House Passes Appropriations Bill Reducing Funding for IRS, SEC, D.C.

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WASHINGTON – The House approved an appropriations bill that would reduce funds for the Internal Revenue Service, the Securities and Exchange Commission and the District of Columbia for fiscal 2017, which begins on Oct. 1.

House members voted 239-185 on Thursday to approve the bill (H.R. 5485), which would provide $21.7 billion in total funding, $1.5 billion below the fiscal 2016 level and $2.7 billion below President Obama's request for these and certain other agencies.

But ultimate passage of the bill by Congress is unlikely because it would provide lower funding levels then a similar measure approved last month by the Senate Appropriations Committee and President Obama has warned he would veto it. The bill pending in the Senate would maintain the level of IRS funding and increase funding for D.C.

The House bill includes $10.9 billion for the IRS, which is $236 million below the fiscal 2016 enacted level and $1.3 billion below Obama's request. Fiscal 2017 funding for the SEC would be $1.5 billion, $50 million below the fiscal 2016 enacted level and $226 below the president's request.

The legislation also includes a $725 million federal payment to D.C, which is $4.6 million lower than the enacted level for the current fiscal years and $38 million below Obama's request.

The Senate bill, meanwhile, includes $11.2 billion in funding for the IRS, equal to the fiscal 2016 enacted level, as well as $746 million in funding for D.C., $16 million higher than last fiscal year's enacted level. That bill would also provide $1.6 billion for the SEC, equal to the fiscal 2016 level.

A total of 46 amendments were introduced or voted on Wednesday and Thursday on the bill in the House.

House Appropriations Committee chairman Hal Rogers, R-Ky., lauded the bill, saying it "prioritizes funding where it will be best used, and makes policy reforms that improve efficiency and accountability and rein in executive overreach."

But the committee's top Democrat, Rep. Maxine Waters from California, blasted the bill and warned it "so gravely underfunds and undermines Wall Street reform that it is fair to say it would expose us to another financial crisis."

The Office of Management and Budget said in a Statement of Administration Policy issued last month that the president would veto the House bill due to the IRS, SEC and D.C. cuts.

The office said the proposed $50 million cut to the SEC would "hinder SEC's enforcement, examination, and market oversight functions," while the $236 million IRS funding cuts would hamper the service's ability to function on a daily basis.

"This reduction would bring IRS funding to FY 1993 levels, in real terms, hindering the agency's efforts to provide robust service to taxpayers, improve enforcement operations, and implement new statutory responsibilities," the OMB said.

Obama also said he objected to a section of the bill that would repeal the D.C. Local Budget Autonomy Act, effectively hindering the district's efforts at fiscal independence.

The House bill marked the final spending bill managed by House Financial Services Subcommittee Chairman Rep. Ander Crenshaw, R-Fla., who is retiring this year. Crenshaw said before the Thursday vote that the IRS provisions included in the bill would "remedy" issues with the service.

"It has been three years and three commissioners since we learned that the IRS betrayed the trust of Americans by applying inappropriate scrutiny to certain groups," Crenshaw said. "Instead of turning over a new leaf, the IRS made a series of embarrassing management mistakes at the expense of customer service."

The House bill includes several oversight and transparency provisions for the IRS, including a prohibition on funds to implement an order from the president for the IRS to determine the tax-exempt status of an organization.

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