Funding for annually appropriated programs has been operating under a stopgap Continuing Resolution (CR) since FY 2013 began on October 1, 2012.  The CR is set to expire on March 27.  On March 6, the House passed H.R. 933 to fund the programs for the remainder of FY 2013.  The House incorporated detailed new spending bills for 2 of the 12 appropriations subcommittees in H.R. 933 – Defense and Military Construction-Veterans Affairs.  For the remaining agencies, funding would continue under another CR to get through the rest of the fiscal year.  Appropriators can adjust spending levels for programs in departments and agencies funded under the new bills to better reflect changing circumstances.  Appropriators, for example, shifted $10.4 billion more to operations and maintenance categories for FY 2014 from other accounts within the Pentagon budget.  Programs funded under the CR have limited flexibility and generally reflect the prior year’s level, with a relative few exceptions (called “anomalies”) because of urgent additional funding needs.  The overall funding level for H.R. 933 is $984 billion, which incorporates the across-the-board “sequestration” cuts that began March 1.  The FY 2013 spending bill started at the $1.043 trillion level agreed to in the Budget Control Act of 2011 (BCA), which places caps on discretionary funding from FY 2012 – FY 2021, and then subtracted the amount required by sequestration.  H.R. 933 passed the House by a vote of 267-151 with 53 Democrats voting for the bill and 14 Republicans opposing it.
The sequestration cuts were necessary because of another provision of the Budget Control Act.  Congress was supposed to come up with a plan to reduce the deficit by another $1.2 trillion over ten years.  If Congress was unable to agree on such a plan, automatic cuts would be triggered – half from defense and half from domestic or international programs.  Because Congress failed to act, sequestration for FY 2013 took effect on March 1.  Unless Congress intervenes to repeal or replace the sequester and 8 more years of spending cuts, for FY 2014 – FY 2021, $1.2 trillion more in cuts will result.  Advocates hoped that the expiring CR would be used as a vehicle to repeal or replace this second set of cuts but that has not happened.  (See March 4 Human Needs Report for more on the sequester.)                     

As a result of sequestration the federal government is being asked to absorb $85 billion in further cuts in FY 2013.  The kind of federal spending that requires annual appropriations – called “discretionary” – would take a cut of $59 billion.  The sequester also cut programs not funded under the appropriations bills including war spending by $6 billion, emergency funding (e.g. Sandy storm recovery) by $2 billion, disaster relief by $1 billion, and mandatory programs including Medicare by $17 billion.

Some of those cuts are beginning to be felt, from children taken out of Head Start programs to a nearly 11 percent cut in unemployment compensation starting April 1.  (See the first weekly Sequester Impact Report for March 5-13.)

When H.R. 933 came to the Senate, Appropriations Committee Chairwoman Barbara Mikulski (D-MD) and Ranking Member Richard Shelby (R-AL) chose to change it by adding three more full spending bills – Agriculture, Commerce-Justice-Science and Homeland Security – leaving 7 unfinished bills funded under the CR.  The Senate bill includes over 80 anomalies to address needed changes in agencies funded under the CR.   Some of those were also in the House bill, such as language needed to continue a pay freeze on federal employees.  The Senate bill adds more funding for the public housing operating fund, rental vouchers and homeless assistance in HUD not included in the House bill.  The Senate adds more funding to some agencies and decreases it for others while maintaining the $984 billion overall funding level.  Areas that receive more funding under the Senate bill include Agriculture, Financial Services, and Transportation-Housing and Urban Development.  Those that lose funding include Commerce-Justice-Science, and Interior-Environment.

Senator Tom Harkin (D-IA) offered an amendment to the Senate bill that would have included a full appropriations bill for FY 2013 to replace the CR provisions for Labor, Health and Human Services and Education.  His amendment called for an increase in funding for some education, health and labor programs.  The increases had been agreed to by the House and Senate during informal negotiations in December but the bill wasn’t included among the new spending bills Senators Mikulski and Shelby chose to include in the substitute.  The amendment was subject to a 60-vote threshold and failed 54-45 along party lines.  An amendment sponsored by Senator Ted Cruz (R-TX) to bar funding for implementing the Affordable Care Act also failed along party lines 45-52.

At press time the Senate was unable to finish the bill due to the inability to agree to a reduced set of amendments that would be allowed a vote.  When the Senate completes work, the bill will go back to the House, which has indicated that it will accept the Senate bill if it maintains the $984 billion spending level and includes no unacceptable changes.

Advocates continue to press members of Congress to repeal the $85 billion sequester which is already beginning to negatively impact human needs programs.  The opportunity may still come as members begin to feel pressure from constituents concerned about the impact of the cuts.

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