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

Volume 20  Issue 8 - March 1, 2013

MARCH MADNESS BEGINS

It’s March, time for sequestration. Barring any future modification, the federal government today begins application of $85 billion in across-the-board spending reductions to non-exempt defense and nondefense discretionary spending programs. According to the Congressional Budget Office, defense programs will be reduced by 7.9 percent, while nondefense discretionary spending will be cut by 5.3 percent. A variety of programs and grants are exempt, notably funding for military personnel, Medicaid, Social Security, Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP) and a majority of transportation funding. Areas most affected by the sequester include education, environment, human services, job training, law enforcement, homeland security and most defense discretionary programs. Sequestration originated in the Budget Control Act (BCA) enacted in the summer of 2011 and initially was intended to begin at the start of the calendar year. The BCA established a congressional task force whose goal was to find agreement on at least $1.2 trillion in deficit savings by November 2011. The failure of this group triggered the sequester, which includes $984 billion in mandatory and discretionary cuts over nine years after considering interest savings on the debt.
 
This week the Senate considered two proposals to either modify or eliminate the first year of the automatic spending cuts. Democrats proposed a $110 billion plan that would raise revenue through tax increases on people with incomes over $1 million, eliminate farm subsidies and targeted discretionary spending cuts. The Republican proposal would have required President Obama to provide Congress with an alternative measure consisting only of spending cuts by March 15. Both plans fell short of the 60-vote threshold, as they were rejected 51 to 49 and 38 to 62, respectively. Another proposal, sponsored by Maine Senator Susan Collins and Colorado Senator Mark Udall, was not brought to the floor for a vote but would have abolished the across-the-board nature of sequestration and granted federal agencies flexibility to rearrange reductions. The Office of Management and Budget (OMB) Wednesday released a memorandum offering new guidance to federal agencies about the implementation of sequestration. The memorandum can be viewed here: http://www.whitehouse.gov//sites/default/files/omb/memoranda/2013/m-13-05.pdf. OMB is expected to release a report later today that will provide agency-by-agency analyses of the sequestration’s impact.
 
Additional updates on sequestration, including a state-by-state chart of its effect provided by the Federal Funds Information for States, is available here:  http://www.ncsl.org/issues-research/budget/federal-deficit-reduction-overview.aspx. Contact us if you have any questions regarding how sequestration will be applied or how your state will be affected, or to share your state’s experiences in managing the pending loss of federal funding. NCSL staff contacts: Michael Bird, Jeff Hurley


THE NEXT CLIFF

The next fiscal deadline lawmakers in Washington, D.C., are focused on is March 27, which marks the end of the current continuing resolution funding the federal government. It may also be the new target to amend or replace sequestration. The House is expected to introduce legislation to fund the federal government for the remainder of FY 2013 that would include spending cuts from sequestration. House Appropriations Chairman Harold Rogers of Kentucky indicated that there is “wide and deep” support for the proposal. The Senate plans to offer a comprehensive omnibus package, including all spending bills for FY 2013, with detailed budget plans for all federal agencies. Senate Appropriations Chairwoman Barbara Mikulski of Maryland says she will base the package off the $1.043 trillion cap set in the Budget Control Act, with the automatic, across-the-board spending cuts applied to the cap. Stay tuned. NCSL staff contacts: Michael Bird, Jeff Hurley


REGISTER FOR NCSL’S SPRING FORUM

The Spring Forum will be in Denver, Colo., on May 2 – 4. The meeting will focus on how best to advance the states’ priorities and address challenging policy issues. Early bird registration is available until April 15. To register, please visit http://www.ncsl.org/meetings.aspx?tabs=2638,122,920#920.