While the administration and congressional leaders continue to work on an agreement, the League’s federal partner, the National League of Cities has a detailed blog post on the latest negotiations on the federal debt limit and the effects of some of the proposals on municipalities.
Without congressional action, it is estimated that the United States will run out of borrowing authority in early June, and this could lead to increased borrowing costs for municipalities.
Republicans are negotiating using the Limit, Save, Grow Act of 2023, which passed the House on April 26, 2023. The bill includes the recission of funds from the six COVID-era bills if the money is unused and still with the authorizing agency. NLC will work to ensure all federal funding that helps stabilize cities will not be rescinded, including the State and Local Fiscal Recovery Funds (SLFRF) program.
In addition, the Limit, Save, Grow Act of 2023 contains a 22% cut to discretionary spending in fiscal year 2024 for programs like Community Development Block Grants (CDBG), and funding for transportation, The bill would also claw back clean energy funding and tax credits from the Inflation Reduction Act. The Biden Administration has already issued a statement it would veto this bill.
Negotiations are expected to continue through the weekend.
Contact: Paul Penna, Senior Legislative Analyst, email@example.com, 609-695-3481, x110.