Capitol to Capitol | May 26, 2017

Special Edition: The President’s FY 2018 Budget

Overview

President Donald Trump’s released his first full budget proposal of his presidency on May 23, 2017. The plan, A New Foundation for American Greatness, lays out his proposals for fiscal year 2018 and the following decade. FY 2018 weighs in at $4.1 trillion. Over 10 years, the budget proposes about $3.6 trillion of deficit reduction, including $1.5 trillion from largely unspecified discretionary cuts, $2.8 trillion in net mandatory cuts (a figure that presumes repeal of the Affordable Care Act), and $300 billion in interest savings.

DYK?

More than 20 towns claim to be the Memorial Day holiday’s “birthplace”—but only one has federal recognition.

Boalsburg, Penn., bases its claim on an 1864 gathering of women to mourn those recently killed at Gettysburg. In Carbondale, Ill., they’re certain that they were first, thanks to an 1866 parade led, in part, by John Logan who two years later would lead the charge for an official holiday. There are even two dueling Columbus challengers (one in Mississippi, the other in Georgia) who have battled it out for Memorial Day supremacy for decades.

Only one town, however, has received the official seal of approval from the U.S. government. In 1966, 100 years after the town of Waterloo, N.Y., shuttered its businesses and took to the streets for the first of many continuous, community wide celebrations, President Lyndon Johnson signed legislation, recently passed by the U.S. Congress, declaring the tiny upstate village the “official” birthplace of Memorial Day.

Through a mix of growth projections, which most economists believe are overly optimistic, combined with the assumption that a tax reform plan will manage to reduce tax rates while remaining revenue-neutral, the president’s budget sets a fiscal goal of balancing by 2027 and lowering the debt burden to 60 percent of gross domestic product. In regards to the rosy budget forecast, the Committee for a Responsible Federal Budget stated that “Exaggerated growth assumptions in presidential budgets are an age-old tradition, but this budget takes it to new levels, assuming we reach 3 percent growth, a full percentage point above what the Congressional Budget Office forecasts.”

As a president’s budget is essentially D.O.A. in Congress, the document is largely a signal of policy priorities and sets the tone of the president’s agenda. In this regard, the budget demonstrates policy priorities that the president made clear on the campaign trail, by 1) increasing defense spending, 2) preserving Social Security and Medicare funding, 3) providing funds for a wall along the southern border, 4) reforming the tax code, and 5) repealing and replacing the Affordable Care Act (ACA).

The ambitious fiscal proposal now heads to a severely divided Congress, which has just over four months to come to an agreement before FY 2018 begins on Oct. 1. The document below outlines key state programs that were changed in the proposed budget.  

A PDF version of the current NCSL policies on budgets and revenue can be found here

A New Foundation for American Greatness

NCSL Summary
Prepared by: Max Behlke, Jake Lestock, NCSL Washington D.C. 

Agriculture

Department of Agriculture: $137 billion (-11.9%)

Decreases overall funding of the department by $16.4 billion, or 11.9 percent, including a 21 percent decrease in discretionary funding, compared to the 2017 enacted level. Reduces rural development funds by 26 percent and eliminates funding for the local food promotion program that was created as part of the 2014 Farm Bill. Caps subsidies to crop insurance premiums, which would save $16.2 billion over 10 years.

  • Supplemental Nutrition Assistance Program (SNAP)

The budget proposes a suite of legislative proposals aimed at targeting SNAP benefits to the neediest households, and encouraging work among able-bodied adults without dependents. The budget proposes establishing a state match for benefit costs, phasing in from a national average of 10 percent in 2020 to 25 percent, on average by 2023. Combined, this would generate nearly $191 billion in savings over 10 years.

Commerce

Department of Commerce: $7.8 billion (-16%)

Decreases funding of the department by $1.4 billion, or 16 percent, compared to the 2017 enacted level. The budget prioritizes enforcement and compliance of our existing trade laws, creating 29 new positions at the International Trade Administration.  

Defense

Department of Defense: $639 billion (+9%)

Increases funding for the department by $52 billion, or 9 percent, compared to the 2017 spending.

The budget’s proposed $1.4 trillion reduction of nondefense discretionary spending over 10 years was partially offset by a sizable increase in defense discretionary spending. The largest increase in spending is due to the repeal of the defense sequester and by raising the cap on defense spending, which will increase defense spending by roughly $470 billion over 10 years. The budget increases spending for military construction spending across the Department of Defense by 25 percent, rising from $7.8 billion in the current year to $9.8 billion next year.

Education

Department of Education: $59 billion (-13.5%)

Decreases funding of the department by $9.2 billion, or 13.5 percent, compared to the 2017 enacted level.

  • Eliminates the $2.3 billion Supporting Effective Instruction State Grants program, which is used for teacher training and class-size reduction.
  • Eliminates the $1.2 billion 21st Century Community Learning Centers program, which supports after-school programs.
  • Eliminates the $190 million Striving Readers/Comprehensive Literacy Development Grants program.

School Choice

  • Increases Title I funding by $1 billion for a new grant program, Furthering Options for Children to Unlock Success (FOCUS), which would provide supplemental awards to school districts that adopt a system of student-based funding formulas and open enrollment.
  • Provides $250 million for the Education Innovation Research (EIR) program for vouchers for low-income students to attend private schools.
  • Increases funding of the Charter School Grants program by $167 million.

Student Loans

  • Ends federal subsidies for student loan interest, amounting to a $1 billion reduction in FY 2018.
  • Simplifies student loan repayment plans. Currently, students can choose between standard repayment (a 10-year term), graduated, extended, pay-as-you-earn, income-based, income-contingent and public service loan forgiveness. These would be replaced with one repayment plan, capping payments at 12.5 percent of a borrower’s discretionary income. Student loans would be forgiven after 15 years for undergraduate borrowers.
  • Eliminates the public service loan forgiveness program, which allows individuals who have worked for the government for at least 10 years to have their loans erased.  

Pell Grants

  • The proposal would make Pell Grants, a form of tuition aid for low-income students, available in the summer in addition to its current availability in the spring and fall. The most recent funding measure passed by Congress for 2017 also contained this provision.

Energy

Department of Energy: $28 Billion (-6%)

Decreases funding of the department by $1.7 billion, or 6 percent, compared to the 2017 enacted level.

  • Eliminates the Weatherization Assistance Program, and the State Energy Program Grant, both of which were funded at $228 million, and $70 million, respectively in 2017.
  • Eliminates the Advanced Research Project Agency-Energy (ARPA-E) program, which was allocated $290 million in FY 2017.
  • Reduces funding for the Office of Energy Efficiency and Renewable Energy, which oversees DOE’s regulatory role in setting efficiency standards for appliances and buildings and supports research in clean energy technologies, to $636 million in FY 2018 from over $2 billion in FY 2017.
  • Reduces funding for the Nuclear Energy Office by 30 percent from FY 2017.
  • Unlike the FY 2017 budget, the proposal includes $90 million to restart licensing activities for the Yucca Mountain nuclear waste repository, and to initiate an interim storage program.
  • Reduces the Strategic Petroleum Reserve by half, which estimates that it will reduce the deficit by $16.5 billion over 10 years.
  • Repeals state payments authorized under the 2006 Gulf of Mexico Energy Security Act, which allows states a share of drilling royalties generated in federal waters off their costs. The provision anticipates that it will lower the deficit by $3.5 billion within 10 years. 

Environment

Environmental Protection Agency (EPA): $5.7 Billion (-31.4%)

Decreases funding of the agency by $2.5 billion, or 31.4 percent, compared to the 2017 enacted level.

  • Reduces $597 million in funding, or 45 percent of categorical grants allocated to states that fund state environmental program offices and activities related to the Clean Air Act, Clean Water Act, and Safe Drinking Water Act.
  • Funding for air quality management programs, which includes the agency’s air toxics program and support for the development of state implementation plans, will be reduced by 24 percent from $132 million in FY 2017 to $100.4 million in FY 2018.
  • State Revolving Funds, which provide low-interest loans for water infrastructure projects, are proposed to be modestly expanded by less than a 1 percent.
  • The Office of Enforcement and Compliance Assurance would see its funding reduced by nearly 24 percent to $419 million in FY 2018. Funding for EPA’s Hazardous Substance Superfund Account sees a request of $762 million, a significant decrease from the $1 billion in FY 2018.
  • Eliminates the EPA’s geographic programs such as the Great Lakes Restoration Initiative and the Chesapeake Bay Program in FY 2018, delegating protection and restoration activities to states and localities.

Department of Interior: $11.7 Billion (-10.9%) 

Decreases funding of the department by $1.5 billion, or 10.9 percent, over the 2017 enacted level.

  • Funds the Bureau of Land Management at $1.1 billion, a $200 million decrease from FY 2017.
  • Funds the Fish and Wildlife Service at $1.3 billion, a reduction of $200 million
  • Funds the National Park Service at $2.55 billion, a reduction of nearly $360 million from FY 2017.
  • Eliminates the FLAME Wildfire Suppression Reserve Fund

Health and Human Services

Department of Health and Human Services: $69 Billion (-18%)

Decreases funding of the department by $15 billion, or 18 percent, compared to the 2017 enacted level.

Medicaid

  • Reduces spending in the Medicaid program by $617 billion over 10 years, which does not include the possible additional savings that would result in repeal and replacement of the Affordable Care.
  • Provides states the option of a per capita cap or a block grant funding mechanism beginning FY 2020.
  • Proposes a new initiative, the Medicaid Direct Primary Care (DPC), which is intended to provide an enhanced focus on direct physician-patient relationships through enrolling Medicaid patients in DPC practices.

Children’s Health Insurance Program (CHIP)

  • Extends CHIP by an additional two years, through fiscal year (FY) 2019.
  • Eliminates the 23 percent increase in the enhanced federal match rate and the current law maintenance of effort requirement after FY 2017.
  • Caps the level at which states could receive the CHIP enhanced federal matching rate at 250 percent of the federal poverty level (FPL).
  • Under current law, states are required to transition children ages 6 to 18 in families with incomes between 100 and 133 percent off the federal poverty level (FPL) off-of CHIP to Medicaid. This proposal allows states to move these children back into CHIP.

    Child Welfare Programs
  • Decreases funding of child welfare programs by $9 million for a total of $316 million.

Temporary Assistance for Needy Families (TANF)

  • Reduces the TANF State and Territory Family Assistance Grants by $2.2 billion to $15.1 billion.
  • Eliminates the Temporary Assistance for Needy Families Contingency Fund, saving $6 billion over 10 years.

Food and Nutrition

  • Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

Provides $6.2 billion, or a $200 million reduction, to serve all projected participants in WIC.

  • SNAP Retailer Application Fee

The budget proposes establishment of an application fee for retailers seeking authorization to accept and redeem the electronic benefits provided by the SNAP, formerly Food Stamps. This proposal is estimated to generate approximately $2.4 billion in revenue over 10 years to offset SNAP expenses.

Program Elimination in HHS

  • Low Income Home Energy Assistance Program (LIHEAP)

Eliminates funding for the LIHEAP program in FY 2018.

  • Community Services Programs

Discontinues funding for the Community Services Block Grant and the Community Economic Development, Rural Community Facilities, and Assets for Independence Programs.

  • Social Services Block Grant

Eliminates funding for the Social Services Block Grant. In FY 2018.​

Homeland Security

Department of Homeland Security: $44.1 Billion (+7%)

Increases funding of the department by $2.8 billion, or 7 percent, over the 2017 enacted level.

  • Increases funding for cybersecurity by $594 million to $971 million.
  • Provides $1.6 billion in funding for a border wall.
  • Provides $2.1 billion for various grant program to assist states in preventing and recovering from acts of terrorism and other “catastrophic events.”
  • Provides $7.4 billion in funding for the Federal Emergency Management Agency’s (FEMA) Disaster Relief Fund to assist states in dealing with domestic major disasters and emergencies, a decrease of $23 million from the FY 2017 annualized continuing resolution.
  • Eliminates or reduces state and local grant funding by $667 million for programs administered by FEMA that are either unauthorized by the Congress, such as FEMA’s Pre-Disaster Mitigation Grant Program, or that must provide more measurable results and ensure the federal government is not supplanting other stakeholders’ responsibilities, such as the Homeland Security Grant Program. For that reason, the budget also proposes establishing a 25 percent non-federal cost match for FEMA preparedness grant awards that currently require no cost match.
  • Increases funding for U.S. Immigration and Customs Enforcement (ICE) by 29.4 percent. Total appropriation of $7.9 billion reflects an increase from $6.1 billion:
    • $975.5 million for border security and surveillance.
    • $100 million for 20,000 new border patrol positions.
    • $185.9 million for expanded ICE enforcement activities.
    • $484 million for transportation costs of detainees.
    • $131.5 for E-verify operations (this program was eliminated in the Obama Administration).

Department of Justice: $27.7 Billion (-4%)

Decreases funding for the department by $1.1 billion, or 4 percent, compared to the 2017 enacted level.

State and local law enforcement funding:

  • Decreases funding for the Edward Byrne Memorial Justice Assistance Grants Program from $385.5 million to $332.5 million.
  • Eliminates the State Criminal Alien Assistance Program, which was funded at $193 million in 2017.
  • Decreases funding of the Second Chance Act/Offender Re-entry from $59 million to $48 million.
  • Retains $45 million in funding for the Victims of Trafficking program.
  • Proposes $20 million in new funding for a Comprehensive Opioid Abuse Program.
  • Increases funding for Concerns of Police Survivors from $201 million to $218 million.
  • Increases funding for Violence Against Women from $182 million to $215 million.
  • Decreases funding for Juvenile Justice from $270 million to $230 million.

There are also provisions in the budget proposal that seek to expand the definition of sanctuary jurisdictions and require states and localities to comply with Department of Homeland Security detainers that are currently not in statute.

Labor and Economic Development

Department of Labor: $9.6 Billion (-21%)

The FY 2018 request of $9.7 billion for the department is a 21 percent reduction from 2017.

Unemployment Insurance/Paid Parental Leave

Establishes a paid parental leave benefit within the unemployment insurance (UI) program to provide six weeks of paid family leave to new mothers and fathers, including adoptive parents, at a cost of $18.5 billion over 10 years.

Apprenticeships

Invests $89.8 million in apprenticeships, an evidence-based approach to job training in efforts to close the skills gap.

Senior Community Service Employment Program

Eliminates the Senior Community Service Employment Program, a program created to transition seniors into unsubsidized employment, for a savings of $433.5 million.

Department of Housing and Urban Development: $40.68 billion (-13%)

Reduces funding of the department by 13 percent. The proposed reductions would be implemented primarily through rental assistance reforms and eliminating funding for programs.  

Veteran Affairs

Department of Veterans Affairs: $78.9 billion (+6%)

Increases funding of the department by $4.4 billion, or 5.8 percent, over the 2017 enacted level.

Adds $4.4 billion in new funding to expand health services and modernize VA's benefit claims system and other services.

Transportation

Department of Transportation (DOT): $16.2 billion (-13%)
Decreases funding of the department by $3.1 billion, or 13 percent, compared to the 2017 enacted level.

  • Funding for the Highway Trust Fund would match the amount authorized by the 2015 FAST Act, including $44 billion in highway formula funding and $11 billion in transit formula funding.
  • Provides $1.2 billion for transit, a reduction of 50 percent from FY 2017.
  • Eliminates funds for TIGER grants, which are currently funded at $500 million.
  • Amtrak funding would be reduced by approximately 50 percent to $774 million in FY 2018 from $1.5 billion in FY 2017.

Infrastructure Initiative

DYK?

On Jan. 8, 1835, all the big political names in Washington gathered to celebrate what President Andrew Jackson had just accomplished. A senator rose to make the big announcement: "Gentlemen ... the national debt ... is PAID."

That was the one time in U.S. history when the country was debt free. It lasted exactly one year.

One noteworthy item included in the budget is a proposal to spend an additional $200 billion over nine years on “infrastructure.” The proposal includes $5 billion in funding in FY 2018, which would increase to $25 billion in 2019, $40 billion in 2020 and $50 billion in 2021 before declining back down to zero by FY 2027. However, the budget does not provide specifics as to how such funds would be appropriated—existing funding mechanisms or something new.

Budget’s fact sheet on the administration’s infrastructure initiative. The document described the administration’s belief that the current system of federal funding is not working. Although it does not define infrastructure, the document mentions infrastructure systems covering transportation, drinking water and wastewater, energy, veterans affairs and inland waterways. 

U.S. Army Corps of Engineers: $5 billion (-16%)

Decreases funding for the U.S. Army Corps of Engineers by $1 billion, or 16 percent, compared to the 2017 enacted level. use. 

The Federal Budget in 2016

The Congressional Budget Office (CBO) graphic below shows the federal government’s revenues and spending in 2016.

Chart showing federal spending and revenue

Read the May 22, 2017, Capitol-to-Capitol.

If you have comments or suggestions regarding Capitol-to-Capitol, please contact Max Behlke.

NCSL's Advocacy in Washington

NCSL's Washington staff advocate Congress, the White House, and federal agencies on behalf of state legislatures in accord with the policy directives and resolutions that are recommended by the NCSL Standing Committees and adopted by the full conference at the annual NCSL Legislative Summit Business Meeting. As a result of the advocacy that is guided by these policies positions, NCSL is recognized as a formidable lobbying force in state-federal relations.

NCSL Staff in Washington, D.C.

  • Neal Osten | 202-624-8660 | Molly Ramsdell | 202-624-3584 | Directors
  • Max Behlke | 202-624-3586 | Budgets and Revenue
  • Rachel Morgan | 202-624-3569 | Health and Human Services
  • Jon Jukuri  | 202-624-8663 | Labor, Economic Development and International Trade
  • Susan Frederick | 202-624-3566 | Law, Criminal Justice, and Public Safety
  • Ben Husch | 202-624-7779 | Natural Resources and Infrastructure