Final Domestic Spending Cuts to be Determined in Conference
On Thursday, January 23, after six days of debate, the new Republican-led Senate passed a $391 billion FY 03 omnibus appropriations bill (H J Res 2). The Senate passed the legislation – which rolls funding for all 11 non-defense bills into one appropriations measure – by a vote of 69-29, cutting the domestic spending level adopted by last year’s Democratic-led Appropriations Committee by $10 billion. Spending reductions include a mix of specific program cuts and a 2.9 percent across-the-board cut to all non-defense discretionary programs. (Due to an amendment introduced by Senator Chris Dodd (D-CT), Head Start would be exempt from the 2.9 percent cut).

Democrats are critical of the omnibus bill for underfunding homeland security, education, and a host of other domestic priorities. For example, under the bill, public housing assistance programs would receive $280 million less than under the earlier Senate level – a $305 million cut from FY 02 spending without adjusting for inflation. Funding for adult job training and youth opportunity grants would receive $684 million less under the FY 03 omnibus than under previously approved Senate levels and $530 million less than in FY 02. The Child Care Development Block Grant (CCDBG) would be funded $60 million below FY 02 levels, reducing serving capacity by 38,000 children.

During floor debate over the omnibus package, Republicans defeated numerous Democratic amendments that, together, would have added more than $40 billion to FY 03 domestic spending. The rejected amendments included a proposal sponsored by Senator Ted Kennedy (D-MA) to increase funding for education, Senator Tom Daschle’s (D-SD) amendment to provide emergency disaster assistance to agricultural producers, and a Senator Robert Byrd (D-WV) provision to increase funding for certain homeland security measures.

With a 2.9 percent across the board cut, the Senate has kept the FY 03 omnibus within range of President Bush’s latest, revised cap of $755.2 billion for all appropriated programs, including those covered by the two defense spending measures passed last year. Now the appropriations bill will head to conference with the House, which passed its version of the measure earlier this month. Lawmakers and aides concur that conference will be difficult, and project that the across-the-board cut, which would push spending levels for many domestic programs below last year’s levels, will not survive the meeting of the two chambers.

Until a FY 03 appropriations bill is passed by Congress and approved by the President, the 11 departments that remain without 2003 appropriations will maintain funding through a continuing resolution (CR). On January 27, the House passed a CR that will fund the non-defense agencies at FY 02 levels through February 7.

On February 3, the President will release his budget for FY 04, likely putting pressure on appropriators to shrink non-defense spending even more. While the President is expected to call for a 4 percent increase in domestic spending for the next fiscal year, the bulk of this spending boost will be directed to homeland security, which would receive $41.3 billion, a 9.5 percent increase over Bush’s FY 03 request. Such significant increases in homeland security spending combined with standard inflation will likely result in relative cuts in non-defense spending for FY 04.

Unhappy with how the Senate has handled the current spending crunch, Representative Jim Nussle (R-IA), Chairman of the House Budget Committee, announced this week that if conferees do not complete work on HJ Res 2 by Presidents Day recess, he will introduce a year-long CR to keep the 11 agencies funded at FY 02 levels through FY 03. Nussle plans to hold hearings on the President’s FY 04 budget proposal throughout the next month, hoping for a markup by March 10 and floor action the week of March 17.

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