May 10, 2018

White House Asks Congress to Rescind Over $15 Billion in Unspent Funds

The White House delivered a request to Capitol Hill this week calling on Congress to rescind $15.4 billion in unspent federal funding.  While the Trump administration initially sought to cancel over $60 billion in spending – with the majority of cuts coming from the recently-enacted fiscal year 2018 omnibus appropriations law (PL 115-141) – GOP congressional leaders were swift to dismiss the plan.  In response, the White House sent lawmakers a scaled-back request that would rescind unspent funds from previous fiscal years.

The request, which can be accessed here, targets 38 federal accounts, including:

• $7 billion from the Children’s Health Insurance Program ($5 billion in lapsed funds and $2 billion from a contingency fund);
• $4.3 billion from the Department of Energy’s (DOE) Advanced Technology Vehicle Manufacturing program;
• $523 million from DOE’s Title 17 Loan Guarantee program;
• $800 million from the Center for Medicare and Medicaid Innovation;
• $252 million from funds to address the 2015 Ebola outbreak;
• $133 million from the Railroad Unemployment Insurance Extended Benefits;
• $148 million from inspections related to animal disease outbreaks that have since been resolved; and,
• $107 million in technical assistance designated for Hurricane Sandy relief efforts.

Looking ahead, lawmakers will have 45 days to act on the president’s request.  While the proposal is likely to pass the House, Senate prospects are less clear.  Notably, the rescission resolution will only require a majority vote to advance in the upper chamber, rather than the 60 votes that are typically needed.  If Republicans are ultimately successful in their efforts to claw back unspent funding, the White House could follow-up with additional rescission requests in the coming months.

House Appropriators Advance FY 19 Spending Bills

The fiscal year 2019 budget process ramped up the week of May 7 as the House Appropriations Committee cleared its first two spending bills of the year: Military Construction-Veterans Affairs and Legislative Branch.  Generally considered the least controversial of the 12 annual funding measures, both bills passed with overwhelming support.  In addition, three other spending measures were approved at the subcommittee level this week: Energy-Water Development; Commerce-Justice-Science (CJS); and, Agriculture.

Energy-Water Development

The fiscal year 2019 Energy-Water bill, which funds the Department of Energy (DOE), the U.S. Army Corps of Engineers, the Bureau of Reclamation, and several independent agencies, was favorably reported to the full Appropriations Committee on May 7.  All told, the measure would spend $44.7 billion, or $1.5 billion above the fiscal year 2018 enacted level and $8.2 billion above the president’s budget request.  Notably, the Army Corps would see its budget increase by over $450 million, while an additional $75 million would be available for the Bureau of Reclamation. 

In addition, the legislation includes $134 million for water storage projects authorized in the Water Infrastructure Improvements for the Nation (WIIN) Act.  With regard to California, the federal funds could be used for the following projects: design and pre-construction work on the Shasta Reservoir project; feasibility study completions for the Sites Reservoir and the Temperance Flat Reservoir; and, initiation of a feasibility study to address subsidence on the Friant Kern Canal.

The House bill also includes several policy riders, including language that would formally repeal the Waters of the United States (WOTUS) rule.  The legislation also would prohibit federal funding from being used to require a permit for the discharge of dredged or fill material under the Clean Water Act.

Commerce-Justice-Science

The CJS Appropriations Subcommittee cleared its fiscal year 2019 spending bill by voice vote on April 9.  The legislation would provide $62.5 billion in total discretionary funding to the Departments of Commerce and Justice, NASA, and related agencies.  The proposed investment would be $2.9 billion more than the fiscal year 2018 enacted level.

Among other things, the legislation would provide $2.9 billion for state and local law enforcement assistance.  This includes $255 million for the State Criminal Alien Assistance Program (SCAAP), an increase of $15 million.  In addition, the bill would increase funding for the Byrne-Justice Assistance Grant program (+26 million), as well as Violence Against Women Act programs (+$1 million).  It also includes level funding ($225.5 million) for the COPS hiring grant program.

With regard to the Victims of Crime Act (VOCA), the House bill would provide $2.6 billion for programs authorized under the law.  The proposed funding level represents a $1.8 billion reduction when compared to the fiscal year 2018 omnibus appropriations act, which set the VOCA cap at an all-time high of $4.4 billion.  It should be noted that the House bill’s funding level for VOCA is $300 million more than the cap recommended by the Trump administration in its fiscal year 2019 budget proposal.

U.S. Forest Service Releases Secure Rural Schools Payments

This week, the U.S. Forest Service released Secure Rural Schools (SRS) payments for fiscal year 2017.  The program, which was renewed for two years as part of the omnibus spending law, provides vital funding to communities facing declining revenue from timber sales on federal lands.

In all, 29 California counties are set to receive more than $23.7 million in SRS formula payments, while 10 counties will collect $4.6 million in 25 percent payments (based on a rolling 7-year average of receipts generated on national forest system land) for a total of approximately $28.4 million.  An additional $2.4 million is also available for federal land projects, or Title II projects, that are identified by local resource advisory committees.  A detailed breakdown of SRS funding by county can be accessed here.

Water Infrastructure Legislation Introduced in the Senate

This week, the leaders of the Senate Environment and Public Works (EPW) Committee introduced a bipartisan water infrastructure bill (S 2800).  The legislation, entitled America’s Water Infrastructure Act of 2018, would authorize a host of flood control, navigation, ecosystem restoration, and other water resources projects under the purview of the U.S. Army Corps of Engineers. 

In addition to specific project authorizations, the measure would revamp the process by which the Corps’ prepares its budget.  Under the bill, the Corps would be required to submit to Congress on an annual basis a five-year budget that includes a work plan for the current fiscal year and a proposed budget for the subsequent four-year period.  While Corps headquarters would be responsible for submitting a budget that addresses projects and initiatives of national significance, each district office would be required to provide a plan for projects of regional, tribal, and local significance.

S 2800 also includes provisions designed to increase local and non-federal stakeholder input in the Corps’ budgeting process.  Additionally, the measure would change cost-sharing rules to allow a state, local government, or private entity that splits the cost of an Army Corps project to be entitled to a partial reimbursement of their contribution if the project comes in under budget.

While the majority of provisions in the Senate’s water infrastructure bill pertain to the Corps, the legislation also would make modifications to several key programs that are administered by the Environmental Protection Agency (EPA).  For example, the bill would expand authorized activities under the Safe Drinking Water Act State Revolving Loan Fund (SRF) to allow states to use up to 10 percent of their SRF capitalization grants to implement source water protection plans.

Additionally, S 2800 would reauthorize the Water Infrastructure Finance and Innovation Act (WIFIA).  Specifically, the measure would extend the authorization for the WIFIA program – which provides long-term, low-cost supplemental loans for regionally and nationally significant water infrastructure projects – at $100 million annually for fiscal years 2020 and 2021.  Authorized by Congress in 2014, EPA issued its first-ever WIFIA loan earlier this year.

The bill also would authorize two key WIFIA studies.  The first study, which would be conducted by the Corps, would require the Secretary of the Army to submit a report to Congress on WIFIA implementation impediments.  To date, the Corps’ WIFIA program has no published guidance and lawmakers have not appropriated any money for the Corps to launch the program.  The study also would need to identify all projects that the secretary determines are potentially viable to receive assistance, as well as identify any legislative amendments or regulatory changes that would improve the secretary’s ability to implement the program.

The second study, to be completed by the General Accounting Office, would examine WIFIA projects in small, rural, disadvantaged, and tribal communities.  Specifically, the study would need to focus on how EPA can create flexibility under WIFIA for the aforementioned entities, including ways to improve access to assistance under the program.

Looking ahead, the EPW Committee is expected to conduct a markup of S 2800 in the near future.  Timing for floor action – as well as timing for the introduction of a House water infrastructure bill – remains uncertain.

TANF Reauthorization

This week, House Ways and Means Committee Republicans released a draft Temporary Assistance for Needy Families (TANF) reauthorization bill.  While the timing for legislative action remains unclear, the committee may conduct a markup of the proposal sometime later this month.  It should be noted that panel Democrats are not expected to support the legislation.

To follow are highlights of the discussion draft.

Work Requirements

All work-eligible individuals would be required to participate in work or work preparation activities – at least 30 hours per week for a single parent with children over 6 or 35 hours combined for a two-parent family.  Single parents with children under 6 would need to participate an average of 20 hours per week per month.

Local agencies would need to create an individual opportunity plan outlining employment expectations and supports, among other provisions.

The state could impose penalties on the individuals failing to comply without good cause.  States would have “sole discretion” to define activities as long as they are consistent with current law.

Work Participation Rate Replaced with WIOA Metrics

Each state would negotiate with the Department of Health and Human Services (HHS) an outcome-based performance system plan.

The plan would include Workforce Innovation and Opportunity Act (WIOA) measures and weights which focus on percent of work-eligible individuals exiting TANF and remaining in unsubsidized employment after the second and fourth quarters.  Median earnings would be a factor, as well as recognition of individuals under 24 attending high school or pursuing a GED.

HHS would be allowed to make modifications on state performance levels to reflect the state’s economy.

HHS could impose fiscal penalties or require corrective action based on the performance levels achieved by the state.

TANF Formula Changes

Federal funds would be allocated to states based on the number of children in families below poverty.

Block grant funding would continue at current levels, but state allocations would change using the following formula:

TANF mandatory funds (75 percent) – Funds could be spent on TANF purposes (same as current law) and with a reduced maintenance of effort (MOE) requirement of 56 percent of historical State expenditures.

TANF matching funds (25 percent) – Funds could only be spent on core activities that support work and would be matched based on the Federal medical assistance percentage.  For purposes of matching, qualified State expenditures would be limited to spending on core activities that support work.

Modified TANF Transfers

States could no longer transfer TANF funds to the Social Services Block Grant.

Up to 50 percent of TANF mandatory funds could be transferred to child care, child welfare (10 percent limitation) or WIOA – consistent with the law for those programs.