Federal Funding Update: The Craziest Year Yet GPA National Conference October 18, 2012 Federal Funds Information for States

Overview The Federal Budget Problem Status of FY 2013 Appropriations Lame Duck Session What Does it Mean for States and Federal Grants?

The Federal Budget Problem

Where the Money Goes: Pieces of the Federal Budget Pie Composition of Federal Outlays in FY 2011 ($ in Billions, % of Total)

State/Local Grants by Program Area Federal Outlays to State and Local Governments, FY 2011 ($ in Billions, % of Total)

FY 2013 Budget: Congress Approves Six- Month Continuing Resolution FY % for most discretionary programs (not highways) Mandatory programs: current-law level Extends SNAP, TANF, related programs Additional funds for a few programs What happens after March 27, 2013?

FY 2013 Appropriations: At What Cost to States? FY 2013 vs. FY 2012 Federal AgencyFY 2012 vs. FY 2010CRHouseSenate Education-1.1%0.6%n/a0.5% Health and Human Services -5.6%1.1%n/a1.2% Housing and Urban Development -5.4%0.6%2.4%5.2% Energy/EPA-33.2%0.6%-36.2%3.1% Justice-40.9%0.6%-6.0%6.9% Homeland Security-35.4%0.6%27.2%3.5% Labor-4.9%0.6%n/a-2.9% Transportation-9.0%0.2%-0.3%0.3%

“To Do” List for Lame Duck Congress Address the BCA’s looming sequester Deal with expiring tax provisions Consider other expiring legislation, authorizations Raise the debt limit Reassure markets and American c onsumers

CBO Estimates of the Fiscal Cliff

The BCA and the Sequester Absent a legislated alternative, a sequester will occur on January 2, 2013 Many mandatory and a few discretionary programs are exempt – OMB report sheds light on its interpretations OMB estimates of ATB cuts: 8.2% (nondefense discretionary), 7.6% (nondefense mandatory), 9.4% (defense discretionary) ATB reduction applied to FY 2013 funding in effect on January 2, 2013 (CR level)

Sequester Coverage Status of 216 FFIS-Tracked Programs

Sequester Coverage Status of $606 Billion FFIS-Tracked Funding

Program Areas Most Affected Budget Function% of Funding Covered by Sequester Agriculture100% Employment and Training100% Community Development100% Justice100% General Gov’t89% Energy, Env., Natural Resources89% Education54% Income Security and Social Services23% Transportation4% Health3%

The Conventional Wisdom Keeps Changing For appropriations, from another CR to an omnibus For BCA, from agreeing to postpone the day of reckoning, to sequester For expiring tax provisions, from extending some tax cuts to allowing all to expire For authorizations, from completing some to extensions

What Does this Mean for States? If Congress Goes for It….. “Grand Bargain” means greater certainty but less funding. Likely changes include: – Reforms to entitlement programs (flexibility vs. funding) – Further reductions in discretionary spending – Revenue effects from tax overhaul

What Does this Mean for States? If Congress Punts….. States continue to face uncertainty FY 2013 budget won’t happen anytime soon – President’s FY 2014 budget released before FY 2013 budget is finalized Program extensions continue In short, more of the same

The End: Questions? Contact information: Trinity Tomsic ,