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President Joe Biden on Friday released the details of his administration’s proposed budget for fiscal year 2022. The $6 trillion budget proposes to increase federal spending in areas ranging from housing, education, health care, and infrastructure. Of note for credit unions, the proposal would boost funding for the Small Business Administration (SBA) and Community Development Financial Institution (CDFI) Fund compared to the 2021 enacted levels. The proposed budget seeks various ways to raise revenues to pay for this spending, including increase the corporate tax rate to 28 percent from 21 percent, raise the individual tax rate for high-income earners to 39.6 percent, as well as increase IRS audits and requiring financial institutions to comply with additional reporting requirements on accounts.

Under the new reporting requirements, financial institutions would be required to file an annual information return for all business and personal accounts with more than $600 in their account. The annual reporting requirement would include information related to gross inflows and outflows, including the amount of cash, transfers to and from accounts held by the same owner, and transactions with foreign accounts.

Last month, NAFCU and several other financial services industry trades to raise concerns about the proposed tax reporting requirement. NAFCU and the trades said proposals "to create new reporting requirements for financial institutions would impose cost and complexity that are not justified by the potential, and highly uncertain, benefits. Furthermore, we believe additional reporting requirements guided by subjective criteria have privacy and fairness implications and the potential to put financial institutions in an untenable position with their account holders." NAFCU will continue to inform policymakers of the burden of this requirements on credit unions and their members and recommend they instead provide the IRS with additional resources needed to conduct effective and efficient audits.

Other items included in the President’s budget include:

CDFI Fund

The proposal provides $330 million to the Treasury's CDFI Fund – an increase of 22.2 percent from the 2021 enacted level (excluding coronavirus-related emergency funding). NAFCU had called for additional CDFI support, including CDRLF, during last year's funding negotiations.

The CDFI funding is cited as supporting opportunities for minority-owned businesses, affordable housing development, and community revitalization projects.

NAFCU consistently advocates for full funding for the CDFI Fund as there are hundreds of CDFI-certified credit unions across the country that work to meet the needs of low-income, minority, and underserved communities. During a meeting earlier this year, NAFCU and member credit unions met with the NCUA on its new Advancing Communities through Credit, Education, Stability and Support (ACCESS) initiative and the value of CDFI designations. 

Housing

The budget request also includes several provisions to expand housing opportunities and reduce the racial wealth gap. Some of the funding would go toward supporting access to homeownership for underserved borrowers through the Federal Housing Administration's (FHA) mortgage insurance programs, as well as supporting coronavirus-related relief provided to homeowners facing financial hardships.

It also proposes $800 million in new investments across Department of Housing and Urban Development (HUD) programs for rehabilitation and modernization to further climate resilience and energy efficiency – aimed at addressing climate change impacts, such as increasingly frequent and severe floods.

Explore the complete budget request here. NAFCU will continue to advocate for funding for agencies and programs that allow credit unions to meet members' needs and support their communities.