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Policy Watch

Volume 24, October 24, 2013
Policy Watch is a newsletter for state and territorial health department staff that provides updates, analysis, and highlights on the impact of national politics on HIV and viral hepatitis programs. Please visit NASTAD’s website at for more information or contact Oscar Mairena or Emily McCloskey.

The Government is Open:
What’s Next?

The Current State of FY2014 Funding

The FY2014 funding process has been anything but “regular order.” The President, Senate, and House have all disagreed on topline spending levels and the allocation for Labor, Health and Human Services programs.

Following the budget impasse over the FY2014 continuing resolution (CR) that resulted in the government’s 16 day shutdown, Congress passed and President Obama signed HR2775, a measure that simultaneously funded the federal government through January 15, 2014 (at the FY2013 post-sequestration spending levels) and raised the debt limit until February 7, 2014. This stop-gap measure is only a temporary fix for a variety of long term issues.

Top Three Reasons Why FY2014 Funding Remains Challenging

  1. Two of the central disagreements that Congress grapples with in terms of FY2014 funding center on whether to maintain or suspend the sequester and the subsequent spending levels for non-defense discretionary and defense funding. The Budget Control Act of 2011 (BCA) established budget caps and sequestration, a process by which automatic cuts are triggered in each fiscal year from FY2013 through FY2021. In FY2014, Congress can appropriate at the BCA cap level ($967 billion), giving Congress the power to target cuts. If Congress appropriates funding at a level higher than the BCA establishes, reductions will be larger than they were in FY2013. The current CR funds at the FY2013 level ($987 billion). Unless Congress provides an alternative to sequestration, agencies can expect a new round of cuts beginning January 15, 2014. The Congressional Budget Office projects that sequestration will lower non-defense discretionary spending (i.e., certain domestic programs) by a range of 7.8% (in FY2013) to 5.5% (in FY2021). The blunt nature of the cuts has been widely criticized, with some favoring more tailored cuts and others arguing for postponement while the economy improves.

  2. A third area of contention centers on The Affordable Care Act (ACA), which remains controversial. The current CR requires HHS to verify the income qualifications of people who apply for tax subsidies to help buy health insurance under the ACA. While it is unlikely that there will be another government shutdown over the ACA, measures to defund, dismantle or further complicate the implementation of the ACA will continue.

  3. The fourth issue that Congress must address is the debt ceiling. The debt ceiling has been extended until February 7, 2014. The Department of the Treasury will have the power to use “extraordinary measures” to continue paying bills. Congress will have to address this contentious issue once again in the late winter.The current CR establishes a bicameral, bipartisan Budget Conference Committee led by House Budget Chairman Paul Ryan (R-Wisconsin), and Senate Budget Chairwoman Patty Murray (D-Washington). The committee’s task is to produce a long-term spending plan by December 13, 2013. Last week, budget conferees were appointed and initial negotiations began. The conference committee will likely address a range of funding and policy issues including: deficit reduction, sequestration, possibly the debt ceiling, as well as entitlement reform or further non-defense discretionary cuts, which would directly affect health departments.

    Beyond Ryan and Murray, the 29-member conference committee includes lawmakers with seemingly unbending stances on major policy and fiscal issues, leaving the prospects for a final deal highly uncertain.

What does this mean for health departments?

If the Budget Conference Committee is successful in proposing a bipartisan, long term spending agreement, regular appropriations could occur in January 2014. However, if an agreement is not reached, health departments should continue to expect delays and partial awards across programs (depending on program funding cycles). Additionally, it is still unclear what the overall government funding level will be for FY2014. Health departments should continue to plan for sequester cuts to grants. Unless Congress can agree on a solution, the sequester calls for a new round of cuts on top of the cut in funding in FY2013. It is likely that FY2014 will result in another long term CR.

Looking Forward

Though FY2014 has just begun, the Obama Administration has started to plan and budget for FY2015. FY2015 will be the first full fiscal year with ACA implementation. Both Congress and the Administration are seeking discretionary funding cost-savings to pay for ACA implementation. NASTAD has heard from the Administration and some Members of Congress that CDC HIV and viral hepatitis prevention and Ryan White programs could see cuts in funding. NASTAD will continue to advocate for the core role of public health programs that cannot be met or replaced by the insurance expansion provisions of the ACA.

NASTAD will continue to monitor the budget process and provide updates.

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