special fy 14 budget report - april 10, 2013...ens resources, inc. 1101 14th street, nw suite 350...

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White House’s FY 2014 Budget Proposal Receives Unenthusiastic Response

Earlier today, the President transmitted his much-‐delayed (65 days) 9iscal year 2014 budget request to Congress. The action is the last administrative step to set the stage for Congress to develop a spending package for the 9iscal year that begins October 1, 2013. The

Special FY 14 Budget Report - April 10, 2013

House and Senate Committees on Appropriations will now begin the arduous task of fashioning individual agency spending bills. The challenge, as is the case in most budget debates, is 9inding a middle ground that would allow for a comprehensive and 9inal agreement by October 1. Because of the continuing debate between Republicans and Democrats over spending cuts and taxes, it is unclear whether such an agreement will be reached. If they were unable or unwilling to compromise, a continuing resolution would be the default outcome. However, the need to raise the debt ceiling later this summer and the prospect of a second round of sequestration may be the nostrum to bring about a comprehensive budget agreement.

As presented to Congress, the President’s budget request for expenditures would emphasize priorities to:

Support manufacturing in the U.S., clean energy, and infrastructure needs.

Impose continued budget cuts on domestic and defense-‐related spending with a ratio of 2:1 in spending cuts and tax increases. Tax increases would be derived through loophole closings.

Create a $1 billion investment in 15 manufacturing innovation institutes

Increase nondefense-‐related R&D by almost 10%.

Support climate resiliency budgets to address needs of infrastructure.

Make renewable energy tax credits permanent.

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Provide $50 billion to support infrastructure needs under a new Fix it First program dedicating $40 billion to high priority crumbling infrastructure and the remaining $10 billion to support a competitive program of assistance.

Establish a National Infrastructure Bank.

Re-‐establish the Build America Bonds Program as America Fast Forward Bonds.

On the revenue side of the equation, the White House is seeking to: Close tax loopholes generating $580 billion.

Secure $200 billion in domestic and defense spending reductions.

Secure $230 billion by revising entitlement increase formulae.

Secure $210 billion in reduced interest payments.

While all recent budget requests have been dead on arrival in Congress, this year’s budget is notable because the White House is seeking to reduce funding in much cherished Democratic priorities, such as entitlements and at the same time raise taxes. This mix has effectively activated opposition on both ends of the political spectrum in Congress.

Outlook

The proposal is just that, a proposal, and as such is unlikely to gain traction in the Republican controlled House. In the Democratic Senate, with a number of Democrats up for re-‐election next year, the prospect of reducing entitlement bene9its and other spending reductions is unlikely to secure support. This means the budget is likely to serve as a menu of options that Congress will consider and mostly dispense with as it develops its own priorities, and challenges the White House to 9ind the votes that would seem elusive at this point in time.






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U.S. Department of Transportation

The president’s budget calls for $76.6 billion in discretionary and mandatory budgetary resources; an increase of 5.5 percent, or $4 billion, above the 2012 enacted level. The proposal includes an additional $50 billion in immediate investments in 2014 to support critical infrastructure projects, including roads, bridges, transit systems, border crossings, railways, and runways. This includes $40 billion in “Fix-‐it-‐First” investments for improving existing infrastructure assets and $10 billion to help spur State and local innovation in infrastructure development. The budget fails to identify a dedicated funding source for the $50 billion; instead it hints that it will be paid for through a peace dividend achieved by the “overseas military operation” savings.

On a positive note, the proposal seeks to fully fund highway programs, $50.1 billion in obligation limitations, authorized under the Moving Ahead for Progress in the 21st Century Act (MAP 21). In addition, it seeks to restructure the current trust fund by renaming the Highway Trust Fund the "Transportation Trust Fund" and adding a dedicated funding source for rail.

Highlights:

$4 billion in new competitive funding for the Transportation Investment Generating Economic Recovery (TIGER) and TIFIA programs

$27 billion for highway repair and construction, including $2 billion for border crossing infrastructure

Reaction to White House Budget

“It’s quite similar, frankly, to his budget last year, and it’s two months late,” “We’re not sure this is a serious exercise.” Senator Mitch McConnell (R-KY)

"The election is over and President Obama cannot run again, so he has no excuse for acting like a milquetoast." Friends of the Earth President Erich Pica

The President’s budget repeats his call to increase spending without identifying a viable means to pay for it. We can’t just keep adding to our tab and expect future generations to foot the bill. House T&I Chairman Bill Shuster (R-PA)






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$2 billion for airport capital grants $3 billion for rail capital projects $2.5 billion for transit formula capital grants, including several set-‐asides for rural areas $6 billion to modernize existing 9ixed-‐guide way systems and replace and rehab buses

and bus facilities $2 billion for a competitive grant program to incentivize state DOTs and MPOs to

institutionalize "best practices in transportation policy"

National Infrastructure Bank -‐ The budget reiterates the Administration’s call for the creation of a National Infrastructure Bank (Bank). The Bank would be capitalized with $10 billion, with each dollar of federal funding potentially leveraging up to $20 in total infrastructure investment. The bank would be organized as an independent entity, not as part of the existing department or agency. As outlined in the budget, the bank would be directed by “infrastructure and 9inancial networks” that would fund up to 50 percent of the costs of transportation, water and energy projects through an unspeci9ied “dedicated revenue stream.”

U.S. Department of Energy President Obama’s 2014 budget provides $28.4 billion in discretionary funds for the Department of Energy, which is an eight percent increase over the 2012 enacted level. The budget cuts $4 billion in annual subsidies to the oil, gas and coal industries, cuts low priority and low performing programs, and increases the utilization of existing facilities and infrastructure. The budget continues the Administration’s priority to reduce oil consumption and promote energy ef9iciency, while seeking to double U.S. renewable electricity generation by increasing funding for the Department’s clean energy technology activities by over 40 percent above the 2012 enacted level. Highlights:

• $5 billion, a 5.7 percent increase over the 2012 enacted level, for the Of9ice of Science for basic research and research infrastructure

• $421 million for the Fossil Energy Research and Development Program• $266 million in fossil energy research and Development dedicated to developing cost-‐

effective carbon capture and storage, and advanced power systems







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• $615 million to increase the use and decrease the costs of clean power from solar, wind, geothermal, and water energy

• $365 million in advanced manufacturing research and development• $16 million, an increase of $10 million, in enhanced energy infrastructure security and

energy recovery capabilities

U.S. Department of the Interior The President’s 2014 budget provides $11.7 billion in discretionary funding for the Department of the Interior, which is a four percent increase over the 2012 enacted level. The budget proposes oil and gas management reform in order to save $2.5 billion over a 10-‐year period that will be accomplished through the development of federal energy resources. The budget states that there will be continued efforts to manage and promote the ecological sustainability and resilience of ecosystems on a landscape and watershed scale, such as the California Bay-‐Delta, the Everglades, the Great Lakes, Chesapeake Bay, and Gulf Coast watersheds. Highlights:

$963 million for research and development, an 18 percent increase over the 2012 enacted level; this includes increased funding for USGS research into climate change and funding to continue the joint fracking study with the EPA and Energy Department

Proposed long-‐term funding of $900 million by 2015, to be dedicated for the 9irst time towards Land and Water Conservation Fund programs (LWCF) to support land conservation and resource protection

$356 million, proposed for 2014, to conserve lands in or near national parks, refuges, forests, and other public lands, including $169 million in collaborative LWCF funds for DOI and the U.S. Forest Service

$15 million in LWCF funding to revive the Urban Parks Recreation and Recovery Program






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$100 million to maintain capacity to review and permit new renewable energy projects on federal lands and waters

$10 million increase over the 2012 enacted level to assist Tribes with managing federal programs themselves under self-‐determination contracts and self-‐governance compacts

U.S. Bureau of Reclamation

The budget request essentially is a 9lat line budget based upon a baseline before taking into account the sequestration impacts. At almost $1 billion, the budget is notable for its increase in Indian settlements, raising the request to $100 million. The trade-‐off is found in a lower federal commitment to water recycling and the overall WaterSmart program. As presented, the WaterSmart program declines to $30 million of which a minimal $14 million is reserved for water recycling project funding. Presumably, the reduced funding would be compensated through the President’s Infrastructure Bank proposal that would provide for $10 billion in competitive grants to support water and other infrastructure needs. Additionally, the agency would require that all project-‐funding opportunities be competitive, reversing the past years’ practice of establishing a series of speci9ic funding priorities.

While the overall WaterSmart program is reduced, the Bureau’s commitment to the Bay Delta Program is funded at $37 million compared with a $39 million pre sequester level. This is also the circumstance with other federal agencies that are part of this regional program. Funding would be slated to support a number of authorized feasibility studies for off-‐stream storage, basin studies, provision of water transfers for environmental water needs, habitat restoration, salinity management and drainage, and ecosystem restoration projects support.

U.S. Environmental Protection Agency (EPA)

The president’s budget proposes $8.15 billion in discretionary spending, which is $296 million below the EPA’s budget for 9iscal year 2012. However, EPA Acting Administrator Bob Perciasepe stated the overall funding level represents an increase from the $7.9 billion the agency has for 9iscal year 2013 (after sequestered funds are subtracted). The budget varies little from the Administration’s 9irst-‐term priorities and reduces funding for Drinking Water and Clean Water State Revolving Funds by a combined $472 million.

Highlights:






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Would fund the clean water state revolving fund at a level of $1.095 billion, $375 million less than the 9iscal 2012 enacted level. For 9iscal year 2014, to the extent there are suf9icient project applications, not less than 20 percent of the funds made available under this title to each State for “green” infrastructure projects

Not less than 20% and not more than 30% of a capitalization grant must be reserved for additional subsidies in the form of principal forgiveness, negative interest or loans if necessary

Revolving Fund capitalization grants shall be used by the State for green infrastructure projects

The state drinking water revolving fund would receive $817 million, which is $101 million less than it received in 9iscal 2012

State grants for air programs would receive $257 million, an increase of $22 million $33 million reduction to the superfund program, which received $1.21 billion in 9iscal

2012 $33 million cut to the superfund program that would place a limitation on new remedial

action projects Eliminates funding for beach protection grants ($10 million) Proposes $1.1 billion in grants to support state and tribal implementation of

environmental programs delegated by the federal government Proposes an investment in of $53 million to control invasive species in the Great Lakes.

Working with the Department of Transportation’s Maritime Administration, the U.S. Coast Guard, and the EPA will fund performance testing of up to four ballast water treatment systems for use in freshwater ecosystems. Furthermore, the U.S. Forest Service and U.S. Fish and Wildlife Service will deploy portable boat washing units to limit the spread of invasive species by recreational boaters. EPA will fund up to 12 projects that will prevent new introductions of invasive species by addressing introduction vectors and by promoting safe recreation and resource use.

EPA will also continue to develop tools and training to implement the VGP (ballast water controls). The permits, regulating approximately 72 thousand vessels, contain requirements for ballast water, oily discharges, nutrients, and other vessel pollution. EPA will be responsible for implementing the permits, conducting outreach to the domestic and international shipping communities, evaluating the ef9icacy of those permits, managing and analyzing data from tens of thousands of these vessels, and beginning to identify and research ef9luent limits and other requirements to be explored






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to improve or streamline VGP. Additionally, EPA will be participating actively in international forums to facilitate development of new international vessel standards, directly relevant to the VGP, to maximize environmental protection from international actors operating in our nation's waters and prepare for issuance of the 2018 VGP. Additionally, a Congressional moratorium exempts incidental discharges from commercial 9ishing vessels and vessels less than 79 feet in length from NPDES permitting until December 19, 2014. To address those discharges, EPA proposed the small Vessel General Permit (sVGP) in November 2011. EPA intends to 9inalize the sVGP to provide an administratively ef9icient mechanism for permit coverage for these vessels in the event the moratorium expires. The sVGP would regulate approximately 120,000 to 140,000 vessels

U.S. Department of Agriculture The President’s 2014 budget provides $22.6 billion in discretionary funding for the Department of the Agriculture, which is roughly equal to the 2012 enacted level. The budget reduces the Federal de9icit by $37.8 billion over 10 years by eliminating direct farm payments, decreasing crop insurance subsidies, and targeting conservation programs. The budget seeks to align program funding with performance measures through the creation of a new rural development grant program and the establishment of a Chief Evaluation Of9icer within the department. Highlights:

$238 million for the Rural Energy for America Program to assist agricultural producers and rural small businesses in developing renewable energy systems, energy ef9iciency improvements, and renewable energy development

$4 billion in loans to rural electric cooperatives and utilities to drive energy



special fy 14 budget report - april 10, 2013...ens resources, inc. 1101 14th street, nw suite 350...

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