Federal Funding Update: The Craziest Year Yet

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

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

3. The Federal Budget Problem

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

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

6. FY 2013 Budget: Congress Approves Six-Month Continuing Resolution • FY 2012 + 0.612% 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?

7. FY 2013 Appropriations: At What Cost to States?

8. “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 consumers

9. CBO Estimates of the Fiscal Cliff

10. 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)

11. Sequester Coverage Status of 216 FFIS-Tracked Programs

12. Sequester Coverage Status of $606 Billion FFIS-Tracked Funding

13. Program Areas Most Affected

14. 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

15. 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

16. 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

17. The End: Questions? Contact information: Trinity Tomsic 202-624-8577, ttomsic@ffis.org