Capitol to Capitol
An Information Service of NCSL's Standing Committees

Volume 18, Issue 30- August 26,2011

 

FEDERAL FUNDING FOR STATES FOR FY 2012 GETS CLEARER

States, on average, can expect level or slightly reduced funding for state-federal discretionary programs for upcoming federal fiscal year 2012. Two pronouncements this week have offered clarity to an otherwise murky picture. On August 19, 2012, the Office of Management and Budget (OMB) reported that House FY 2012 appropriations actions to date would “result in a sequestration (essentially an across-the-board reduction) of discretionary budget authority in the ‘security’ category if offsets are not enacted.” The early-August deficit reduction deal (the Budget Control Act – BCA)established separate discretionary spending ceilings for FY 2012 and FY 2013 for defense, homeland security and veterans  (“security”) programs and for all other “domestic” programs where most state-federal programs reside (education, transportation, criminal justice, environment, energy, labor and other “non-security” programs). The BCA also set discretionary spending ceilings for FY 2012 at $7 billion below FY 2011. House appropriators were on a course to reduce FY 2012 spending by $30 billion or more by slicing funding for domestic discretionary programs and increasing funding for defense-homeland security-veterans.  This would have presented states with a likely double-digit percentage reduction in FY 2012 discretionary spending. 

The OMB report prompted House Appropriations Committee chairman and Kentucky Rep. Harold Rogers to announce he would abandon all appropriations work to date and instead comply with the spending ceilings established in the BCA. Since the Senate has barely started its appropriations work, it appears that both chambers are now on course to pass their dozen annual appropriations bills that will net a $7 billion spending reduction from FY 2011 levels by cutting both the security and non-security segments of the budget. When will this happen? Congress has a mere 11 legislative days in September. States should expect Congress to pass at least one continuing resolution before the current fiscal year ends on Sept. 30. This will give appropriators additional time to work out their differences. Bottom line: the larger and more pronounced reductions to state-federal programs will be saved for FY 2013 and beyond. NCSL will keep you updated. NCSL staff contacts: Michael Bird, Jeff Hurley


FIRST GLIMPSE OF FY 2013

This week the Office of Management and Budget directed federal agencies to prepare budget documents for FY 2013. The OMB guidance directs agencies to prepare budget submissions that will accomplish both five percent and 10 percent reductions from likely FY 2012 funding levels. The guidance also encourages agencies to prioritize spending requests. This is definitely a sign of future federal funding levels for states resulting in part from the BCA (see above story) and the mission of the Joint Select Committee on Deficit Reduction (also created in the August deficit reduction “deal’) to find $1.2 trillion to $1.5 trillion in additional deficit reduction savings. The OMB guidance is available at http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/mll-30.pdf. NCSL staff contacts: Michael Bird, Jeff Hurley


TWO TRACKS FOR TRANSPORTATION REAUTHORIZATION

When the Senate returns Sept. 7, its Environment and Public Works Committee has tentatively planned to markup a simple extension of SAFETEA-LU authority that will keep state-federal highway, safety and mass transit programs funded through the end of Jan. 2012. Simultaneously, the same committee will markup a two-year full reauthorization of SAFETEA-LU sponsored by California Sen. Barbara Boxer that will these programs at $109 billion, an amount that exceeds anticipated gas tax revenues by 10 percent. These two bills will compete with a six-year reauthorization favored by House Transportation and Infrastructure Committee chair and Florida Rep. John Mica. Failure to accomplish at least a short-term extension will put collection of the federal gas tax, and therefore the highway trust fund, in jeopardy. Stay tuned. NCSL staff contacts: Molly Ramsdell, Helen Narvasa.