Federal Budget Update May 6, 2015

Following the House of Representatives’ action last week, yesterday the United States Senate narrowly approved the Fiscal Year 2016 joint budget resolution, Congress’ first budget in six years.  The budget blueprint calls for a balanced federal budget in eight years entirely by reducing spending by $5.3 trillion over the next decade.  This framework sets the stage for the Appropriations process where the funding levels for the science agencies will be set. 

Overall FY16 Funding Levels

Unlike President Obama’s FY16 budget, which proposed a mix of spending cuts and new revenues to provide a 7 percent increase in discretionary spending, including a $38 billion increase in defense spending and a $37 billion increase in non-defense accounts, the joint congressional budget retains “budget sequestration” enacted in 2011 by capping defense spending at $523 billion and non-defense discretionary spending at $493.5 billion.  The budget authorizes a total government-wide spending increase of just $3 billion over FY15.  If adhered to, this level of spending would result in significant and debilitating cuts to many of the research agencies Northeastern relies on. There is still hope for a new budget deal that would provide for higher funding levels, but we are not likely to see that happen any time soon. 

Finally, the budget agreement includes so-called “reconciliation instructions” to several House and Senate committees, which requires the committees to produce legislation to reduce mandatory spending.  This could lead to proposals later this year to make changes to the federal student loan program, health care law, or tax benefits, among other items of interest to the university community.

FY16 Appropriations

Two weeks ago, the House Appropriations Committee approved the spending levels for each of the 12 appropriations bills that fund the government.  Of particular note and concern, the Labor-Health and Human Services-Education (Labor HHS) Bill, which funds the NIH and Department of Education student financial aid programs, among others, would suffer a $3.7 billion (or 2 percent) cut from the FY15 enacted level.  The allocations also cut $400 million from the Department of Homeland Security (DHS).  The Commerce-Justice-Science (CJS) bill, which funds the NSF, would see a slight increase.

As of this writing, the House has passed two FY16 appropriations bills, the Military Construction-Veterans Administration (MilCon-VA) Bill and the Energy and Water Appropriations Bills.  Both bills, which customarily see broad bipartisan support, passed largely along party lines as a consequence of continued disagreement over the overall funding allocations.  The President has threatened to veto the Energy and Water Bill because it adheres to the sequester spending caps.  

Of note in the House Energy and Water Bill, the Energy Efficiency and Renewable Energy (EERE) program would be funded at $266 million below the FY15 enacted level and $1.1 billion below the President’s request.  The House would provide level funding for the Advanced Research Projects Agency-Energy (ARPA-E) program.  The DOE Office of Science would see a $29 million increase over FY15 to $5.1 billion, some $240 million less than the President requested.  Biological and Environmental Research would see a $54 million or 9  percent cut from the FY15 enacted level.  

The Senate Appropriations Committee has not yet set the spending levels for its appropriations bills.

Outlook

The House and Senate Appropriations Committees will now aim to "mark-up" and pass all of their draft bills by the August congressional recess.  Throughout this process, we will continue to advocate for increased funding for the programs that Northeastern benefits from.

Some observers note that the joint budget resolution used various reserve funding mechanisms to leave some room for a possible budget deal to lift the sequester.  However, if Congress cannot come to a new agreement on spending cuts and revenue, a year-long continuing resolution (CR) to fund the government in FY16 is likely.

We will provide additional information as it becomes available.  Please do not hesitate to contact me if you have specific questions.