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

Volume 20    Issue 9 - March 8, 2013

SEQUESTER STARTS

Uncertainty lifted. On March 1, the first of nine years of across-the-board reductions equally split between domestic defense and non-defense discretionary spending began. For FY 2013, the reductions to many state-federal and defense programs will total $85 billion. In succeeding years, the statutory reduction target is $109 billion annually. Per the Office of Management and Budget (OMB), FY 2013 reductions to non-exempt domestic discretionary programs (education, environment, health [ but not Medicaid], social services, justice, job training, housing and others) will be 5 percent. Cuts to defense discretionary programs (procurement, civilian personnel and others) will be 7.8 percent. Medicare is in line for 2 percent reductions while nonexempt, nondefense mandatory programs face 5.1 percent cuts. Now begins more agency sequestration planning and execution. In a Feb. 27 memorandum, OMB advised agencies to “protect the agency's mission to serve the public to the greatest extent practicable.” Agencies are directed to “continuously communicate with stakeholders (including states), make contract determinations in light of sequestration, possibly reduce the level of assistance provided through formula funds and block grants” and provide various details on projected furloughs of employees. NCSL will continue to give updates on sequestration implementation on the webpage and through information alerts. Read OMB's memoranda here: http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-06.pdf and http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-05.pdf. NCSL staff contacts: Michael Bird, Jeff Hurley (sequestration generally, bonds), Lee Posey (impact aid)


 

ANOTHER CLIFF APPROACHING

The next fiscal challenge for Congress and the administration is to decide what to do about current federal fiscal year appropriations. Since Oct. 1, the federal government has funded its operations and grants to states via a continuing resolution (CR). For states, this has meant that domestic discretionary programs have been funded 0.612 percent above FY 2012 levels. That’s about to end.
 
The CR runs its course on March 27. There is consensus between Congress and the administration to avoid a government shutdown. Therefore, the House passed H.R. 933 this week, on a vote of 267-151, that would: (1) complete specific FY 2013 appropriations work on Defense and Military Construction/Veterans Affairs programs and fund all other programs through a continuing resolution through Sept. 30; (2) provide the administration with more flexibility in applying sequestration reductions to defense and veterans affairs programs; and (3) adhere to a $984 billion domestic defense and nondefense discretionary spending cap that includes sequestration cuts of $85 billion.
 
Expect the Senate to take up H.R. 933 next week, most likely with the following modifications: (1) an additional three completed FY 2013 appropriations measures (Homeland Security, Agriculture, Commerce-Justice-State) with the rest funded through a continuing resolution and (2) more administrative flexibility in a wider program area than just defense and veterans affairs.
 
For states, two things stand out. First, there will be no tug-of-war over the $85 billion sequestration target for FY 2013. Second, the House version of H.R. 933 does not include an extension of program and funding authority for the Temporary Assistance for Needy Families (TANF) block grant. However, the House will consider a combined H.R. 987/890 next week that extends TANFthrough Dec. 31, 2013, and prohibits HHS from granting states waivers of what counts as a TANF work activity. The Senate could either amend the CR or accept the House proposal with a longer extension. Whether in a CR or stand-alone bill, states should contact their congressional delegations and urge an expedited extension of TANF.
 
The overarching goal is to get a bipartisan, bicameral deal finished by March 22. Congress departs on a two-week recess that day. More to follow. NCSL staff contacts: Michael Bird, Jeff Hurley (appropriations generally), Sheri Steisel, Emily Wengrovius (TANF)



AND THEN ANOTHER CLIFF

Next week both the House and Senate Budget Committees will take up their versions of a FY 2014 budget resolution. It appears from various reports that the two resolutions will stake out and accentuate positions that could impede getting any agreement by the budget resolution’s April 15 deadline. Wisconsin Rep. Paul Ryan will unveil his resolution on March 12. It is likely to embody provisions of his previous resolutions, such as recommendations to convert Medicaid and the Supplemental Nutrition Assistance Program into block grants.   Most notably, it will seek to balance the federal budget in 10 years. Washington Senator Patty Murray will introduce the Senate’s version next week. It appears that document will seek to establish parameters for a “grand bargain” on deficit reduction and long-term debt management. That is likely to translate into a combination of spending reductions, increased revenues, tax expenditure modifications and public works investments. One month from now, President Obama will unveil his FY 2014 proposed budget. Can the two resolutions and the president's proposal set the foundation for bipartisan negotiations and “grand bargains?” Stay tuned. NCSL staff contacts: Michael Bird, Jeff Hurley



EDUCATION REAUTHORIZATION SOUGHT

Greater funding and program flexibility. Awareness of state budget challenges. Streamlined regulatory and compliance systems. And, movement away from a process/compliance model to one allowing for state innovation. Those messages were delivered to nearly six dozen congressional offices at a convocation hosted by NCSL and other state, local and school organizations on the long-overdue reauthorization of the No Child Left Behind Act. The meeting was yet another step in a collaborative effort co-led by NCSL and the National Governors Association to get federal policymakers to pass serious changes to the more-than-a-decade-old law. In addition to previous meetings on Capitol Hill, all participating organizations have laid out their principles and road map for NCLB reform in letters available at:  (http://www.ncsl.org/documents/standcomm/sceduc/SLCoalitionReauthESEA113th.pdf , http://www.ncsl.org/default.aspx?tabid=24694, http://www.ncsl.org/default.aspx?tabid=24336). In recent years, partisan differences, inattention and policy clashes have increasingly impeded standard reauthorizations. Today’s meeting partially was intended to display consensus between political parties and among several organizations and to express the need for expedited action. NCSL staff contact: Lee Posey