Tech sees steep cuts in House Republicans’ funding proposal

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The Technology Modernization Fund would once again see zero contributions in FY25, though the U.S. Digital Service would get new authority to get reimbursements from agencies under the bill.

The Technology Modernization Fund would see no new funding under the newly released fiscal 2025 Financial Services bill from Republicans on the House Appropriations Committee. 

The Financial Services and General Government bill is one of several funding proposals with cuts that have drawn pushback from Democrats and the White House. Those cuts include some federal technology accounts.

Overall, the bill would allocate 20% below the White House’s budget request and about 10% below fiscal 2024 funding, according to committee majority. 

“This bill reins in wasteful spending and takes steps to prevent agencies like the IRS from unfairly targeting hardworking Americans,” said subcommittee chair Dave Joyce, R-Ohio, in a statement.

The TMF, a revolving fund for information technology modernization projects, would receive no funding under this proposal. 

The administration asked for $75 million for the fund in its fiscal 2025 budget request, noting that “absent additional appropriations, the TMF will… not be able to support the large-scale investments needed to deliver high-quality digital solutions to the public or meet the significant demand shown for the fund.”

Congress also zeroed out the TMF in fiscal 2024 appropriations and rescinded $100 million of the $1 billion they gave the fund as part of the 2021 American Rescue Plan Act. 

GSA’s 2025 budget request noted that “the TMF is on track to allocate the vast majority of current funds, including $1 billion provided by the American Rescue Plan Act and is planning to announce several large value investments in the first half of 2024.” The program currently manages $900 million in ongoing projects, according to the TMF website.  

"GSA is committed to the TMF’s long-term operations and success, and will continue to solicit proposals from agencies," a GSA spokesperson told Nextgov/FCW. "However, it is essential that Congress provide the necessary resources to allow the TMF to fully meet the growing demand for investments across government."

The Information Technology Oversight and Reform account, which funds the Office of the Federal Chief Information Officer and the U.S. Digital Service, would receive well below its funding ask in the proposed bill. 

That account would receive $8 million — the same as it got in fiscal 2024 — as opposed to the approximately $44.5 million it asked for in the fiscal 2025 budget request, which would break down to about $14 million for OFCIO and $30 million for USDS. 

The latter has been drawing on its $200 million ARPA funding in recent years, but that money expires at the end of this fiscal year. Lawmakers also clawed back $10 million of that funding in the fiscal 2024 package.

The $30 million called for in fiscal 2025 is meant to move USDS back to using appropriations, the budget request states.

Lawmakers would, however, give USDS new authority for agencies to transfer or reimburse money to USDS, up to a $30 million cap, under the newly released funding bill.

Such authority is something USDS asked for in its fiscal 2025 budget request, estimating that that amount would fund 112 employees, “ensuring that USDS can continue to play a pivotal role in the government by bringing technology and innovation to the forefront to improve digital services.”

Finally, the Federal Citizen Services Fund at the General Services Administration — administered by the Technology Transformation Services to support digital services governmentwide — would receive $55 million in appropriations under the proposal. It requested $97 million in direct appropriations. 

FCSF would also have a $29 million cap on what agencies can send in reimbursements and a total cap of $150 million for appropriations, revenues and reimbursements.

Both those numbers are down from last year, when the fund received $75 million with a $250 million cap. 

The bill also includes a number of policy riders on technology issues.

House Republicans want to prevent the $2 billion in funding allotted to the SEC to be used for enforcing a regulation requiring publicly traded firms to file with the agency within four business days of discovering a cybersecurity incident. 

The disclosure rule, which was issued on grounds that investors should know how cyberattacks impact companies’ bottom lines, is facing pushback from some lawmakers and cybersecurity executives who argue it could draw unwanted attention from other hackers and force firms to direct their attention to potential legal dilemmas instead of cyber threat mitigation.

The Republicans’ proposal would also prohibit the IRS from using funding to develop or offer a free, government-backed electronic filing system without prior approval of multiple congressional committees. 

The tax agency just recently committed to fielding its new Direct File system permanently after testing it during the most recent tax season. Direct File has come under fire from some Republicans, including attorneys general in over 10 states who’ve argued the IRS doesn’t have the authority for the program. Democrats in Congress, meanwhile, have praised the IRS move to offer the tool permanently.

The House Appropriations subcommittee is slated to markup the bill tomorrow morning. Already, some Democrats have panned the proposal. 

Ranking member of the subcommittee, Rep. Steny Hoyer, D-Md., said that the bill “would cut vital federal resources that our government agencies need to protect American consumers, enforce financial laws, and go after those who break them” in a statement.

"The Republicans who are trying to zero out the [TMF] are doing so because they don't want our federal government to work properly for the American people. That view underpins the entirety of this partisan FSGG bill," Hoyer said in a statement to Nextgov/FCW. "Zeroing out the TMF is particularly damaging because it removes a valuable resource for agencies to continue their modernization efforts and to operate more efficiently for the taxpayer. I will continue fighting to ensure that our federal agencies receive the resources they need to carry out their essential work."

Rep. Gerry Connolly, D-Va., longtime advocate for TMF, called the bill “an unserious proposal” in a statement to Nextgov/FCW

“With the majority so focused on policy riders that attack diversity, climate action, and women’s reproductive freedom, it is no surprise they got the fundamentals wrong too,” he said. “We must fund IT modernization if we want federal agencies to safeguard sensitive data and serve the public effectively. When we don’t, those programs fail, cyber vulnerabilities are exploited, and distrust in government grows.”

The Senate Appropriations Committee hasn’t yet released its funding proposals. 

Nextgov/FCW Cybersecurity Reporter David DiMolfetta contributed to this report.

Editor's note: This article has been updated to include additional comment from Rep. Steny Hoyer and GSA.