Overview of the President's FY 2017 Budget

2/10/2016

Overview

President FY 2017 BudgetThe president on Feb. 9 released his final budget request, weighing in at more than $4 trillion. The budget abides by top-line discretionary spending for FY 2017 ($1.15 trillion) that was agreed to last fall in the Bipartisan Budget Act of 2015, but makes one more attempt to remove spending reductions known as sequestration.

As in past years, the president would eliminate these across-the-board discretionary spending reductions in FY 2018 and beyond and divert funding to domestic and security programs. The budget would reduce cumulative deficits over the next 10 years by $2.9 trillion, primarily through health and tax reforms, which Congress is unlikely to consider this year.

The release of the president’s budget marks the beginning of the FY 2017 budget process, with the fiscal year beginning Oct. 1, 2016. The House and Senate will aim to establish budget resolutions this spring.  While both of these proposals are expected to be considerably different than the president’s framework, it does provide insight into the administration’s goals and objectives for the president’s remaining months in office.

A Federal Funds Information for States (FFIS) report highlights discretionary and mandatory program funding differences between FY 2016 and the president’s FY 2017 proposal.

Below are select provisions included in the president’s budget proposal that would impact state governments.

 

Agriculture

  • Provides $700 million, double the 2016 funding level, for Agriculture and Food Research Initiative (AFRI) to assist challenges confronted by agricultural producers, such as climate change, pollinator health, anti-microbial resistant bacteria and bioenergy.
  • Nearly doubles funding for implementation of the Food Safety Modernization Act.
  • Reduces crop insurance payments by $18 billion over 10 years by decreasing the premium subsidy provided to farmers.
     

Commerce

  • Expands and provides additional funding to the National Network for Manufacturing Innovation (NNMI) institutes in an effort to help revitalize American manufacturing.
  • Includes $521 million for the International Trade Administration (ITA) to promote American exports and investment in the United States. 
     

Defense

  • The president’s FY 2016 budget provides $524 billion in discretionary funding for the base budget of the department and $59 billion in Overseas Contingency Operations (OCO) funding for a total of $583 billion to sustain the president’s national security and defense strategies.
  • Eliminates excess infrastructure and facilities to include requesting authority to initiate a new round of Base Realignment and Closure (BRAC).
     

Education

  • Proposes $4 billion in mandatory funding over three years to support state efforts to expand access for all students for computer science instruction and programs of study.
  • Increases the federal Pell Grant program by $300 million for students taking at least 15 credit hours a semester to promote on-time completion, lifting of the restriction on Pell Grants for incarcerated individuals eligible for release, and indexing the Pell Grant program to inflation beyond the 2017 award year by mandatory funding.
  • Provides $1.3 billion in mandatory funding for Preschool for All, as part of an investment of $75 billion over 10 years, to support universal high-quality preschool programs.
     

Energy/Environment

  • Calls for doubling spending on clean energy research and development over the next five years to total $12.8 billion.
  • Increases funding for the Drinking Water State Revolving Fund by almost 20 percent, but decreases the Clean Water State Revolving Fund. These programs are joint state-federal partnerships to finance water infrastructure upgrades to states to help prevent drinking water contamination.  
  • Establishes a $1.65 billion Climate Infrastructure Fund over 10 years, these funds being in addition to the Environmental Protection Agency’s $8.2 billion request.

Health/Human Services

  • Addresses the opioid epidemic by 1) including $500 million to continue efforts to expand state-level prescription drug overdose prevention strategies, and 2) providing $1 billion in new mandatory funding over two years to help individuals seek treatment. States would receive funds based on the severity of the epidemic and their effort to address the issue.
  • Establishes a federal-state Medicaid negotiating tool for high-cost drugs to assist states in lowering drug prices.
  • Provides three years of full federal funding to any state that expands Medicaid coverage.
  • Proposes adding $200 million above FY 2016 discretionary child care funding to assist states implement the new statutory requirements included in last year’s reauthorization of the Child Care and Development Block Grant program and a to establish pilots to test innovative strategies to address the child care needs of working families, particularly those with non-traditional working hours or who live in rural areas.

Homeland Security

  • Provides $19 billion for cybersecurity, almost doubling the amount allocated in FY 2016. This will be used to establish a new senior federal cybersecurity official and a commission on cybersecurity.
  • Consolidates a collection of Federal Emergency Management Association programs, including funding for emergency management performance grants, the federal flood insurance program and the homeland security grant program.

Housing and Urban Development

  • Sustains funding to support programs dedicated to ending veteran homelessness, while also funding housing vouchers and rapid rehousing over the next 10 years to reach and maintain the goal of ending homelessness among all of America’s families in 2020.

Interior

  • Provides $2 billion for a program to increase resiliency efforts of coastal communities over the next 10 years. To pay for this, the budget would repeal offshore oil and gas revenue sharing payments to states.
  • Calls for a permanent authorization and mandatory funding for the Land and Water Conservation Fund, which preserves land in states for conservation and recreational uses.
  • Establishes a new framework for how wildfire disasters are funded.
  • Requests a shift in wildfire funding that would provide stable funds for wildfire suppression, and includes a base funding level of 70 percent of the 10-year average for suppression costs within the discretionary budget cap.

Justice

  • Decreases Byrne/JAG grant to $383.5 million down from $476 million in FY 2016. This program, however, would also receive $10 million in incentive grants to supplement formula grants and incentivize states to implement sound law enforcement strategies.
  • Eliminates funding for SCAAP, which received $193 million in FY 2016.
  • Creates several new programs, including $20 million to promote fairness in the criminal justice system and build community trust, and $30 million towards a competitive program for the purchase of body worn cameras for state, local, and tribal law enforcement.

Labor

  • Creates an Apprenticeship Training Fund, investing $2 billion in mandatory funding.
  • Provides funding to fully implement the Workforce Innovation and Opportunity Act (WIOA).
  • Proposes $2 billion for a demonstration program, which aims at helping up to five states launch paid leave programs.

Tax Provisions

  • Limits the tax exemption for municipal bonds to 28 percent.
  • Changes “Cadillac tax” formula to better target the most expensive health plans by aligning threshold to the state’s average premium.
  • Expands the Earned Income Tax Credit for workers without qualifying children, and creates a Second Tax Credit for married couples in which both spouses work.
  • Achieves deficit savings by reforming the federal tax code, including: increasing the top tax rate on capital gains and dividends to 28 percent, requiring anyone making over $1 million annually to pay no less than 30 percent of income in taxes (known as the “Buffet rule”) and taxing unrepatriated income held abroad to pay for infrastructure.

Transportation

  • Establishes the 21st Century Clean Transportation Plan—$303 billion in new infrastructure investments over 10 years that are funded from both a fee of $10.25 per barrel on oil, along with “one-time revenues from pro-growth business tax reform.”
  • Proposes $4 billion over 10 years, including $200 million in FY 2017, to advance autonomous and self-driving vehicle technology through large scale pilots to ensure multistate interoperability.
  • Reduces the direct role of states in determining transportation funding allocations by “directing billions of dollars through regional governments such as Metropolitan Planning Organizations, empowering them to play a stronger role in decision-making.”
  • Reduces the U.S. Army Corps by 18 percent, or nearly $1 billion, in total funding.

Veteran's Affairs

  • Requests $75.2 billion in discretionary funding for the Department of Veterans Affairs (VA) to provide needed care and other benefits to eligible veterans, their families, and survivors.  This includes $65 billion for VA medical care, and invests $1.6 billion in programs that will combat homelessness.

Additional Resources

  • Budget of the United States Government, Fiscal Year 2017 contains the Budget Message of the President, information on the president’s priorities, budget overviews organized by agency, and summary tables.
  • To download "Budget of the United States Government, Fiscal Year 2016" as a single PDF click here (182 pages, 2.9 MB)