Monday, February 14, 2011

President Obama Sends FY 2012 Budget Request to Congress

Even when submitted on Valentine's Day, the annual budget request from the White House is far from a fait accompli. However, these documents, chock-full of details and ideas, do help shape the basis by which the annual appropriations process begins to unfold. That said, there are many interesting ideas wrapped up in this latest budget request, and it will be even more interesting to see which of these gain traction in the halls of Congress.

Since the budget documents (which all are posted on-line at the Office of Management and Budget's website) are about annual spending, here's a quick rundown of what is being discussed that may be of greatest relevance to the federal investment in public transit and its most closely linked medical, workforce and social services programs.

Federal Transit formula grants
President Obama and Transportation Secretary Ray LaHood are requesting total spending for the Federal Transit Administration (FTA) of $22.4 billion in FY 2012. This is more than double the funds appropriated to FTA in FY 2010 and 2011. Within the formula-based transit grant programs, the FTA budget request would increase "Section 5307" urban transit grants to $6.2 billion and "Section 5311" rural transit grants to $766 million. Although the details would have to be contained within a SAFETEA-LU reauthorization, the Administration's budget request calls for consolidating the current "Section 5310" funding for elderly and disabled persons' transit, "New Freedom" funding t, and "Job Access and Reverse Commute" (JARC) funding under a $405 million "Consolidated Specialized Transportation" grant program. In addition, there is a DOT-wide initiative requested under this budget proposal for $50 billion of "Up-Front Investments," of which at least $3 billion is sought for additional funding of urban and rural transit projects at a 100 percent federal share, plus $7.5 billion for 100 percent federally funded fixed-guideway modernization projects, and $1.0 billion for "New Starts," above those covered in the existing Section 5309 program. Another notable feature is the Administration's request that there be a mechanism by which urban transit funding in areas experiencing unemployment above a certain threshold would be able to be used to cover a portion of those grantees' operating costs.

Federal payments for Medicaid are a form of mandatory spending that is outside the annual appropriations process. In the budget request, it is estimated that federal spending on Medicaid will be $270.7 billion in FY 2012.

Temporary Assistance for Needy Families
Federal payments to states for Temporary Assistance for Needy Families (TANF) are a form of mandatory spending that is outside the annual appropriations process. TANF spending is fixed by law at $16.4 billion per year.

Workforce Investment Act programs
Employment and training grants under the Workforce Investment Act (WIA), along with funding for closely related federal job training programs, are slated for a reduction of approximately 12 percent, to $3.5 billion under the President's budget request. The bulk of that funding would continue to be directed to workforce development activities for dislocated workers ($1.3 billion), youth ($965 million) and job-seeking adults ($792 million).

Older Americans Act programs
The portion of Older Americans Act funding that is directed to supportive services and senior centers, which historically has been a significant partner to many urban and rural transit arrangements, is slated for a 13 percent increase under the President's budget request, to a level of $468 million. Elsewhere in the Administration's request is an interesting note, that President Obama is seeking to shift management of the Senior Community Service Employment Program away from the Department of Labor and into the Administration on Aging.

Community Development Block Grants
The Department of Housing and Urban Development's Community Development Block Grant program would receive a 20 percent cut under the President's budget request, to $3.7 billion.

Community Services Block Grants
Making good on a commitment he made in his most recent State of the Union speech, President Obama is requesting a 50 percent reduction in funding for Community Services Block Grant activities, to $350 million.

Vocational Rehabilitation
Grants from the Department of Education to state vocational rehabilitation agencies are slated for very slight growth, to $3.1 billion in FY 2012 under the President's budget request.

Qualified Transportation Fringe Benefits and Other Tax Credits
Although tax expenditures are not a part of the annual appropriations process, the President's budget documents are the one place where the estimated values of these "tax breaks" all are noted in one place, typically without much analysis or commentary. As anyone who follows these items can suspect, the leading tax expenditures continue to be the tax deductions for employer-provided health care (estimated at $173.8 billion in FY 2011) and itemized deductions for mortgage interest on personal residences (estimated at $88.7 billion in FY 2011). Of greater interest to public transportation and its partners are the impacts of the Qualified Transportation Fringe Benefit for transit and vanpooling (estimated at $510 million in FY 2011) and, for a much smaller segment of the population, the claimed value of the Work Opportunity Tax Credit (estimated at $1.0 billion in FY 2011). Under the American Recovery and Reinvestment Act, some transportation projects were able to be financed with Build America Bonds; although that program has since terminated, the tax expenses associated with current Build America Bonds are estimated at $2.6 billion in FY 2011. Credits claimed for activities financed through New Markets Tax Credits are estimated at $800 million in FY 2011.

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