In this issue:

F E D E R A L
Congress Passes Final FY 2011 Spending Bill

F E D E R A L
CDBG, Sustainable Communities Budgets Cut, but Preserved

F E D E R A L
TIGER Grants Fare Well; High Speed Rail Eliminated

F E D E R A L
Clean Water, Drinking Water Funds Hit Hard by Cuts to EPA

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Climate Service at NOAA Cut from Budget

In addition, negotiations over the FY 2012 budget are well under way. On April 15, the House passed its budget resolution, which calls for steep cuts to entitlements and discretionary spending, cutting $1.019 trillion from FY10 spending levels. The Senate's anticipated bill is expected to clash with the House proposal, so it is unlikely a concurrent resolution will be passed. While budget resolutions do not have the force of law, they do set guidelines for tax and appropriations legislation. Adding to the debate, President Obama sharply criticized Rep. Paul Ryan's plan and proposed his own that includes allowing Bush–era tax cuts to expire, a plan that Republicans have categorically rejected.

CDBG, Sustainable Communities Budgets Cut, but Preserved
$100 MILLION FOR SUSTAINABLE COMMUNITIES AND HOPE VI

The Department of Housing and Urban Development was a popular target for cuts during the budget debates, but overall, HUD did not fare poorly. While some programs were reduced by as much as 50 percent, retaining funding for many HUD programs is a major victory in this political climate.

The Community Development Block Grant program received $3.343 billion for FY 2011, which is $647 million, or 16 percent, less than FY10 levels. This is a large cut, but much smaller than the proposed cut in the original House–approved spending bill (HR 1). In HR 1, CDBG funding would have been reduced by $2 billion, a 62 percent decrease, which would have resulted in the lowest appropriation level in the program's 36-year history. The President proposed a reduction to CDBG in his FY12 budget proposal, requesting funding of $3.69 billion.

Funded within the CDBG budget, the Sustainable Communities Initiative also was targeted for reduction or total elimination; HR 1 proposed eliminating the program's budget for FY11 and rescinding nearly all the funds appropriated for FY10. The final spending bill contains $100 million for Sustainable Communities: $70 million for Regional Integrated Planning Grants and $30 million for Community Challenge Planning Grants. Although the FY11 budget is a $50 million reduction from FY10, the final spending bill did not rescind any funding. Notices of Funds Availability are expected to be released shortly for the second round of grants.

The HOPE VI program also sustained a large cut in the final spending bill; the program received $100 million for FY11, down from $200 million in FY10. Choice Neighborhoods, the administration's replacement for HOPE VI, received $65 million for a pilot program in FY10 but no funding for FY11. The HOME program did well compared with other HUD programs: only a $19 million reduction from its FY10 level of $1.8 billion.

TIGER Grants Fare Well; High Speed Rail Eliminated
UNOBLIGATED PROJECTS REMAIN AT RISK IN FY 2011 BUDGET

All major transportation programs received cuts or rescissions in the final spending bill. With a reauthorization effort expected to begin over the next month, and the administration pushing for a $556 billion, six-year investment plan, this bill is a weak launching point.

The TIGER program — part of the Partnership for Sustainable Communities joint venture with EPA and HUD — received $528 million for FY11 grants. This program was authorized by the American Recovery and Reinvestment Act of 2009 with $1.5 billion in funding. In FY10, TIGER II received $600 million, with $35 million specifically set aside for planning grants. The $528 million available for FY11 does not contain this setaside. It is unsurprising that TIGER continued to receive funding, as it is generally considered a successful program by members on both sides of the aisle. The multi-modal, discretionary style of TIGER grants has received enough positive feedback that proposals for a National Infrastructure Bank have used it as a model. The administration proposed a $30 billion bank as part of its six-year reauthorization plan and legislation to establish a bank has been introduced by Senators John Kerry (D-Mass.) and Kay Bailey Hutchison (R-Tex.) and in the House by Rep. Rosa DeLauro (D-Conn.).

Overall, transit programs received deeper FY11 cuts than highway programs. A $293 million program of earmarks has been cut from the Federal Highway Administration budget, and $3.2 billion in contract authority from FY 2010, which includes $630 million in earmarks, has been rescinded. Highway funding otherwise remains stable from FY10 to FY11. Transit funding, however, is reduced by $991 million below FY10. This includes a $400 million reduction for Capital Investment Grants (New Starts). New Starts received $2 billion in FY10, but only $1.6 billion for FY11. The final spending bill also rescinds $280 million of the FY10 funding.

High-Speed Intercity Passenger Rail, a top priority for the administration, is among the hardest hit programs in the budget. The final spending bill does not provide any funding for this program, and it rescinds $400 million from FY10 appropriations. This amounts to a total cut of $2.9 billion. Amtrak will receive approximately $1.5 billion in FY11 after incurring a $78 million reduction in Capital and Debt service grants from FY10 levels.

The Senate Environment and Public Works Committee is actively working on a reauthorization bill, as is the House Transportation and Infrastructure Committee. The administration released an outline in its FY12 Budget Request, but has withheld a more detailed plan until Congress moves forward. The big sticking point is how to generate enough revenue for a six-year bill. Expected revenue from the federal gas tax is not expected to cover a bill the size of SAFETEA-LU, which provided $244 billion over six years. If the final spending bill for FY11 gives any indication, highways continue to take priority over transit and the administration's signature initiative — high speed rail — is in jeopardy.

Clean Water, Drinking Water Funds Hit Hard by Cuts to EPA
RESTRICTIONS ON EPA REGULATORY AUTHORITY DEFEATED

The Environment Protection Agency budget was reduced by $1.6 billion in the FY 2011 budget agreement put together by House and Senate leaders. The number represents a roughly 16 percent cut, but is only half the proposed reduction put forward by House Republicans earlier this year. Nearly $1 billion of the cuts to the EPA budget came from funds that pay for state and local drinking water and sewage projects in the Clean Water and Drinking Water State Revolving Funds. The remainder of cuts has yet to be determined. Those decisions will be made by EPA as programmatic choices and could affect funding for brownfields and area-wide planning grants. A plan by the agency detailing where the reductions will be made is due in 30 days.

None of the controversial climate riders restricting the EPA from regulating greenhouse gas emissions and other functions were included in the final bill. However, the budget does prohibit funding for a planned Climate Service within the National Oceanic and Atmospheric Administration and eliminates the position of Assistant to the President for Energy and Climate Change, otherwise known as the Climate Czar. That position, previously held by Carol Browner, is currently vacant.

Climate change continues to emerge in debate in the Senate, which heard a series of unrelated amendments to the reauthorization of the Small Business Act (S. 493) restricting the reach of EPA's regulatory authority. Senate Republican Leader Mitch McConnell (R-Ky.) offered an amendment that would repeal EPA's authority to regulate GHGs as well as the agency's scientific finding that carbon emissions threaten public health and welfare. In addition, Sen. McConnell's amendment would ban EPA from proceeding with GHG and fuel efficiency standards for light-duty vehicles beyond the model year 2016. Sen. Jay Rockefeller (D-W.Va.) offered an amendment to suspend the agency's GHGs rules on power plants and oil refineries for two years, and Sen. Max Baucus (D-Mont.) sought to shield the agriculture sector and small industrial GHG sources from EPA regulation. Lastly, Sen. Debbie Stabenow (D-Mich.) offered an amendment that would impose a two-year suspension on EPA regulation of GHGs and block tough CO2 standards for vehicles built after the 2016 model year from taking effect. None of the amendments were adopted, but the legislation was delayed for days while debate continued.

The Republican budget framework for FY 2012, released recently by Budget Committee Chair Paul Ryan (R-Wis.), continues to target EPA. House Republican leadership has signaled that it will attempt to attach riders related to EPA regulations to other legislative vehicles.

Climate Service at NOAA Cut from Budget
FUTURE OF PROJECT IN FY 2012 REMAINS UNCLEAR

Several years ago, the National Oceanic and Atmospheric Administration began development of a Climate Service that would make climate information and data available in “accessible and timely” formats to assist in decision making related to climate issues at a variety of levels. However, the FY11 continuing resolution agreed to by House and Senate leadership earlier in the month explicitly blocks any funding for the effort.

NOAA's reorganization would bring together its existing widely dispersed climate capabilities to create the Climate Service, which would be akin to the National Weather Service. The goal is to efficiently and effectively respond to demand for scientific data and information about climate change in a way that assists individuals, municipalities, organizational partners, and other agencies. The Climate Service would develop products, assessments and “decision support tools” to help stakeholders prepare for and respond to climate change. The Climate Service was to be created through a realignment of funds within the current budget rather than any additional allocation.

The CR prevents the use of funds “to implement, establish, or create a NOAA Climate Service.” As NOAA's proposal is to establish the Climate Service in FY12, the lack of funding in FY11 does not appear to impact its plans unless this prohibition is carried over into the 2012 spending bill. Support for the plan in Congress is uncertain.