Unfinished bills, tax law preparation push lobbying spending up

While there are still legislative obligations that Congress will have to address this year, including the farm bill, FAA reauthorization, the annual defense policy package and fiscal 2025 appropriations, K Street is already turning its attention to laying the groundwork for next year, lobbyists said.

“There is a narrative that a lot of stakeholder engagement slows down in an election year. And I don’t think we have sort of the same bounds as we did previously,” said Karishma Shah Page, a partner at K&L Gates. The firm reported $4.3 million in lobbying revenue last quarter, compared with $4 million in the fourth quarter and $5.5 million in the first quarter of 2023.

Companies reading the tea leaves expect to see a repeat of the tight margins of this Congress, even if control of the chambers changes, Page said.

“A lot of sophisticated stakeholders are recognizing that it’s going to be close, and it’s going to be very slim majorities in the House and Senate,” she said. “In order to be proactive, now is the time to be developing policy priorities, figuring out what the risks are, what the opportunities are, engaging on the Hill now to be prepared for whatever the outcome is in 2025.”

The 2017 tax provisions due to expire at the end of 2025 are at the very top of everyone’s radar, lobbyists said. The political environment has changed since 2017, including turnover on the House and Senate tax-writing committees and a growing populist bent in both parties, Page said.

“Taken together, it really requires that stakeholders take a proactive approach to educate members on policies and why they’re in place and whether they need to be renewed or tweaked,” she said. “If they wait until next year it is going to be too late because, at that point, things are going to be moving very quickly.”

Nadeam Elshami, co-chair of Brownstein’s government relations department, said the “tax Super Bowl of 2025” has piqued the interest of a lot of clients previously disengaged on tax issues. Brownstein reported $16.2 million in lobbying revenue last quarter, up from $16 million in the fourth quarter and $15.8 million in the first quarter of 2023.

“You can’t just start this a few weeks before the bill is completed. You’ve got to start early. You’ve got to engage early,” Elshami said. “You’ve got to be prepared, so that’s exactly what we’re doing with current and new clients.”

Most of the 2017 law’s individual and small-business tax cuts are due to expire at the end of 2025, while some popular business deductions have already started to phase out.

BGR Group’s Monroe said he’s also noticed increased interest from clients in next year’s expiring tax provisions. BGR Group reported nearly $10.9 million in lobbying revenue, up from about $10.8 million in the fourth quarter and $10.2 million in the first quarter of 2023.

“There’s a lot of interest and, I’d say, a moderate level of anxiety just because of Congress having a tough time meeting deadlines, starting with the existing provisions that have expired,” he said.

A cut to the corporate tax rate was made permanent under the 2017 law, but negotiations next year are likely to span beyond just expiring provisions, Monroe said.

“We’re telling our clients everything’s on the table, and that’s partially because of growing deficit concerns but also because it’s going to be a lot of horse trading,” he said. “How much is the corporate tax rate? What do we do with the child tax credit? What about rates for the wealthy versus provisions to encourage homeownership? That’s why I refer to it as a menu — you’d almost call it a buffet.”