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Human Services Overview of the Fiscal Cliff Deal

Human Services Overview of the American Tax Payer Relief Act January 2013

U.S. Capitol

The “fiscal cliff” was temporarily avoided when President Obama signed H.R. 8, the American Taxpayer Relief Act. Most of what created the fiscal cliff was not permanently resolved. The automatic across-agency spending cuts, known as “sequestration,” were delayed until early March, the statutory debt limit still needs to be addressed in February, and the current federal government is funded under a continuing resolution that expires at the end of March. However, H.R. 8 addressed several tax and health issues, continues federal unemployment benefits, and extends the Farm Bill.  Below is the impact of the law on human services programs. You can read NCSL’s general overview of H.R. 8. by clicking here.

Farm Bill

H.R.8 extends, but does not reauthorize, the Farm Bill through Sept. 30, 2013. There were no policy changes for federal nutrition programs included in the law. The state option for categorical eligibility and state performance bonuses remain intact. It level funds the Supplemental Nutrition Assistance Program’s (SNAP) employment and training program at $79 million and continues to fund the Seniors Farmers Market Nutrition Program and Community Food Projects. H.R. 8 cuts $110 million from SNAP-Ed, the nutrition education and obesity prevention grant program for FY 2013.

Tax Provisions

Several tax credits that were set to expire were extended for five years. The Earned Income Tax Credit’s (EITC) simplification rules were included in the extension as well as the credit for families with three or more children. The Child Tax Credit (CTC) was extended with the refundability provisions passed in 2001 and 2009. Additionally, refunds from the EITC and CTC will not count as income or resources for 12 months after receipt when applying for benefits or assistance under any federal program or state program financed entirely or partially with federal funds. This included the Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP), among many others. The Dependent Care Tax Credit was extended and the increase for eligible expenses ($3,000 for one child, $6,000 for two or more children) was included. 

The Adoption Tax Credit was made permanent (meaning it does not expire); however, the refundability provision was not included in the law.

Sequestration

Sequestration was postponed until early March and it is anticipated that an alternative agreement will replace sequestration. It is unclear what programs would be impacted by any alternative agreement negotiated and it is possible that cuts to human services programs could be included in the negotiated agreement.  
 
The following programs are exempt from sequestration, should no alternative come to pass:

  • Temporary Assistance for Needy Families (TANF)
  • Contingency fund
  • Child Care entitlement to states
  • Supplemental Nutrition Assistance Programs (SNAP)
  • Supplemental Security Income program (SSI)
  • Child nutrition programs, except special milk programs
  • Family support payments to states
  • Medicaid payments to states
  • Commodity Supplemental Food Program
  • Pell Grants
  • Child Welfare foster care and permanency payments
  • Social Security
  • Refundable Tax Credits
  • Child Support Enforcement
  • Unobligated non-defense  balances

The Social Services Block Grant (SSBG), the Low Income Home Energy Assistance Program (LIHEAP), the Supplemental Nutrition Assistance Program for Women, Infants and Children (WIC), and the non-entitlement portion of the Child Care Block Grant (CCBG) would not be exempt from sequestration.


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