
Bad Things Come in Threes NCSL Fiscal Analysts Seminar October 9, 2013 Federal Funds Information for States www.ffis.org
Three months, three crises in the making • Continued government shutdown? • Increase the debt limit or default? • Turn off sequestration or live with BCA?
How did we get here? And where are we going? Source: CBO Long-Term Budget Outlook, 9/13
Focus on grants in the FFIS database Source: FFIS Grants Database
Implication of Shutdown on State Grant Programs? • Do discretionary programs have new funds? • Title I, Special Education, WIA formula grants, FHWA • Prior-year funds? • Obligation deadline, funding period, carryover funds • Matching/MOE requirements? • How long does the shutdown continue? • State furloughs/hiring freezes, cash flow issues, IT issues • After October, everything changes
Debt Ceiling: Will the unthinkable happen? • Debt limit hit in May • October 22 – November 1: Unable to meet all obligations • Market uneasiness before • Bills paid from available cash • Prioritization of payments? • Individuals, providers, states don’t receive payments • Widespread uncertainty, risks(economy, interest rates, global markets)
The BCA is the law of the land • Discretionary spending caps (saves $917 billion/10 yrs.) • Joint Select Committee on Deficit Reduction (failed) • Sequestration ($1.2 trillion in savings/9 yrs.) • $984 billion in cuts through FY 2021 ($109 billion per year) • Split equally between defense/nondefense • Many mandatory and a few discretionary programs exempt (special rules for some programs)
Is there a way out? • House, Senate agree to short-term CR, debt limitincrease, rolling all three issues into one debate/timeframe (mid-December?) • BCA is amended to provide additional defense spending in FY 2014, possibly achieved by extending BCA caps for a few years beyond 2021 • Negotiations include mandatory spending, tax reform
Clear as mud? Questions? For more information: www.ffis.org, Trinity Tomsic (ttomsic@ffis.org)