President Releases Budget With Steep Cuts to Domestic Spending

On Friday, February 9, 2018, President Trump signed a continuing resolution, or CR, and spending deal that ended a brief government shutdown that morning. The two-year deal funds the federal government at current levels until March 23.

Shortly after, on February 12, the White House released the President’s Budget for the 2019 Fiscal Year. The $4.4 trillion budget proposal, entitled “Efficient, Effective, Accountable: An American Budget,” includes aggressive cuts to spending. It also includes plans to cut deficits by $3 trillion over the next decade. While the President’s budget is often seen as “a statement of policy priorities and is not usually adhered to by Congress when setting annual appropriation levels,” says National Association of State Budget Officers, or NASBO, the budget provides insight into the administration’s priorities, and enacting it could have significant impact on state finances.

According to NASBO, states receive approximately one third of their budgets from federal outlays and significant cuts to those priorities could result in critical budget realignments for many states. Overall this proposal would enact cuts to both mandatory and discretionary spending.

Trump’s budget proposal again targets cutting social service programs including popular programs like the Low-Income Home Energy Assistance Program, or LIHEAP, which he refers to as having “sizeable fraud and abuse.” LIHEAP provides the poor with support for their heating and cooling bills. States like Connecticut use the money received through LIHEAP to keep families afloat during hard times throughout the year. Connecticut administers their LIHEAP funding through the Connecticut Energy Assistance Program to help offset winter heating costs for families that cannot afford the increased expense. During last year’s budget process, Trump proposed LIHEAP cuts, and Congress instead funded it at essentially the same level as the previous year.

The budget also calls for a $214 billion cut to food assistance programs such as the Supplemental Nutrition Assistance Program, or SNAP, and proposes “Harvest Boxes” of shelf-stable groceries as opposed to cash benefits. The budget also does not provide any money for the Social Services Block Grant, used by states to fund “essential social services” including protecting children and adults from neglect, abuse, and exploitation. A proposed $21 billion cut for the Temporary Assistance for Needy Families, or TANF, program is also included.

Farmers also face reductions under Trump’s proposal, as it pushed for ending the Rural Economic Development program that was intended to create job programs for rural America. Popular crop subsidies could lose a third of current funding by cutting $26 billion from subsidies over the next ten years. Crop insurance advocates say this essential funding helps cover farmers during underperforming harvest seasons.

It is important to keep in mind that an administration’s budget is an aspirational outline of programmatic priorities.  Congress has seldom voted on a president’s budget, and will not this year with the two-year agreement already signed. How federal spending will be assigned comes through the appropriations process, and CSG will continue to monitor state priorities as lawmakers finalize annual spending details.