What City Leaders Need to Know about the FY18 Spending Bill

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This week, city leaders achieved a major legislative victory with the enactment of the Consolidated Appropriations Act of 2018, which boosts funding levels for dozens of city priorities across multiple agencies in the federal budget.

For many cities, the threat of significant funding cuts has loomed over council meetings and municipal budget committees for more than a year, since the president proposed an unprecedented $54 billion in cuts to federal funding for domestic programs in the White House Budget Proposal for Fiscal Year 2018.

The White House proposal reflected the president’s conviction that cities and states could be doing more with less, and the result was a proposal to eliminate programs like the Community Development Block Grants — which provides billions in direct funding to local governments,

To stop these uninformed and harmful budget cuts,NLC responded with the #FightTheCuts campaign. Thanks to the bipartisan advocacy of city leaders throughout 2017 and into 2018, Congress heard our message, rejected the Administration’s FY2018 proposal, and effectively preempted the Administration’s FY2019 Budget Proposal. They did so by approving the “The Bipartisan Budget Act”, which increased the overall amount of federal funding available for fiscal years 2018 and 2019 by nearly $300 billion above levels generally sought by White House.

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Rather than eliminate programs important to cities and towns, the $1.3 trillion Consolidated Appropriations Act of 2018 maintains or increases funding for key programs that cities use to fund infrastructure, economic development, and public safety, among others.

Moreover, the bill makes good on the President’s infrastructure priorities by allocating approximately $10 billion in new funding for infrastructure programs, many of which are highlighted in NLC’s Rebuild With Us infrastructure campaign.

Funding levels for specific programs are available on NLC’s FY18 Budget Tracker. Here’s what city leaders need to know going forward:

We Saved CDBG Again!

The Community Development Block Grant program is the single largest and most flexible federal grant program allocated directly to local governments. Funding is allocated for both large and small cities, and can be used for a range of activities that promote economic mobility, including infrastructure.

As such, the increase or decline of CDBG funding often serves as a bellwether for city outcomes in other policy areas. The Consolidated Appropriations Act of 2018 meaningfully increases CDBG funding for the first time since 2010, from $3 to $3.3 billion. In fact, funding is increased across the board for city priorities in the HUD budget.

Congress Wants to Make Good on Infrastructure

Overall funding for the U.S. Departments of Transportation and Housing and Urban Development increased by about 20 percent. Most of that increase comes from approximately $10 billion in new funding for infrastructure. The House Appropriations Committee calls this a “down payment” on the president’s infrastructure proposal, because it is in line with his goal of $200 billion in infrastructure funding over ten years. But there is one important difference: Rather than creating new programs sought by the White House, Congress elected to route the new funding through existing programs, including:

  • an additional $2.5 billion in discretionary highway funding for roads and bridges,
  • an increase of $1.6 billion for the Federal Aviation Administration,
  • an additional $1.2 billion for rail infrastructure and safety programs
  • an additional $1 billion from the Highway Trust Fund for federal aid highways programs,
  • an additional $1 billion in TIGER funding,
  • an additional $1 billion for transit
  • an increase of $866 million for HUD Community Planning and Development, including CDBG, HOME, and Homeless Assistance Grants
  • an additional $600 million for the Clean Water and Drinking Water State Revolving Loan Funds
  • an additional $600 million for a rural broadband pilot program within the Rural Utilities Service
  • an additional $457 million  for maritime ports and intermodal water/land transportation
  • an increase of $85 million for lead abatement and housing health
  • $50 million in new funding for water infrastructure grants for small and disadvantaged communities, lead testing of water in schools, and lead service line replacement

 

President Trump’s reaction to the Consolidated Appropriations Act of 2018 was not entirely positive, but among the reasons he cited for signing it into law was that it represented “a robust investment in infrastructure”. There remains the possibility of a larger package in the future thanks to this shared support for infrastructure between the White House and Congress.

Small Cities Make Big Gains

The “do more with less” message in the president’s budget proposal fell flattest with small and rural cities and towns. Senators in both parties have referenced discussions with small and rural city leaders as a reason they supported the Consolidated Appropriations Act of 2018. For one, the act does not require cities to provide a greater percentage of local funds for projects in order to qualify for federal spending.

The president’s proposal sought to reverse the historic 80/20 federal/local split for infrastructure projects. Small cities and towns warned they would essentially be shut out of federal funds if that came to pass. In the case of TIGER funding, the act explicitly prohibits the administration from basing grant awards on how much non-federal money is involved – which is a reversal from the previous administration.

The bill also directs a slew of new funding to rural communities for infrastructure, including an additional $600 million for loans and grants to expand rural broadband and an additional $500 million for loans and grants for drinking water and wastewater systems in rural communities.

City Victories Aren’t Limited to Funding

With midterm elections on the horizon, many view the Consolidated Appropriations Act of 2018 as the last “must pass” bill of the year. Given that, members of Congress sought to attach dozens of “policy riders” to the bill. The fact that a historically high 19 policy riders ultimately made it into the bill is evidence this is probably the case.

The following riders represent significant wins for cities:

  • Brownfields: The Act reauthorizes the Brownfields program, which has long been a top NLC priority, and makes other significant program improvements and reforms. According to the EPA, there are over 450,000 brownfield sites across the U.S. that cannot be put to productive use in their current state.
  • EB-5: The Act reauthorizes the EB-5 regional center program through the end of the fiscal year. EB-5 was developed to encourage direct foreign investment in the United States, and served as an important source of revenue for many city projects during the economic downturn.
  • FAA: The Act extends Federal Aviation Administration authorization through the end of Fiscal Year 2018.
  • Flood Insurance: The Act extends the National Flood Insurance Program through July 31, 2018.
  • Low Income Housing Tax Credits: The Act partially fixes an unintended consequence of federal tax reform that resulted in the loss of value of Low Income Housing Tax Credits, which are the largest source of financing for the construction of new affordable housing.

 

We Get To Do It All Again in Six Months

Congress approved the Consolidated Appropriations Act of 2018 nearly six months late, which means there are only six more months to complete work on appropriations bills for fiscal year 2019. Although the act was approved with bipartisan majorities, the process resulted in some bad will. Or, as Senator John Kennedy (R-LA) said regarding the Act, “This mushroom management of keeping you in the dark and feeding you manure — I’m not too high on it.”

Since signing the Act into law, the President also appears to have soured on the bipartisan deal. The White House is reportedly seeking both line-item veto authority for future appropriations bills, and is considering requesting a “rescission” bill from Congress that would cut FY18 funding for unidentified programs retroactively. NLC would oppose on both counts.

Lastly, some in Congress are preparing legislation to kick-off a balanced budget amendment to the Constitution – the outcome of which would be unavoidable funding cuts for many reasons — including the loss of federal revenue resulting from recently enacted tax reform.

In other words, without ongoing robust advocacy from local leaders, the federal landscape could yet tilt against cities.

About the Authorsmike_wallace_125x150Michael Wallace is the Program Director for Community and Economic Development at the National League of Cities. Follow him on Twitter @MikeWallaceII.