Federal Budget Proposal

As promised in our February 7 letter, here is a more detailed analysis of the Administration’s Proposed Budget for the Federal Government’s 2008 Fiscal Year, which begins on October 1, 2007.

Department of Housing and Urban Development
The President’s proposal renews previous themes of consolidation and reduction in the HUD budget, while allowing for modest increases to a select few programs. Among the programs that would benefit under the FY08 proposal include:

The HOME Investment Partnership program would increase $200 million to $2 billion;
The Homeless Assistance Grants program would increase $170 million to $1.5 billion; and
The Section 8 tenant-based voucher program would increase $80 million to $16 billion, an
amount HUD assumes to be sufficient to renew all existing housing vouchers.

The budget proposal cuts the Community Development Block Grant program by $735 million for a total of $2.97 billion. Of that amount, $200 million would be set-aside to fund competitive challenge grants. Other programs in the Community Development Fund, including Brownfields, Economic Development Initiative grants, and Rural Housing and Economic Development would by consolidated into CDBG, effectively eliminating them.

Department of Education
The Administration proposal cuts $1.5 billion from the funding levels of the House-passed 2007 Continuing Resolution and eliminates 44 discretionary education programs. These include Federal Supplemental Educational Opportunity Grants, Leveraging Education Assistance Grants, Education Technology State Grants, school counseling, Even Start, mentoring, parent information and resources centers and dropout prevention.

No Child Left Behind, which expires at the end of September, would receive $13.9 billion, an 8.6 percent increase over the fiscal 2006 spending level for expanding testing into high schools. The budget also proposes $500 million for a new grant program to help chronically underperforming schools and would double, to $199 million, an incentive program for teachers that was funded at $99 million in fiscal 2006. IDEA, Individuals with Disabilities Education Act, would be reduced $291 million below the recently adopted 2007 Continuing Resolution-funded level of $10.7 billion, and Head Start would be funded at $6.78 billion, $107 million below the 2007 CR funded level.

Department of Energy
Overall, the DOE budget would receive a spending increase of less than 3 percent over enacted levels. Savings on environmental cleanup programs would finance major increases in programs to develop alternative fuels highlighted by the President in his State of the Union Address. The Energy Department said the budget also includes almost $495 million for the development of the proposed radioactive waste site at Yucca Mountain, with the goal of opening the facility in 2017. The Administration also proposed reducing spending on weatherization projects to $205 million from $318 million in fiscal 2006, according to Energy Department documents. The program supports state and local efforts to help families insulate their homes to reduce heating and air-conditioning bills.

Department of Health and Human Services
The budget for the Department of Health and Human Services would see drastic cuts for preventive health and health services and social programs, with a sharp increase for Centers for Disease Control (CDC) infectious disaster programs. The proposal includes elimination of a $99 million block grant under the Centers for Disease Control and Prevention (CDC) for preventive health and health services, while funding for a new CDC pandemic flu initiative of $1.8 billion.

A social services block grant would be cut by nearly $1 billion, to $1.2 billion; and community-service programs, including the $630 million Community Services Block Grant, would be eliminated due “to “poor performance.” Budget documents note that other programs “can achieve greater results and better focus on communities most in need of assistance.”

Spending programs providing home energy subsidies for low-income families, the Low Income Heating and Energy Assistance Program (LIHEAP), would be funded at $1.8 billion, a nearly $400 million cut from the levels adopted in the FY 2007 continuing resolutions.

Department of Homeland Security
The White House’s $34.6 billion Homeland Security budget request for fiscal 2008 would slash state and local grant programs while increasing support for border security programs. Funding for the department’s first-responder grant programs, including grants for states, municipalities and local law enforcement agencies and funding for training and exercises would be dramatically reduced. Overall, funding for state and local programs would drop to $1.9 billion from last year’s total of $2.7 billion, a proposed 63 percent reduction.

Funding for the port security grant program, enacted last year by Congress, would receive $210 million in the president’s budget proposal, down from the $400 million authorized by Congress. Federal programs for surface transportation security would receive $41 million in the budget proposal, only a $4 million increase from fiscal 2007 spending. A new $1 billion grant program for interoperable communications would be jointly administered by the FCC and DHS and would be funded through the sale of electromagnetic spectrum. Funds would then be available for cities to use for 700 MHz communications equipment.

Department of Justice
Federal assistance to state and local law enforcement would be cut by more than half in the Bush Administration’s fiscal 2008 Justice Department budget request, despite the recent surge in urban violent crime.

Unlike in the past, however, the Bush administration has not proposed eliminating the Byrne grant program for state and local governments. Instead, the president wants to consolidate several separate law enforcement grant programs — which totaled more than $2 billion in fiscal 2006 — into four grant programs that would total $1 billion in new budget authority. The original COPS program that funded local law enforcement programs, is proposed to be cut $510 million below the $542 million in funds adopted as part of the 2007 Continuing Resolution to $32 million.

The 2008 budget proposes to combine 70 distinct programs into four "flexible" and competitive grant programs including the Byrne JAG program which has been expanded to encompass funding for methamphetamine clean up and enforcement (this was formerly in the 2006 COPS program), drug courts, firearms crime prosecution, efforts to combat domestic trafficking and other priorities based on local needs.

The budget also proposes eliminating funding for the State Criminal Alien Assistance Program (SCAAP), which has strong state, local and Congressional support.

Department of Labor
President Bush is once again looking to overhaul and cut spending on federal job training programs as part of a reduced discretionary spending plan for the Department of Labor. A key target of the cuts are training and employment programs — core elements of the 1998 Workforce Investment Act (PL 105-220). The President requested $4.3 billion for these programs, a 17 percent reduction from $5.2 billion in fiscal 2006.

However, the budget also points toward legislation the administration will propose again this year that would consolidate a handful of existing grant programs into so-called Career Advancement Accounts. That legislation would add another $745 million that is not accounted for in the budget. The plan would increase states’ flexibility to administer the programs, require that a greater percentage of resources be directed to training services for workers instead of administrative overhead, and consolidate various programs into a single state grant.

The Administration also proposed cutting spending on a program that provides part-time community service jobs for low-income adults 55 and older. The budget recommends $350 million for these programs, down from $432 million in fiscal 2006.

Department of Transportation
The FY 2008 budget requests $67.4 billion for transportation programs. The spending request would cut Amtrak funds by $518 million, fund the federal highway program at SAFETEA-LU authorized levels but cut transit substantially below authorized levels. In addition, DOT proposes new aviation fees that will eventually replace airline ticket taxes when the Airport Improvement Program expires in September 2008.

Amtrak would receive $800 million in direct payments, plus another $100 million for new matching grants to states for intercity passenger rail projects, a cut from the House-passed continuing resolution level of $1.3 billion The budget request also proposes $39.6 billion in federal highway funding for fiscal 2008, the amount called for under the 2005 highway law (PL 109-59) and $500 million more than the House-passed continuing resolution would provide for 2007. However, the Administration’s budget proposal does not honor several funding guarantees enacted as part of SAFETEA-LU. Transit funding enacted as part of SAFETEA-LU set spending at $9.7 billion. The DOT budget would provide only $9.4 billion for transit programs. SAFETEA-LU also established a new mechanism for funding highway programs, the Revenue Aligned Budget Authority (RABA), which allowed highway funding to exceed the authorization if gas tax revenues surpassed projections. Based on these calculations, the states were guaranteed an additional $631 million RABA adjustment in fiscal 2008, but this amount was not included in the president’s budget.

DOT has requested an additional $175 million for an urban congestion initiative to fund local pilot programs such as rush hour toll measures and staggered work hours. The budget again calls for authority to set fuel-economy standards for passenger cars based on vehicle size and weight, known as the Corporate Average Fuel Economy (CAFE) standard, although Congressional leaders continue to assert their authority over these standards rather than leave it up to the Administration.

Environmental Protection Agency (EPA)
President Bush’s budget would continue the Administration’s trend of slashing EPA funding, with the bulk of the proposed cuts directed toward a popular clean-water infrastructure program. The EPA would receive $7.1 billion, a $500 million cut compared with fiscal 2006 funding (PL 109-54), and an $800 million reduction below fiscal 2005 funding (PL 108-447).

The Clean Water State Revolving Fund has been slated to be eliminated by the end of 2009. The program would receive $688 million in fiscal 2008, a drop of about $312 million from the fiscal 2007 spending package (H J Res 20) awaiting Senate action. The Administration’s position it that it wants to allow for more private investment to help with water infrastructure funding.

The Administration did not seek increased funding for the EPA’s climate-change activities, requesting $216 million on climate research and $439 million on programs such as voluntary industry partnerships — nearly level funding from fiscal 2006.

With the submission of the President’s budget, Congress will begin the 2008 budget cycle with hearings on spending requests before the Appropriations Committees in the House and action on an overall spending package by the Budget Committee. Congress is still completing action on the fiscal year 2007 spending bill. Fiscal year 2007 began on October 1, 2006 but the last Congress left with a continuing resolution that funded federal programs until February 15. The House has adopted a spending bill for the balance of the fiscal year, H.J. Res. 20, a long term Continuing Resolution (CR), and the Senate must act before February 15.

We urge you to contact Senators Lautenberg and Menendez and your own Congressman to express your thoughts on the overall proposal and, especially, any parts of it that could affect your municipality. We will follow this analysis with letters dealing with the component parts of the budget and their affect on New Jersey. In the meantime, if you have any questions, please call Jon Moran at 609-695-3481, ext. 121.