Budget Work for FY13 and FY14 Impeded by Sequestration

Congress spent another week juggling the major fiscal challenges of finalizing FY13 spending, addressing sequestration, and developing an FY14 budget, but made little progress due to lack of regular order in the budget and appropriations process. The threat of sequestration consumed much of lawmakers’ and the Administration’s focus in February. The Administration has still not submitted its FY14 budget request to Congress, a month past the statutory deadline. During the week of February 18, House Committee on Appropriations Chair Harold Rogers (R-KY) announced plans to introduce an FY13 funding bill that would provide a full-year continuing resolution (CR) for all federal departments. Programs receive funding at FY12 levels under the current CR, which expires on March 27. The Administration submitted a list of “anomaly” requests for HUD to the Committee, including increases over FY12 funding for the Native American Housing Block Grant and the Public Housing operating fund. The public housing operating fund was underfunded in FY12 because public housing agency reserves were used in that year only to supplement the appropriation. An “anomaly,” in the context of a CR, is any special provision included to address the particular needs of a program. Because CRs typically continue the previous fiscal year’s funding into the current fiscal year, programs in CRs are level-funded. House and Senate leaders explicitly linked the anticipated CR with efforts to avert the March 1 implementation of sequestration. House Speaker John Boehner (R-OH) indicated that he anticipates the CR could be used to move a sequestration replacement package negotiated later in the month. The Speaker also indicated that the House would introduce a CR to extend the current deadline of March 27 to allow for additional sequestration negotiation time while averting a government shutdown. Congressional Democrats and the President indicated that they also wish to avoid a government shutdown (see article elsewhere in Memo).Despite not having an FY13 budget or an understanding of how sequestration would be handled, the House authorizing committees marked up their “FY14 Budget Views and Estimates” during the week of February 25. These documents are usually crafted in relation to the President’s budget request to Congress, creating a dialogue between Congress and the Administration. Instead of waiting for the President’s request, the House Committee on the Budget instructed authorizing committees to craft and submit their “Views and Estimates” by winter 2013, according to the House Committee on the Budget’s Oversight Plan, which authorizing committees have taken to mean by early March. The documents generally reflect the opinions of the majority party.The House Committee on Financial Services marked up its “Views and Estimates’ on February 26. The committee criticized HUD’s administration of its programs, stating concerns over “unexpended balances and slow spend-out” rates. It also criticized HUD’s major rental and homeownership programs. The committee noted that there are numerous HUD programs that are not currently authorized, such as the Choice Neighborhoods Initiative program. “The Committee continues to have specific concerns about HUD’s administration of the Section 8 program, the HOME Investment Partnerships Program, the Section 202 and Section 811 programs for elderly and persons with disabilities, and the Community Development Block Grant (CDBG) program.” Regarding tenant-based rental assistance, the committee “believes that the public is better served not by expanding Section 8 but by reforming the program so that public housing authorities can serve more people within existing funding levels.”The committee also indicates in this document that it will continue to review USDA rural housing programs “with an eye toward consolidating or reducing duplicative programs.” Debate during the markup focused fairly little on the document at hand, and instead devolved into a partisan debate over sequestration implementation. Committee Democrats stated their view that it is premature for the committee to submit its budget priorities without having an FY13 budget and without understanding the impact of sequestration on the programs within the Committee’s jurisdiction. Republicans countered that the President and Democrats are exaggerating the impact sequestration will have on these programs and that it is appropriate for the committee to proceed with FY14 budget work regardless of these potential impacts. Also on February 26, the House Committee on Agriculture held a business meeting to debate its own “Views and Estimates.” Ranking Member Collin Peterson (D-MN) said that the Committee on Agriculture is the only committee to submit a majority and minority joint letter to the House Committee on the Budget. Rural housing was not discussed in the committee’s letter. The President is now expected to submit an FY14 budget request to Congress toward the end of March. Click here to view the House Financial Services Views and Estimates. Click here to view the House Agriculture Views and Estimates.