May 2009

APA Analysis: The FY 2010 Federal Budget

President Obama's proposed budget for FY 2010 includes an overall spending increase, as well as cutting or eliminating 121 programs that were funded in FY 2009. The proposal reflects a 9.7 percent increase over President Bush's FY 2009 request, and the $3.7 trillion plan is overall very favorable to planning programs:

  • The Department of Housing and Urban Development budget increases by $7.4 billion and includes funding increases for existing programs like the Community Development Block Grants and the creation of new programs like the Sustainable Communities Initiative and the Energy Innovation Fund.
  • The Department of Transportation budget request of $73.3 billion is 4 percent more than authorized in FY 2009. The most significant inclusion in the DOT budget is $1 billion for high speed rail, which is the first segment of the administration's plan to authorize $5 billion over five years.
  • Funding trends for the Environmental Protection Agency have dramatically reversed in this budget. Several new programs have been added, and both State Revolving Loan Funds for water have received large funding increases.

Here is a brief department-by-department overview of the budget proposal for key programs.

Department of Housing and Urban Development

The Department of Housing and Urban Development (HUD) receives $43.7 billion in the proposed budget, which is a 7 percent increase from the enacted FY 2009 level.

The Community Development Block Grant (CDBG) budget increased from $3.9 billion in 2009 to $4.5 billion, in addition to $1 billion included in the American Recovery and Reinvestment Act of 2009 (ARRA). The administration is proposing changes to the CDBG formula, focusing on modernization to better target communities with the greatest economic need. The formula will contain a "hold harmless" provision to ensure that communities do not receive less than FY09 allocations this year. Specifics on the formula will be addressed in future legislation.

Several new programs were added as CDBG set-asides: the Sustainable Communities Initiative, Rural Innovation, and the University Community Fund.

The Sustainable Communities Initiative (SCI) allocates its $150 million budget in three ways. Regional planning grants receive $100 million, focusing on creating a collaborative effort between HUD and the Department of Transportation (DOT) to establish long-term, cross-jurisdictional partnerships with both the public and private sectors. The grant money will be distributed largely to metropolitan planning organizations and HUD block grant recipients. Metropolitan Challenge Grants receive $40 million, giving local governments additional funding for broader regional plans, and to facilitate zoning changes and land use policies to establish sustainable growth patterns. Finally, $10 million of the SCI budget is for joint HUD–DOT research to advance transportation and housing linkages. This funds a previously announced HUD–DOT interagency partnership.

The Rural Innovation program awards $25 million in competitive grants to promote innovative and cost effective improvements in housing conditions in rural communities. The University Community Fund allots $25 million to promote revitalization in communities adjacent to universities.

Also in the CDBG budget is $1 billion for Neighborhood Stabilization Program II (NSP II) grants, which is in addition to $2 billion in separate NSP II funding from the Housing and Economic Recovery Act of 2008.

In a significant expansion and evolution of HOPE VI, the HUD budget includes $250 million (more than double the HOPE VI FY09 levels) for a new program, the Choice Neighborhoods Initiative. This program builds on the HOPE VI by expanding eligibility to non-public housing and promotes greater linkage to schools, early childhood programs, other public assets and access to jobs. For the first time local governments and nonprofits are eligible recipients.

The budget also creates an Energy Innovation Fund, designed to help stimulate private investment in energy-efficient retrofits. The Energy Innovation Fund provides $25 million for existing single and multifamily house energy consumption through FHA mortgage products with its Multifamily Energy Pilot. It also establishes $50 million to promote local initiatives.

The HUD budget includes $1 billion for a Housing Trust Fund, a $1 billion increase in Tenant-Based Rental Assistance, and adjustment proposals to the HOME Investment Partnership formula.

Changes in the budget proposal from prior years include the Brownfields Economic Development Initiative (BEDI) and Section 108 loan guarantees. Both are zero funded for FY 2010. HUD argues in its budget that BEDI and Section 108 are duplicate programs with eligibility under CDBG. The Section 108 program will continue to run until the credits are exhausted, at which point the program will be restructured based proposed legislation that requires zero credit subsidy cost.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
CDBG $3.59 billion $3.9 billion $1 billion $4.5 billion 14.3%
Sustainable Communities Initiative - - - $150 million new
University Community Fund - - - $25 million new
Rural Innovation - - - $25 million new
Energy Innovation Fund - - - $100 million new
HOME $1.7 billion $1.9 billion $2.25 billion $2 billion 3.4%
Brownfields Economic Development Initiative $10 million 0 - 0 0%
Sec. 108 0 0 - 0 0%
Research (OPDR) $28 million $32 million - $50 million 36%
Section 8 $16.4 billion $16 billion - $16.2 billion 1.8%

Italicized rows are set-asides

Department of Interior

The administration proposes $12 billion for the Department of Interior in 2010, an 8 percent increase from FY 2009 levels. This proposal invests in programs that will address climate change and clean energy, and stimulate the economy.

The 2010 U.S. Geological Service budget includes an increase of $22 million for the Climate Impact Initiative to analyze the effects that climate change is having on national resources and develop responses. The initiative includes funding to expand priority climate change monitoring and develop regional collaborative research hubs for the National Climate Change and Wildlife Science Center.

This proposal also makes a commitment to fully funding the Land and Water Conservation Fund (LWCF), including state grants. These competitively awarded LWCF grants aim to assist states and local and tribal governments with the protection and creation of park lands, open space, and wildlife habitat.

The 2010 budget includes $77.7 million for historic preservation, $8.2 million more than the 2009 enacted level. This includes $20 million for Save America's Treasures and $54.5 million (an increase of $5 million) for historic preservation grants-in-aid to states, territories, and tribes.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
State LWCF Grants $25 million $19 million - $30.0 million +57%
USGS $1 billion $1 billion $140 million $1.1 billion +5%
NPS $2.4 billion $2.5 billion - $2.7 billion +8%
Historic Preservation $70.4 million $69.5 million $15 million $77.7 million +12%

Department of Commerce

The Economic Development Administration receives $284 million in the FY 2010 budget, including $73 million for public works, $16 million for the Global Climate Change Initiative, $31 million for planning, and $2 million for research.

The 2010 census is expected to cost between $13.7 and $14.5 billion. For FY 2010, the budget allocates almost $6.9 billion in funding. An additional $1 billion was included in the American Recovery and Reinvestment Act (ARRA). Approximately $7.8 billion is expected to be spent on the census in FY 2010, to be covered by appropriations remaining from FY 2009, as well as ARRA funding and FY 2010 funding. Appropriations for the 2010 census include funding for the American Community Survey, an ongoing statistical survey that replaces the long form in the decennial census.

The National Ocean and Atmospheric Administration (NOAA) receives a 2.5 percent increase above levels authorized in the FY 2009 omnibus appropriations bill. The budget expands the role of NOAA in weather forecasting and climate data records with more than $1.3 billion to fund vital weather satellites and climate sensors. This funding includes $7 million for climate data records to transform raw satellite data into useful products for climate scientists and decision makers.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
2010 Census $921 million $2.7 billion $1 billion $6.9 billion +155%
EDA $274 million $272 million $150 million $284 million +4.4%
NOAA $3.9 billion $4.37 billion - $4.48 billion +2.5%

Department of Transportation

The FY 2010 budget for the Department of Transportation includes $73.2 billion in funding. With SAFETEA-LU set to expire September 30, 2009, the transportation budget request does not represent a budget approach or recommended funding level for the upcoming surface transportation authorization. The budget reflects the condition and OMB estimates for the Highway Trust Fund. The budget assumes that in order to maintain baseline spending this year the trust fund will require support from the General Fund.

To maintain baseline highway and bridge spending, $36.1 billion is required from the General Fund. For Transit Capital Investment Grants, approximately $1.82 billion would need to be transferred from the General Fund and for Formula and Bus Grants the Highway Trust fund share is $5 billion and the remaining $3.3 billion would need to come from the General Fund.

Overall funding levels increased slightly from amounts authorized in the 2009 omnibus appropriations bill. Highways and bridges will receive and 8 percent increase in funding, transit receives a 2 percent increase and Amtrak is allocated an additional 15 percent. High speed rail, a priority of the Obama administration, will receive $1 billion this year, with a planned $5 billion over the next five years.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
Highways & Bridges $40.2 billion $38.6 billion $27.5 billion $41.84 billion +8%
Transit $9.4 billion $10.1 billion $8.4 billion $10.3 billion +2%
Formula & Bus Grants $8.7 billion $8.3 billion - $8.3 billion -
Capital Investment Grants $1.5 billion $1.8 billion $750 million $1.8 billion -
Amtrak $1.3 billion $1.3 billion $1.5 billion $1.5 billion +15%
High Speed Rail - - $8 billion $1 billion -
Multi-Modal Discretionary Grants - - $1.5 billion - -

Italicized rows are set-asides

Environmental Protection Agency

The president's budget proposes a significant increase in funding for the Environmental Protection Agency (EPA). The administration proposed $10.5 billion in discretionary funding for EPA in FY 2010. This is a 45 percent increase from the level enacted for FY09. The proposed EPA budget reflects the administration's priorities including their efforts to address climate change.

The proposal includes $19 million in investments in a new greenhouse gas (GHG) emissions inventory and other analytic products and partnerships. This funding aims to help prepare the administration for the passage of climate change legislation.

The president's budget calls for a major investment in water infrastructure, requesting $3.9 billion in Clean Water funds. This is an increase of $2.4 billion from FY 2009. This will support efforts to build and update an estimated 1,000 clean water and 700 drinking water infrastructure projects, support green infrastructure, and create thousands of jobs throughout the country.

The budget proposes $175 million for the brownfields program, which will provide additional assessment, cleanup, and job-training grants.

As in past years, it is unclear how much funding has been included in the Environmental Program & Management (EPM) budget for the EPA's Smart Growth program. APA has submitted a request for further clarification from the administration.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
Brownfields Programs $168.6 million $169.1 million $100 million $174.6 million +3%
Brownfields Projects (STAG) $94 million $97 million $100 million $100 million + 3%
Brownfield Grants $51 million $49.4 million - $49.4 million 0
Brownfield EPM $23.6 billion $22.7 million - $25.2 million + 11%
Clean Water State Revolving Loan Fund $689 million $689 million $4 billion $2.4 billion + 248%
Drinking Water State Revolving Loan Fund $829 million $829 million $2 billion $1.5 billion +80%
Environmental Program & Management (EPM) $2.3 million $2.4 million - $2.9 million +20%
GHG Emissions Inventory n/a $6.4 million - $19 million +165%
State and Local Air Quality Grant $226 million $224 million - $226.5 million +1%

Italicized rows are set-asides

Department of Agriculture

The administration proposes $25.7 billion for the U.S. Department of Agriculture, a 6 percent increase from the FY 2009 appropriation. There are proposed cuts to crop insurance subsidies and direct payments to large farms, which would offset increased funds for food assistance programs.

The budget proposal underscores the administration's commitment to renewable energy and energy efficiency. The Rural Energy for America Program would receive $128 million for loan guarantees and grants, which is a significant increase from the mandatory spending for the program in the 2008 farm bill. The Urban and Community Forestry Program received $29.3 million, a negligible decrease from last year.

The administration has proposed terminating the Watershed Protection and Flood Prevention Operations, a conservation program, while backing other conservation programs including Conservation Stewardship Program, the Conservation Reserve Program, and the Environmental
Quality Incentives Program and conservation tax incentives that were provided in the 2008 Farm Bill.

Though the Watershed Protection and Flood Prevention program is unlikely to be eliminated by Congress, the Office of Management and Budget stated that the program has been subject to numerous earmarks, and the agency has been unable to prioritize projects based on cost-effectiveness. The Bush administration also attempted to cut this program but was blocked by lawmakers. The proposed cut comes just after the program received $290 million in the ARRA.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
Watershed Protection and Flood Prevention - - $290 million $0 -
Environmental Quality Incentives Program (EQIP) $1.2 billion $1.1 billion - $1.2 billion +12%
Wetlands Reserve Program $183 million $418 million - $391 million -6%
Conservation Security Program $31.7 million $28.3 million - $23.4 million - 17%
Urban Forestry Program $27.7 million $29.6 million - $29.3 million -1%
Rural Development Office $170 million $192 million - $196 million +2%

Department of Energy

The president's FY 2010 budget provides nearly $26.4 billion for the Department of Energy. This a 2 percent increase in funding above the FY 2009 enacted level.

The budget for this department reflects the administration's commitment to long-term investment in energy efficiency, the development of renewable technologies, and the development of an improved transmission system. While the budget does not reflect the generation of revenue from a cap-and-trade system, it does create a Clean Energy Fund as a receptacle for those funds once they are produced.

The newly created Energy Efficiency and Conservation Block Grant program was omitted from the proposal under the rationale that it had already received adequate funding in the ARRA.

In a combined effort with HUD, an Energy Innovation Fund was proposed to drive the creation of an energy-efficient housing market, which would include retrofitting older, inefficient housing to spur private lending in the residential sector.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
Smart Grid Technology - - $4.5 billion $208 million n/a
Energy Efficiency and Conservation Block Grants - - $2.7 billion $0 n/a
Weatherization Program $291 million $250 million $266 million $301 million +16%

Department of Homeland Security

The Department of Homeland Security budget includes $10 million in new resources to support integrated planning with the Department of Transportation to inform development and modernization of intermodal freight infrastructure linking coastal and inland ports to highway and rail networks.

The Federal Emergency Management Agency (FEMA) is allocated $6.3 billion, and an additional $3.8 billion for grant programs. Within FEMA, the National Pre-Disaster Mitigation Fund was allocated $195 million. Resources from this agency will be used to support the development and enhancement of hazard mitigation plans. The Flood Map Modernization Fund also received a 2.3 percent increase in funding for a total of $225 million.

Program FY2008 FY2009 ARRA FY2010 +/-
('09 & '10)
FEMA State and Local Programs $4.1 billion $4.2 billion $300 million $3.9 billion -7%
National Pre-Disaster Mitigation Fund $75 million $150 million - $195 million +30%
Flood Map Modernization Fund $220 million $200 million - $225 million +2.3%
Public Transportation Security Grant Program - - $150 million $250 million -
Urban Area Security Initiative $855 million $837 million - $887 million +6%

Italicized rows are set-asides