants, which were known as TIGER grants during the Obama administration and BUILD grants under the Trump administration. RAISE grants funded 166 transportation projects last year—nearly two-thirds of them in historically disadvantaged communities or areas with persistent poverty.

The House, however, would eliminate the program.