Two-Year Budget Agreement Reached, Sequester Relief Provided

Budget Brief 13-18
December 13, 2013

Summary 


House and Senate budget negotiators have reached a two-year budget agreement to set overall discretionary spending levels for fiscal year (FY) 2014 and FY 2015. Establishing overall funding levels will enable appropriators to begin work on a final FY 2014 appropriations package. The current Continuing Resolution (CR) expires on January 15, 2014. Moreover, the agreement puts Congress on track for meeting FY 2015 budget deadlines since the breakdown in recent years has been a result of major differences in overall spending levels. 

Specifically, the budget deal, known as the Bipartisan Budget Act (H.J.Res.59), would increase the post-sequestration Budget Control Act (BCA) caps by $44.8 billion in FY 2014 and $18.7 billion in FY 2015, with the increase in funding split equally between defense and nondefense. The agreement maintains sequestration of nonexempt mandatory programs and, in fact, extends it for an additional two years, through FY 2023. It includes a variety of other spending offsets ranging from fee increases to program changes. Offsets that affect states include: changes to the collection of unemployment insurance overpayments, strengthening Medicaid third-party liability, new requirements for reporting of prisoner data, and an extension of state administrative cost sharing to help defray the federal government’s cost of managing mineral leases.

The Bipartisan Budget Act was approved by the House yesterday and now heads to the Senate for approval. The House approved an amendment to the agreement to provide a short-term extension of a number of expired/expiring health programs, delay the Medicaid Disproportionate Share (DSH) reductions included in the Affordable Care Act (ACA) for two years, and prevent the scheduled 23.7% reduction in the Medicare reimbursement rate for physicians set to occur on January 1, 2014.