2013

MICHAEL BIRD, NCSL SENIOR FEDERAL AFFAIRS COUNSEL

MAY 3, 2013

FEDERAL DEFICIT REDUCTION

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PRESENTATION AT NCSL'S SPRING FORUMDENVER, COLORADO

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THE CLIFFS OF ’13

• January Tax Cuts/Hikes (H.R. 8)

• March 1 Sequestration

• March 27 Continuing Resolution Ends

• March-April 15 President’s ’14 Budget and Congress’ Budget Resolutions

• May 19 - Aug./Nov. Debt Limit

• Sept 30 FY 2014 Appropriations

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Deficit Reduction – Debt Management to date - 10 yearsBUDGET CONTROL ACT $2.1 trillion

Pot 1 - discretionary spending caps .912 trillion

Pot 2 - sequestration 1.2 trillion

H.R. 8 (tax bill) $0.6 trillion

TOTAL $2.7 trillion

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Discretionary Spending Caps-FY 2012 – 2021 (in billions)

FY 12 $1.043 FY 17 $1.131

FY 13 $1.043 FY 18 $1.156

FY 14 $1.054 FY 19 $1.182

FY 15 $1.086 FY 20 $1.208

FY 16 $1.107 FY 21 $1.234

Per Budget Control Act of 2011/H.R. 8/H.R. 933

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SELECTION OF PROGRAMS EXEMPT FROM SEQUESTRATION

Most Transportation Programs

Medicaid (vendor payments and administration)

Pell Grants

Children’s Health Insurance Program

Most child nutrition and Food Stamp programs

Most child care, child support enforcement, foster care and adoption assistance

programs

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Programs Not Exempt from Sequestration

Education (elementary, secondary, vocational, higher)

Employment and Training

Energy

Environment

Agriculture/Natural Resources

Justice

Housing/Community Development

Social Services (non-mandatory programs)

Health (non-Medicaid/CHIP programs)

National Forests/Mineral Leasing

Defense

Majority of Funding in Hurricane Sandy Disaster Assistance

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SEQUESTRATION – FY 2013

• NON-DEFENSE DISCRETIONARY -5.0%

• DEFENSE DISCRETIONARY -7.8%

• NON-DEFENSE MANDATORY -5.1%

• MEDICARE -2.0%

as of February, 2013, OMB

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SEQUESTRATION – FY 2013

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• $85 BILLION

• STARTED AT $109 BILLION - SEE H.R. 8

• APPLIED ACROSS PROGRAM, PROJECT

SEQUESTRATION:

WHAT IT MEANS FOR STATES SO FAR

• SOME CERTAINTY FOR ’13; ONLY UNCERTAINTY BEYOND

• MIXED MESSAGES ON FURLOUGHS, REPAYMENTS

• FLEXIBILITY FOR SOME, NOT FOR OTHERS

• ECONOMIC CONSEQUENCES

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SEQUESTRATION: ROAD AHEAD

• STATES/OTHERS EAT INFLATION

• STATES/OTHERS EAT DEMOGRAPHICS (except for mandatory/entitlement programs)

• “SHARK TANKS” (defense vs. non-defense; non-defense vs. itself)

• MANDATE RELIEF UNLIKELY SHORT- TERM

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SEQUESTRATION: ROAD AHEAD

• MORE UNCERTAINTY (talk of repeal or restructuring)

• RED TAPE RELIEF

• LONG-TERM RESTRUCTURING (fight about the numbers vs. service/benefit delivery)

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FY ’13 APPROPRIATIONS-CONTINUING RESOLUTION

NON-DEFENSE AND DEFENSE DISCRETIONARY SPENDING

PROGRAMS FUNDED AT 0.612% ABOVE FY 2012 THROUGH MARCH

27, 2013

DISCRETIONARY SPENDING IS SUBJECT TO A CAP OF $1.043

ALL PROGRAMS ARE TREATED THE SAME UNDER A CONTINUING

RESOLUTION (there can be exceptions)

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2013 APPROPRIATIONS (H.R. 933)

• SEQUESTRATION IMPOSED, 5% REDUCTIONS

• AGRICULTURE, HOMELAND SECURITY, DEFENSE, VETERANS AFFAIRS, COMMERCE-JUSTICE-STATE GET “SEQUESTER FLEXIBILITY”

• A FEW DISCRETIONARY PROGRAMS GET “LIGHTER” REDUCTIONS

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FY 2014

• President’s budget proposal – April 10, 2013

• House and Senate Budget Resolutions – April 15, 2013 (No Budget, No Pay Act – spending outline – unenforceable – sets appropriations subcommittee allocations – RECONCILIATION-“BOOKENDS for “grand bargain”)

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DEBT LIMIT DEBACLE• Dec. 31, 2012 - federal government breached the $16.4

trillion debt limit

• Jan. 31, 2013 - President signs "No Budget, No Pay Act"

• May 18, 2013 - Debt limit will be raised by the federal government's outstanding obligations

• August, 2013 - Extraordinary measures by Department of Treasury will expire

*credit rating / economic threats

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STATE ALERT

• TAX EXEMPT FINANCING

• DEDUCTIBILITY

• MANDATORY SOCIAL SECURITY

• MEDICAID

• MARKETPLACE FAIRNESS ACT

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Contact Information:jeff.hurley@ncsl.org ; 202-624-7753

2013

Questions?

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