Federal Funding Update: The Craziest Year Yet

GPA National Conference October 18, 2012

Federal Funds Information for States

Overview

 The Federal Budget Problem  Status of FY 2013 Appropriations  Lame Duck Session  What 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 level  Extends SNAP, TANF, related programs  Additional funds for a few programs  What happens after March 27, 2013?

FY 2013 Appropriations: At What Cost to States?

Federal Agency

Education Health and Human Services Housing and Urban Development Energy/EPA Justice Homeland Security Labor Transportation

FY 2012 vs. FY 2010

-1.1% -5.6% -5.4% -33.2% -40.9% -35.4% -4.9% -9.0%

CR FY 2013 vs.

FY 2012 House

0.6% 1.1% n/a n/a

Senate

0.5% 1.2% 0.6% 2.4% 5.2% 0.6% 0.6% 0.6% 0.6% 0.2% -36.2% -6.0% 27.2% n/a -0.3% 3.1% 6.9% 3.5% -2.9% 0.3%

“To Do” List for Lame Duck Congress

 Address the BCA’s looming sequester  Deal with expiring tax provisions  Consider other expiring legislation, authorizations  Raise the debt limit  Reassure markets and American c onsumers

CBO Estimates of the Fiscal Cliff The Fiscal Cliff

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2011 2012 2013 Revenues 2014

Fiscal Year

Expenditures 2015 2016 2017

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

Agriculture Employment and Training Community Development Justice General Gov’t Energy, Env., Natural Resources Education Income Security and Social Services Transportation Health

% of Funding Covered by Sequester

100% 100% 100% 100% 89% 89% 54% 23% 4% 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 uncertainty  FY 2013 budget won’t happen anytime soon – President’s FY 2014 budget released before FY 2013 budget is finalized  Program extensions continue  In short, more of the same

The End: Questions?

Contact information: Trinity Tomsic 202-624-8577, [email protected]