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POLICY INSIGHT
BEYOND THE NUMBERS

Senate Should Give More Departments — Not Just Defense and Veterans Affairs — Updated Funding Levels

The House approved a bill yesterday from Appropriations Committee Chairman Hal Rogers (R-KY) to fund the government for the rest of the fiscal year.  The bill includes full appropriations bills for the Departments of Defense (DoD) and Veterans Affairs (VA), reflecting updated priorities for those departments.  But, for all other departments, it merely extends the continuing resolution (CR) — which basically funds all discretionary (non-entitlement) programs at last year’s funding levels — for the rest of the year. This approach is unnecessary:  the House and Senate Appropriations Committees have largely agreed on appropriations bills (and the updated priorities they reflect) for nearly all departments.  And, as we explain below, relying on a CR would make the 2013 sequestration cuts even more harmful than they would otherwise be. As the Senate crafts its own version of the 2013 funding bill, therefore, it should include full appropriations bills not only for DoD and VA but for as many departments as possible.  If there are some appropriations bills on which the House and Senate cannot agree and lawmakers continue funding through a CR, the Senate should target adjustments for program areas where today’s circumstances require significant changes to last year’s funding levels, either up or down.  (These adjustments are known in budget parlance as “anomalies.”) The Rogers bill includes a small number of anomalies, but the Senate should consider a fuller list that better reflects the areas where last year’s appropriation levels do not mesh with current needs. Senate Appropriations Committee Chair Barbara Mikulski (D-MD) is pressing for this approach and some Republicans agree.  Politico reports that Senator Lamar Alexander (R-TN) would prefer to include full appropriations bills for all departments, given that negotiations are nearly complete.  He concluded that:  “We probably won’t get that far as a practical matter, but the further we go down that path, the better we will be doing our job and the easier the sequester will be.” Senator Alexander is right — funding domestic agencies under a mechanical CR approach can exacerbate the impact of the 2013 sequestration cuts.  Here’s why: Under the sequestration rules, departments and agencies will apply the sequestration cuts, which went into effect on March 1, to whatever funding level Congress has appropriated for the year.  With their updated priorities in place, DoD and VA would be better able to absorb the sequestration cuts under the House bill than non-defense agencies, which would absorb those cuts off of funding levels that reflect last year’s priorities. After all, the problems that sequestration creates are especially severe if that starting point doesn’t reflect current circumstances.  If one program has more funding than it needs and another has too little, sequestration exacerbates the funding shortfall in the latter program even though the former program could absorb a larger cut. For example, last year’s funding bill for the Departments of Transportation and of Housing and Urban Development (HUD) cut operating funds for public housing by $750 million but targeted this cut on housing agencies with reserves that they could draw down to help cover their costs. This one-time savings cannot be repeated, yet the cut is carried forward to 2013 mechanically in the CR.  If extended for the rest of the year, it would mean that, even before sequestration, housing agencies would receive only 81 cents for every $1 they need to cover the gap between their operating costs and the rents that low-income residents can afford. As a result, agencies would have to take harmful measures such as delaying or cancelling maintenance and repairs, furloughing staff, and delaying making vacant units available to tenants on the waiting list.  Sequestration would require even more severe steps.  An appropriations bill that replaces the CR approach to funding housing programs could ease this problem by adding resources here and making offsetting cuts in another area. Particularly in a year in which across-the-board sequestration cuts are occurring, Congress should do its best to ensure that program funding levels for fiscal year 2013 reflect current circumstances.  Specifically, it should include full appropriations bills whenever possible and consider targeted changes to funding levels in those departments that will still be funded under a CR.