FY 2012 Federal Budget Updates

The proposed federal budget for Fiscal Year 2012 illustrates continuing investment in communities by the Obama administration and the federal government. The American Planning Association is pleased to see financial support for so many planning-related initiatives, even in a time of reduced government spending. This is a time when communities need the assistance. Supporting communities of all sizes offers better choices for where and how people work, live, and recreate.

On February 14, 2011, the Obama administration released its blueprint for federal spending in Fiscal Year 2012. The President's budget calls for significant and vital investment in good planning, sustainable development, and livable communities. The budget also calls for important reforms in the planning process to increase efficiency and better leverage federal funding.

See the narrative and tables below for dollar amounts proposed for various programs. The proposed planning and sustainability funding is particularly important in the context of today's challenging economic and fiscal climate. The President's budget recognizes that investments in planning and creating communities of lasting value are the cornerstone of restoring economic growth and creating long-term competitiveness and prosperity.

The February 24, 2011, issue of APA Advocate is devoted to coverage of the FY 2012 budget.

Expanded Budget Tables

As the federal budget process continues, APA will expand and add to the tables displayed below.

Download the expanded tables (pdf)

Department of Transportation

The FY 2012 budget request for the Department of Transportation includes major new investments and structural changes that signify a strong commitment and opportunity for transportation. Structurally, DOT programs have undergone many changes between the FY 2010 enacted budget, the administration's request for FY 2011, and the recently released FY 2012 request. Programs within the Federal Highway Administration and the Federal Railroad Administration have been streamlined or reduced and programs within the Federal Transit Administration have been reorganized. For this reason a direct year-to-year comparison is difficult. Overall, the funding request for highways is a 70 percent increase over FY 2010 enacted levels, transit is 107 percent increase, and rail is a 90 percent increase.

The administration has based its FY 2012 budget request around a six-year, $556 billion surface transportation reauthorization plan. This plan includes $336 billion for highways, $119 billion for transit, a $30 billion National Infrastructure Bank, and $53 billion for high-speed rail. The plan also calls for a $50 billion "Up-Front" boost in funding for FY 2012. Because of this, the amount requested for certain programs is higher than it would be in the five years following.

Key changes in this year's budget request include a modification to the budgetary treatment of surface transportation programs. Starting in FY 2012, all surface transportation spending (outlays) will be considered mandatory and subject to "PAYGO" provisions. The administration also proposes expanding the Highway Trust Fund into a Transportation Trust Fund by adding accounts for Passenger Rail and the Infrastructure Bank, in addition to the existing Highway and Transit accounts. As part of this change, the administration plans to work with Congress to identify a new revenue source to support the additional outlays. Further details are expected to be released in the coming days.

Highways

The FY 2012 budget request for the Federal Highway Administration is $70.5 billion. The administration's budget consolidates 55 separate programs within FHWA into 5 core programs:

• Safety: $2.5 billion
• National Highway: $32.4 billion
• Livable Communities: $4.1 billion
• Research, Technology and Education: $661 million
• Federal Allocation: $1.4 billion

It also includes $1.3 billion for a competitive grant program — the Transportation Leadership Awards — to incentivize reform and reward states and regions that take steps to institutionalize positive structural change. This program will receive a total of $32 billion over six years.

In addition to the regular annual request, the administration is calling for an additional $50 billion "Up-Front" boost for transportation investment. Within FHWA this includes $25 billion for critical highway infrastructure, $2.2 billion to support significant improvements at land ports of entry facilities, and $450 million for TIFIA.

Transit

The FY 2012 budget request for transit programs is $22.4 billion. This is a $10 billion increase over FY 2010 enacted levels. The administration's proposal consolidates the FTA structure into five budget accounts:

• Bus and Rail State of Good Repair: $10.7 billion
• Transit Formula Grants: $7.7 billion
• Transit Expansion and Livable Communities: $3.5 billion
• Safety and Operations: $166 million
• Research and Technology Deployment: $166 million

As part of the Transit Formula Grants Program, operating costs will be an eligible use of funding "on a temporary and targeted basis." Of the $7.7 billion included for this program in FY 2012, $3 billion is part of the "Up-Front" investment boost. The State of Good Repair Program will have a streamlined formula to target agencies with equipment most in need of repair. Eligibilities and program specifics are expected to be released by the administration as Congress moves forward with reauthorization process. The FY 2012 request for State of Good Repair includes a $7.5 billion "Up-Front" boost.

Livable Communities

The Obama administration continues its commitment to fostering livable communities with a request of over $7.6 billion for Livable Communities programs within the Department of Transportation. This funding includes $10 million for the Livable Communities account within the Office of the Secretary for coordinating the interagency partnership with EPA and HUD, as well as developing performance standards and providing direct technical assistance to communities. The Federal Highway Administration's request includes $4.1 billion for Livable Communities, which is now one of its five streamlined programs. The Federal Transit Administration includes $3.5 billion in its request for a Transit Expansion and Livable Communities program that includes many existing programs, as well as new demonstration grants.

The FHWA request of $4.1 billion is part of a plan for $28 billion in investment over six years. The Livable Communities Program includes:

• A new $3.4 billion formula-based program for rural and urban projects
• A new $500 million competitive grant program to promote innovative, multi-modal, and multi-jurisdictional highway projects that promise significant environmental and economic benefits to an entire metropolitan area, a region, or the nation
• A $200 million discretionary grant program to support metropolitan transportation planning capacity building

The $3.5 billion Transit Expansion and Livable Communities Program in FTA includes:

• $3.2 billion for a Capital Investment Grants program ($1 billion from the "Up-Front" boost)
• $140 million for Planning Programs
• $50 million in funding for new Livable Communities demonstration grants
• $28 million for Transit in the Parks
• $15 million for Tribal Transit

High Speed Rail

Prior to the release of the budget request, Vice President Joe Biden announced that the administration would be requesting $8.3 billion for high speed rail. This amount is actually the total request for the Federal Railroad Administration and is nearly $4 billion over FY 2010 enacted levels. It includes $4 billion for competitive grants for the development high-speed rail corridors. These grants would be distributed amongst three types of rail corridors:

• Core Express: These corridors will form the backbone of the national high-speed rail system, with electrified trains traveling on dedicated tracks at speeds of 125-250 mph or higher.
• Regional: Crucial regional corridors with train speeds of 90-125 mph will see increases in trips and reductions in travel times, laying the foundation for future high-speed service.
• Emerging/Feeder: Trains traveling at up to 90 mph will provide travelers in emerging rail corridors with access to the larger national high-speed and intercity passenger rail network.

Another $4 billion would be used for a System Preservation Program. This funding includes Amtrak's capital, operating and debt service needs. It would be distributed in three pots:

• National Network Service: $914 million
• State of Good Repair and Recapitalization: $150 million
• Public Asset Backlog Retirement: $2.9 billion

The remainder of the request includes $223 million for a safety and operations program and $40 million to fund research and development.

Other Programs

As part of the $50 billion "Up-Front" investment, $2 billion is included for a National Infrastructure Investment grant program, which will be structured similar to the TIGER program. For the National Infrastructure Bank — I-Bank, as it is being branded — the request includes $5 billion for FY 2012. The I-Bank would receive $30 billion over the six-year plan.

Department of Housing and Urban Development

Overall, the HUD budget was reduced by 1 percent. However, the administration has made livability and sustainability principles a part of its larger infrastructure goals, so the bulk of the reductions were not in those types of programs. In a statement on the HUD website, Secretary Shaun Donovan said, "The budget provides a roadmap for HUD to work with our regional and local partners to win the future by investing in innovation, building neighborhoods that are connected to jobs and providing greater access to opportunity, so American businesses and communities are the best in the world."

After two years of major changes and new programs, the administration this year did not choose to introduce any new programs, instead deciding to focus resources on moving forward with programs that have been proposed in last two years.

Community Development Block Grants

In the weeks leading up to the budget release, OMB Director Jacob Lew and other administration officials highlighted the $300 million, 7.5 percent cut to the CDBG budget as one of the most painful cuts of the FY12 budget proposal. However, the administration pulled $150 million of that cut from the Sustainable Communities Initiative and made it a program with a separate budget from CDBG.

Housing Trust Fund: $1 billion

Created in 2008, the National Housing Trust Fund was intended to help communities build, preserve and rehabilitate rental housing, but the program has never had a funding source. When Congress authorized the program, funding was supposed to draw from Fannie Mae and Freddie Mac, but it never materialized when the financial crisis hit that summer. Since then, several funding streams have been proposed, but none of the proposals have passed. For the FY12 request, the administration proposed $1 billion in mandatory funding, as opposed to discretionary funding that could put the NHTF in competition with other HUD programs for funding. The administration did not make a recommendation for a specific funding source, rather, suggested that legislative vehicles for funding be sought.

Office of Sustainable Housing and Communities

Pulled from the CDBG budget and made into a separate program, the Office of Sustainable Communities and Housing continues the cross-agency collaborations between HUD, DOT, and EPA. The funding provides $100 million for regional planning grants, $40 million for challenge grants and $10 million for research tools and best practices.

Transforming Rental Assistance

Recognizing that the introduction of TRA as a $350 million program to streamline rental assistance, provide residents with mobility options, revitalize neighborhoods and increase economic opportunity within neighborhoods was too broad of an agenda that was not presented well to the public, the administration proposed a scaled-back demonstration program. The main purpose of the demonstration program is to preserve public and assisted housing, and be a "starting point for discussion to streamline the rental assistance process, to make it simpler and to better leverage private investments" Secretary Shaun Donovan said at a briefing.

HOPE VI/ Choice Neighborhoods

Taking a new approach to the administration's proposed transition from HOPE VI to Choice Neighborhoods, the President's has proposal combines the two programs and consolidates their funding. The administration is still focused on comprehensive revitalization of neighborhoods with Choice Neighborhoods, utilizing interagency partnerships with the Department of Education and the Department of Justice to make safer neighborhoods.

Environmental Protection Agency

With an overall budget reduction of $1.3 billion, nearly 13 percent, in the President's FY 2012 budget, EPA will still support brownfield clean-up efforts, as well as GHG emission reduction activities. The majority of the budget reduction comes from the Clean Water State Revolving Fund, which is cut by $947 million to just over $1.5 billion. Other cuts include targeted water infrastructure spending, Local Government Climate Change Grants, and the Great Lakes Restoration Initiative. However, the budget increases funds for the EPA Smart Growth office to $9.9 million, a $4.2 million plus-up from the enacted level of funding.

The President's budget proposal includes $99 million for Brownfields projects. With the FY 2012 request, EPA plans to focus resources on the Brownfields area-wide planning effort which will fund approximately 20 area-wide planning projects, with a combination of grant and technical assistance funding, at a maximum level of $350 thousand per project.

The Republican Interior and Environment Appropriations Subcommittee proposal for the remaining months of FY 2011 takes aim at reducing the ability of EPA to regulate GHG emissions in a meaningful way with roughly $3 billion in proposed cuts. Specifically, the measure (HR 1) would block funding for the EPA to implement new regulations on greenhouse gas emissions from stationary sources. In conjunction with the reduction in funding, the House Energy and Commerce Committee is readying legislation to block EPA climate rules entirely under the Clean Air Act.

Some key 2012 budget initiatives include:

• $2.5 billion — a decrease of $947 million — combined for the Clean Water and Drinking Water State Revolving Funds (SRFs).
• $1.2 billion for the Superfund program to support cleanup at hazardous waste sites that addresses human health and environmental hazards at the highest priority sites. This constitutes a $70 million reduction, which will not affect on-going projects, but will delay the start of new projects.
• An additional $46 million for regulatory efforts to reduce greenhouse gas (GHG) pollution and implement GHG reporting requirements under the Clean Air Act. This includes $25 million for states and $5 million for EPA to address GHGs in Clean Air Act permitting activities.
• $99 million for Brownfields projects resulting in assessments and clean-up activities that assist communities in paving the way for the productive reuse of contaminated properties and abandoned sites.

Department of Agriculture

The proposal for USDA includes a $2 billion reduction in spending, for a total budget authority of approximately $145 billion for FY 2012. This includes a proposed decrease in agricultural spending of $2.5 billion over the next 10 years in anticipation of debate over the Farm Bill later this year, the legislation authorizing many USDA programs. The request also includes $35 million for the Healthy Food Financing Initiative (HFFI), which was introduced in last year's budget proposal, but never passed. As part of the HFFI, USDA will increase the availability of affordable foods in underserved urban and rural communities.

Watershed Flood Prevention Operations and the Watershed Rehabilitation Program were both zeroed out under the President's proposal. In a stakeholder's presentation, Secretary Vilsack stated that while the programs were sound, they were too small to be effective and projects could be funded by other sources. USDA is continuing to request funds to implement Strategic Watershed Action Teams at $15 million.

The Wetlands Reserve Program, a House Republican target in their proposed bill, would receive a $172 million bump for a total of $785 million for the program. The Environmental Quality Incentives Program would similarly receive an additional $220 million for a total of $1.4 billion in the President's Budget.

Cuts were made from the FY 2010 enacted budget levels to the Conservation Security Program ($197 million, reduced by $37 million,) the Wildlife Habitat Incentives Program ($73 million, reduced by $12 million, and the Grassland Reserve Program ($67 million, a reduction of $34 million.) However, the Farm Ranchlands Protection Program      would be increased by $50 million to a total of $200 million.

Conservation Reserve Program, which is traditionally funded by both parties at roughly the $2 billion level, would receive $2.14 billion under the President's budget. This includes $116 million for Conservation Reserve Program Technical Assistance funds.

The USDA budget maintains minimal reductions to the Rural Development programs under its purview, cutting the Business and Industry Guarantee Loan Program by roughly 17 percent to $823 million, but continued to fund Value Added Producer Grants at $20 million, the Community Facilities Grant Program at $38 million, and the Community Food Projects Competitive Grant Program at $5 million. The administration doubled the Farmers Market Promotion Program budget to $10 million after its first year in action.

Within the Forest Service the administration plans to merge multiple programs to streamline forest management overall. The FY 2012 proposal includes eliminating funds for Forest Service Land Management Planning, but significantly increases funds for the Land and Water Conservation Fund. LWCF would be fully funded at $900 million under the President's budget, up from a total of $450 million last year. There would also be increases funds for Urban and Community Forest from $30 million to $32 million, and $5 million for Community Forest and Open Space, previously funded at $500,000 as a pilot program.

Department of Energy

The DOE budget proposal for FY 2012 is one of the few to have an overall increase in funds, and makes a significant investment in the Weatherization program, increasing from $289 million in the FY 2010 enacted budget to $394 million. The administration again did not renew funding for the Energy Efficiency and Conservation Block Grants originating in ARRA. The program was intended to assist local communities in deploying energy efficiency and conservation projects through formula and competitive grants, but was not funded in the FY 2011 proposal either.

Department of Commerce

The Economic Development Administration would receive an additional $55 million for a total budget authority of $325 million. This includes a slight reduction in EDA Planning Grants at $31 million. However, the President's proposal invests $40 million in EDA to develop a new Regional Innovation Program in a coordinated effort between HUD, EDA and USDA. The program would target "Growth Zones" to foster collaboration across the federal government to build regional innovation clusters based upon the inherent strengths of local communities. The Regional Innovation Program included in the proposal was authorized under the America COMPETES Act, passed late last year. Currently, the outline for the program provides for 20 competitive grants for clusters of accelerated economic growth, balanced between urban and rural settings. The administration is still working though the interagency partnership to determine further details.

In line with the regular decennial Census budget cycle, the bureau would receive $753 million, which is a steep reduction from FY 2010 funding levels of over $7 billion, but consistent with off-year funding.

Under the President's proposal, NOAA would see an additional $100 million, for a total of $3.4 billion, $200 million of which would be slated for the National Environ. Data Info Service (Climate Service.)

Department of the Interior

The administration has stated it intends to fully fund the Land and Water Conservation Fund at $900 million. This is a total of funds divided between the USDA and Interior budgets, with Interior supplying $675 million total. LWCF is the umbrella for funding for: the National Park Service Land Acquisition & State Assistance Program at $375 million; LWCF State grants program at a significantly increased $200 million; and the Forest Legacy Program, funded at $194 million.

The National Park Service would receive an additional $200 million for activities, for a total budget of $2.9 billion. Funding for the US Geological Survey would remain largely unchanged at $1.1 billion. Historic Preservation Fund faces likely cuts, with a 23 percent reduction in the President's budget, and a 31 percent cut in the House Appropriations proposal currently being considered.

Department of Homeland Security

Under the President's FY 2012 budget proposal, FEMA would see a dramatic $3.26 billion decrease. Current federal funding under the enacted FY 2010 budget is $7.1 billion, but the FY 2012 budget would provide for only $3.84 billion in funds. This includes halving the Map Modernization/Risk MAP budget to $102 million.

Department of the Treasury                      

The Community Development Financial Institutions Fund remains a budget priority for the administration in the President's FY 2012 budget proposal with an $18.2 million increase. The $125.8 million budget item will include funding for New Market Tax Credits, which permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities. The Treasury also makes an investment in the Healthy Food Financing Initiative with a $25 million allocation.