|Dear IAPMO members, friends, and clients:
By now you have undoubtedly heard that President Trump released the outline for his first federal budget. As the media has been covering, there are a lot of changes, cuts, and increases “proposed”(explained in greater detail below). The purpose of our message to you is to help put things in perspective and provide a little background on how this long process will play out.
PRESIDENT’S BUDGET — WHAT DOES IT MEAN
The president’s proposed budget to Congress officially kicks off a legislative process that ultimately determines how much money each federal program receives in FY 2018 (Oct. 1, 2017 to Sept. 30, 2018). It is important to remember that this budget is not binding — it simply serves as a blueprint that outlines the new administration’s priorities. But, it is ultimately Congress that approves all budgets and federal appropriations — not the president. This is just the beginning of a long process that will ultimately be impacted by priorities, politics, economic conditions, and lobbying.
President Trump’s $1.065 trillion budget proposes $54 billion in domestic cuts for FY 2018. It raises defense spending to $603 billion and lowers nondefense spending to $462 billion. This is also just the beginning. The budget delivered to Congress this week says that by next year, OMB will propose a large-scale reorganization of federal departments and agencies. The IAPMO Group opposed some items in the proposed budget, and will continue to work with Congress to protect key federal programs of importance to our industry.
WHERE ARE THE BIGGEST CUTS?
The federal agencies facing the biggest cuts include the: Environmental Protection Agency (-30%), departments of Agriculture (-29%), State (-29%), Health and Human Services (-23%), Labor (-21%), and Commerce (-17%), the Army Corps of Engineers (-17%), General Services Administration (-17%), and the Department of Housing and Urban Development (-15%).
With these proposed overall cuts, there are a number of programs that the president’s budget seeks to completely eliminate. Among these are the Corporation for Public Broadcasting, Legal Services Corporation, National Endowment for the Arts, National Endowment for the Humanities, Overseas Private Investment Corporation, the U.S. Institute of Peace, and Community Development Block Grants.
WHERE ARE THE BIGGEST INCREASES?
The federal agencies facing the biggest boost include the Pentagon (+10%) Homeland Security (+7%); Veterans Affairs (+10%) and nuclear security at the Energy Department (+11%). While some Transportation programs would be slashed, overall it would see a 13% increase.
HOW DOES THE BUDGET PROCESS WORK?
There are five key steps to this process:
1. The president submits a budget request to Congress
2. The House and Senate pass budget resolutions
3. House and Senate appropriations subcommittees “mark up” appropriations bills
4. The House and Senate vote on appropriations bills and reconcile differences
5. The president signs each appropriations bill and the budget becomes law
Step 1: The President Submits a Budget Request
Typically, in February, the president sends a budget request to Congress for the coming fiscal year, which begins on Oct. 1. To create his request, the president and the Office of Management and Budget (OMB) solicit and accept budget requests from federal agencies, outlining what programs need more funding, what could be cut, and what new priorities each agency would like to fund. Most of the information we have heard about the president’s budget up to this point has been from information that has been leaked from the dialogue between OMB and the White House about how the federal agencies will adjust to proposed cuts to their overall funding.
Step 2: The House/Senate Pass Budget Resolutions
Now that the president has submitted his budget request, the House Committee on the Budget and the Senate Committee on the Budget each write and vote on their own budget resolutions. A budget resolution is not a binding document, but it provides a framework for Congress for making budget decisions about spending and taxes. It sets overall annual spending limits for federal agencies, but does not set specific spending amounts for particular programs. After the House and Senate pass their budget resolutions, some members from each come together in a joint conference to iron out differences between the two versions, and the resulting reconciled version is then voted on again by each chamber.
Step 3: House/Senate Subcommittees “Mark Up” Appropriation Bills
The Appropriations committees in both the House and the Senate are responsible for determining the exact levels of spending for all discretionary programs. The Appropriations committees are tasked with creating the 12 spending bills that each fund a different part of our government. The Appropriations committees are broken down into smaller appropriations subcommittees. Subcommittees cover different areas of the federal government: for example, there is a subcommittee for defense spending, and another one for energy and water. Each subcommittee holds hearings during which they pose questions to leaders of the relevant federal agencies about the budget request for that agency. With this information, the chair of each subcommittee writes a draft of the subcommittee’s appropriations bill, using the spending limits set out in the budget resolution. All subcommittee members then consider, amend, and finally vote on the bill. Once it has passed the subcommittee, the bill goes to the full Appropriations Committee. The full committee reviews it, and then sends it to the full House or Senate.
Step 4: The House and Senate Vote on Appropriations Bills and Reconcile Differences
The full House and Senate then debate and vote on appropriations bills from each of the 12 subcommittees. After both the House and Senate pass their versions of each appropriations bill, a conference committee meets to resolve differences between the House and Senate versions. The conference committee produces a reconciled version of the bill, which the House and Senate vote on again. After passing both the House and Senate, each appropriations bill goes to the president for his signature.
Step 5: The President Signs Each Appropriations Bill and the Budget Becomes Law
The president must sign each appropriations bill after it has passed Congress for the bill to become law. When the president has signed all 12 appropriations bills, the budget process is complete.
DOES THE BUDGET PROCESS ALWAYS WORK?
Rarely. When the budget process is not complete by Oct. 1, Congress may pass a continuing resolution so that agencies continue to receive funding until the full budget is in place. A continuing resolution provides temporary funding for federal agencies until new appropriations bills become law. When Congress does not pass a continuing resolution by Oct. 1, it can result in a government shutdown, as in 2013. Currently, our government is funded by a continuing resolution that will expire on April 28. It will be a busy time for Congress as they start the budget process for FY 2018 and then also discuss spending levels from April 28 through Sept. 30. When Congress can’t agree on 12 separate appropriations bills, it will often resort to an omnibus bill — a single funding bill that encompasses all 12 funding areas.
Already, we are hearing from senior members of congress on both sides of the aisle that most of the president’s budget is “dead on arrival.” Rest assured, we will continue to work with our members, clients, industry partners, and coalitions to ensure Congress hears and understands the importance of programs critical to our industry. As mentioned, this is just the first step in a long process, so buckle your seats belts; we are in for a wild ride.
Your IAPMO Group Government Affairs Department