Congress begins work on budget reconciliation process

Congress begins work on budget reconciliation process

Making cents of the budget process …

By Staff – February 22, 2025

On February 12, the U.S. House of Representatives unveiled a draft Fiscal Year (FY) 2025 budget resolution with budget reconciliation instructions to various House committees to officially begin the process of drafting legislation that the U.S. Congress will look to pass through budget reconciliation. The House Budget Committee marked up the resolution on February 13 and voted by party lines to send it to the floor a vote. The U.S. Senate unveiled their version of a FY 2025 budget resolution on February 10 and on February 12 the Senate Budget Committee marked up their reconciliation instructions and also voted along party lines to advance the resolution to the Senate floor.

Currently the two chambers differ in their approaches to budget reconciliation, as detailed below, with the U.S. Senate taking a two-bill approach and the U.S. House looking to enact a wide range of policy priorities in one, sweeping bill.

What is ‘budget reconciliation’?

By the Heritage Foundation – February 22, 2025

Budget reconciliation is a budgeting tool used to adjust taxes, spending, and deficits. Its purpose is to conform tax and spending policies with the budget resolution. It is a two-step process. Currently, Congress is working on step 1.

STEP 1 – Pass a budget resolution: The process begins by the House and Senate Budget Committees each passing budget resolutions. A budget resolution creates the reconciliation instructions that task various committees with drafting legislation that conforms to the budget resolution’s goals on revenue, spending, and deficit reduction or increases. Think of the budget resolution as the outline for an essay.

That budget resolution framework must then pass each chamber, and they must match in order to move forward with step 2 – the reconciliation process. The resolutions do not need to be signed by the President.

STEP 2 – Passing reconciliation instructions: The instructed committees submit their legislative recommendations to their respective Budget Committees by the deadline prescribed in the budget resolution.

Reconciliation instructions can require some committees to cut a certain amount in spending, or it can give certain committees a deficit allowance – i.e. up to $1 billion in deficit “spending.” This deficit allowance can be important for tax committees to be able to pass tax cuts, which on paper create a “deficit” (if not offset by cuts in spending elsewhere).

STEP 3 – The last step is for both chambers to vote on the final product and, if passed by both, for the president to sign it into law.

The primary advantage to this process is that it bypasses the Senate filibuster, meaning that it can pass with a simple majority of 51 votes instead of needing the usual 60 votes to end debate and send the bill to a final vote before the entire chamber.

What is in the House and Senate resolutions?

Detailed information on reconciliation instructions to committees included in both the U.S. House and Senate budget resolutions is available below.

U.S. House Budget Resolution

As referenced above, the U.S. House is moving forward with one budget reconciliation bill that will include a broad range of policy priorities for the U.S. Congress and the Administration. The budget resolution marked up by the House Budget Committee would:

  • provide no more than $4.5 trillion to extend expiring provisions of the 2017 Tax Cuts and Jobs Act
  • raise the national debt limit by $4 trillion
  • increase spending by $300 billion over 10 years for defense and immigration priorities
  • require at least $1.5 trillion in mandatory spending cuts, with $2 trillion as the target, over the next decade.

U.S. Senate Budget Resolution

The U.S. Senate is moving forward with a bifurcated approach to budget reconciliation, marking up a budget resolution instructing U.S. House and Senate committees to draft legislation limited to defense and immigration related policy priorities of Congress and the Administration. Under this strategy, Congress would save extending the 2017 tax law for a second reconciliation bill later in the year.

According to the Senate Budget Committee, this first reconciliation bill would provide $342 billion in funding for defense and immigration over the next four years and the projected annual spending increase of $85.5 billion would be fully offset each year by spending reductions of the same amount. Of note to counties, the resolution instructs the Senate Finance Committee to reduce spending by $1 billion over 4 years.

What are the next steps?

On February 20, the U.S. Senate voted 52-48 to pass their slimmer budget resolution after debating and voting on 25 amendments over 12 hours in what is known as a “vote-a-rama.” The U.S. House will consider and vote on their respective budget resolution, which has been endorsed by the President, in the coming weeks. Following passage of the budget resolutions U.S. House committees will be required to draft legislation in accordance with reconciliation instructions.

Sources: The National Association of Counties (NACo); The Heritage Foundation