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April 18, 2013
On April 10, 2013, the president released his fiscal year (FY) 2014 budget proposal, more than two months after the statutory deadline. The delay was reportedly precipitated by the absence of final FY 2013 appropriations and uncertainty surrounding budget sequestration mandated by the Budget Control Act of 2011 (BCA, P.L. 112-25). The president’s budget retains the discretionary spending caps included in the BCA (and amendments to it), while eliminating the annual sequestration mandated by the failure of the Joint Select Committee on Deficit reduction (JSC). This is accomplished through both revenue increases and savings in mandatory programs.
The budget repeats themes from earlier budget requests, including proposals to consolidate funding into fewer grant programs, replace existing formula grant programs with competitive grants, and implement a host of new competitive grant programs.
The FY 2013 spending data included in the president’s proposal do not reflect final enacted spending levels, nor do they reflect the effects of sequestration. Instead, the budget reports FY 2013 figures based on the first continuing resolution (CR) adopted last fall, which was in effect until March 27, 2013. It assumes the full annualized levels associated with that CR. In contrast, FFIS figures for FY 2013 cited here reflect final enacted spending levels and the impact of sequestration.
Overall, the FY 2014 budget would provide a 7% funding increase for the major discretionary programs reported by FFIS on Table 1. This increase is somewhat misleading, as various consolidation proposals—such as the one for homeland security grants—would replace smaller programs not listed on the table with one large program that is listed. The increase also underscores the impact of sequestration on FY 2013 program levels.
The mandatory programs included on Table 1 are estimated to increase 12% in FY 2014. The increase is driven by Vaccines for Children (+19%), Child Care Entitlements to States (+17), Medicaid vendor payments (+15%), and the Children’s Health Insurance Program (CHIP, +10%). Combined funding for discretionary plus mandatory grant programs would increase 10% under the budget.
Significant FY 2014 budget proposals are described in the following sections.
March 27, 2013
Before adjourning for the Easter recess, Congress approved a bill (H.R. 933) to fund the federal government for the remainder of fiscal year (FY) 2013, which ends on September 30, 2013. H.R. 933 includes a combination of five new appropriations bills and a continuing resolution (CR) for the remaining program areas. The funding levels in the bill are in effect for the entire fiscal year and replace the annualized levels included in the first CR. H.R. 933 does not reverse the March 1, 2013, sequester included in the Budget Control Act of 2011 (BCA; P.L. 112-25). As such, final FY 2013 funding levels for programs subject to sequester are determined by subtracting sequester cuts from funding levels in the final spending bill. The final FY 2013 funding levels mitigate or worsen the effects of sequester in some instances.
This Budget Brief describes the provisions in H.R. 933 relevant to states. Table 1 includes final FY 2013 funding levels for major grant programs that reflect both the March 1 sequester and the final spending bill. Compared to FY 2012, states will see a -$4.6 billion funding reduction for the major discretionary programs on Table 1. The mandatory programs are estimated to increase 7%, in part because most of the programs are exempt from sequester and funding for the largest program, Medicaid, is projected to increase by almost $18 billion.
March 5, 2013
Last week, the federal Office of Management and Budget (OMB) released a list of appropriations issues that would need to be addressed if the continuing resolution (CR) that is now in place for fiscal year (FY) 2013 is extended for the remainder of the fiscal year. The CR is set to expire on March 27, 2013. Some of the policy changes could affect funding for state grant programs.
Since the list was released, it is becoming even more likely that Congress will enact a full-year CR for most federal agencies. Today, the House released a bill that would provide new FY 2013 appropriations for Defense and Military Construction-Veterans Affairs, with the remaining appropriation bills funded through a year-long CR. The House version addresses some of OMB’s recommendations.
This Budget Brief highlights OMB’s provisions of note and indicates whether the recommendations are included in the House CR.
March 1, 2013
This week, the Office of Management and Budget (OMB) issued guidance to federal agencies outlining their responsibility for implementing the March 1, 2013 sequester. While the guidance does not indicate how OMB will carry out the sequester, it does provide a framework for agency actions.
The guidance does not provide the final across-the-board (ATB) percentage reductions for fiscal year (FY) 2013. However, OMB indicates an effective percentage reduction of approximately 9% for nondefense programs. The effective reduction takes into account that the cuts must be absorbed over seven months of the fiscal year, rather than the entire fiscal year. However, the cuts are calculated by multiplying the annual ATB percentage reduction, which is around 5% for nondefense programs, by annualized funding levels in the current continuing resolution (CR).
Unless Congress and the president enact legislation to amend the sequester, the president must issue a sequester order by midnight tonight to cancel $85 billion in budgetary resources.
February 27, 2013
With all the attention surrounding a scheduled sequestration of federal spending on March 1, 2013, the existence of a second sequestration provision has largely gone unnoticed. The Budget Control Act of 2011 (BCA; P.L. 112-25) incorporated certain provisions of an earlier deficit-reduction law, the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177). The BBEDCA, along with ensuing legislation, provided for sequestering discretionary funding provided in annual appropriations bills if that funding exceeded the spending caps allowed by law.
Under the current continuing resolution (CR) and subsequent fiscal year (FY) 2013 appropriations—namely those for disaster relief—current funding for FY 2013 exceeds the caps specified for FY 2013 under the BCA and the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240). As a result, if funding levels contained in the current CR are extended for the remainder of the year, a second sequestration could occur on March 27, 2013.
February 1, 2013
On January 29, 2013, President Obama signed P.L. 113-2, providing supplemental appropriations primarily for Hurricane Sandy disaster assistance. The bill includes approximately $50 billion in direct government spending, aid to individuals, and grants to state-local governments and other entities. It adds to the $9.7 billion in borrowing authority for the National Flood Insurance Program that was enacted in early January (P.L. 113-1). This Budget Brief highlights the funding that will flow to states as well as other provisions of note.
January 4, 2013
On January 2, 2013, the president signed the American Taxpayer Relief Act of 2012 (H.R. 8), addressing some of the issues debated during the recent fiscal cliff negotiations. The deal includes a number of tax provisions, an extension of unemployment benefits and farm programs, and certain health extensions and offsets. The package also delays sequestration (previously scheduled to take effect January 2, 2013) for two months and pays for those two months of cuts with a combination of other spending cuts and revenue increases. This Budget Brief provides details on the agreement.
September 14, 2012
On September 11, 2012, the House unveiled a Continuing Resolution (CR) for fiscal year (FY) 2013 that would keep the federal government running until March 27, 2013. Discretionary spending levels in the CR are set at an annualized level of $1.047 trillion, the FY 2013 amount included in the Budget Control Act of 2011 (BCA, P.L. 112-25). Since this amount is about $8 billion more than FY 2012 appropriations based on recent estimates from the Congressional Budget Office (CBO), the CR provides a 0.612% across-the-board increase for most programs and specifies additional funding for some areas such as cybersecurity, disaster assistance, presidential inauguration activities, refugee assistance, and the Commodity Assistance Program (CAP). In addition, the CR contains a few policy provisions and would extend funding for several programs that are set to expire on September 30, 2012. The full House approved the bill on September 13, 2012. The Senate will consider the measure next week.
August 14, 2012
With less than two months left until the start of the new fiscal year, Congress has yet to enact even one appropriations bill for fiscal year (FY) 2013. Part of the holdup is that the House and Senate are starting from two very different points; a $19 billion difference to be precise. The House passed a budget resolution this spring that provided $1.028 trillion in overall discretionary spending. In contrast, the Senate did not pass a budget resolution and is adhering to the FY 2013 discretionary spending level of $1.047 trillion included in the Budget Control Act of 2011 (BCA, P.L. 112-25). House and Senate appropriators have proceeded with the appropriations process under these different levels. To date, the House has acted on 11 bills (of which six have been passed by the full House). The full Senate has not considered any appropriations bills, but its Appropriations Committee has approved 11 bills.
Initially, it was expected that Congress would finalize the FY 2013 budget after the November election during a lame-duck session. However, prior to adjourning for the August recess, congressional leaders announced that they had reached an agreement on a six-month continuing resolution (CR) to fund the government through March 31, 2013. The length of the CR is, in part, to allow Congress to focus on expiring tax provisions and the BCA sequester during the lame-duck session. Details on the CR have yet to be worked out, and legislation will not be considered until September.
July 5, 2012
In May, FFIS released Budget Brief 12-05, detailing provisions in the fiscal year (FY) 2013 appropriations bills that had been approved by House and Senate appropriations committees. At that time, the House Appropriations Committee had approved its Commerce-Justice-Science (CJS) bill and its Energy-Water spending bill. The Senate Committee on Appropriations had approved its FY 2013 Agriculture, CJS, and Energy-Water bills. The House committee has now approved all bills, except Labor-Health and Human Services (HHS)-Education, typically one of the most controversial. In addition, the full House has taken action on six of those bills. The full Senate has yet to take up any appropriations bills, but nine have passed at the committee level. This Budget Brief describes the provisions of these additional bills, focusing on proposals that would affect state budgets. Table 1 provides recommended funding levels for the discretionary and mandatory programs of most importance to states based on the latest House and Senate actions.
May 9, 2012
As described in FFIS Budget Brief 12-03, the House of Representatives adopted its fiscal year (FY) 2013 budget resolution on March 29, 2012. The resolution included reconciliation instructions directing six committees to report recommendations that would generate federal budget savings of $261.5 billion over 10 years; those recommendations are summarized in FFIS Budget Brief 12-04. The budget resolution also specified the overall discretionary spending levels for FY 2013, on which 302(b) suballocations are based. These allocations allow the House Committee on Appropriations to begin its work, which it has done. Specifically, the House appropriations committee has approved two of its 12 annual spending bills: Commerce-Justice-Science (CJS) and Energy-Water. In addition, the committee has released four bills to be considered at the subcommittee level this week: Military Construction and Veterans Affairs, Defense, State and Foreign Operations, and Homeland Security.
In lieu of adopting a budget resolution for FY 2013, the Senate chose to comply with the spending levels specified in the Budget Control Act (BCA; P.L. 112-25). Its appropriations committee released its 302(b) suballocations, and has adopted three spending bills: Agriculture, CJS, and Energy-Water.
This Budget Brief describes the provisions of these bills, focusing on proposals that would impact state budgets. It also provides an update on the FY 2013 sequester that is required under the BCA. Table 1 provides recommended funding levels for the discretionary and mandatory programs of most importance to states based on the latest House and Senate actions.
May 4, 2012
The House-passed budget resolution for fiscal year (FY) 2013 (H. Con. Res. 112) directs six House committees to find $261.5 billion in savings over 10 years to help replace the automatic across-the-board spending reductions that are scheduled to begin in January 2013, under the Budget Control Act (BCA; P.L. 112-25). All committees have advanced their proposals to the House Budget Committee, which combined them into one budget reconciliation bill that is scheduled to be considered by the full House this month. Several recommendations would affect state grant programs and funding. The Senate does not plan to take up this bill or proceed with a budget resolution.
March 30, 2012
On March 20, 2012, House Budget Committee Chairman Paul Ryan released his proposed budget resolution for fiscal year (FY) 2013 (H. Con. Res. 112). The House Budget Committee approved the measure on March 21 and the full House adopted it on March 29.
The resolution sets a FY 2013 discretionary budget cap that is lower than the one set by the Budget Control Act (BCA; P.L. 112-25) and cancels the January 2013, BCA-mandated sequester of discretionary spending in order to shield defense spending from cuts. Sequestration is replaced with cuts to nondefense discretionary and mandatory spending (which would be accomplished through budget reconciliation). State grant programs are likely targets, with Medicaid and the Supplemental Nutrition Assistance Program (SNAP) specifically identified for possible conversion to block grants. It also calls for a deficit-neutral overhaul of the tax code, with two personal income tax rates replacing the current structure and the repeal of unspecified tax preferences. It also would reduce the top corporate tax rate.
That said, the following considerations are relevant in evaluating the FY 2013 House budget resolution:
- It is not legislation. It sets the spending levels the House will allocate among its appropriations subcommittees, where actual funding recommendations for individual departments, agencies, and programs will be made.
- While it includes long-term projections, it only dictates FY 2013 spending levels.
- The Senate does not plan to adopt a budget resolution, instead deferring to the spending levels set in the BCA.
- Because the Senate is adhering to BCA spending levels and the House is reducing those levels, there will be no concurrent budget resolution and almost certainly no full-year appropriations bills enacted prior to the November 2012 election.
The most important aspects of the House budget resolution are: 1) its suspension of the sequester provisions of the BCA for FY 2013, 2) its call for reconciliation, and 3) its budget levels for FY 2013 discretionary spending.
February 17, 2012
On February 13, 2012, the president released his proposed fiscal year (FY) 2013 budget. It shares much in common with earlier budget requests, including proposals to consolidate funding into fewer grant programs (sometimes with less total funding than the replaced programs provided) and replace existing formula grant programs with competitive grants.
More importantly, the budget includes both tax and spending recommendations that would avert the budget sequestration process mandated by the Budget Control Act of 2011 (BCA, P.L. 112-25). Absent congressional approval of some such measures, the BCA calls for an across-the-board sequester of FY 2013 spending beginning in January 2013. Many observers believe that with the president’s signal that he would prefer to avoid a sequester, serious negotiations to do so will likely occur during a lame duck session of Congress, convened after the November 2012 elections.
The FY 2013 budget also calls for policies included in the president’s “American Jobs Act of 2011,” which was unveiled in September 2011. These proposals are described in FFIS Budget Brief 11-14.
Overall, the FY 2013 budget would provide a 2.7% funding increase for the major discretionary programs reported by FFIS on Table 1. This increase is somewhat misleading, as various consolidation proposals—such as the one for homeland security grants—would replace smaller programs not listed on the table with one large program that is listed.
The mandatory programs included on Table 1 are estimated to increase 7% in FY 2013. The increase is driven by child nutrition programs (+8.5%), child care (+17.1%), the Children’s Health Insurance Program (CHIP, +16.1%), and Medicaid vendor payments (+7.5%). Table 1 also estimates the potential impact of the BCA sequester on major programs, should lawmakers fail to adopt policies to replace the sequester provisions of the law.
The details of the various spending proposals are described in the following sections.
February 2, 2012
Per capita federal spending is one measure for states seeking to assess how they fare in their fiscal relationship with the federal government. This report provides a per capita analysis of the 200+ federal grant-in-aid programs tracked by FFIS and included in its grants database. Per capita data are calculated for federal fiscal years (FYs) 2010 and 2011 using population estimates for July 2010 and July 2011, which were released by the Census Bureau in December 2011.