Maryland Senate Budget and Taxation CommitteeJanuary 28, 2015

Federal Funds Information for States

www.ffis.org

Federal Funding Update: We Live in Interesting Times

Big Questions

How does FY 2015 budget play out? Is there any hope for common ground?

– FY 2016 appropriations– Budget Control Act (BCA)– Expiring programs– Tax reform– Debt limit

But first, the basics

Composition of Federal Outlays in FY 2013($ in Billions, % of Total)

Per capita federal spending flowing to Maryland, FY 2013

Source: Pew Charitable Trusts

What program areas are supported by federal grants to state/local gov’t?

Recent trends in grant funding

Per capita federal spending on selected grants, FY 2013

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© 2014 Federal Funds Information for States

$4,815

$1,877

$1,187

Federal grants going to Maryland: per capita, FY 2013

Major Category U.S. Average

Per Capita

MarylandPer Capita

Maryland Rank

Medicaid $852 $695 36Other State 587 486 48Local 88 80 24Individual/Other 344 279 38Total $1,871 $1,540 42

Conflicts on the horizon

FY 2015 Homeland Security/immigration FY 2016 budget; amending BCA Deficit reduction Tax reform Federal workforce Debt limit Highway Trust Fund solvency Expiring programs

The BCA is the law of the land

Discretionary sequestration persists in form of lower caps

Mandatory sequestration still occurs– Bipartisan Budget Act (BBA) extended it to FY 2023– Repeal unlikely– ATB percentages applied to current-law levels

Defense Nondefense

FY 2014 -9.8% -7.2%

FY 2015 -9.5% -7.3%

The BCA going forward

BCA projections

2013 2014 1/ 2015 1/ 2016 2017 2018 2019 2020 2021

Nondefense caps $490.9 $506.0 $520.0 $530.0 $541.0 $553.0 $566.0 $578.0 $590.0Sequestration: nondefense discretionary -26.4 -14.2 -27.6 -37.0 -37.3 -37.3 -36.3 -35.1 -34.8 Subtotal 464.5 491.8 492.4 493.0 503.7 515.7 529.7 542.9 555.2

Change from previous year ($) NA 27.3 0.6 0.6 10.7 11.9 14.0 13.2 12.3 Change from previous year (%) NA 5.9% 0.1% 0.1% 2.2% 2.4% 2.7% 2.5% 2.3%

Nondefense, mandatory sequestration -16.9 -18.1 -17.2 -17.7 -17.4 -17.3 -18.4 -19.6 -19.9

Defense caps 552.1 552.0 566.0 577.0 590.0 603.0 616.0 630.0 644.0Sequestration -34.3 -31.5 -44.7 -53.9 -53.9 -53.9 -53.9 -53.9 -53.9Subtotal 517.8 520.5 521.3 523.1 536.1 549.1 562.1 576.1 590.1

Change from previous year ($) NA 2.7 0.8 1.8 13.0 13.0 13.0 14.0 14.0Change from previous year (%) NA 0.5% 0.2% 0.3% 2.5% 2.4% 2.4% 2.5% 2.4%

Total discretionary spending $982.3 $1,012.2 $1,013.6 $1,016.1 $1,039.8 $1,064.7 $1,091.8 $1,119.0 $1,145.3 Change from previous year ($) NA 29.9 1.4 2.4 23.7 24.9 27.0 27.2 26.3 Change from previous year (%) NA 3.0% 0.1% 0.2% 2.3% 2.4% 2.5% 2.5% 2.3%

1/ FY 2013 discretionary caps reflect FY 2013 appropriations. FY 2013 sequestration includes other adjustments.

Source: Congressional Budget Office

The Budget Control Act: Sequestration and Discretionary Caps FYs 2013-2021(dollars in billions)

2/ FYs 2014 and 2015 subtotals are the revised caps in the Bipartisan Budget Act, which partially reduces the effect of sequestration on discretionary spending.

Implications of the BCA

Source: CBO Budget and Economic Outlook, 2/14

Expiring programs in an uncertain environment

Programs covering all major areas expire in 2015 Most are mandatory-funded programs

– Require congressional action

Some have been operating under short-term extensions for years

ACA programs at greatest risk

National funding at stake

Recent and upcoming deadlines

October 1, 2014

• Mandatory sequestration

• Health insurance rate review, ADRCs, College Access Challenge grants expired

January 1, 2015

• Medicaid primary care increase expired

• No new exchange grants

• Tax extenders expired

February 27, 2015

• FY 2015 CR for Homeland Security expires

Recent and upcoming deadlines

March 15, 2015

• Debt limit reinstated

April 1, 2015

• Qualifying Individual, Transitional Medical Assistance, Early Childhood Home Visiting and others expire

June 1, 2015

• Highway Trust Fund (HTF) projected to become insolvent

• Surface transportation programs expire

Recent and upcoming deadlines

July 1, 2015

• Import-Export Bank expires

October 1, 2015

• TANF and related programs expire

• No new allotments for CHIP• Many ACA programs expire• Airport improvement program

expires• Some child nutrition programs

expire• Internet tax moratorium expires

More questions than answers

Budget resolution

BCA

Deficit reduction

Tax reformProgram extensions

ACA

Debt limit increase

• Will it be total gridlock and if so, how will it affect states?

Questions?

For more information: www.ffis.org, Trinity Tomsic (ttomsic@ffis.org )