Federal Relations

February 7, 2011

Congress Works to Finalize FY11 Budget

The Republican effort to roll back non-security discretionary spending to FY08 levels officially gets started this week with the return of House lawmakers from their one-week recess.  On Tuesday, House Republicans will set their new, enforceable spending limits for FY11, and later in the week unveil their package to cut spending for the remainder of the year.  House Budget Chairman Paul Ryan (R-WI) announced last week that the new discretionary spending cap will represent a $32 billion reduction from the annualized spending level under the stopgap continuing resolution (CR) currently funding federal government. This proposed cap assumes a $41 billion reduction in non-security spending (i.e., programs other than defense, homeland security, and veterans), while providing a nominal increase for security spending.  The new cap is intended to reduce non-security spending to FY08 levels for the final seven months of the current fiscal year (FY11). The current CR expires March 4th.

Also this week, the House Appropriations Committee plan to adopt spending allocations for each of the 12 individual funding bills for FY11, which determine the level of cuts each domestic spending bill will incur.  GOP appropriators have been working for weeks to identify specific program cuts for each bill. We expect to see a draft of the CR extension that will reflect those spending cuts, in preparation for House floor action on the measure next week. No committee markup of the legislation is expected, and GOP leaders haven’t yet announced whether a full Defense spending will be considered. Analysis of the proposed spending caps show that while on average non-security spending for the remainder of the fiscal year would be cut by more than 15 percent, discretionary spending for some bills would be cut much more deeply. Transportation-HUD programs, for instance, face a 26 percent cut, with Agriculture to be cut 24 percent, and Energy-Water cut 20 percent.

The Office of Federal Relations continues to advocate for maintaining federal funding at the FY10 level, with some targeted investments in research.  While the House is likely to agree to drastic cuts for FY11, the Senate – controlled by the Democrats – will not agree to such severe cuts.  It is not yet clear where we will end up but it looks like we may see the remainder of FY11 funded at levels somewhere between FY09 and FY10.  Stay tuned…