CITY OF MINNEAPOLIS Federal Budget Update Intergovernmental Relations Committee March 30, 2017 1
Federal Budget Overview • Process (February-September) • President submits budget to Congress • House and Senate pass budget resolutions setting budget appropriation amounts for respective subcommittee assignments • House and Senate Appropriation subcommittees develop bills and reconcile through a conference committee • House and Senate vote on appropriation bills-in recent years through an Omnibus package • President signs each appropriation bill or omnibus • If no appropriation signed by start of federal fiscal year (October 1) then agencies operate under a Continuing Resolution 2
Federal Budget Overview • Key dates in current FY17 and FY18 Budgets • March 16- President Trump presented his Budget Blueprint for FY18 and additional FY17 funding • April 28 - the temporary, government-wide FY17 Continuing Resolution funding bill expires. Unless new legislation passes, government would partially shut down. • May – the President will reveal the remainder of his budget. Congress will work on its annual budget resolution. • Summer/Fall – Congress will try to advance spending bills for the 2018 budget year, which begins on October 1. 3
Presidents FY18 Budget Proposal Issued March 16 • Proposal adds $54 billion to defense budget caps and reduces nondefense budget caps by the same amount Caps set in the Budget Control Act of 2011 (“Sequestration”) • Increases requested for Departments of Defense, Homeland Security and Veterans Affairs with deep cuts for several agencies At least 80 programs and offices/agencies slated for elimination • Would result in a 1.2% cut in discretionary spending over all 4
FY17 and Defense Supplemental • Proposal increases base defense spending by $25 billion and reduces nondefense programs by $15 billion • $5 Billion for Overseas Contingency Operations Fund • $3 Billion increase for Department of Homeland Security for: Planning and construction of southern border wall Hiring more Border Patrol and ICE • Offset with $18 Billion in undetermined Non- Defense Discretionary funds • Balance of $10 Billion is addition to national debt 5
President’s FY18 Discretionary Budget Levels ($Billions) FY17 FY18 Trump Proposal $700 603 $600 551 549 519 516 $500 462 $400 $300 $200 $100 $0 Defense Non-Defense 6
FY18 Budget Proposal is Only 27% of the Story • May necessitate additional budget cuts to achieve balance Domestic 13% Discretionary 14% Defense Mandatory 73% Entitlements 7
What isn’t included in the budget? • Specific program-level details for discretionary spending with exception of some highlighted programming • Corporate and/or individual income tax change proposals • Potential changes to mandatory programs, such as Medicaid or Medicare • Specifics on potential changes to the Affordable Care Act • Any changes would have budgetary effects on both spending and revenue • Infrastructure financing 8
Agency 2017 baseline 2018 proposal Pct. change Environmental Protection Agency $8.2 $5.7 – 31% State and other development programs 38.0 27.1 – 29% Agriculture 22.6 17.9 – 21% Labor** 12.2 9.6 – 21% Justice** 20.3 16.2 – 20% Health and Human Services** 77.7 65.1 – 16% Commerce 9.2 7.8 – 16% Education 68.2 59.0 – 14% Transportation** 18.6 16.2 – 13% Housing and Urban Development** 36.0 31.7 – 13% Interior 13.2 11.6 – 12% Energy 29.7 28.0 – 6% Treasury 11.7 11.2 – 4% NASA 19.2 19.1 – 1% Veterans Affairs 74.5 78.9 +6% Homeland Security** 41.3 44.1 +7% Defense 521.7 574.0 +10% ** Agencies covered in further detail
Labor • 2018 Proposal - $9.6 billion • ⬇ $2.5 billion ⬇ – 21% • Scales back on a number of job training programs, including those aimed at helping seniors, disadvantaged young people and unemployed Americans • Minneapolis receives pass through job training funds through the State • Approximately $2 million received annually 10
Justice • 2018 Proposal - $16.2 billion • ⬇ $4 billion ⬇ – 20% • Cuts funds classified as “mandatory,” such as the Crime Victims Fund • Increases funding for border enforcement, immigration judges and F.B.I. • Minneapolis averages $1 million over past five years in competitive grant awards from Justice programs 11
Health and Human Services • 2018 Proposal - $65.1 billion • ⬇ $12.6 billion ⬇ – 16% • Eliminates $4.2 billion in community services programs like the Low Income Home Energy Assistance Program and Community Services Block Grant Key funding for community partners such as CAPSH • Cuts spending at the National Institutes of Health by $5.8 billion • Minneapolis receives direct funding awards for Healthy Start and Maternal, Infant and Early Childhood programs • Approximately $1.5 million 12
Transportation • 2018 Proposal - $16.2 billion • ⬇ $2.4 billion ⬇ – 13% • Initiates the privatization of the nation’s air traffic control operations • Elimination of TIGER grants • Federal Transit Administration New Starts would only continue for those with full funding grant agreements in place, affects funding status of: Blue Line Extension SWLRT Orange Line BRT 13
Housing and Urban Development • 2018 Proposal - $40.7billion • ⬇ $4.3 billion ⬇ – 12% • Eliminates the Community Development Block Grant Program • Eliminates HOME Investment Partnerships • Loss of $12 million in formula entitlement to City • Elimination of Choice Neighborhoods- a redevelopment source of funds for public housing agencies 14
Homeland Security • 2018 Proposal - $44.1 billion • ⬆ +$2.8 billion ⬆ +7% • Increase of $4.5 Billion (in additional funding over the net budget) for southern border wall and immigration enforcement enhancements • $314 million for 500 Border Patrol agents and 1,000 ICE personnel • Reduction of $667 million in FEMA emergency preparedness funds • Emergency preparedness grantees would need to provide 25% local cost share • Minneapolis averages $1 million over past five years in emergency preparedness grant awards 15
Other Local Budget Implications to Note • Elimination of US Interagency Council on Homelessness • Elimination of Legal Services Corporation • Elimination of Economic Development Agency • Elimination of arts and culture funding, including: • National Endowment for the Arts • National Endowment for the Humanities • Corporation for Public Broadcasting • Institute of Museum and Library Services • No infrastructure funding at this point- potential later request likely would necessitate further cuts 16
Impact on the City Budget • Reduction to FEMA administered grants • Proposal to establish a 25% non-federal cost match for FEMA preparedness grants • Elimination of CDBG and HOME funds • Likely decrease in level of Department of Labor workforce training funds 17
Annual Federal Expenditures by Minneapolis (in millions) $110 Millions $97 $100 $90 $78 $80 $69 $66 $70 $60 $47 $50 $38 $40 $31 $30 $20 $10 $- 2009 2010 2011 2012 2013 2014 2015 Expenditures Affected by Trump Budget Eliminations All Federal Expenditures (in millions) 18
Budget Prospects • In both chambers, most programs cited for elimination have bipartisan advocates • Budget has an uphill battle in the Senate: Republicans hold 52 seats, bipartisan support needed for the 60 votes required to overcome a filibuster • Exceeding sequestration budget levels also requires 60 votes to overcome a filibuster • Democrats have indicated that any increase in spending caps would need to include 1-1 paired increase of domestic discretionary programs with defense 19
Additional Considerations • Again, proposed budget covers only discretionary spending- no mandatory spending, no tax expenditures, no revenues • Generally budgets include out years as well to provide a picture of Administration fiscal priorities • The Non-Defense Discretionary piece of the budget only accounts for 4% of spending growth over the next decade. • Social Security, Health Care, Mandatory programs, and Interest account for 90% of future growth • Budget Sequester “deal” runs through 2024 20
Next Steps in Process • FY17 continuing resolution (CR) set to expire April 28 A year long CR is possible for remainder of FY17, or An agreement on some type of omnibus bill for FY17 Senate Democrats have threatened a shut down if any controversial provisions are included (Planned Parenthood, defense spending, etc.) • OMB warned department heads against discussing specific details at congressional hearings until the release of the full FY18 budget Many hearings now postponed, meaning work on FY18 will be delayed May budget will have the inclusion of recommendations on mandatory spending and tax policy 21
Questions? 22
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