As the 113th Congress comes to a close and Republicans prepare to take over both chambers, Congressional leaders on both sides of the aisle, for both practical and political reasons, battled in the final month of 2014 over passage of government spending priorities.
“Cromnibus” is a hybrid term that was coined as the 113th Congress worked to fund the government for both the short and long term. The word combines both terms and conditions of a “Continuing Resolution,” which is often used as a short-term, stop-gap funding measure, and a long-range, one-year “Omnibus” spending package for all federal agencies, designed to outline government departmental budget spending priorities and limitations.
The 113th Congress is now sine die (indefinitely adjourned). At this writing, both the Cromnibus and Tax Extenders bills have been sent to the White House for President Obama’s signature. Despite several delays—a White House veto threat over the scope of these tax extenders, the President’s immigration policy, as well as the need for Senate Democrats to move forward with the President’s government agency and judicial nominees—a deal was finally struck December 13, 2014 on the Cromnibus. It was signed by President Obama December 16, 2014. That same day, the Senate passed a package of tax extenders and sent them to the White House for the President’s signature.
This means that critical government agencies did not have to shut down or provide limited services. The government is open.
AFM Cromnibus Issues
Interior Appropriations: $146 million each for the National Endowment for the Arts and for the National Endowment for the Humanities. This matches FY 2014 funding levels. As for our work on African elephant ivory, the Interior appropriations package does not include a House policy rider that prohibited funding for the development or revisions of regulations regarding imported ivory. Our lobbying work continues with outside partners to remedy the negative effects on international travel for musical instruments that contain small portions of African elephant ivory.
Department of Education Appropriations: The Arts in Education program will remain funded at $25 million in spite of ongoing battles over the years to end the program.
Labor, Health and Human Services, Education, and Related Agencies: The Corporation for Public Broadcasting (PBS, NPR) will remain funded at the $445 million level.
Pension Provisions: The Cromnibus bill includes a number of multi-employer pension provisions aimed at troubled multi-employer plans facing insolvency. These new provisions would do a number of things. Most notably, the new provisions would cut benefits to retirees who have already earned those benefits. This is not a concern for the AFM-EPF plan as it is estimated to be solvent until the year 2047. AFM staff participated in weekly pension strategy calls throughout the year. More details about our plan and how it is affected by this new legislation will come from AFM-EPF Plan Trustees.
Tax Extenders: Throughout 2014, House Ways and Means and the Senate Finance committee members and staff struggled over passage of tax programs that needed to be extended in order for taxpayers to take advantage of a 2014 deduction.
Section 181-Film and Television Production: First and foremost for the AFM is a provision in section 181 of the internal revenue tax code that extends tax subsidies for film companies. Both the House and Senate devised and passed provisions that would extend these subsidies. The sticking points centered on the duration, whether permanent as proposed in the House or for two years as proposed in the Senate. In addition, both chambers agreed to the inclusion of new language that provides the same tax break to live theater. While the AFM worked and helped develop legislation that would require 100% of production costs of film and television to be done in the US before the subsidy could be applied, we also supported the live theater provision on behalf of our union brothers and sisters at Actor’s Equity and SAG-AFTRA. The enhanced 181 provision was included for one year so that taxpayers can make the deduction only for the tax year 2014. Though the AFM provision was not included in this year’s package, it serves as our marker when Congress revisits tax extenders again in 2015. As the clock ticked away in the lame duck session, Congress decided not to institute a long conference session to hammer out details.
Other Tax Extenders
The following tax extensions are worth mentioning, either because of the impact they have on individuals and/or arts related nonprofit charities. The AFM strongly suggests that you consult your tax adviser to see whether these benefits apply to your situation.
Deduction for mortgage insurance premiums: Those of you who put down a small down payment to buy a home, may have been required to pay for mortgage insurance to protect the lender against default. This tax break lets you deduct the cost of your premiums, if you itemize your deductions.
Income exclusion for mortgage debt that’s been forgiven: If you sold your home for less than what you owed the bank (under water), or if your home was foreclosed, the bank may have agreed to forgive the remaining debt you owed. The IRS typically treats that forgiven debt as taxable income. This tax break lets you exclude it from your income.
Tax-free IRA withdrawals for charity: With this measure, anyone above age 70 1/2 may take tax-free distributions of up to $100,000 from a traditional IRA, if the money was distributed directly to an eligible charity.
Thanks to our members’ hard work over the years, more long awaited news is in the federal pipeline. We anticipate additional good news at the end of the year. We will share it in the next edition of the International Musician.