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Eno Transportation Weekly

House Appropriators OK FY20 Spending Plan With $2.5B THUD Increase

May 10, 2019

On May 8, the House Appropriations Committee adopted chairman Nita Lowey’s (D-NY) plan for dividing $1.295 trillion in discretionary spending amongst the twelve general appropriations bills.

The plan would give the Transportation-HUD subcommittee a net discretionary spending allocation of $75.8 billion, a 6.6 percent increase over 2019. But in real terms, the gross spending increase is only $2.5 billion, or 3.6 percent (see below).

Republicans on the panel complained that there has not yet been a grand President-House-Senate bipartisan agreement on spending totals for fiscal 2020, and without such an agreement, it is premature for the panel to set subcommittee allocations or start marking up bills at numbers that the Trump Administration, on the non-defense side, says it will not support. New full committee ranking minority member Kay Granger (R-TX) said she did not support the overall $1.295 trillion total and specifically did not support Lowey’s allocation for the Homeland Security Subcommittee, which gets what is by far the smallest spending increase of any subcommittee.

But Lowey forged ahead, saying “The work of this Committee is too important for us to sit on our hands and wait for the Senate and White House to work with us on a bipartisan budget agreement…we are rejecting the inadequate and ill-considered allocations of recent years and instead providing sufficient resources to secure our nation and give all Americans a better chance at a better life.”

The full committee adopted Lowey’s spending plan by a party-line roll call vote of 30 yeas, 22 nays.

(If appropriations bills at the $1.295 trillion total were somehow enacted into law, and no separate law was passed amending the Budget Control Act spending caps, then a new round of budget sequestration would be ordered and that $1.295 trillion would be reduced by $176 billion, to $1.119 trillion.)

Overall plan. On April 9, the House indirectly adopted H. Res. 293, a resolution which “deemed” the Appropriations Committee to have been given a discretionary spending allocation of $1.295 trillion for fiscal year 2020 under section 302(a) of the Budget Act. The plan that Appropriations approved on May 8 subdivides that overall allocation to each subcommittee under section 302(b) of the Budget Act.

H. Res. 293 also capped the amount of FY 2020 Overseas Contingency Operations spending outside the big 302(a) total at last year’s $77 billion and increased funding under other outside-the-base spending categories as well, particularly by creating a new one-time Program Integrity Adjustment for 2020 Census costs ($7.5 billion).

Broken down into pie format, the FY 2020 House allocations look like so:

Defense vs. non-defense. House Democratic leaders tried to bring to the floor a bill (H.R. 2021) that would have amended the Budget Control Act to increase that act’s statutory caps on discretionary spending for fiscal 2020 and 2021. The caps, as presently set, would cause massive cuts in both defense and non-defense spending in 2020 below last year’s levels unless a law is enacted lifting the caps. H.R. 2021 would have increased the spending caps by $356 billion over two years, with the increases over current law split 50-50 between defense and non-defense:

Defense Non-Defense Total
Current FY20 Caps 576.175 543.193 1,119.368
H.R. 2021 Increase +87.825 +87.825 +175.650
H.R. 2021 FY20 Caps 664.000 631.018 1,295.018
Current FY21 Caps 590.186 556.133 1,146.319
H.R. 2021 Increase +89.933 +89.923 +179.856
H.R. 2021 FY21 Caps 680.119 646.056 1,326.175
Total Caps Increase +177.758 +177.748 +355.506

A revolt on the progressive flank of the Democratic Caucus prevented House Democrats from having the votes to pass H.R. 2021 – Republicans were all voting no just to prove their votes could be necessary, and enough Democrats thought the defense number too high and the non-defense number too low that the House was unable to pass a bill. Those progressives generally supported a possible amendment that would have tacked on an extra $33 billion per year for non-defense.

But the progressives didn’t really focus on the fact that in order to bring up a separate bill on net neutrality, they also had to agree to a special rule which also deemed H. Res. 293 to be adopted, which gave the appropriators the exact same $1.295 trillion total that H.R. 2021 would have. H. Res. 293 did not specify how the money was to be split between defense and non-defense, true, and Lowey’s draft allocations to subcommittees do not distinguish between defense and non-defense, either. (The House appropriators never do, though the Senate panel does split its subcommittee allocations between defense and non-defense – see last year’s example.) But there is enough information in the Lowey plan to indicate that her plan is hewing very closely to the defense/non-defense split from H.R. 2021, if not meeting it exactly.

Under H.R. 2021, the defense allocation for 2020 would have been $664 billion, up $17.0 billion from 2019’s $647 billion. The table above indicates that the Defense bill by itself gets a $15.6 billion increase. The press release accompanying the Military Construction/Veterans bill indicates that $207 million of that bill’s increase is for defense category programs. That’s $15.8 billion of the $17.0 billion defense increase promised by H.R. 2021. And in 2019, there was $30.3 billion in defense category funding spread across the other ten appropriations bills ($22.4 billion for the nuclear weapons complex at Energy, $5.5 billion for the FBI at Commerce-Justice-Science, $2.1 billion for cybersecurity and other items at Homeland, and some odds and ends). If those accounts collectively get a 3.8 percent funding increase under the Lowey plan, then her plan will match up precisely with H.R. 2021’s defense/non-defense split. Even if they get lesser increases, it will be very close to H.R. 2021.

Transportation-HUD. The Lowey plan gives the Transportation-HUD Subcommittee a discretionary budget allocation of $75.771 billion, which is an increase of $4.692 billion over 2019’s $71.079 billion. On its face, this is a healthy 6.6 percent increase – however, all is not as it seems.

To begin with, the Transportation-HUD bill has an unusually large amount of offsetting receipts that are classified as discretionary (from the mortgage insurance programs at HUD and GNMA). These vary from year to year, and when developing its bills, the appropriators have to use the Congressional Budget Office’s estimates of what those receipts will be. (For more information on these receipts, see this CRS report on pages 8-9.)

CBO’s new baseline that came out last week had bad news in this regard. These HUD offsetting receipts, which lowered the net spending in the Transportation-HUD bill by $9.55 billion in 2019, are now only estimated to lower spending by $7.40 billion in 2020. As a result, the increase in the 2020 budget allocation looks like a $4.7 billion increase (+6.6%) but, in real terms, is only a $2.53 billion increase (+3.6%) over 2019.

But the appropriators still have $2.5 billion in real money to give away as spending increases. How will they distribute that funding? Here is the gross spending total in the 2019 law, broken down by major category.

Above, “DOT capital grants” are as follows: BUILD grants ($900m), Airport grants ($500m), Highway formula/bridge ($3,250m), Amtrak grants ($1,942m)*, Rail grants other than Amtrak ($670m), Transit formula and WMATA grants ($850m), Transit CIG ($2,553m) and Port grants ($293m).
*Yes, we know that there are some operating subsidies built into those Amtrak grants, but they aren’t spelled out in bill language, so maybe $600m of that isn’t really capital.

The first discretionary spending program that gets taken care of by Transportation-HUD every year is the mammoth  HUD “section 8” housing voucher renewal program ($20.3 billion in 2019). This simply renews the annual tenant-based vouchers for people already getting HUD vouchers to help with their rent and who are renewing their rent for another year. This program’s costs increase not with regular inflation but with the market cost of rent, which in a lot of metro areas goes up much more rapidly than inflation. Anecdotally, renewals are said to be up this year, which means less money to increase other programs (the section 8 voucher renewals got a $713 million increase in 2019 over 2018).

(There are also renewals for people in housing projects, which got $11.5 billion in 2019, but those increases usually aren’t as steep because there is less market rent pressure. That program increased by $272 million in 2019, over 2018.)

The point is, cutting these accounts, or failing to give them the increase they need, actually throws people out of their existing homes, which puts them very high up on the list of programs that get first crack at spending increases each year.

Altogether, HUD housing renewals totaled $31.8 billion in 2019. Since the two HUD voucher programs got a $985 million total increase in 2019 over 2018, one can probably assume they will get at least $1 billion of that $2.5 billion this time.

The next step is to take care of FAA Operations ($10.4 billion in 2019), since no one in Congress wants to share blame for any air traffic slowdowns, or any accidents, by virtue of having under-funded air traffic controller or aviation safety inspector salaries or FTEs. One can expect at least $200 million of the $2.5 billion in FY 2020 funding increases to be dedicated to this very salary-intensive account.

Then the other operational or non-capital grant programs get taken care of. There are several very popular grant programs at HUD for assistance with housing the homeless ($2.6 billion in FY19), the elderly and disabled ($862 million in FY19), Native Americans ($755 million in FY19), and persons with AIDS ($393 million in FY19), which have been counting on the new Democratic majority increasing their funding. Within the “Other DOT” slice above ($5.1 billion), $2.1 billion of that goes for operational or other general DOT activities, all of which will probably get at least their inflation adjustment, and the other $3.0 billion is FAA procurement, which is one of the lower priorities.

Then at the end of the line you have grants for capital. At HUD, this is mostly the Community Development Block Grant program, which got $3.4 billion in 2019. At DOT, the various general fund capital grant programs totaled $11 billion in 2019, which is even more impressive when you consider that many of these are a recent invention. Consider that in fiscal 2017 (the year before the February 2018 budget agreement flooded the Appropriations Committees with extra money), those programs that in 2019 totaled $11.0 billion only received $4.5 billion.

The aggregate amount of those programs shrank somewhat from 2018 to 2019 and might shrink again in 2020. If a final budget deal negotiated with the Senate and the President eventually forces a reduction in the size of the House’s THUD bill, those general fund capital grant programs will probably be the first on the chopping block, especially the formula supplements.

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