Punted deadlines on must-pass legislation drove lobbying activity and revenues, as expenditures by K Street’s biggest spenders ticked up in the first quarter of this year.

The top 10 interest groups by spending last quarter dropped $89.1 million on lobbying, up about 3 percent from the fourth quarter and up nearly 13 percent compared with the first quarter of last year, according to new disclosures filed with the House and Senate.

“There’s a pent-up demand to get issues across the finish line. The unpredictability of the legislative process has companies turning to trusted partners to help them navigate a very confusing policy and political landscape,” said Loren Monroe, a principal at BGR Group. “There are a lot of policy priorities waiting to get done, but many did get done in the last couple of weeks where literally hundreds of billions of dollars were appropriated in a relatively short order.”

Lobbying spending edged up as Congress delayed action on a number of must-pass bills, typically handled before the December recess, well into the new year. Congress finally passed a pair of fiscal 2024 spending laws in March. Attention has now turned to a $95.3 billion foreign aid package, while action on reauthorizing the Federal Aviation Administration and the multiyear agricultural policy law known as the farm bill is still to come later this year.

Preparing for next year, including election outcomes and the expiring 2017 tax cuts, has also kept private sector interest in Congress high and K Street firms busy, Monroe and others said.  

“There will be a lot of change after the election,” Monroe said. “That requires a lot of thought and early engagement, as you can’t just show up the day after the election and look for a meeting. All those plans, all those people, all the opportunities for engagement will be happening throughout the summer and into the fall.”

The makeup of the top 10 spenders — which represented companies across business, technology, real estate, automotive and health care sectors — looked largely unchanged from the final quarter of 2023, with two exceptions. Meta Platforms, the parent company of Facebook, and General Motors Co. regained spots among the top 10 spenders, knocking off CTIA, which represents the wireless communications sector, and AARP, formerly known as the American Association of Retired Persons.

Half the groups spent more in the first quarter this year than they did in the final quarter of 2023, while the other half spent less. The U.S. Chamber of Commerce spent $23.4 million on lobbying, up 22 percent from the previous quarter. The Pharmaceutical Research and Manufacturers of America boosted spending by 49 percent to $9.6 million in the first quarter. 

Meta and General Motors each increased lobbying expenditures by more than 60 percent from the fourth quarter, spending $7.6 million and $4.7 million, respectively, according to disclosures. 

The ‘tax Super Bowl of 2025’

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.”