Capitol Insights: Reconciliation discussions could shape WOTC timing

Capitol Insights provides a weekly update on federal legislative activity that may influence employer tax incentives and workforce programs, including developments that could affect the Work Opportunity Tax Credit (WOTC).

At a glance:

• DHS funding lapse has now extended beyond 50 days without resolution

• Emergency defense funding discussions are ongoing following recent geopolitical developments

• Senate vote thresholds continue to limit progress on standalone appropriations

• Budget reconciliation is being evaluated as an alternative legislative path

• Lawmakers are discussing whether tax provisions could be included in a broader package

Congress returns with unresolved funding priorities

Congress returns from a two-week Easter recess facing immediate pressure to resolve two major funding issues: the ongoing Department of Homeland Security (DHS) funding lapse, now exceeding 50 days, and the Administration’s request for at least $200 billion in emergency defense funding to replenish military stockpiles following recent international conflict developments.

Progress on both fronts remains uncertain. A bipartisan DHS funding agreement that has passed the Senate multiple times continues to face resistance in the House. At the same time, concerns across both parties regarding recent military actions have made it difficult to secure the 60 votes needed in the Senate for additional defense appropriations.

Recent geopolitical developments have increased pressure on Congress to consider emergency defense funding, while also raising the likelihood of war powers votes that may affect legislative priorities.

Reconciliation re-emerges as a potential path forward

As a result, budget reconciliation has re-emerged as a potential path forward. This process would allow legislation to pass the Senate with a simple majority, bypassing the traditional 60-vote threshold.

Congressional leaders are expected to evaluate reconciliation options this week, including how broadly to structure the legislation. Senate leadership has begun internal discussions around a budget resolution that could advance funding priorities under reconciliation rules, with further conversations expected among members in the coming days.

Current discussions include using reconciliation to fund immigration enforcement and border-related programs, including ICE and CBP, over a multi-year period.

Scope of reconciliation under discussion

There is also ongoing discussion around whether reconciliation should include tax-related provisions. Some House leaders have indicated that tax items, including extensions and technical corrections, should be part of any package, while the Senate has not yet taken a firm position.

One option under consideration is a two-step approach: an initial bill focused on DHS and defense funding, followed by a second package addressing tax and other policy issues. The Administration has expressed a preference for a narrower bill, though final scope will depend on negotiations in both chambers.

Additional legislative pressures shaping timelines

In parallel, Congress is managing several competing priorities that may influence the timing and structure of any legislative package.

These include potential war powers votes related to recent international developments and the upcoming expiration of Section 702 of the Foreign Intelligence Surveillance Act (FISA), which requires near-term action. Legislative sequencing decisions may affect how quickly funding measures and any related provisions can advance.

What this means

Budget reconciliation is increasingly viewed as a potential legislative vehicle for advancing additional priorities beyond spending, including tax-related measures. This may influence the path forward for provisions related to the Work Opportunity Tax Credit.

While the program remains expired, employers may continue screening and submitting applications for eligible hires. Based on prior legislative patterns, certifications submitted during lapse periods may be processed retroactively if the program is renewed.