JUNE 2012 UPDATE

FY 2013 Transportation, Housing, and Urban Development Appropriations

Overview

Following the President's budget proposal release in February, the House and the Senate released their topline spending numbers in April, which was a full five months earlier than the Senate released their numbers a year ago. Shortly after, the Senate Appropriations Committee marked up their THUD spending bill, with the House following in June. The House is expected to bring their bill to the floor shortly.

The relatively quick pace does not mean there is agreement between the two chambers; the House adopted an overall budget that is $19 billion lower than the Senate's topline spending number. The Obama administration has threatened to veto spending bills based on the House–adopted funding level because it violates the terms of the Budget Control Act passed last August in the wake of the debt ceiling crisis. The Senate's funding level is consistent with the Budget Control Act.

While the House and Senate will continue to work on their respective approaches to individual appropriations bills, it is unlikely that a compromise agreement on FY 2013 funding will be struck before the end of the federal fiscal year on September 30. A more likely scenario is that Congress will adopt a continuing resolution to fund the government until after the November election. A final decision on FY 2013 appropriations would be one of several key fiscal items awaiting a lame duck session.

THUD Differences — Key Programs

The biggest difference between the House and Senate versions of THUD legislation comes in the approach to three new competitive grant programs launched during the Obama administration. The House bill eliminates funding for DOT's TIGER grants and HUD's Choice Neighborhoods and Sustainable Communities programs. Both the House and Senate bills provide a needed increase in Community Development Block Grants after several years of deep cuts. The House bill comes in at $3.3 billion for CDBG and the Senate bill at $3.1 billion. Funding for transportation programs is likely to change in both bills based on the outcome of the negotiations over a new surface transportation bill.

Department of Housing and Urban Development FY 12 Enacted FY13 President FY13 Senate FY13 House
Community Development Fund $3.308 billion $3.14 billion $3.21 billion $3.4 billion
CDBG $2.98 billion $2.98 billion $3.1 billion $3.3 billion
Sustainable Communities Initiative $0 $100 million $50 million $0
(Regional Planning Grants) $0 $50 million $0
(Challenge Planning Grants) $0 $50 million $0
HOPE VI/Choice Neighborhoods $120 million $150 million $120 million $0
HOME $1 billion $1 billion $1 billion $1.2 billion
Public Housing Capital Fund $1.875 billion $2.070 billion $1.99 billion $1.985 billion
Public Housing Operating Fund $3.961 billion $4.524 billion $4.6 billion $4.524 billion
Project-Based Rental Assistance $9.339 billion $8.7 billion $9.8 billion $8.3 billion
Transformation Initiative $50 million $120 million $43 million $50 million
Transportation FY 12 Enacted FY13 President FY13 Senate FY13 House
Highways $39.1 billion
Livable Communities $0
Transit $10.315 billion
Capital Investment Grants $1.95 billion
Formula & Bus Grants $8.36 billion
Grants for Energy Efficiency & Greenhouse Gas Reductions $25 million
Amtrak $1.4 billion
High Speed Rail $0
TIGER/National Infrastructure Investments $500 million
National Infrastructure Bank $0
Office of Livable Communities $0

Senate THUD Overview

The bill includes $53.4 billion in budget authority, a 3.5 percent or $3.8 billion decrease from current funding levels. It was approved by the full Appropriations Committee on April 19, but has not yet been considered by the full Senate.

HUD

The Community Development Block Grant program was increased by $152 million for a total FY13 level of $3.1 billion. Included in this total is $50 million for the Sustainable Communities Initiative, which had its funding zeroed out in FY12. The bill also included language that specifically confirms the current 20 percent cap on CDBG spending that can be used on administrative and planning expenses. Last year, the House spending bill contained language that would have cut the cap in half. The final THUD spending bill maintained the 20 percent cap, but ordered a GAO study on Community Development Fund best practices as a compromise. The Appropriations Surveys and Investigations staff also conducted their own study on the use of administrative and planning expenses. So far, nothing negative has been reported as a result of the investigations.

The Choice Neighborhoods program was funded at $120 million, a level that is equal to the current funding level. The HOME program received $1 billion, which is equal to FY12 levels but a major disappointment for those hoping the Senate would restore some of the 46 percent cut the program saw between FY11 and FY12. The Senate also chose to fully fund the Project-Based Rental Assistance for FY13, rejecting the President's proposal to short-fund contracts to free up funding for other HUD programs.

DOT

The TIGER program also received level funding at $500 million, and it again includes a $35 million set-aside for planning projects that has not been approved since FY10. Funding for the federal-aid highway program is maintained at its FY12 level of $39.1 billion. Within FTA, the New Starts program receives an $89 million increase over current levels, for a total of $2.044 billion. Increased funding is also included for Amtrak, which would receive $1.45 billion of an aggregate $1.75 billion for rail infrastructure. Of this total, $100 million would support improvement of existing high performance passenger rail. This is in place of any other funding for new high speed rail investment. A new "distracted driving" grant program is also established, as part of the bill's increased emphasis on transportation safety.

House THUD Overview

The bill contains $51.6 billion in funding, a $4 billion decrease from current levels and a $2 billion decrease from the President's request, and $1.8 billion lower than the Senate. It was approved by the full Appropriations Committee on June 19, and while members are hopeful the bill will be considered by the full House, time is running out to make that a reality.

HUD

CDBG was funded at $3.3 billion, a nearly $400 million increase over current funding levels and the President's FY13 request, and a $200 million increase over the Senate bill. This proposed funding increase is a huge win for the program, which has been cut by $1 billion over the past two years. Also included in the bill is language that re-affirms the 20 percent cap on administrative and planning expenses for CDBG. Last year, the House bill contained language that would have cut the cap in half. The final THUD spending bill maintained the 20 percent cap, but ordered a GAO study on Community Development Fund best practices as a compromise. The Appropriations Surveys and Investigations staff also conducted their own study on the use of administrative and planning expenses. With the 20 percent language included in both the House and the Senate bill, it is unlikely to be at risk for a cut in the immediate future.

The HOME program also fared very well with a funding level of $1.2 billion, $200 million over the President's request and the Senate bill. The program was in danger of being eliminated just a year ago after a series of negative articles by the Washington Post.

Unfortunately, the Choice Neighborhoods program and its predecessor, HOPE VI, did not receive any funding, though the bill includes language that allows HUD to continue providing assistance to grantees. The cut is not a huge surprise; the House chose not to fund either program last year, however, the Senate was able to negotiate a final funding level of $120 million for FY12.

Also not surprising was the House's decision to continue to not fund the Sustainable Communities Initiative. Operated under the CDBG program, the unauthorized program has been a popular target for Republicans, and funding for the program was essentially eliminated last year. Though no Regional Planning or Community Challenge grants were awarded in FY12, the Office of Sustainable Housing and Communities did receive enough funding to continue to provide assistance to FY10 and FY11 grantees, which was a huge victory considering the House bill contained language eliminating the office and preventing the departments from talking to each other about sustainability. If there is an upside to not receiving funding for grants again from the House, it is that the bill this year did not contain that language and even offered the Office of Sustainable Housing and Communities funding to continue to operate.

DOT

Funding for highway programs in the bill is unchanged from last year and matches the Senate level of $39.1 billion. Within FTA, funding for transit formula grants remains level at $8.4 billion. Funding for New Starts is down $138 million from FY12 to $1.8 billion, but it does include full funding for all current Full Funding Grant Agreement projects and Small Starts. It is important to note that funding levels for highway and transit programs are tentative, as enactment of a reauthorization bill would likely require modifications.  A 10th extension or reauthorization bill is necessary for the Highway Trust Fund to operate beyond September 2012.

No funding is provided for TIGER grants, but with $500 million included in the Senate bill — and bipartisan, bicameral support for the program — this is unlikely to be a death knell for TIGER. The other favorite target for House cuts, high-speed rail, not only received no FY13 funding, but additional rescissions of past funding are included in the bill. Within FRA, Amtrak is funded at $1.8 billion, with $500 million reserved for "high-priority state of good repair" projects.

FEBRUARY 2012

FY 2013 Federal Budget Summary and Analysis

In the year following one of the most contentious budget battles since 1995, the Obama administration's budget walks a fine line between attempting to preserve critical domestic programs while addressing the concerns about the deficit, all within the context of an election year and the tight constraints of the Budget Control Act. To attempt to achieve this difficult balance, the administration has proposed a budget that relies heavily on tax reform, including the expiration of the Bush tax cuts at the end of the calendar year, and defense cuts in light of the end of the Iraq war.

All budgets are inherently political documents outlining policy priorities as much as a specific blueprint for appropriations. This year's budget is no different. The administration has presented a budget that articulates their belief in the importance of strategic domestic investments within the context of declining domestic spending and the constraints imposed by the Budget Control Act. Smart growth and sustainability programs fared reasonably well with all key programs receiving funding, including those defunded in the last round of appropriations.  With the budget, the Obama administration has clearly noted these programs as priorities. HUD Secretary Shaun Donovan labeled them "signature initiatives." Still, the appropriations road ahead will be difficult. In particular, Congress is likely to restore funding for some of the proposed cuts outlined in the budget making it all the more difficult to find resources for other domestic programs.

Given the election year dynamics, the administration opted to keep most cuts to a minimum. While the FY13 budget proposal certainly hurt some programs more than others, most departments didn't see massive reductions and many programs maintained at least level funding compared to enacted FY 2012 levels. The Budget Control Act, adopted as part of the debate over raising the debt ceiling last year, sets the baseline for FY 2013 spending. The administration's budget assumes that figure as the cap and the Senate has indicated it will do the same. However, House Republicans appear likely to set their budget resolution cap lower than the BCA amount. Given these circumstances, the current fiscal year (enacted FY12) is likely to be the high point for many programs and the standard by which future fiscal years are measured.

Unfortunately, as one HUD official aptly described it, "FY12 is the new normal."

From FY11 and FY12 appropriations alone, EPA lost 18 percent of its discretionary budget. In the current budget proposal HUD gains 3 percent, though the increase goes primarily to the sky rocking need for housing assistance and homeless vouchers. The positive news in the budget for most programs, including the key smart growth programs, is unlikely to lead to gains that erase funding loses from the last two appropriations cycles (e.g., CDBG lost 25 percent over the past two years). The "new normal" means most, but not all, programs can exist, and major improvements to the country's infrastructure or investments in community development are extremely limited.

The budget, particularly for HUD and DOT, set up the 302(b) allocations as especially important. HUD and DOT have suffered disproportionately in recent years.  Since 2007, overall domestic spending has risen slightly while both HUD and DOT rank at the bottom in terms of cuts over that same period.

In the most recent appropriations rounds, HUD and DOT have been cut more than the rate of overall decline in domestic spending. Last year the appropriators found themselves making "tough choices" between key transportation and community development programs due to the low allocation for the THUD bill (HUD and DOT are funded in the same appropriations subcommittee). To avoid pitting key sustainability and community development / infrastructure programs against one another this year, a larger overall allocation for THUD is vital.

Department of Housing and Urban Development

Overall Funding

All things considered, the President's budget request for HUD for sustainability and community development was as good as could have been realistically expected. With a few exceptions, nearly all the programs received at least level funding. The overall gross budget authority for HUD was increased by 3 percent or $1.5 billion. This amount includes an extra $1 billion in funding from the recently announced mortgage services legal settlement and $3.6 billion in receipts from the FHA and Ginnie Mae. The CBO score on the FHA and Ginnie Mae receipts is still pending (it is scheduled for release by mid-March), but HUD believes that their estimation of the receipts will be similar to the CBO score. There is some concern within HUD and within housing advocacy groups that since the receipts are higher than they have been, the Appropriations Committees might choose not to keep the funds within the HUD budget, which would place a multi-billion dollar strain on an already strained HUD budget.

As the HUD budget grows slowly, the need for HUD's services has grown quickly. In FY13, 83 percent of HUD funding went to rental assistance, operating and capital needs, and maintaining existing Homeless Assistance grants. For each percentage point increase in housing renewals, all other programs must shrink by 5 percent in order for HUD to maintain its budget level. Between 2009 and 2011, families receiving HUD assistance rose from just under 5.2 million families to nearly 5.35 million families. It is estimated that in 2013, over 5.4 million families will need assistance. 

To help offset those costs, the President's budget proposed increasing the ceiling and flat rent for public housing, raising the minimum rents to $75 and making minimum rent mandatory (some PHAs don't enforce mandatory rents), and changing the income and medical deduction calculations. Those changes are supposed to generate a combined $400 million to $480 million in additional funding to make the HUD budget work in FY13, though housing advocacy groups believe the estimates of revenue generation are too optimistic. Some of these changes will need to be made through legislation, and the solvency of the HUD budget proposal is precariously based on January 1, 2013, implementation of the reforms.

The House has made some progress on voucher reform. Earlier this month, the House Financial Services Subcommittee on Housing and Community Opportunity approved the "Affordable Housing and Self-Sufficiency Improvement Act" (the bill has not yet been assigned a number). The bill creates savings by relying heavily on regulatory overhaul, income calculation updates, and contributions from renters to reduce the costs of housing vouchers. This is drawing criticism from many groups, particularly the provision requiring residents to pay $69.45 minimum rent, though it does fall short of the President's $75 proposal.

While HUD should be highly commended for finding a way to provide level funding for most of its programs and for providing $100 million for the Sustainable Communities Initiative, the budget math may not hold up once Congress begins analyzing it. It depends heavily on savings from reforms that likely will never be realized and from a hefty $640 million cut to Project-Based Rental Assistance that Congress will almost certainly restore, at least in part. As an example, over the past two budgets HUD proposed cuts to the Section 202 and 811 housing assistance programs, but these programs have strong support on Capitol Hill and the cuts were ultimately restored leaving other HUD programs cut to make up the difference. The HUD budget is actually in worse shape than it appears in the budget, and Congress is likely to have to make some difficult choices, placing programs like the Sustainable Communities Initiative in a dire position despite formal support by the administration.

Community Development Programs

An attempt to resurrect the Sustainable Communities Initiative's Regional Planning and Community Challenge grants from the virtual death sentence in the FY12 enacted budget, the President's budget request includes $100 million for the program. The funding will be split evenly between the two grants at $46 million apiece, which is a change from the past funding where regional planning grants received higher funding.

The proposed funding for the Sustainable Communities Initiative continues to come from a set aside in the Community Development Block Grant (CDBG) program. In the FY12 budget request, the President recommended the program be separated as a stand-alone item in the HUD budget. Instead, Congress all but eliminated it. Until the program can get authorized, a long-shot in this Congress, its best chance at survival is within the HUD mainstay of CDBG. However, as CDBG funding erodes, it is becoming less of a hospitable home for the Sustainable Communities Initiative.

The President's request includes $2.98 billion for CDBG, a funding level that is equal to the current funding level and stops the bleeding from one of the most direct funding mechanisms from the Federal government to communities. While Secretary Donovan's description of the funding level for the program — "not enough" — is certainly accurate, it is a huge improvement on the deep austerity approach that has resulted in a 25 percent reduction in the last two years alone.

Secretary Donovan also promised that HUD would push back on Hill proposals to cap the amount of program funding allowed to be used on administrative fees. A focus of the House-proposed FY12 Transportation, Housing, and Urban Development bill, many programs face steep cuts to administration caps; CDBG's cap would have been halved from 20 percent to 10 percent, decimating many planning departments in the process. The caps were not included in the final appropriations bill language, but the issue is likely to come up again this year.

The Choice Neighborhoods program once again came out as a clear winner. Secretary Donovan specifically called out Choice Neighborhoods and the Sustainable Communities Initiatives as "signature initiatives." The President's budget requests $150 million for the program, which is a $30 million or 25 percent increase from FY12. The funding will provide 4-6 communities with $30-$40 million grants to transform extremely distressed public housing and uplift surrounding communities. Choice Neighborhoods is an expansion and evolution of the HOPE VI program. Ten percent of the program would set aside to support a comprehensive planning process centered on neighborhood redevelopment in areas with distressed public housing.

The budget request also included $1 billion for the HOME Investment Partnership program. The program has been oft-maligned by the Washington Post leaving it especially vulnerable to cuts.  The HOME program had its budget slashed by 38 percent in FY12. The $1 billion funding level maintains the current funding level for the program. Reforms to HOME were enacted last year by HUD and included in the THUD appropriations bill. However, HOME could face an uphill battle to be included in Congressional budgets, as it could be an easy target for elimination. While HOME is considered to be an affordable housing program, it has taken on a smart growth in many communities by providing critical gap financing for multifamily housing that is in high demand in many areas.

Technical Assistance Focus

An attempt to help communities utilize the limited dollars available to them better, the administration focused on investments in technical assistance and capacity building. To achieve that goal, the budget included $120 million for the Transformation Initiative, a fund that is primarily used for research, evaluation and program metrics, program demonstrations, and technical assistance and capacity building. Within the Transformation Initiative, One CPD will again offer technical assistance for Community Planning and Development grantees to build sustainable grantee management systems and organized capacity. The TI funding also includes the National Resource Network, an integral part of the multi-agency Strong Cities, Strong Communities initiative proposed last year, primarily the Economic Development Administration. The National Resource Network is intended to provide communities a single place to find national experts who can provide policy and implementation support.

Mandatory Funding Proposals

Announced last fall in his American Jobs Act, Project Rebuild is a significant part of the President's HUD budget, proposing $15 billion in mandatory spending. The program would be modeled after the Neighborhood Stabilization Program, but would be expanded to include commercial properties rather than just focusing on residential. HUD is hoping to rehabilitate 200,000 residential and commercial properties and build 250,000 new properties with the funding. However, aside from smaller provisions within the American Jobs Act, the legislation was basically dead on arrival in Congress and is unlikely to be passed in this Congress, leaving Project Rebuild without any immediate hope for funding.

Also included in the mandatory spending account is $1 billion for the National Housing Trust Fund. Authorized in the summer of 2008, the fund originally was to draw support from Fannie Mae and Freddie Mac receipts to improve the existing affordable housing stock and build new units. Unfortunately, the Government Sponsored Enterprises collapsed almost immediately after the trust was authorized, and the funding source disappeared when the GSEs were taken into government conservatorship. Since then, housing advocates have tried unsuccessfully to find a new funding source for the trust. The President has included it in his mandatory budget request for HUD every year, but without a clear off-set or stable funding source, Congress has not provided funding and this year is likely to be no different.

Department of Housing and Urban Development FY11 Enacted FY 12 Enacted FY13 Request +/- From 2012
Community Development Fund $3.508 billion $3.308 billion $3.143 billion -5%*
CDBG $3.343 billion $2.98 billion $2.98 billion 0%
Sustainable Communities Initiative $100 million $0 $100 million 100%
Regional Planning Grants $70 million $0 $46 million
Challenge Planning Grants $30 million $0 $46 million
HOME $1.61 billion $1 billion $1 billion 0%
HOPE VI $100 million $0 (program transitioned to Choice Neighborhoods) $0 (program transitioned to Choice Neighborhoods) 0%
Choice Neighborhoods $100 million (from HOPE VI) $120 million $150 million 25%
Sec. 108 Loan Guarantees $6 million $5.952 million $0 -100%
Public Housing Capital Fund $2.044 billion $1.875 billion $2.070 billion 10.4%
Public Housing Operating Fund $4.626 billion $3.961 billion $4.524 billion 14%
Project Based Rental Assistance $9.257 billion $9.34 billion $8.7 billion -7%
Transformation Initiative - $50 million $120 million 140%
Policy Development & Research $48 million $46 million $52 million 13%

* CPD / CDBG programs are level funded compared with non-disaster amounts from FY 2012. The decrease shown is due to the fact that disaster funding was included in last year's THUD appropriations bill as a direct take down of CPD funds for the first time. HUD strongly opposes similar action in future years.

Environmental Protection Agency

Overall Funding

The President's budget request for the EPA is $105 million, 2 percent less than the current fiscal year. The 2 percent reduction is consistent with spending cuts to EPA throughout the couple years; even if the President gets his way on EPA funding, which is unlikely considering the current controversy over both spending and environmental programs, the EPA will have lost 4 percent in total funding since 2010.

Cuts to EPA programs weren't divided equally — the Clean Water Revolving Loan Fund lost 20 percent, the Drinking Water Revolving Loan Fund lost 7.5 percent and the State and Local Air Quality Grants lost 28 percent. Fortunately, the Office of Smart Growth received a slight increase in funding. The Brownfields program also received level funding, though project funds were down slightly.

Water Infrastructure

The President's budget proposal reduces the Clean Water Revolving Loan Fund and the Drinking Water Revolving Loan Fund by a combined $354 million or 15 percent. However, the programs historically enjoy bipartisan support, so it is likely that Congress will restore full funding to improve the nation's water infrastructure, which could lead to cuts in other EPA programs in the appropriations process.

Brownfields and Office of Sustainable Communities

The Brownfields program received $167 million, which includes $1.3 million funding for the Partnership for Sustainable Communities. The Partnership also received $8.5 million from EPM for a total budget request of $9.8 million. The budget request also proposes an additional collaboration between the Brownfields program and the Partnership for Sustainable Communities to develop a set of best practices from the lessons learned from the Partnership to help guide future brownfields sites in area-wide planning and clean-up efforts. The proposal also calls to expand its technical assistance to focus more directly on rural or disadvantaged areas that have been adversely impacted by contamination or environmental problems. 

EPA FY 2011 Enacted FY 2012 Enacted FY13 Request +/- change from FY 2011
Brownfields $173.6 million $167.07 million $167 million 0%
Brownfields Projects $100 million $95 million $93 million -2%
Sec. 128 Grants $49.5 million $49.4 million $47.6 million -3.6%
Brownfields EPM $24.1 million $23.68 million
Clean Water Revolving Loan Fund $1.525 billion $1.469 billion $1.175 billion -20%
Drinking Water Revolving Loan Fund $965 million $919 million $850 million -7.5%
Environmental Programs and Management $2.76 billion $2.683 billion $2.817 billion 5%
Sustainable Communities $10.7 million - precise number is debatable Level funding - budget not yet public $9.8 million
Section 319 Nonpoint Source Management Program $200 million $164.8 million $164.8 million 0%
Superfund $1.28 billion $1.216 billion $1.176 billion -3.3%

Department of Transportation

The administration requests $74 billion in mandatory and discretionary budget resources for the Department of Transportation for FY13, which is $1.4 billion, or 2 percent, over FY12 enacted levels.  Although key transportation programs have not actually been cut dramatically in recent budgets, official estimates of  the funding backlog needed for infrastructure have been as high as $2.2 trillion—a number not likely to be reached with proposals that only increase funding by 2 percent.

The administration also uses this document to lay out a six-year, $476 billion reauthorization plan that—much like the FY12 request—includes $50 billion in up-front spending to boost the economy through job creation. The total six-year amount is down from last year's $556 billion proposal, but still far above plans being offered in Congress. The real battle for major transportation programs continues to be at the authorizing level; with much of the funding considered mandatory, the largest obstacle comes in the form of declining Highway Trust Fund revenue.

Highway and transit programs would both see funding increases under this proposal. FY13 funding for FHWA totals $42.569 billion and $10.836 billion for FTA. This would be a 9 percent increase for highway programs over FY12 and a 5 percent increase for Transit. The funding split by mode remains close to 80 percent highways and 20 percent transit. In FY12, the ratio was slightly more in favor of transit with 20.8 percent compared to 20.3 percent in the FY13 request.

Key overall policy changes include moving several programs from the General Fund to the Transportation Trust Fund (TTF), which would replace the current Highway Trust Fund as the repository for federal gas tax receipts. A new Multimodal Account would fund passenger rail and TIGER grants. This would also result in a reclassification of all surface transportation spending as mandatory and would mark the first time that passenger rail is fully incorporated into surface transportation. Undeterred by the zeroing out of funding in Congress the past two years, the administration again requests significant investment in high-speed rail, calling for $2.5 billion in FY13.

In addition to gas tax revenue, a $231 billion transfer from the General Fund would be needed to keep the TTF solvent over the lifetime of a six-year bill.

Transportation FY 2011 Enacted FY 12 Enacted FY13 President's Request +/- from FY 2012
Highways $41.846 b $41.545 b $42.569 billion 2.5%
Transit $10.1 billion $10.315 b $10.836 billion 5%
Capital Investment Grants $1.6 billion $1.95 billion $2.2 billion 13%
Formula & Bus Grants $8.34 billion $8.36 billion Recategorized (see transit charts below)
Amtrak $1.5 billion $1.4 billion $1.5 billion 7%
High Speed Rail $0 $0 $2.5 billion -
TIGER $526 million $500 million $500 million 0%
National Infrastructure Bank $0 $0 $0 -
Office of Livable Communities $0 $0 $5 million -

Livable Communities

The administration requests $500 million for TIGER grants in FY13, an amount equal to FY12 spending and 5% less than FY11. TIGER, which originated in the Recovery Act, has proved to have durable popularity – and bipartisan – popularity with congressional appropriators. TIGER continues to have no formal authorization but may be included in the pending reauthorization. Although at least $120 million of the total is reserved for projects in rural areas, there is no set aside for planning grants as was included in the FY10 program. The proposal also calls for the permanent authorization of the discretionary grant program, which has served as the key component of DOT's participation in the Partnership for Livable Communities.  Within the Office of the Secretary, the administration requests $5 million to coordinate the livable communities program and to support a Livability Technical Assistance and Capacity Building pilot program in conjunction with HUD and EPA.

Included in the streamlining of highway programs, is a $4 billion request for a new Livable Communities program which would provide formula funding and competitive grants for "place-based planning, policies, and investments."

Transit programs would be streamlined to include a Transit Expansion & Livable Communities program, for which $30 million would go to Livability Demonstration Grants.  Shortly before the release of the budget request, the administration announced policy changes to the New Starts program, which would change the evaluation criteria of projects to place new emphasis on local needs such as economic development, community revitalization, and environmental benefits. Impacts on job creation, affordable housing, energy use, and air pollution will now be valid considerations.

Immediate Transportation Investments

The president has again put forward the idea of a one-time boost of $50 billion in infrastructure investment to get the economy moving and create jobs in industries that were hit badly by the recession. The administration proposes spending this funding in FY12 on:

  1. $26 billion for highway investment
  2. $6 billion for transit state of good repair
  3. $3 billion for urban and rural transit programs
  4. $4 billion for high speed rail
  5. $2 billion for Amtrak
  6. $4 billion for TIGER

Administration's Reauthorization Proposal

In line with the FY12 budget request, the administration has put forward a proposal for a $476 billion, six-year reauthorization of surface transportation programs. The total size of this investment has decreased from last year's request for $556 billion, but is still significantly larger than the House proposal for $260 billion over five years or the Senate proposal for $109 billion over two years. Over six-years, the administration's proposal would provide $305 billion for roads and bridges, $108 billion for transit, and $47 billion for high speed rail. The TIFIA credit program, which has had increased prominence in recent years, would receive $500 million for FY13, and $3 billion over the six year period.

In evidence of the administration's efforts to decrease the amount of time it takes to evaluate projects and release funding, programs across the Department have been consolidated and streamlined. New categories also reflect the administration's priorities on safety, immediate investment as an economic boost and modernizing our infrastructure system through research and technology.

Highways

The administration proposes consolidating and streamlining 55 programs down to five:

Program FY13 Six-Year Total
National Highway Program $32.4 billion $225 billion
Highway Safety $2.5 billion $17.5 billion
Livable Communities $4 billion $27.4 billion
Federal Allocation $1.4 billion $9 billion
Research, Technology, and Education $644 million $4 billion

  1. National Highway Program—streamlines several programs, including STP into two new subprograms: Highway Infrastructure Performance and Flexible Investment
  2. Highway Safety— performance-based framework and new Highway Safety Data Improvement Program
  3. Livable Communities—formula and competitive grant programs for place-based planning
  4. Federal Allocation—consolidates several programs into one with five components: Federal Lands Transportation, Federal Lands Access, Tribal Transportation, Emergency Relief and Workforce Development
  5. Research, Technology, and Education—establishes a comprehensive nationally coordinated program

Transit

Similar to the FHWA restructuring, the administration proposes streamlining transit funding into five key programs:

Program FY13 Six-Year Total
State of Good Repair $3.207 billion $31.6 billion
Transit Expansion & Livable Communities $2.45 billion $21 billion
Transit Formula Grants $4.76 billion $45.3billion
Research & Technology Deployment $121 million $1.1 billion
Operations & Safety $166 million $1.1 billion

  1. State of Good Repair—capital investment for transit assets that need to be repaired or replaced
  2. Transit Expansion & Livable Communities—Capital Investment Grants, Planning Programs, Transit in the Parks, Tribal Transit and Livability Demonstration Grants.
  3. Transit Formula Grants—formula grants with operating cost flexibility for certain larger urban and rural systems
  4. Research & Technology Deployment—technical assistance and greenhouse gas and energy reduction demonstrations
  5. Operations & Safety—transit safety oversight

Transportation Leadership Awards

The administration has proposed a new "race to the top" style incentive program for the second time in this budget request.  Nearly $20 billion is requested to encourage better, more performance-based planning and outcomes. The Leadership Awards program is conceived of by DOT as a key source of livability funding, however there is currently no corresponding language regarding the program in pending House and Senate transportation authorization bills.

Department of Agriculture

The President's budget request for the FY13 Department of Agriculture is in many ways less important than the funding mechanisms within the Farm Bill, which is due for reauthorization this year; 85 percent of the funding for USDA is mandatory and 15 percent of the funding is discretionary. Much of the FY13 request is based on the 2008 Farm Bill, though the administration's budget does provide a blueprint for discretionary funding and other priorities for the upcoming Farm Bill reauthorization.

The $23 billion in discretionary spending that comprises the USDA budget request is geared towards research into renewable energy, mostly biofuels, food research initiatives, SNAP, and AGO initiatives. To counteract the costs and reduce the deficit, the administration has proposed cuts to crop insurance to farmers in order to save $7.6 billion a year. The administration and others have cited high exports and record profits for farmers as a justification for the cuts. Several members of Congress have made it a priority to either prevent the crop insurance cut or create a mechanism that complements new crop insurance funding levels. However, there appears to be growing momentum for reform with measures passing the Senate last year and changes floated by the House and Senate Agriculture Committees during the Super Committee debate. The USDA will also look to cut costs through consolidation of offices, a recent wave of 7,100 retirements, reduction of operational costs, streamline rules, and more "targeted" funding for conservation programs.

Conservation

In the President's budget proposal, several conservation programs will continue to have level funding at or near FY12 enacted levels. Examples of these programs include the Environmental Quality Incentives Program (EQIP) at $1.403 billion proposed, Conservation Reserve Program at $2.1 billion proposed, and Farmlands Protection Program at $150 million. The administration asserts that level funding of these programs will result in a net savings in the future. The Conservation Stewardship Program was increased substantially; the administration's request included a 27 percent or $203 million increase for the program. But, despite this large funding increase, the budget also proposes to permanently reduce the program by 759,632 acres. Overall, conservation programs fared better than expected, considering the programs have been targeted for reduction recently by the deficit reduction super committee. However, they could be targeted again in future appropriations and Farm Bill negotiations.

Rural Development

Recently, private financing for rural development projects has become tighter, resulting in more strain on the public financing options. This has put USDA in the position of having to do more with the scarcer resources available to fund Rural Development.  Secretary Vilsack and others have stressed a need for more venture capital investments in rural communities with a competitive grant programs to help the most innovative and in-need communities. The proposed budget is mixed bag in terms of cuts and increases. On the one hand, major cuts to smaller rural development programs such as the 523 "Self-Help" program that builds low and moderate income communities in rural areas and makes $900 million reduction to direct single family housing loan program. Additionally, the administration has taken a strong stance against federally funding repair and maintenance of watershed projects. This has resulted in complete defunding of programs such as the Watershed Rehabilitation Program and Watershed Flood Prevention Operations. On the other hand, the budget proposal has increased the community facilities program's direct loan program by $700 million, but kept the community facilities grant program at $17 million, close to FY12 enacted level.

Department of Agriculture FY11 Enacted FY 12 Enacted FY13 Request +/- From 2012
Watershed Flood Prevention Operations $30 million $15 million $0 -100%
Wetlands Reserve Program $494 million $437 million $224 million -48.7%
Environmental Quality Incentives (EQIP) $1.1 billion $1.4 billion $1.4 billion 0%
Conservation Stewardship Program $788 million $768 million $972 million +26.6%
Farmlands Protection Program $150 million $150 million $150 million 0%
Wildlife Habitat Incentives Program Rescinded $50 million $73 million +46%
Grassland Reserve Program $44 million $67 million $5 million -92.5%
Conservation Reserve Program $1.9 billion $1.9 billion $2.1 billion +10.5%
Conservation Reserve Program Technical Assistance $108 million
Watershed Rehabilitation Program $18 million $15 million $0 -100%
Value Added Producer Grants $14 million
Community Facilities Grant Program $20 million $16 million $17 million 6.3 %
Community Food Projects Competitive Grant Program $5 million $5 million $5 million 0%
Farmers Market Promotion Program $10 million

Department of the Interior

Land and Water Conservation Fund State Grants

The President's budget request includes $60 million for the Land and Water Conservation Fund State Grants. The request is a 34 percent or $15.1 million increase over FY12. The 34 percent increase is slightly higher than the increase for the overall Land and Water Conservation Fund, which was increased by 30 percent. The increased funding levels are intended to provide resources to build the interagency partnerships started in FY11.

Historic Preservation Fund

The Historic Preservation Fund funding level for FY13 was maintained at FY12 levels. The $56 million in funding will help communities maintain cultural features, ecosystems, and historic sites that might otherwise be neglected as a result of tightening local budgets.

Urban and Community Forestry

The President's budget request includes level funding for the Urban and Community Forestry program at $31.3 million. The program provides resources to help communities create and maintain trees and green spaces in urban areas and provides technical, research, and education assistance.

Department of Interior FY11 Enacted FY 12 Enacted FY13 Request +/- From 2012
Land and Water Conservation Fund $301 million $345 million $450 million 30%
NPS Land Acquisition & State Assistance $95 million $102 million $119.4 million 17%
LWCF State Grants Program $37.13 million $44.9 million $60 million 34%
National Park Service $2.6 billion $2.6 billion $2.6 billion 0
Historic Preservation Fund $54.5 million $56 million $56 million 0

Treasury Department

CDFI and Healthy Food Financing

The President's budget proposal contains $221 million for the Community Development Financial Institutions fund, which funds the program at levels equal to the current fiscal year. The CDFI provides monetary awards and tax credit to promote economic growth in urban and rural-low income areas.

Within the CDFI, the budget also provides $25 million for the Food Financing program, $3 million higher than the current fiscal year. Combined with an additional $10 million in the budget request for the Department of Health and Human Services, the program is funded at a total of $35 million. The Treasury's budget request also includes an additional $250 million for the program, contingent on Congress approving a $7 billion allocation authority for New Market Tax Credit as a part of its reauthorization this year.

New Market Tax Credits

While the President's budget contains no direct appropriations for New Market Tax Credits, the proposal outlines a reauthorization plan that contains $7 billion in allocation authority for the program. Established in 2000, the program encourages business and real estate development in low-income communities.

Treasury Department FY11 Enacted FY 12 Enacted FY13 Request +/- From 2012
Community Development Financial Institutions Fund $228 million $221 million $221 million 0
Healthy Foods Financing $25 million (additional $10 million from HHS) $22 million (additional $10 million from HHS) $25 million (additional $10 million from HHS)

Department of Commerce

Economic Development Administration

The President's budget contains $219.7 million for the Economic Development Administration (EDA), a 15 percent decrease from FY12 enacted. This includes $27 million for the Partnership Planning program and $25 million for the Regional Innovation Program.

National Oceanic and Atmospheric Administration

The President's budget includes a 3 percent or $154 million budget increase for NOAA over FY12 enacted levels. The funding includes continued support for environmental data and services, weather, drought and flood forecasting, and renewable energy research. Though he didn't include it in his FY13 request, the President is seeking authority from Congress to re-organize the Department of Commerce, which would remove NOAA from Commerce's jurisdiction and place it under the Department of the Interior. Congress does have to grant the President the authority to make those changes, and it has begun holding hearings on the matter.

Census

The Commerce budget request also includes $970 million for the Census, which is a 3 percent or $28 million increase over the current fiscal year. The bulk of the funding increase will be used for data collection of businesses for their economic census. The administration also hopes to save money by collecting data more efficiently and utilize internet response options more frequently. The American Community Survey's budget was decreased slightly, but the administration believes that the collection efficiency improvements will bolster the ACS budget.

Department of Commerce FY11 Enacted FY 12 Enacted FY13 Request +/- From 2012
Economic Development Administration $283 million $257 million $219 million -14.7%
Partnership Planning $32 million $29 million $27 million -7%
Regional Innovation Program $0 $0 $25 million 100%
NOAA $4.636 billion $4.906 billion $5.06 billion 3%
Census $863 million $888 million $970million 9%

Department of Homeland Security

The Department of Homeland Security budget, including funding for the Federal Emergency Management Administration (FEMA), is projected to remain largely unchanged in FY 2013. However, DHS is proposing some important changes to key local government programs in the Obama administration's budget proposal. DHS continues to list "ensuring resilience to disasters" as one of the department's five core missions. The budget calls for overhauling how much of the assistance programs for states and municipalities would function.  In the budget, FEMA suggests consolidating all state and local grants (with the exception of fire and emergency management grants) into a new "National Preparedness Grant Program" (NPGP). The new NPGP approach would use a "competitive, risk-based model" for allocating funding. 

The budget also makes a major change in the National Pre-Disaster Mitigation Fund. FEMA proposes elimination of pre-disaster mitigation grants but argues that the change would not hamper mitigation efforts because FEMA would use unobligated balances from previous years to funds grants and mitigation assistance would also be eligible under other grant programs.  The budget slightly reduces funding for the Flood Hazard Mapping and Risk Analysis Program by 8.6 percent to a proposed level of $89.3 million. The National Flood Insurance Program, funded by insurance policy fees, includes $120 million for three interrelated mitigation grant programs to increase flood preparedness and resiliency.  Funding for post-disaster assistance is directed by the enactment of last year's Budget Control Act.

Department of Homeland Security / FEMA FY11 Enacted FY 12 Enacted FY13 Request +/- From 2012
State & Local Programs / National Preparedness Grant Program $2.1 billion $2.245 billion $2.9 billion* 29.1%*
National Pre-Disaster Mitigation Fund $49.9 million $35.5 million 0 **
Flood Hazard Mapping and Risk Analysis Program $181.6 million $97.7 million $89.3 million -8.6%

* The NPGP Account includes Firefighter Assistance and Emergency Management Performance Grants in the FY 2013 request. Including these programs in the FY 2012 account for State & Local Programs results in  $2.245 billion. The FY 13 request is an increase of $655 million, 29.1%.

** Pre-disaster grants would be funded from unobligated balances from FY 2008–2012.