Carolina Wasinger
Government Relations Advisor
Hobbs, Straus, Dean & Walker, LLP

As the Republican Party now holds the reins of power in the House, Senate, and White House, it’s an opportune moment to discuss a legislative process that flies under the radar, both in Indian Country and outside the Beltway of Washington D.C. This process is known as budget reconciliation, a vital tool that has shaped our fiscal landscape since its inception. By engaging in strategic advocacy within the reconciliation framework, Indian Country now has a remarkable opportunity that should not be overlooked.

Established by the Congressional Budget Act of 1974, budget reconciliation allows for the expedited consideration of legislation related to taxes, spending, and the debt limit. Reconciliation bills cannot be filibustered, which is why the reconciliation process has often been used in recent decades when one party controls the presidency, the House, and the Senate but does not have the 60 votes needed in the Senate to overcome a filibuster.

On the spending side, reconciliation can be used to address most “mandatory” or entitlement spending — that is, programs such as Medicare, Medicaid, federal civilian and military retirement, SNAP (formerly known as food stamps), and farm programs — though the Budget Act specifically prohibits using reconciliation to change the Social Security program. Mandatory spending is determined by rules set in ongoing authorizing laws, so changing spending usually requires amending those laws.

Over the decades, budget reconciliation has been embraced by nearly every presidential administration to expedite budget initiatives. In fact, since 1974, policymakers have enacted 22 budget reconciliation bills. In recent years, we have witnessed this process’s impact on various governmental priorities. For instance, in President Donald Trump’s first term, Republicans utilized budget reconciliation to advance key initiatives, including tax reform and the Tax Cut and Jobs Act. More recently, the Biden administration leveraged this process to pass the American Rescue Plan.

As we stand at a pivotal moment, the power dynamics in Congress have shifted back to the Republicans, who are now initiating their budget reconciliation process. Recently, President Trump hosted Republican leaders at Mar-A-Lago, Florida, to discuss their strategic roadmap for budget reconciliation.

The evolving landscape presents both challenges and opportunities for tribal nations. Congressional members and their staff are currently working on legislation that could benefit tribal nations. Among the proposals under consideration are several tax provisions aimed at enhancing economic stability and growth within Indian Country.

One key proposal is the Indian Employment Tax Credit, which serves as an incentive for businesses to hire tribal members residing on reservations. By offering tax credits on qualified wages and employee health insurance costs, this initiative promotes job creation and fosters economic empowerment.

Another vital consideration is the expansion of Low-Income Housing Tax Credits, which could enhance housing opportunities for tribal members. Tribal governments need improved access to these resources, which are essential in addressing the pressing need for affordable housing across Indian Country.

Furthermore, the New Market Tax Credits have strong support among Republicans, especially Sen. Tim Scott from South Carolina. He has co-sponsored legislation to make New Market Tax Credits permanent. Established in 2000, this initiative has proven itself as a powerful mechanism for attracting essential capital investment into tribal infrastructure while simultaneously creating valuable employment opportunities. The metrics speak for themselves: for every federal dollar invested, New Market Tax Credits generate a stunning $8 in private investment — an 800 percent return on investment. This demonstrates not only the efficacy of such programs but also their potential to foster growth in Indian Country.

Additionally, tribal adoption tax credits for adoptions ratified in tribal courts are another opportunity for tribes to achieve greater tax parity with States. Currently, families who adopt through tribal courts are not consistently eligible for the same financial support afforded to families who adopt through state courts.

Budget reconciliation also presents an opportunity for tribal nations to strengthen their economic sovereignty by addressing key gaps and a lack of clarity in the federal tax code. It is essential for tribal nations to have equal footing with states when issuing tax-exempt bonds, as this could significantly enhance their ability to finance critical projects and promote local economic development. The tribal bond exemption continues to be championed by Alaska Sen. Lisa Murkowski and Kansas Sen. Jerry Moran, both Republicans. Additionally, the tax treatment of charitable organizations established and funded by tribal governments is ambiguous. As tax policy discussions continue to evolve, it is becoming increasingly important to clarify the tax status and applicability of tax rules of these tribal-funded charitable organizations. Addressing this issue also has the potential to enhance financial support for these initiatives.

Moreover, Republicans’ focus on energy development could also translate into the inclusion of the Indian Coal Production Tax Credit. Montana Sen. Steve Daines, Republican, has repeatedly introduced this Indian Coal Production Tax credit at every Congressional session for many years. This tax credit has previously received broad bipartisan support and provides a tax incentive for the development of tribal coal resources to mitigate the impact of heightened regulatory requirements for coal mining on tribal lands.

As we progress through this legislative session, it is crucial for all stakeholders in Indian Country to explore the emerging opportunities that are available. Now, more than ever, it is essential for tribal leaders and citizens to connect with Congress, advocating for the inclusion of meaningful provisions in the budget reconciliation legislation and beyond. Through collaboration and a united voice, Indian Country can help ensure that these opportunities are embraced thoughtfully and effectively and finally passed into law.

Carolina M. Wasinger is a Government Relations Advisor at Hobbs, Straus, Dean & Walker, LLP. Her work specializes in federal Indian policy advocacy and emphasizes bipartisanship. Carolina is a citizen of the Delaware Tribe of Indians and the Cherokee Nation.

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