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Trump’s Expected “Rescissions” Would Cut Funds That Agencies Still Need

Lawmakers of both parties have criticized the Administration’s announcement that President Trump will soon ask Congress to cut (or “rescind”) funding that policymakers have previously enacted for appropriated programs, arguing that would undermine the recent bipartisan deal to fund the government for 2018 and 2019. The President reportedly won’t propose to cut funding provided in the 2018 Omnibus Appropriations Act but only funds that policymakers provided in prior fiscal years that haven’t yet been obligated (i.e., legally committed, as by signing a contract). But the implication that these “carryover balances” are unneeded is simply wrong.

In many programs, an agency must obligate all the funding it receives by the September 30 end of the federal fiscal year; any unobligated funding disappears. But for many other programs, Congress gives the agency multiple years to obligate the funding because its projects or activities are long term in nature and the agency can more carefully manage the funds by obligating them over time, as they are needed. That’s the case with long-term construction projects and research and development programs. Congress also allows an agency to obligate the funds over the course of more than one year when the programs in question operate on a different cycle than the federal fiscal year (such as a school year).

In any given year, an agency funds these kinds of programs through appropriations that the President and Congress provided in the current year and prior years. So taking a dollar from prior-year funding would force the agency to reduce its intended activities for the year just as much as taking a dollar from current-year funding would.

Where carryover funding truly is unneeded, Congress can rescind these funds and then use the savings to cover unmet funding needs elsewhere. That’s what lawmakers did in the 2018 omnibus act, which rescinded some carryover balances in more than 50 budget accounts by more than $2 billion and shifted those dollars to other programs while remaining within the overall, agreed-upon caps on defense and non-defense discretionary funding.

If an agency now discovers some additional carryover balances that it doesn’t need, the President and Congress can always rescind them and use the funds to cover ongoing needs that the 2018 omnibus act couldn’t fully address. Even with the funding increase for non-defense discretionary programs in the omnibus act, such funding remains 5.4 percent below its 2010 level as adjusted for inflation. One example of where funding falls short of need is job training, which members of both parties have highlighted as a priority; core job training grants to states have shrunk by 18 percent since 2010, after adjusting for inflation.

Shifting funds that are unexpectedly unneeded to places where they are needed would have no impact on overall funding and, thus, would keep faith with the new funding caps to which policymakers agreed in the budget deal. But simply rescinding the funding — whether it was provided in the 2018 omnibus act or in some prior year — would reduce funding below the agreed-upon caps and break faith with that agreement.