Federal Funding Update: The Craziest Year Yet

GPA National ConferenceOctober 18, 2012

Federal Funds Information for States

Overview

The Federal Budget ProblemStatus of FY 2013 AppropriationsLame Duck SessionWhat Does it Mean for States and

Federal Grants?

The Federal Budget Problem

Where the Money Goes: Pieces of the Federal Budget Pie

Composition of Federal Outlays in FY 2011($ in Billions, % of Total)

State/Local Grants by Program Area

Federal Outlays to State and Local Governments, FY 2011($ in Billions, % of Total)

FY 2013 Budget: Congress Approves Six-Month Continuing Resolution

FY 2012 + 0.612% for most discretionary programs (not highways)

Mandatory programs: current-law levelExtends SNAP, TANF, related programsAdditional funds for a few programs What happens after March 27, 2013?

FY 2013 Appropriations: At What Cost to States?

FY 2013 vs. FY 2012

Federal Agency FY 2012 vs. FY 2010 CR House Senate

Education -1.1% 0.6% n/a 0.5%

Health and Human Services

-5.6% 1.1% n/a 1.2%

Housing and Urban Development

-5.4% 0.6% 2.4% 5.2%

Energy/EPA -33.2% 0.6% -36.2% 3.1%

Justice -40.9% 0.6% -6.0% 6.9%

Homeland Security -35.4% 0.6% 27.2% 3.5%

Labor -4.9% 0.6% n/a -2.9%

Transportation -9.0% 0.2% -0.3% 0.3%

“To Do” List for Lame Duck Congress

Address the BCA’s looming sequesterDeal with expiring tax provisionsConsider other expiring legislation,

authorizationsRaise the debt limitReassure markets and American consumers

CBO Estimates of the Fiscal Cliff

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2011 2012 2013 2014 2015 2016 2017

$ in

bill

ions

Fiscal Year

The Fiscal Cliff

Revenues Expenditures

The BCA and the Sequester

Absent a legislated alternative, a sequester will occur on January 2, 2013

Many mandatory and a few discretionary programs are exempt– OMB report sheds light on its interpretations

OMB estimates of ATB cuts: 8.2% (nondefense discretionary), 7.6% (nondefense mandatory), 9.4% (defense discretionary)

ATB reduction applied to FY 2013 funding in effect on January 2, 2013 (CR level)

Sequester Coverage Status of 216 FFIS-Tracked Programs

Sequester Coverage Status of $606 Billion FFIS-Tracked Funding

Program Areas Most Affected

Budget Function % of Funding Covered by Sequester

Agriculture 100%Employment and Training 100%Community Development 100%Justice 100%General Gov’t 89%Energy, Env., Natural Resources 89%Education 54%Income Security and Social Services 23%Transportation 4%Health 3%

The Conventional Wisdom Keeps Changing

For appropriations, from another CR to an omnibus

For BCA, from agreeing to postpone the day of reckoning, to sequester

For expiring tax provisions, from extending some tax cuts to allowing all to expire

For authorizations, from completing some to extensions

What Does this Mean for States?If Congress Goes for It…..

“Grand Bargain” means greater certainty but less funding. Likely changes include:– Reforms to entitlement programs (flexibility

vs. funding)– Further reductions in discretionary

spending– Revenue effects from tax overhaul

What Does this Mean for States?If Congress Punts…..

States continue to face uncertaintyFY 2013 budget won’t happen anytime

soon– President’s FY 2014 budget released

before FY 2013 budget is finalizedProgram extensions continue In short, more of the same

The End: Questions?

Contact information: Trinity Tomsic202-624-8577, ttomsic@ffis.org