Tax Extenders

Since our last Washington update, Senators Grassley (R-IA) and Wyden (D-OR), the Chairman and Ranking Member of the Senate Finance Committee, respectively, have introduced the Tax Extender and Disaster Relief Act of 2019 (S. 617). The bill extends through 2019 a number of expired energy and energy-efficiency tax provisions, including the:

  • credit for nonbusiness energy property;
  • credit for new, qualified fuel cell motor vehicles;
  • credit for alternative fuel vehicle refueling property;
  • credit for two-wheeled plug-in electric vehicles;
  • second-generation biofuel producer credit;
  • biodiesel and renewable diesel incentives;
  • credits for energy production from closed-loop biomass, open-lop biomass, geothermal, landfill gas, trash, qualified hydropower, and marine and hydrokinetic renewable energy;
  • production credit for Indian coal facilities;
  • credit for energy-efficient new homes;
  • special allowance for second-generation biofuel plant property;
  • energy-efficient commercial buildings deduction;
  • special rule for sales or dispositions to implement FERC or state electric restructuring;
  • policy for qualified electric utilities; and,
  • excise tax credits relating to alternative fuels.

Both Chairman Grassley and Ranking Member Wyden have stated that they would prefer not to continue short-term tax policies but noted that decisions were made by taxpayers last year with the expectation that Congress would extend the provisions.

With that said, revenue measures must originate in the House of Representatives, so action on that side of the Capitol is necessary if tax extenders are to advance. House Ways and Means Committee Chairman Neal (D-MA) has said he is considering a tax extenders package, and the Subcommittee on Select Revenue Measures held a hearing on March 12 titled “Temporary Policy in the Internal Revenue Code,” which included discussion of expired energy tax provisions. Subcommittee Chairman Mike Thompson (D-CA) described the expiration of these provisions as having left taxpayers “in limbo” as they await word on whether Congress will retroactively extend the provisions and said he would like to see the committee move expeditiously on a tax extenders package.

Fiscal Year 2020 Budget Request

Delayed by more than a month due to the federal government shutdown, President Trump has submitted to Congress his budget request for Fiscal Year 2020. The proposed budget calls for a reduction in federal spending of approximately $2.7 trillion over the next decade, achieved by reductions in spending for most agencies with, for Fiscal Year 2020, the exception of the Departments of Commerce, Defense, Homeland Security, Treasury, and Veterans Affairs as well as NASA and the Small Business Administration, all of which would receive an increase in spending.

For Fiscal Year 2020, the Department of Energy would receive a funding reduction of nearly eleven percent with the president’s proposed spending level of $31.7 billion. For Fiscal Year 2019, the Department of Energy was funded at $35.7 billion. For those looking for a silver lining, the president’s budget request for Fiscal Year 2020 is far higher than the funding level he sought in his first budget request as president when he proposed slashing Department of Energy funding to $28 billion.

The proposed budget would eliminate the Advanced Research Projects Agency-Energy as well as the loan programs at the Department of Energy. The president attempted to eliminate the programs in his previous budget request, but they were funded by Congress for Fiscal Year 2019.

A summary of the Department of Energy budget request can be found here.

Although Congress is required to approve a budget setting top-line spending levels for the upcoming fiscal year by April 15, increasingly that requirement has not been met, and there are indications that House Democrats are considering skipping the budget resolution this year. There are no penalties for not agreeing on a budget resolution, and in the absence of an agreement, appropriators would work to agree more informally on spending levels for the next fiscal year. The House and Senate are already holding hearings for input from members and the public on spending priorities for the upcoming fiscal year.