House Resolution Continues Last Year’s Spending, Mostly

Sep 17, 2014

Update: The House Rules Committee made in order an amendment by Armed Services Committee Chairman Howard McKeon (R-CA) to authorize funding to arm the Syrian opposition to fight the Islamic State terrorist group. The amendment does not appropriate new funding, it only allows the Department of Defense (DoD) to request transfers or reprogramming from existing Overseas Contingency Operations (OCO) funding for this purpose.

House Appropriations Committee Chairman Hal Rogers (R-KY) this week released the text of a continuing resolution, or CR, (see Appropriations 101 to learn more) to fund the federal government after September 30, 2014. The legislation, which will likely receive a vote in the House next week, continues funding for all programs, projects, and activities at current levels through December 11, 2014, with small changes. If this CR is signed into law,  lawmakers will need to revisit appropriations some time before December 11 to continue funding the government through enactment of full year appropriations or a further CR.

The CR includes changes such as an extension of the Temporary Assistance for Needy Families (TANF) program and an extension of Export-Import bank operations through June 30, 2015. There are also some funding increases, such as $88 million in new funding to address the Ebola outbreak and $59 million to address disability claims at the Department of Veterans Affairs. A small across-the-board cut along with select funding changes brings the overall budget authority under the FY2015 spending cap of $1.014 trillion, the same as topline spending level agreed to by the House and Senate, known as 302(a) allocations.

For full text of the legislation, click here. For the Appropriations Committee summary, click here.

Supplemental Funding

The CR, introduced by Chairman Rogers, does not include supplemental funding for immigration or to specifically address the Islamic State terrorist group (Update: the McKeon amendment would authorize DoD to arm forces fighting the Islamic State terrorist group and allow DoD to request reprogramming or transfers of OCO funding which is continued in the supplemental for this purpose, see above). The measure does continue Overseas Contingency Operations (OCO) funding at this year’s level of $91.9 billion, with a small decrease to reflect the across-the-board cut, which could potentially be used for operations against the terrorist group. While continuing funding at essentially the previous year levels makes sense for programs or activities that are expected to operate at roughly the same level as the prior year, that is not the case for OCO, which is scheduled to decline with the ongoing troop drawdown in Iraq and Afghanistan. The Administration requested $65.8 billion in OCO funding for FY 2015, meaning that Congress is designating $26.1 billion more on an annual basis than is needed for ongoing operations, or about $5.1 billion more for the two-and-half-month period the CR covers. President Obama addressed the nation Wednesday and requested unspecified additional resources and authorities from Congress to pursue the fight in the Middle East. But it seems unlikely that the near-term cost of these operations will match the reduction in costs from ongoing troop drawdowns.

Continuing OCO funding at levels above what is expected to be necessary is particularly troubling because OCO funding is not subject to any budget discipline. It may reflect policymakers' desire to maintain some funding flexibility for developing issues, or their desire to maintain the OCO account as a slush fund to backfill the base defense budget for items not directly related to overseas operations.

Previous Appropriations Action

Earlier this summer, the House made substantial progress and passed seven of the twelve annual appropriations bills. The Senate, however, did not pass a single appropriations bill, despite that nine of the twelve were reported out of full committee, largely without objection. For the status of all of the individual appropriations bills, see our Appropriations Watch: FY2015.

In recent years, the House and Senate have increasingly resorted to continuing resolutions to keep the government funded sometimes because the chambers could not agree on the overall funding level. That has not been the case for FY 2015, as the House and Senate both passed topline discretionary funding levels, formally titled 302(a) allocations, of $1.014 trillion in budget authority back in the spring, complying with the Ryan-Murray budget agreement which envisioned discretionary budget authority rising from $1.012 trillion in FY2014 to $1.014 trillion in FY2015.

However, the House and Senate disagreed on the appropriations subcommittee funding levels, or 302(b) allocations. For example, the Senate allocated $54.4 billion for the Transportation, Housing and Urban Development bill, while the House allocated $52 billion. Another area of disagreement is the Interior and Environment bill, where the House allocated $30.2 billion, higher than the Senate's $29.5 billion. The table below compares the House CR, with FY 2014 enacted appropriations, along with the funding levels for FY 2015 proposed by the House, Senate, and President's budget. In addition, the chambers disagree on issues other than funding levels, such as policy riders placing restrictions on how funding may be used and blocking certain executive branch actions.

House CR Compared to FY2014 Funding and FY2015 Budgets (billions of budget authority)*
Subcommittee FY 2014 Enacted House CR President's Budget FY2015 House FY2015 Senate FY2015
Agriculture $20.9 $20.8 $20.4 $20.9 $20.6
Commerce, Justice, Science $51.9 $49.1 $50.2  $51.2  $51.2
Defense $486.9 $487.4 $490.7 $490.9  $489.6
Energy and Water Development $34.1 $33.9 $33.7 $34.0 $34.2
Financial Services and General Government $21.9 $21.9 $22.9 $21.3  $22.5
Homeland Security $39.3 $39.4 $38.3 $39.2**  $39.0
Interior, Environment $30.1 $29.5 $29.5 $30.2  $29.5
Labor, HHS, Education $156.8 $156.8 $158.0 $155.7  $156.8
Legislative Branch $4.3 $4.3 $4.5 $4.3  $4.3
Military Construction, VA $73.3 $72.9 $71.9 $71.5  $71.9
State, Foreign Operations $42.5 $42.3 $42.7 $42.4  $39.7
Transportation, HUD $50.9 $54.0 $51.0 $52.0  $54.4
Total $1.012 trillion $1.012 trillion $1.014 trillion $1.014 trillion $1.014 trillion

*This table does not include funding for Overseas Contingency Operations, disasters, or program integrity.

Spending Adjustments in FY2014

In its score of the CR introduced in the House, CBO estimates that a CR to simply continue projects and activities across the federal government at FY 2014 levels would provide $1.021 trillion in net budget authority on a annual basis, almost $9 billion higher than FY 2014 enacted appropriation from January 2014. See the "House CR Baseline" column in the table below.

There are several reasons why this is the case.  One major reason is a reduction in the estimate of Federal Housing Administration (FHA) receipts of about $4.2 billion by CBO. Because FHA receipts count as negative spending, this reduction in receipts is reflected in the increase in T-HUD spending in the CR for FY 2015 above the FY 2014 appropriation level. Another cause is already enacted advance appropriations for the Department of Veterans Affairs (VA) that are higher than FY 2014 because some appropriations for VA are approved two years at a time. Additional contributing factors include lower estimates of savings from certain Changes In Mandatory Programs (CHIMPs) included in FY2014 appropriations and rescissions of that were enacted in FY2014 that are no longer available in FY 2015. These CHIMPs and rescissions offset a portion of the gross spending in the FY2014 omnibus to bring net spending within budget limits, but since continuing these provisions into FY 2015 achieves lower or no savings in FY 2015 net spending under a FY2015 CR is higher than it was in FY2014.

The House CR replaced a portion of the lost savings from CHIMPs and rescissions with savings within Labor, HHS, Education total from a new Children's Health Insurance Program (CHIP) CHIMP rescinding unobligated budget authority that is not expected to be spent. While this CHIMP produces a reduction in budget authority to help comply with budget allocations and discretionary spending limit CBO estimates that it will not produce any real savings in the form of lower outlays because it was not expected to be spent. This is a budget gimmick, as it merely gives the illusion of a reduction in spending to offset higher spending elsewhere in the bill without actually achieving any savings.

The bill further contains a small across the board cut of 0.0544 percent that achieves about $600 million in savings, while other provisions in the CR, most notably the new CHIP CHIMP, reduce the final cost of the bill by about $8 billion, bringing the spending total for the House CR down to an annual level of $1.012 trillion, which is below the aggregate cap for FY2015.

House CR Breakdown (billions)*
Subcommittee FY 2014 Enacted House CR Baseline Across-the-Board Cut Other Provisions Introduced CR
Agriculture $20.9 $20.8 -<$.1 -<$.1 $20.8
Commerce, Justice, Science $51.9 $49.2 -<$.1 -$0 $49.1
Defense $486.9 $487.7 -$.3 -$0 $487.4
Energy and Water Development $34.1 $34.0 -<$.1 -$0 $33.9
Financial Services and General Government $21.9 $21.9 -<$.1 -<$.1 $21.9
Homeland Security $39.3 $39.4 -<$.1 -$0 $39.4
Interior, Environment $30.1 $29.5 -<$.1 -$0 $29.5
Labor, HHS, Education $156.8 $161.4 -<$.1

-$4.5

$156.8
Legislative Branch $4.3 $4.3 -<$.1 -$0 $4.3
Military Construction, VA $73.3 $76.3 -<$.1 -$3.3 $72.9
State, Foreign Operations $42.5 $42.6 -<$.1 -$.2 $42.3
Transportation, HUD $50.9 $54.0 -<$.1 -<$.1 $54.0
Total $1.012 trillion $1.021 trillion -$.6 billion -$8.0 billion $1.012 trillion

*This table does not include funding for Overseas Contingency Operations, disasters, or program integrity.

Compliance With Statutory Budget Caps

As mentioned above, the increases in nondefense discretionary spending lead to a CR that falls under the overall FY2015 cap of $1.014 trillion and the FY2015 defense cap of $521.3 billion, but exceeds the FY2015 nondefense cap of $492.4 billion by $2.2 billion. As a consequence, a point of order could possibly be raised against the bill in the Senate, although it may fail because the CR only covers two and half months, and thus would not exceed the cap for the entire fiscal year.

If the higher level of nondefense discretionary spending in the CR were continued throughout FY 2015, then the statutory nondefense cap would be violated, according to CBO's estimate. Under the Budget Control Act, if appropriations for defense or nondefense discretionary spending exceeded the statutory caps for their category, OMB would be required to implement an across-the-board sequester to make up this difference. However, OMB, which has statutory authority for enforcing statutory caps, disagrees with CBO on the estimate of FHA receipts. OMB will likely estimate a lower spending level for the CR that may not exceed the nondefense cap. In any event, the CR would not trigger a sequester because it only provides spending for a few months. Nonetheless, the issue of compliance with the nondefense cap and the use of CHIMPs and other budget gimmicks -- which help comply with budget limits on paper by reducing budget authority but do not provide any real savings -- will be important to watch when Congress considers appropriations for the rest of FY 2015.

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