Congress Acts on Final Fiscal Year 2014 Spending Bill

Congress Begins Consideration of Final Fiscal Year 2014 Spending Bill
 

This afternoon, the House of Representatives approved by a 359-67 margin the “omnibus appropriations” bill (H.R. 3457) that emerged late Monday from several weeks of negotiations between the House and Senate Appropriations Committees. In order to speed the legislative process, this legislation incorporates 12 final FY 2014 appropriations bills covering the entire federal government’s operations. A smoother than usual path to enactment is expected because the bill reflects the overall discretionary spending level of $1.012 trillion that Congress approved on a bipartisan basis in December as part of the Ryan-Murray budget agreement (H.J. Res 59) that also eliminated some of the annual cuts that would have gone into effect this month due to sequestration. Had this agreement not been reached, overall spending for FY 2014 would have been reduced to $967 billion.

Now that the House has acted, the Senate should follow suit after a few days of deliberations and by the end of the week, the bill should be on its way to the President for signature, avoiding another government shutdown and providing certainty to agencies for planning their operations through September 30.

This appropriations bill provides $520.5 billion in defense spending and $491.7 in non-defense domestic spending for the current fiscal year, which began on October 1. Although overall discretionary spending will increase, not every agency will receive additional funding and some will lose funding relative to FY 2013 spending. This reflects the authority that appropriators had to decide how to allocate funding among agencies and their programs, provided that they did not exceed the overall spending limit imposed by the Ryan-Murray agreement.

In order to ensure that floor consideration would be less contentious, top negotiators like Senate Appropriations Committee Chairman Barbara Mikulski (D-MD) and House Appropriations Committee Chairman Hal Rogers (R-KY) obtained permission from their leadership to leave out of the omnibus appropriations bill major regulatory riders that could have stalled the appropriations process. Democrats were able to remove riders limiting funding for implementation of elements of the Affordable Care Act, the Dodd-Frank financial overhaul, and EPA power plant regulations. Longstanding riders preventing abortion coverage in Medicaid were still included, but will likely not prevent the bill’s passage.

Highlights of the Omnibus Appropriations bill include:
 

Affordable Care Act: The legislation reduces funding for the Prevention and Public Health Fund by $1 billion and prevents the Administration from reallocating funding from PPHF for health reform programs. The bill also reduces funding for the Independent Payment Advisory Board by $10 million from the original $15 million appropriation. This Board is supposed to make binding recommendations to reduce Medicare spending if per capita spending exceeds specific budget targets.

Higher Education: The bill provides $70.6 billion for the Department of Education, which is $739 million below 2013 levels. The maximum Pell Grant award will be increased by $85 to $5,730, and the number of recipients is expected to increase by 186,000. The bill also includes $75 million to create the “First in the World” program, which provides funds to higher education institutions that create innovative plans to reduce costs for students.

Innovation and Technology: The bill continues to fund many programs that encourage innovation and job growth. The bill will increase spending on research at science agencies, including the National Institute of Standards and Technology (NIST), the National Science Foundation and NASA. NIST, which received an increase of $81 million to $850 million, is a major supporter of private sector research and development of manufacturing technology. With a $288 million increase in its budget over last year, the National Science Foundation will be able to provide almost 780 more competitive grants.

Transportation and Infrastructure: The bill provides $71.1 billion to the Department of Transportation, represents a 2 percent decrease in discretionary resources when compared to FY 2013 enacted level (pre-sequestration). Included in the budget is a robust $600 million for TIGER Grants, which support a wide range of transportation projects meant to spur investment in transportation infrastructure. Mass transit capital grants also received a robust level of funding, which will help cities throughout the nation expand their rail and bus systems. Forty-one billion dollars is allocated for the Federal-aid Highway program, which was the funding level authorized by the MAP-21 Act and which is primarily used to provide state highway departments with funds for road and bridge improvements. Also, the bill increases funding by $47 million for Amtrak, setting its budget at $1.39 billion, which will go to maintenance and improvement of their 21,000 mile rail network.

NIH: Approximately $30 billion is appropriated for the National Institutes of Health, which, although less than what the President requested, is nearly $1 billion more than the FY 2013 post-sequestration budget. NIH received the largest increase from FY 2013 health care spending. We are advised that the higher funding level will enable the agency to add as many as 385 new grant opportunities for researchers, even after the pipeline of existing grants are funded for the year.

Centers for Medicare and Medicaid Services (CMS): The bill includes $3.7 billion for the CMS for management and operations functions, which is the level of funding under sequestration and $195 million less than was enacted in FY 2013. The bill specifically precludes CMS from using new funding allocated for payment processing for initiatives related to the Affordable Care Act.

Food and Drug Administration (FDA): The bill maintains the Senate level of $2.6 billion for the Food and Drug Administration, which is $217 million above fiscal year 2013. This includes increases of $53 million to continue implementation of the Food Safety Modernization Act and $19 million for improvements to medical product safety. In addition, the bill provides full collection authority for all authorized user fees, and includes a provision that makes previously sequestered FDA user fees available to use for their original intent. This brings the total FDA resources to $4.3 billion, four percent more than enacted for FY13.

District of Columbia: The bill includes $673 million for the District’s budget, which is a slight decrease of $2.2 million over the final enacted FY 2013 budget but which the Senate Appropriations Committee points out is $33 million (a roughly 5 percent increase) over the post-sequestration amount if the current Continuing Resolution had been extended for all of FY 2014. Notably, the bill does not include language allowing for DC budget autonomy, which local voters approved last spring. It also withholds funding for three Department of Homeland Security headquarters buildings that were slated to be built on the campus of St. Elizabeth’s Hospital in Southwest Washington.

GSA: The bill provides $9.37 billion for the General Services Administration, $1.3 billion over the Agency’s FY 2013 budget. This includes almost $1.65 billion for construction and repair of federal buildings.

Federal Communications Commission: The bill provides $339 million for the FCC, an increase of $17 million above prior funding levels.

Ryan White: the bill includes $2.3 billion for the Ryan White HIV/AIDS program, which is about $18 million less than the final FY 2013 spending level and approximately $93 million less than the President’s request.

Children’s Hospitals Graduate Medical Education: The bill provides $265 million for the Children’s Graduate Medical Education program, which is an increase in $10 million from post-sequestration spending levels in 2013. This spending level is significant higher than the $88 million requested by the President, which if enacted would have represented a 67 percent cut to the program.

Department of Homeland Security The bill provides $46.6 billion for DHS, an increase of $1.14 billion above the post-sequestration funding level for FY13. It may be of interest to technology-related companies that $792 million is included for cybersecurity to protect federal civilian computer systems and $15 million is allocated for education to “train future cyber warriors.”

Because the current Continuing Resolution (CR) that is funding the government expires today, we expect the Senate to approve the three-day temporary CR approved by the House yesterday that will allow both chambers to debate and pass the omnibus bill without shutting down the government. The House will take up the omnibus bill today and by tomorrow, it should be on the Senate floor. Once the President signs the bill into law, Congress will begin the FY 2015 budget process. The President’s Budget Request is expected to be released in late February or early March, later than usual because of the delay in finalizing the current year’s budget.

The text of the FY 2014 Omnibus Appropriations bill and a summary of key programs and issues can be found here.