As the end of Fiscal Year (FY) 2011 nears, key Republican lawmakers are urging swift action on FY 2012 appropriations bills – at spending levels in line with the discretionary spending caps set by the recently enacted Budget Control Act of 2011 (PL 112-25). Office of Management and Budget (OMB) Director Jacob Lew has released Budget Guidance for the formulation of FY 2013 budgets calling for FY 2013 spending levels to be cut to at least five percent below FY 2011 enacted levels.
FY 2012 Appropriations
The Budget Control Act of 2011 was designed to produce federal deficit reduction in two ways; one method is by placing annual caps on federal discretionary appropriations over the next ten years, the second is by enacting the recommendations of the Deficit Reduction Committee – or if they are not enacted, by automatic sequestration (see General Memorandum 11-094, August 5, 2011). While the amount of the discretionary spending cap set for FY 2012 is less than FY 2011 enacted levels, it is actually greater than the amount originally set by the House Republican-approved FY 2012 Budget Resolution (H.Con. Res. 34). Significantly, as of August 17 and August 19, respectively, both House Majority Leader Eric Cantor (R-VA) and House Appropriations Chairman Hal Rogers (R-KY) endorsed the FY 2012 discretionary spending level set by the Budget Control Act and urged Congress to quickly move to pass appropriations bills. The Majority Leader’s letter and Chairman’s press release are attached.
As the present versions of the appropriations bills were drafted in line with spending levels set by H.Con. Res 34, it can be expected that the spending levels set in these bills may now slightly increase. Prior to the August Recess, the FY 2012 Interior-Environment appropriations bill (HR 2584) was being debated and amended on the House floor. When Congress returns, members of the House will have the opportunity to provide greater spending levels through the amendment process and through conference with the Senate.
As the end of the fiscal year (September 30, 2011) is rapidly approaching, it may not be realistic to assume that all appropriations bills will be enacted by that time and a Continuing Resolution may be necessary. It has been suggested that the Military Construction-Veterans Affairs appropriations bill (HR 2055), versions of which have been passed by both the House and Senate, would make the most likely vehicle for a Continuing Resolution while work on the remainder of the bills continues.
FY 2013 Budget Guidance
On August 17, on behalf of the President, OMB Director Jacob Lew transmitted FY 2013 Budget Formulation Guidance to the heads of departments and agencies. The guidance calls for agency FY 2013 budget requests (unless otherwise specified) to be five percent below FY 2011 enacted levels and to also include recommendations for additional cuts that would bring spending levels to ten percent below FY 2011 enacted levels. The letter explicitly states, however, that the cuts are not to be across-the-board cuts. Rather, they are to be program specific. OMB also asks the agencies to include (within the five and ten percent reduction caps) requests for increases to programs which are identified as priority investments related to economic growth. The increases would essentially be paid for by recommendations for cuts to or elimination of “low-priority” or “ineffective programs.” Please note however, that these figures are not set in stone. As Director Lew indicated in his August 18 press release “This does not mean that we will institute either a five percent or ten percent cut in an individual agency’s budget or in all agency budgets. We asked agencies to provide these two options so that the President can have the information needed to make the tough choices necessary to meet the hard spending targets put in place by the Budget Control Act and to meet the needs of the Nation.” The Director’s press release and letter are attached.
During the weeks and months ahead, it will be extremely important for tribes to communicate their views on spending priorities to agencies and members of Congress. Please let us know if we may provide additional information or assistance regarding FY 2012 appropriations or the Office of Management and Budget’s Budget Formulation Guidance for FY 2013.