What to Make of the Federal Budget

The Budget Control Act in 2012, which created the automatic spending cuts called “sequestration,” the government shutdown in October 2013 and the Ryan-Murray Budget in December 2013, have all been the result of the partisan divide that exists in Congress surrounding federal discretionary spending levels.

Will BrownFor at least the last two years, Congress has dealt with little, if anything, more than the federal budget. The Budget Control Act in 2012, which created the automatic spending cuts called “sequestration,” the government shutdown in October 2013 and the Ryan-Murray Budget in December 2013, have all been the result of the partisan divide that exists in Congress surrounding federal discretionary spending levels. We can now add one more item to this list — the Omnibus Appropriations bill of 2014 — which will fund the government through the end of the fiscal year.

First, let’s go over some of the basics. Every year, Congress is responsible for passing legislation to fund the federal government. This process always begins with the House as the Constitution stipulates. Annually, the President sends his budget priorities to the House, but this simply provides a starting point. The House Budget Committee then formulates a top-line number budget that must be passed by the House and Senate to serve as a guide for appropriators to fill in the more detailed funding levels for federal programs. Then, the House Appropriations Committee is responsible to formulate 12 appropriations bills, one for each of the major federal agencies, using the top-line budget as the frame. Once the House and Senate have passed the budget and 12 appropriations bills, the entire product is the federal budget. This is how the process is supposed to go, but, as we know, things rarely go as they are supposed to in Congress.

Actually, this process hasn’t been completed in full since the 1980s. So practically, this isn’t how the government gets funded every year. The process has started the same. The President always sends his budget to Congress as a blueprint for how the Executive Branch would like things to be funded. Paul Ryan, Chairman of the House Budget Committee, then writes a bill for the federal budget and passes it out of Committee, the full House debates this budget and it’s passed by the House, generally along party lines. However, over the past few years, there has been an additional Republican budget that is much smaller than the one that Chairman Ryan supports. This budget is backed by the Republican Study Committee (RSC) — the most conservative fraction of the House. The RSC is not officially affiliated with the Tea Party, but there is clearly a connection.

You may have heard the popular talking point that the Senate hasn’t passed a budget since 2009. Up until last spring, that was true, but in 2013 the Senate did, in fact, pass a budget. The Senate set the top-line number at $1.058 trillion for Fiscal Year 2014 (FY14). Comparatively, the House set the top-line budget number at $967 billion for FY14, which is the same number prescribed under the Budget Control Act after sequestration takes effect.

The Ryan-Murray negotiated budget set the top-line budget at $1.012 trillion for FY14. This agreement alleviates about half of the intended sequestration cuts but leaves half in place.

Since a budget agreement has passed both chambers, as mentioned earlier, the next phase is the appropriations process. Fortunately, we didn’t have to wait long. In the week of Jan. 13, 2014, both the House and Senate passed the Omnibus Appropriations Act of 2014 which describes the specific funding levels of the numerous discretionary budget accounts. Despite the continued threat of cuts to transportation and infrastructure related accounts due to sequestration over the last two years, the utility and excavation industries have reasons to feel positive. Here are some highlights:

$41 billion for the Federal Highway Program authorized by MAP-21. This constitutes full funding and a $557 million increase over Fiscal Year 2013 (FY13) levels.

$5.5 billion for the Army Corps of Engineers, an increase of $487 million (10 percent) over FY13 levels. This includes a $1.6 billion for public health and flood and storm damage reduction.

$2.4 billion for Rural Development programs, an increase of $180 million above FY13, of which $462 million is for Rural Utility Services (RUS) water projects.

In the current fiscal climate, increases in programmatic funding are rare. However, there have been three increases in key programs that are an outstanding and welcome shift for the infrastructure industry. More dollars means more projects, which ultimately means more work for utility and excavation contractors. Not all of NUCA’s priority accounts were so fortunate, but there’s certainly reason to be optimistic. The State Revolving Fund (SRF) appropriations under the Environmental Protection Agency is funded at $2.35 billion, earmarking $1.45 billion for the Clean Water SRF and $900 million for Drinking Water SRF. This amounts to a $4.7 million decrease in funding from the FY13 levels, but when compared to the $119 million decrease that would have been enacted through the sequestration, these levels should be considered just about the best possible scenario. Considering NUCA has been asking for level funding for the SRFs over the last several years (and has been successful through continuing resolution legislation), a $4.7 million dollar decrease is a welcome alternative to the hundred million dollar or more decrease that would have been enacted by sequestration.

The budget has been a long and frustrating process for Congress. It has been partisan and unresolved for the last two years, but utility and excavation contractors should be content with what Congress has done. Considering sequestration could have decreased every discretionary account in the budget, and few of NUCA’s priorities were cut, it’s difficult to realistically imagine a much better outcome.

Will Brown is NUCA’s Government Relations Manager.

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