An Information Service of NCSL's Standing Committees
Volume 18 Issue 12 - April 8, 2011
LAST GASP ON 2011 APPROPRIATIONS
With the current continuing resolution expiring April 8, lawmakers spent much of the week trying to find common ground to fund the federal government for the remainder of fiscal year 2011. Although a 7th continuing resolution is not off the table, members from both sides of the aisle are more inclined to finalize appropriations. However, House Republicans have proposed H.R. 1363, which would extend $12 billion in cuts for one week while also fully funding the Department of Defense for the rest of the fiscal year. Spending reductions proposed in it include $39 million from the Broadband Loan Program, $137 million from the Rural Development/Conservation Program, $700 million from the Clean Water/Drinking Water State Revolving Funds, $390 million from the Low-Income Home Energy Assistance Program (LIHEAP) contingency fund, and $1.5 billion from high-speed rail. The House passed this measure by a vote of 247-181; however, the president offered a statement of administration policy that he would veto it. Current speculation is that Senate Democrats may offer a clean resolution without the cuts for an undetermined period to give lawmakers more time to negotiate.
Negotiations among leaders in the House and Senate indicate spending cuts between $33 billion and $40 billion are being discussed. Although specific reductions have yet to be released, potential cuts may include both discretionary and mandatory programs. Compromise on fiscal year 2011 spending levels is not the only issue up for discussion, as several policy riders also continue to be debated. (NCSL staff contacts: Michael Bird, Jeff Hurley)
CLOCK SOON TO STRIKE 12
Barring a last-minute agreement on funding levels, at midnight on April 9 the federal government will shutdown for the first time since 1995 as the 6th continuing resolution of fiscal year 2011 expires. The White House noted that approximately 800,000 government employees will be furloughed, with only those deemed “essential” still working. What does this mean for states? If the length of the shutdown is relatively short, the state impact should be relatively limited. However, if states cannot draw down federal funds they may have to cover the shortfall in the interim. As past precedent has indicated, benefit payments under entitlement programs, such as Medicare and food stamps, are not subject to one-year appropriations. Thus, these payments should continue to be funded, although a prolonged government shutdown may complicate the issue. For updates and links to more information on the government shutdown, please check http://www.ncsl.org/default.aspx?TabId=22503. (NCSL staff contacts: Michael Bird, Jeff Hurley)
2012 BUDGET HEADS TO HOUSE FLOOR
On April 6, the U. S. House Budget Committee favorably reported the FY 2012 budget resolution. The legislation, sponsored by Wisconsin Representative Paul Ryan, cleared the committee on a 22-16 vote. Like previous budget resolutions, it is a spending and revenue blueprint for the coming fiscal year and an overall 10-year budget plan. The resolution excludes budget reconciliation instructions. This means that budgeters are relying on substantive committees to produce some of the savings, modify programs, and make changes in enforcement mechanisms and taxes, which are all outlined in the “Path to Prosperity,” a narrative supplement for the budget resolution. Due to the nation’s mounting debt problems, Rep.Ryan’s budget plan aims to diminish the deficit by $4.4 trillion over the next 10 years and reduce the unemployment rate to 4 percent by 2015.
States could have concerns in this or any other budget resolution that may surface. Rep. Ryan’s budget resolution would reduce domestic, non-security discretionary spending—home to many state-federal programs—to pre-FY 2008 levels and freeze this spending for five years. This would produce double digit percentage reductions for many programs. It also proposes block grants for Medicaid and food stamps, saving the federal government nearly $800 billion in future Medicaid commitments over 10 years. The resolution would subject all mandatory and entitlement programs to the annual appropriations process rather than giving states predictability (by formula or other factor) of funding for many of these state-federal programs. It would set up a universal spending cap, tied to gross domestic product, and impose sequestration (across-the-board cuts) if the cap is breached in any year. It would also prohibit transfers of general fund money into the highway trust fund, a recent practice that has maintained transportation program funding on which states rely. Other features of the budget plan include consolidation of duplicative programs, continued prohibitions on earmarks, Medicare reform, repeal of federal health care reform, scaled back financial services reform, extension of federal tax cuts, enhancement of domestic energy production, and a 10 percent reduction in the federal workforce.
What’s next? This budget resolution gets an up or down vote next week on the House floor. There will likely be alternatives from the Republican Study Committee, the Democratic minority, the congressional Black Caucus and perhaps the Blue Dog Democrats (whose budget principles have already been rejected by the House Budget Committee). An NCSL summary of the House legislation is available at: http://www.ncsl.org/default.aspx?TabId=22501. Text of the budget resolution and the “Path to Prosperity” are available at: http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf.
What about the Senate? April 15 is the target date for each house to move its budget resolution. There is no sign of a Senate budget resolution surfacing let alone being debated and passed in the near future. (NCSL staff contacts: Michael Bird, Jeff Hurley)
DEBT CEILING: THE NEXT BATTLEGROUND?
U.S. Treasury Secretary Timothy Geithner announced this week that the federal government will hit its borrowing ceiling in mid-May. The secretary intimated that use of various fiscal and economic tools could prevent a default on federal obligations through July 8. The debate on raising the $14.29 trillion debt ceiling promises to be contentious based on comments made by various members of Congress. The rancor over resolution of the FY 2011 appropriations bill serves as a signal for what to expect when America runs out of borrowing authority. Secretary Geithner’s letter to Congress is available here: http://www.treasury.gov/connect/blog/Documents/FINAL%20Letter%2004-04-2011%20Reid%20Debt%20Limit.pdf. (NCSL staff contacts: Michael Bird, Jeff Hurley)