President Obama’s Final Budget Highlights Local Priorities

On Tuesday, President Obama released the final budget proposal of his Administration for fiscal year 2017. The largest new proposals focus on local priorities, including over $1 billion to address the prescription opioid abuse and heroin use epidemic, a 10-year clean transportation initiative, and a 10-year initiative to end family harmlessness.

Despite a cold reception on Capitol Hill, the President's proposal represents a starting point in funding negotiations that will take place throughout the budget and appropriations process this year. And, while big-ticket items will be subject to political debate, countless smaller programs that together are just as important for local governments also need justification from stakeholders, including local governments, to ensure funding remains adequate and stable. For the most part, the news is positive in that the President's budget continues funding for local priorities.

The following are highlights of the President's budget request for programs important to local governments:

Public Safety

While the President's $29 billion budget for the Department of Justice would maintain essentially flat, the proposal would benefit cities by increasing funding for local law enforcement and criminal justice programs as a part of a larger effort to reform the criminal justice system. 

Specifically, the President's budget calls for $500 million per year for the next 10 years to support the administration's "21st Century Justice Initiative" program to help local governments reduce crime and build community trust with law enforcement. The President's budget also asks Congress for an additional $74 million next year for the Department of Justice's Community Oriented Policing Services Office (COPS) program, which would bring the total to $286 million. In addition to helping local governments hire community policing officers, the budget proposal includes $20 million to help promote the next generation of police leaders, and $5 million to improve law enforcement diversity. The budget includes $27.5 million to help local police departments equip officers with body-worn cameras to record interactions with citizens. The budget also requests $20 million for a "smart on juvenile justice initiative," and an additional $103 million for programs that support delinquency prevention, children exposed to violence, and girls in the juvenile justice system. Finally, the budget includes $208 million to support programs aimed at combating opioid misuse.

Infrastructure and Finance

The President's budget proposal builds on the recently passed long-term transportation funding bill, the FAST Act, by establishing several new city-focused programs and provides a financing mechanism that would give a welcome cash infusion to our nation's road, bridge, and transit programs.

For local projects, the President's most significant proposal is for a $10 per-barrel oil tax - which translates to about a 25 cents per gallon at the pump. While increasing the gas tax has been unpopular with lawmakers since it was last raised in 1993, this proposal comes at a time when gas prices are at a historic low and the Highway Trust Fund has teetered on the brink of insolvency despite a number of general-fund bailouts. This marks a shift from his previous proposal to finance our transportation system through corporate tax reforms, an idea that has been widely discussed in Congress with little to show for in the form of details.

In addition to shoring up the Highway Trust Fund, revenue from the oil fee would pay for a number of city and region-focused transportation programs, including $20 billion per year in new transit and high speed rail projects, as well as continued funding for the popular TIGER discretionary grant program. The proposal also calls for new investments in emerging technologies such as autonomous vehicles, greenhouse gas reduction, resilient infrastructure, and innovation grants for Metropolitan Planning Organizations.

The proposed budget would also support NLC's policy goals for broadband internet by proposing new resources for underserved and rural communities. First, a new $5 million ConnectHome program would provide broadband to public housing residents in select areas through public-private partnerships. And total grant funding for broadband infrastructure in rural communities would get a significant boost to $39.5 million in FY2017, up from $10.3 million in FY2016.

In part, to pay for new programs, the President proposes a 28 percent cap on the deductibility of interest earned on municipal bonds. As NLC and city officials have in previous years, we will continue to oppose this proposal or any others that would change the tax exemption on municipal bonds.

Housing, Community, and Economic Development

The centerpiece of the President's proposal for the Department of Housing and Urban Development is $11 billion in mandatory spending for the prevention and elimination of family homelessness over the next ten years, which the Administration projects would help 550,000 families under several homeless assistance programs operated at the local level. The proposal is an effort to fulfill President Obama's "Opening Doors" initiative of ending homelessness by 2020.

Like previous budgets, the President's proposal would fund housing vouchers at sufficient levels to extend and slightly increase the number of families served annually, with increases being offset by slight cuts to development programs including the Community Development Block Grant Program, which the President would cut from the current $3 billion to $2.8 billion. The proposal would maintain overall funding for the HOME program at $950 million for the construction of affordable housing, but turn the $10 million Self-Help Homeownership Opportunity Program into a set-aside within the HOME program.

A handful of programs are proposed to help cities in conjunction with HUD's new fair housing regulations. The proposal would increase HUD's Fair Housing Initiatives Program by $6 million for a total of $46 million for grants to state and local governments and community organizations that administer programs to prevent or eliminate discriminatory housing practices through enforcement, education, and outreach. The budget also proposes a new $15 million housing choice voucher Mobility Counseling Demonstration program to help families with housing vouchers move and stay in areas of opportunity.

Under economic development initiatives at the Department of Commerce, the President's budget would allocate $215 million for Economic Development Assistance Programs that fund a variety of economic development efforts at the regional and local level. It would also provide $85 million to support distressed communities with their infrastructure needs that will help drive regional growth, $20 million for the Regional Innovation Strategies Program to promote economic development projects that spur entrepreneurship and innovation at the regional level, and $50 million for Economic Adjustment Assistance for critical investments such as economic diversification planning and implementation, technical assistance, and access to business start-up facilities and equipment.

Environment, Climate and Energy

Under the U.S. Environmental Protection Agency, the President has requested a total of $2 billion for the State Revolving Loan Fund (SRF) programs (an overall decrease of $257 million from FY16). In what may be a nod to the water contamination crisis in Flint, MI, the proposal would increase the Drinking Water SRF by $157 million $1.020 billion, but that would come with a reduction in funding for the Clean Water SRF by $414 million to $979.5 million. Additionally, the FY17 budget request includes $20 million for the new the Water Infrastructure Finance and Innovation Act (WIFIA) for low-interest loans for large water and wastewater infrastructure projects, a program the NLC supports.

With regard to environmental cleanup and economic development, the FY17 budget request includes $90 million for the Brownfields program, an increase of $10 million over FY16 and $1.13 billion for the Superfund program, an increase of nearly $35 million over FY16. These programs are used for the restoration and redevelopment of abandoned or under-utilized industrial and commercial sites, which are frequently contaminated due to past use.

Climate mitigation, adaptation and resilience figures prominently in throughout the President's request, specifically noting that the "Clean Power Plan is the top priority for the EPA and the central element of the U.S. domestic climate mitigation agenda." However, in light of the Supreme Court's ruling (see related article), requests to support the Clean Power Plan, including $25 million requested to help states develop implementation plans, are in jeopardy.

On the energy front, the U.S. Department of Energy's recommended request is nearly $2.9 billion to support a range of strategies aimed at reducing U.S. reliance on oil, increasing energy affordability, ensuring environmental responsibility, enhancing energy security, offering Americans a broader range of energy choices, and creating jobs. Specifically, the Weatherization Assistance Program received $225 million request, an increase of $13.4 million from FY16, which aim to reduce energy costs for low-income households by improving the energy efficiency of their homes.