Fiscal Year 2024 – President’s Budget Request Update

By: LSN Partners on March 16, 2023

The annual release of the President’s Budget Request (PBR) kicks off the appropriations process on Capitol Hill. Over the last two weeks, the Biden Administration has been rolling out its $6.9 trillion budget blueprint. The fiscal year (FY) 2024 PBR calls for significant investments in climate change, scientific research, and conservation. In addition, the plan further reinforces the Administration’s priorities of dedicated resources to increase access to childcare, build affordable housing, incentivize home energy improvements, and make college more affordable. 

The president’s proposal relies more heavily than previous proposals on tax increases for upper-income households, an option that Republicans in the House of Representatives will not consider. Specifically, the Administration’s plan calls for actions such as but not limited to the following:

• Imposing a 25% minimum tax on the wealthiest 0.01% of households
• Quadrupling a 1% surcharge on corporate stock buybacks
• Restoring the top marginal income tax rate to 39.6%
• Raising the corporate income tax rate from 21% to 28%

According to the PBR, federal aid to state and local governments will likely fall slightly to $1.12 trillion this year, down from $1.19 trillion in FY2022. However, that is still higher than the $829.1 billion distributed in 2020. In addition, the National Association of State Budget Officers estimates 38% of state spending came from federal funds in FY2022.

Oversight hearings have begun and will continue through at least May. Over the coming weeks, we will hear from cabinet secretaries, agency heads, and program managers in support of their requests. Then, congressional leaders can ask questions and ultimately develop their budget bills to fund each federal agency. The funding levels proposed by the Biden Administration are still being determined and will be negotiated on Capitol Hill through the federal appropriations process.

The federal fiscal year ends on September 30th, and Congress will likely be required to approve at least one Continuing Resolution (CR) before the final agreement is reached. Currently, House Republicans are attempting to reduce spending to FY2022 topline levels; we expect to encounter bipartisan opposition to this in the United States Senate.