Budget Blog

What the Federal Government is Telling States: Statements from the President’s 2018 Budget Proposal

By John Hicks posted 06-02-2017 11:21 AM


The President’s fiscal year 2018 budget request to Congress includes many elements that shift more responsibility to state and local governments or modify some longstanding fiscal federalism practices through funding eliminations or major reductions.

Below are statements pulled directly from the Administration’s budget documents produced by the Office of Management and Budget and the individual Departments, and written testimony on the budget from Administration officials.

New State Financial Requirements

SNAP - First-time State Funding Match
Shift to States - $191 billion from 2020-2023

The Budget also proposes to re-balance the Federal/State partnership in SNAP benefits to low-income households by gradually establishing a State match for benefit costs, phasing in from a national average of 10 percent in 2020 to 25 percent, on average, by 2023. To help States manage their costs, new flexibility regarding benefit levels would be provided. This proposal allows States to determine their level of SNAP benefits…and gives States options that can mitigate the effects of the funding shift…By giving States a financial stake in the cost of providing these benefits, rather than relying entirely on Federal funds, it would increase State incentives to create economic paths to self-sufficiency.

FEMA - State Homeland Security Grant and Urban Area Security Initiative – First-time State Funding Match
Shift to States - $267 million

The Budget proposes a 25 percent non-Federal cost match for grant dollars with State and local partners. General Kelly, May 24, 2017 written testimony to Congressional committee: By using a cost-sharing approach, Federal dollars are spent on activities that our non-Federal partners themselves would invest in, providing clear results in priority areas.


Parental Leave – Funded by State Unemployment Insurance (UI) Taxes

The Budget also includes a proposal to provide six weeks of paid parental leave, which is paid for with a package of mandatory savings proposals to improve Unemployment Insurance (UI) program integrity and solvency. Using the UI system as a base, the proposal will allow States to establish paid parental leave programs in a way that is most appropriate for their workforce and economy. States would be required to provide six weeks of parental leave and the proposal gives States broad latitude to design and finance the program. The proposal is fully offset by a package of sensible reforms to the UI system—including reforms to reduce improper payments, help unemployed workers find jobs more quickly, and encourage States to maintain reserves in their Unemployment Trust Fund accounts. 

Better Done At The State And Local Level

Labor - Workforce Investment and Opportunity Act (WIOA) Adult Employment and Training, Youth Activities and Dislocated Workers and Employment Service
Reduced - $1.3 billion or 39%

The Budget would decrease funding for WIOA Title I and III formula programs by $1.3 billion, shifting more responsibility for funding these programs and training American workers to States, localities, and employers and giving them more freedom to design their programs. The Budget also provides States and localities with new flexibility and discretion to serve workers based on the specific training needs of their workforce.


Education – 21st Century Community Learning Centers
Eliminated - $1.16 billion

The provision of before- and after-school academic enrichment opportunities may be better supported with other Federal, State, local or private funds, including the $15 billion Title I Grants to Local Educational Agencies program.


Education – Student Support and Academic Enrichment Grants
Eliminated - $277 million

Also, the activities authorized under this program generally can be supported with funds from other Federal, State, local or private sources, including the $15 billion Title I Grants to Local Educational Agencies program.


Transportation - Transit Capital Investment Program (New Starts)-Future Grants
Eliminated - $928 million

Future investments in new transit projects would be funded by the localities that use and benefit from these localized projects. Several major metropolitan regions have recently passed multi-billion revenue measures to fund transit projects, and the Administration believes that is the most appropriate way to fund transit expansion and maintenance efforts. These regions realize waiting for Federal grant funding is not the most efficient way to meet their local transportation needs.


HUD - Community Development Block Grant (CDBG)
Eliminated - $2.9 billion

The Budget recognizes that State and local governments are better positioned to address local community and economic development needs.


Regional Commissions
Eliminated - $156 million

The Appalachian Regional Commission (ARC), the Delta Regional Authority (DRA), the Denali Commission and the Northern Border Regional Commission (NBRC) are independent agencies that award Federal grants for regional development. The proposed elimination of the regional commissions reflects the need to reduce unnecessary Federal spending and streamline the Federal Government’s role, while encouraging States and localities to partner with the private sector to develop local-tailored solutions to local problems.


EPA – Geographic Programs
Eliminated - $427 million

These programs perform local ecosystem protection and restoration activities, which are best handled by local and State entities. The EPA will encourage (the six Chesapeake Bay states and Washington D.C., five Gulf of Mexico states, New York and Vermont, Long Island Sound states and local entities, state, tribal, and local entities, the state of California and local entities, the eight Great Lakes states and tribal and local entities) to continue to make progress from within core water programs in (restoring the Bay, restoring the Gulf of Mexico, restoring Lake Champlain, restoring the Sound, restoring the Puget Sound, restoring the San Francisco Bay, protecting and restoring sensitive aquatic ecosystems in South Florida, restoring the Great Lakes).


HUD - Choice Neighborhoods
Eliminated - $125 million

State and local governments may be better positioned to fund locally-driven strategies for neighborhood revitalization. Moreover, local government’s commitment to policy changes and interagency coordination are critical to achieving the educational and public safety goals associated with the program, and to achieve the necessary scale to impact entire neighborhoods.


HUD - Home Investment Partnerships Program
Eliminated - $948 million

The Administration devolves affordable housing activities to State and local governments who are better positioned to comprehensively address the array of unique market challenges, local policies, and impediments that lead to housing affordability problems.


HUD - Housing Trust Fund and Capital Magnet Fund
Eliminated - $194 million

The Budget would devolve some affordable housing activities to State and local governments who are better positioned to comprehensively address the array of unique market challenges, local policies, and impediments that lead to housing affordability problems.


Legal Services Corporation
Eliminated - $351 million

The proposal also puts more control in the hands of State and local governments which better understand the needs of their communities.

You're Doing Too Much

EPA - Categorical Grants
Reduced - $482 million

Many States have been delegated authority to implement and enforce Federal environmental laws including the Clean Air Act, Clean Water Act, and Safe Drinking Water Act. The Budget proposes to eliminate or substantially reduce Federal investment in State environmental activities that go beyond EPA’s statutory requirements. States may be able to adjust to reduced funding levels by reducing or eliminating additional activities not required under Federal law, prioritizing programs, and seeking other funding sources including fees. Grants proposed for elimination include Beaches Protection, Lead, Multipurpose Grants, Nonpoint Source, Pollution Prevention, Radon and Underground Storage Tanks. Grants proposed for reductions include Hazardous Waste Financial Assistance, Pollution Control, Public Water System Supervision, and State and Local Air Quality Management.

You're Not Doing Enough

HUD - Rental Assistance Programs
Reduced - $1.9 billion

The Budget also recognizes the need for greater contribution from State and local governments and the private sector to help address affordable housing needs among low-income households. 

You're Already Doing It

DHS - Transportation Security Administration Law Enforcement Grants
Eliminated - $45 million

The amount of financial support offered by this program has waned in recent years, declining below 50 percent of total State and local law enforcement costs in fiscal year 2016 and continuing to decline. As such, State and local jurisdictions are supporting more of the cost of providing law enforcement presence at airports. Discontinuing this program should not place an undue burden on State and local jurisdictions, since they already pay the majority of law enforcement costs. 

You Have Other Funds You Can Use

EPA – Water Quality Research and Support Grants
Eliminated - $26.8 million

States have the ability to develop technical assistance plans for their water systems using Public Water System Supervision funds and set-asides from the Drinking Water State Revolving Fund (DWSRF).


HHS – Social Services Block Grant (SSBG)
Eliminated - $1.4 billion

SSBG is a permanently authorized program, which funds a wide variety of services. There are 29 broad service categories within SSBG (including "other"). However, better targeted State and Federal programs currently fund most of these services. SSBG lacks strong performance metrics and the means to hold States accountable for spending SSBG funds effectively. 

You're Not Doing It Right

HHS - Temporary Assistance for Needy Families (TANF) Reduction and TANF Contingency Fund
Reduced TANF by 10% - $1.2 billion
Eliminated Contingency Fund - $567 million

While the proposal would reduce the amount available to States for cash assistance and other benefits that promote self-sufficiency, the proposal also recognizes that TANF’s flexible spending rules have resulted in States using a large portion of TANF funds for benefits and services that do not directly serve the core intent of the program – to help low-income families meet their basic needs and move them toward self-sufficiency.

While the intent of the Contingency Fund has been to assist States experiencing increased demand for cash assistance during economic downturns, States may use contingency funds for any TANF purpose, many of which have no direct relationship to helping families meet needs in hard economic times. Some States have used contingency funds to simply replace existing block grant funds, without spending more to address increased need.


Labor - Unemployment Insurance Solvency Standard

Despite several years of recovery since the recession, State Unemployment Insurance (UI) programs are still not adequately financed. Fewer than half the States have sufficient reserves to weather a single year of recession, the common measure of trust fund solvency. The Budget proposes to add a minimum solvency standard to address the challenge States face in maintaining sufficient reserves in their Unemployment Trust Fund accounts to weather future recessions. This proposal would impose credit reductions on States that fail to meet the solvency standard for two consecutive years.

It's Yours Anyhow

FEMA – Continuing Training Grants, National Domestic Preparedness Consortium, Countering Violent Extremism/Complex Coordinated Terrorist Attack Grants, and Emergency Food and Shelter Program
Eliminated - $279 million

These programs are eliminated because they are duplicative of other Federal programs and are primarily State and local responsibilities.


Justice - State Criminal Alien Assistance Program
Eliminated - $210 million

This program represents a general revenue transfer to States that neither focuses resources on immigration enforcement nor fully reimburses their detention costs.

You No Longer Need It

HHS - Low Income Home Energy Assistance Program (LI-HEAP)
Eliminated - $3.38 billion

Perhaps more notably, the Budget recognizes the program is no longer a necessity as States have adopted their own policies to protect constituents against energy concerns.


EPA – Leaking Underground Storage Tanks (LUST) Cooperative Agreements
Reduced - $16.1 million

Reduction reflects success of LUST cooperative agreement funding over the past decade to a position where states can now undertake a more primary responsibility.


Education – Impact Aid Payments to Local Education Agencies (LEAs) for Federal Property
Eliminated - $67 million

The Administration believes that the majority of LEAs receiving assistance under this program have now had sufficient time to adjust to the removal of the property from their tax rolls.