In addition to dealing with the FY16 budget when it returns from recess, Congress has just a few months remaining in the calendar year to deal with an array of other legislative issues. Pending are broad low income housing reform, GSE reform, tax reform and the Low Income Housing Tax Credit program, and protections for runaway and homeless youth.
A rumor persists that House Committee on Financial Services Chair Jeb Hensarling (R-TX) will introduce some kind of low income housing reform legislation in September. In February, Chair Hensarling made clear his intention for the Committee to “take an extensive review and thorough examination of the successes and failures of HUD,” during HUD’s 50th anniversary year. The anticipated legislation is expected to be the result.
While the content of such legislation is unknown, Mr. Hensarling has hinted that he could seek to change HUD’s largest rental assistance programs. "HUD’s golden anniversary is a proper time for this Committee to examine whether HUD has succeeded in its mission and has adapted to the challenges that Americans face today," Chair Hensarling said in his opening statement at a June 11 hearing.
On housing finance reform, no advance on legislation is expected for the remainder of 2015. Lawmakers have indicated there is no political will to move reforms forward at this time. While there have been a few bills introduced specifically to reform the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, there have been no hearings held in either chamber to discuss these measures. When asked about the future of the GSEs during a congressional hearing, Treasury Secretary Jacob Lew responded, “I'd have to say [housing finance] reform is [an] area we haven't addressed. And it would be a good thing if we would. I'm not sitting here today optimistic that that's going to happen legislatively.”
Senate Banking Chair Richard Shelby (R-AL) introduced a broad regulatory reform bill (S. 1484) that would maintain the GSEs, but would include several reforms, including lowering taxpayer risk while continuing to provide private-market access to a common securitization platform. The bill was voted out of the Committee by a party-line vote and later attached to the Senate FY16 Financial Services and General Government Appropriations spending bill. Due to the uncertainty around the stalled federal budget process, it remains unclear whether Chair Shelby’s bill will move forward.
There have also been several measures introduced that would end the Treasury’s sweep of Fannie and Freddie’s profits and allow them to recapitalize. The Administration has signaled its opposition to allowing the GSEs to recapitalize, and these bills stand little chance of being enacted.
The prospect of Congress moving forward on comprehensive tax reform in the coming months also is unlikely. While the Senate Finance Committee established working groups early in the year to examine ways of overhauling the tax code, the resulting reports were far below the scope and detail originally expected. The reports were silent on reforming the mortgage interest deduction and the Low Income Housing Tax Credit (LIHTC) program. Senate Finance Committee Chair Orrin Hatch (R-UT) acknowledged the unlikelihood of accomplishing comprehensive tax reform this year, stating, “We don’t have any illusions. We doubt seriously that we can get comprehensive tax reform through.” Senate Majority Leader Mitch McConnell also commented, “We’re certainly not going to be able to be doing big comprehensive tax reform with this president.”
While Congressional action on comprehensive tax reform appears unlikely, LIHTC advocates are hoping for at least an extension of the minimum 9% credit floor that expired on December 31, 2014. Bills with numerous cosponsors have been introduced in the House and Senate to achieve this goal, as well as to create a new minimum 4% LIHTC credit floor. The Senate Finance Committee approved a tax extenders package that includes an extension of the minimum tax credit at a fixed 9% rate for new construction and substantial rehabilitation through 2017. It would also establish a minimum fixed 4% tax credit rate during that period for new acquisitions.
However, it is unclear when the bill will advance to the Senate floor given the chamber’s busy schedule in the coming months. Senator Hatch has stated that he hopes to move the extenders package as a stand-alone measure by the end of the year. There had been some discussion earlier in the session about attaching the extenders package to the highway spending bill, which is considered must-pass legislation.
Finally, effort continues in the Senate to pass the Runaway and Homeless Youth and Trafficking Prevention Act (S. 262) that would reauthorize the Runaway and Homeless Youth Act (RHYA) and add provisions. Authorization for RHYA expired on September 30, 2013. S. 262 authors Senators Patrick Leahy (D-VT) and Susan Collins (R-ME) recently offered S.262 as an amendment to a broader human trafficking bill, but the amendment failed to pass by four votes. It is possible that a similar amendment might be offered when the Senate considers the Juvenile Justice and Delinquency Prevention Reauthorization Act (S. 1169), possibly in September.