Category: Budget

Leaders in the House and Senate have apparently decided to forgo the development and passage of a typical 5-year budget resolution and will instead set a one-year spending plan. The plan will provide caps for discretionary spending in the 12 appropriations bills that fund federal government operations. According to House Majority Leader Steny Hoyer (D-MD), the proposed spending caps will require reductions below the budget figures recommended by President Obama in February.  Further, the House plan calls for the 12 appropriations sub-committees to find efficiencies through the elimination of unnecessary programs within their jurisdiction.

In the House, it is expected that the spending caps will move alongside an FY10 supplemental spending bill prior to the July 4th congressional recess. The Senate timeline for approving the spending caps is less clear at this time, though budget chairman Kent Conrad (D-ND) has expressed tentative support for the concept.

The long expected decision will likely clear the way for consideration of the individual FY11 spending bills, as it gives the various sub-committees top-line allocations to work with. Although some appropriations bills may advance in July, it remains highly likely that most will be rolled into an omnibus appropriations package after the November election.

The consideration of FY11 spending bills has been delayed for weeks, largely due to the inability of the House and Senate to produce a budget resolution. Each year, one of the first steps Congress takes in the appropriations process is the development of a budget resolution. A budget resolution sets the spending limits for the 12 appropriations bills that Congress considers. The resolution is not a mandatory part of the process, but is one that many deem fiscally responsible. Moving forward in the appropriations process without a budget resolution is akin to a family spending money without ever setting a budget for itself.

Despite dozens of hearings on President Obama’s FY11 budget request and some committee staff action in developing the bills, the appropriations process has largely been placed on hold. The stalemate over a budget resolution combined with the necessary consideration of a FY10 supplemental spending bill and a package of tax break extensions has resulted in little recent action on the FY11 appropriations bills.

Early this week, leaders on the Hill gave some indication that they might hold subcommittee markups on a few appropriations bills prior to the July 4th congressional recess. Nonetheless, it remains highly improbable that Congress will send appropriations bills to the President until after the November mid-term elections. On October 1st, Congress will likely need to pass a continuing resolution (CR) to keep the government operating until it can pass the FY11 spending bills. A CR would continue government functions at existing (FY10) levels. However, it should be noted that congressionally directed appropriations that are a part of the FY11 process will not be funded until new spending measures are signed into law.

The House of Representatives continues to explore options for providing funds to states to save education jobs and to close the shortfall in the Pell Grant program, as part of a fiscal year 2010 supplemental spending bill.

The $84 billion bill crafted by House Appropriations Chairman David Obey (D-WI) includes $23 billion to help states avoid laying off K-12 public school teachers and $5.6 billion to cover the projected shortfall in the Pell Grant program. Public higher education jobs are not provided for in Congressman Obey’s draft. Additionally, the proposal would establish a minimum level of funding for K-12 education without providing the same protection to public higher education. This provision could leave public colleges and universities vulnerable to cuts as states strive to meet the K-12 maintenance of effort (MOE) requirement. UW Federal Relations is working with the Washington delegation and the broader higher education community to seek modifications to the higher education exclusion and K-12 MOE recruitment.

Many fiscally conservative Members of Congress have expressed concern with providing funding for education jobs in a supplemental spending bill, as it would add to the deficit. In response, House Democrats are now discussing various options for offsetting the education provisions by eliminating a portion of unobligated Recovery Act funding.

The supplemental spending bill approved by the Senate at the end of May did not include the education jobs provision or funding to cover the Pell Grant shortfall.

Over the weekend, President Obama sent a letter to the Hill advocating for roughly $50 billion of spending on domestic programs — including the education provisions outlined above — in the supplemental appropriations bills. The supplemental spending bill is largely intended to fund military operations in Iraq and Afghanistan and emergency response activities (e.g. Gulf oil spill, flooding in the south).

The coming week should provide some indication on the prospects for education funding in the House supplemental bill. However, we may be several weeks off from a final outcome, as the House and Senate will still need to come to agreement on a final version of the legislation.

Letter from President Obama to Congressional Leadership

Yesterday, the White Office of Management and Budget (OMB) issued two memoranda instructing non-security federal agencies to submit two separate plans for cutting both spending and low-priority programs in their FY12 budget submissions.

The first memorandum, from OMB Director Peter Orszag, requires each agency to submit an FY12 budget request that is five percent below the FY12 discretionary budget listed for the agency in the President’s FY11 budget request.  “This will allow the President’s Budget to accomplish an overall non-security discretionary freeze even while providing funding for new initiatives and any contingencies that arise over the coming months,” says the memorandum. 

The memorandum directs agencies not to cut programs across-the-board, but to eliminate low-priority programs and activities, redesign staffing and management processes, and “focus management attention on high-priority performance goals.”  It also directs agencies to review with OMB “savings opportunities in the full range of mandatory programs.”

The second memorandum, from Orszag and White House Chief of Staff Rahm Emanuel, directs the agencies to identify the programs and subprograms that “have the lowest impact on your agency’s mission and constitute at least fiver percent of your agency’s discretionary budget.”  This is designated as a separate effort from identifying agency budget cuts of five percent.