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March 13, 2014
On March 4, 2014, the president released portions of his fiscal year (FY) 2015 budget proposal, about one month after the statutory deadline; remaining documents were released on March 10. The president’s budget retains the FY 2015 discretionary spending caps included in the Bipartisan Budget Act of 2013 (BBA), but it also includes a separate proposal that would increase FY 2015 spending by $56 billion. Importantly, the president’s budget proposes to eliminate sequestration of mandatory programs that is part of the Budget Control Act of 2011 (BCA). Such sequestration would reduce affected programs by -7.3% in FY 2015.
The budget recycles themes and specific requests from earlier budget submissions, including proposals to consolidate grant programs, replace formula grant programs—or a portion thereof—with competitive grants, and implement new competitive grant programs. It also proposes to increase the minimum wage to $10.10 per hour and index it to inflation.
Overall, the FY 2015 budget would provide a 6.7% funding increase for the major discretionary programs reported by FFIS on Table 1. The mandatory programs are estimated to increase 9.1% in FY 2015. Combined funding for discretionary plus mandatory grant programs would increase 8.4% under the budget.
Significant FY 2015 budget proposals are described in the following sections.
January 24, 2014
On January 17, 2014, the president signed the fiscal year (FY) 2014 omnibus appropriations spending package (H.R. 3547), completing the budget process for FY 2014. The omnibus includes all 12 appropriations bills and sets overall discretionary spending at $1.012 trillion. The funding levels in the bill are in effect for the entire fiscal year and replace the annualized funding levels set in the previous continuing resolution (CR). Moreover, the Congressional Budget Office (CBO) scored the legislation as exactly matching the defense and nondefense discretionary caps set by the Bipartisan Budget Act (H.J.Res. 59) in December 2013.
This Budget Brief describes the funding and policy provisions in the omnibus relevant to states. Table 1 includes FY 2014 funding levels for major grant programs. Compared to FY 2013, states will see a 4.5% increase in these major discretionary programs. Mandatory programs are estimated to increase 11.5%, largely driven by projected growth in Medicaid. A few mandatory programs listed on the table are subject to FY 2014 sequestration of nonexempt mandatory programs, as explained below.
December 13, 2013
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.
November 27, 2013
On November 13, 2013, the Congressional Budget Office (CBO) released its periodic report of options for reducing the federal budget deficit. The report outlines 103 policy options that would either reduce federal spending or increase federal revenues over the next 10 years. The options are taken from a variety of sources, such as the president’s budget, proposed legislation, congressional budget resolutions, private organizations, and others. The options may have more relevance than usual this year, as Congress wrestles with an incomplete budget process and a desire to both reduce federal budget deficits while simultaneously providing additional discretionary spending in fiscal year (FY) 2014. The sections below highlight the options that would have an impact on states.
October 17, 2013
Early on October 17, 2013, the president signed H.R. 2775, making continuing appropriations for fiscal year (FY) 2014. The bill’s notable features include:
- Ending the 16-day federal government shutdown
- Providing appropriations until January 15, 2014, at final FY 2013 levels, similar to the provisions of the initial House continuing resolution (CR) described in FFIS Budget Brief 13-12 (Sec. 101)
- Reimbursing states for costs incurred for operating federal programs during the shutdown, including reimbursement for furloughed employees (Sec. 116)
- Providing short-term extensions for several programs that expired on September 30, 2013, including the nutrition title of the farm bill and Temporary Assistance for Needy Families (TANF) (Sec. 111 and 139)
- Requiring additional verification that persons seeking federal subsidies under the Affordable Care Act (ACA) are eligible for such subsidies (Sec. 1001)
- Suspending the federal debt ceiling until February 7, 2014 (Sec. 1002)
While not part of the legislative text, the House and Senate also agreed to create a conference committee that would craft a broad budget agreement by December 13, 2013.
October 7, 2013
Most discretionary programs (and some mandatory programs funded in appropriations acts) are affected by the government shutdown in that no new money is available during the lapse in federal budget appropriations. While Congress is considering legislation to ensure that federal workers are paid during the shutdown once appropriations are enacted, it has not addressed whether states would be reimbursed for any state funds used to run federal programs. The Office of Management and Budget (OMB) said it will advocate for such reimbursement, and several agencies have advised states that federal reimbursement will be allowed, unless Congress specifies otherwise.
This brief is designed to help states assess their options for funding programs during the appropriations lapse, as well as to determine how specific programs may be affected.
October 3, 2013
Some mandatory programs are less affected than others by the current lapse in federal budget appropriations. Nuances in the federal budget process result in a number of mandatory programs relying on annual appropriations while others do not.
September 30, 2013
With just a few hours remaining before the beginning of federal fiscal year (FY) 2014, attention has turned to the possibility that Congress will be unable to agree to a continuing resolution (CR) to maintain funding for the federal government. A CR is necessary because no appropriations bills have been enacted for FY 2014. Last week, the House passed a CR that incorporated “defunding” of the Affordable Care Act (ACA; P.L. 111-148). In response, the Senate stripped the defunding provision from the CR and sent it back to the House, where new language was added to delay implementation of the ACA, and repeal its medical device tax. The Senate rejected these provisions in its latest vote, and it is unclear how the House will proceed.
FFIS has summarized the impact of the House CR (H.J. Res. 59) in Budget Brief 13-12. This brief discusses the impact of a federal government shutdown on major grant programs, should it come to pass.
September 12, 2013
On September 11, 2013, the House unveiled a draft Continuing Resolution (CR, H.J. Res. 59) for fiscal year (FY) 2014 that would keep the federal government running until December 15, 2013. Discretionary spending levels in the CR are set at an annualized level of $986 billion. This reflects the FY 2013 post-sequester spending level, plus additional funding for certain areas including judicial services, wildfire management, and veterans’ disability claims processing. The CR also contains a few policy provisions and would extend funding for several programs that are set to expire on September 30, 2013.
August 22, 2013
In the days leading up to their five-week August recesses, both chambers of Congress reached an impasse on an important spending bill, which signaled a fundamental breakdown in the appropriations process for fiscal year (FY) 2014. In both chambers, it was the spending bill for Transportation-Housing and Urban Development (T-HUD) that caused problems. In the House, the bill was reportedly pulled prior to a floor vote when it became clear that there was insufficient support for the deep cuts included in it. In the Senate, the majority party was unable to invoke cloture (which requires 60 votes and is necessary to end debate), so the bill never made it to a vote. It was the first FY 2014 appropriation bill to be brought to the Senate floor.
While neither of these developments is shocking given the acrimonious environment on Capitol Hill, they do raise important issues for states. What is the outlook for the federal budget as the new fiscal year approaches on October 1, 2013? What will become of the Budget Control Act (BCA; P.L. 112-25) and sequestration? What are the implications for state grant programs?
July 9, 2013
Last month, FFIS released Budget Brief 13-09, detailing provisions of the House committee’s fiscal year (FY) 2014 Homeland Security appropriations. Since that time, there has been movement on several other FY 2014 spending bills. Both the House and Senate appropriations committees have approved FY 2014 Agriculture, Energy-Water, and Transportation-Housing and Urban Development (HUD) appropriations bills. In addition, both committees have now approved their respective 302(b) allocations to the various appropriations subcommittees. This Budget Brief describes the differences in the 302(b) allocations and the provisions of the recent spending bills. 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.
June 14, 2013
On June 6, 2013, the House passed H.R. 2217, a bill to fund the Department of Homeland Security (DHS) for fiscal year (FY) 2014. The bill would provide $1.5 billion for state and local programs under the Federal Emergency Management Agency (FEMA), a 10.3% increase from FY 2013. Most of these funds would be distributed at the discretion of the secretary of DHS. This Budget Brief explains the proposed changes.
May 22, 2013
As part of the federal budget process, the February release of the president’s budget is followed in April by congressional adoption of a concurrent budget resolution, which establishes broad spending parameters for the annual appropriations process. This process has been turned on its head in recent years, with the president’s budget frequently being released after the statutory deadline and Congress seldom adopting a concurrent budget resolution. In fact, the last concurrent budget resolution adopted by Congress was in April 2009 for fiscal year (FY) 2010.
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.