‘Fiscal Cliff' Deal Leads to More Uncertainty On Funding for State Environmental Agencies

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State environmental agencies continue to be uncertain about the level of federal funding they will receive in fiscal year 2013 after Congress passed legislation to delay a series of automatic budget cuts until March 1, according to organizations that represent state clean air and water agencies.

The American Taxpayer Relief Act of 2012 (H.R. 8), which was passed Jan. 1 by the House and Senate, would delay a scheduled 8.2 percent cut to nondefense discretionary funding from Jan. 2 until March 1, giving Congress an additional two months to negotiate a deficit-reduction deal.

The cuts, which were to be implemented by a process known as sequestration, were required under the Budget Control Act of 2011 (Pub. L. No. 112-25) unless Congress acted to amend that law.

The legislation, intended to prevent a series of scheduled tax increases and spending cuts referred to as the “fiscal cliff,” also included over $18.1 billion to extend existing energy tax incentives over a 10-year period, including a production tax credit for wind and other renewable energy sources (see related story).

President Obama has not yet signed H.R. 8 into law but told reporters Jan. 1 that he intends to sign the legislation.

Bill Becker, executive director for the National Association of Clean Air Agencies, said the agreement effectively “kicked the can down the road,” leaving state clean air agencies unsure of whether federal grants awarded under Section 105 of the Clean Air Act will be cut this fiscal year.

“It makes it extremely difficult to do an already difficult job,” Becker said. “It is impossible to plan for uncertainty, and that is exactly what is likely to occur several times in the next few months.”

Becker said it was “extremely disconcerting” that environmental funding could be at risk of significant cuts three times in the next few months, including the prospect of sequestration on March 1 unless Congress acts to avoid the automatic cuts.

Becker said funding also is at risk with upcoming action needed on raising the federal debt limit and funding the federal government when the current continuing resolution expires March 27.

Changes Planned in Event of Cuts

R. Steven Brown, executive director for the Environmental Council of the States, told BNA Jan. 2 that some state environmental agencies are already preparing a list of projects that will need to be cut from their annual work plan in the event of a significant cut in federal clean water and drinking water grants.

Brown said state lead agencies have decided to “wait and see” if there is an eventual cut to federal grants, then amend their work plan to reflect those cuts. States agree to environmental work plans to receive a federal grant from EPA, according to Brown.

He predicted that cuts to state grants would not “stop frontline protection of human health” but rather would slow down some projects or force action to be delayed to future fiscal years. Brown predicted that budget cuts could result in a lower number of annual inspections conducted by state lead agencies or slow down the issuing of permits, though he said some states are required under state law to issue permits in a timely fashion.

Brown also said he is unsure how the scheduled automatic spending cuts would affect ongoing negotiations on an omnibus bill to cover fiscal 2013 funding when the continuing resolution expires, as well as the development of fiscal 2014 appropriations bills.

Congress to Determine Source of Spending Cuts

The White House, in a Jan. 1 statement, said the legislation postpones budget sequestration by two months, avoiding $24 billion in automatic spending cuts. That action is “paid for” by $12 billion in new revenue and $12 billion in unspecified spending cuts, which are “divided equally between defense and nondefense,” according to the administration.

A House Budget Committee aide told BNA Jan. 2 that the bill fully accounts for the delay, meaning that if a sequestration order is issued in March, it would result in $24 billion less in automatic spending cuts in fiscal 2013 compared to if sequestration went into effect Jan. 2.

The legislation includes language that reduces the security and nonsecurity discretionary spending caps by $2 billion each in fiscal 2013, with an additional $8 billion in reduced spending authority scheduled for fiscal 2014.

OMB told BNA Jan. 2 that Congress will determine how the discretionary spending cuts are allocated through the enactment of appropriations legislation in fiscal 2013 and fiscal 2014.

A document released by the Congressional Budget Office states that the new fiscal 2013 discretionary funding cap for nonsecurity programs of $359 billion is greater than the level of appropriations provided for in the continuing resolution under which the federal government is operating.

“Reducing the nonsecurity cap to $359 billion would not have any impact on the budget relative to that current level of funding,” CBO said.

Agreement Called 'Bad Deal' for Federal Staff

William Dougan, national president of the National Federation of Federal Employees, released a Jan. 1 statement referring to the fiscal cliff legislation as a “bad deal for federal employees.”

Dougan said the possibility of sequestration will continue to “hang over the head of federal employees throughout government” as Congress attempts to reach a long-term deficit-reduction agreement.

The automatic discretionary funding cuts would force agencies to take “drastic action” to meet their budget, including furloughs, hiring freezes, and reduction in force actions, according to NFFE.

The U.S. Office of Personnel Management issued a supplemental guidance document Dec. 28, prior to the announcement of a deal to avoid sequestration Jan. 2, explaining the administrative furlough process to federal employees. Federal agencies would need to provide at least 30 days notification for an administrative furlough of 22 workdays or less and at least 60 days notice for longer furloughs, according to OPM.

Cuts Compounded by Jackson's Departure

Jeff Ruch, executive director of PEER (Public Employees for Environmental Responsibility), told BNA Jan. 2 that automatic cuts to EPA could be compounded by the fact that EPA Administrator Lisa Jackson is scheduled to step down shortly after the president delivers the annual State of the Union address in January.

Ruch said an 8.2 percent cut of the agency's budget would require “some strategic rethinking” of agency priorities, which would be difficult without a permanent administrator.

Robert Perciasepe, currently serving as EPA's deputy administrator, will take over as acting administrator when Jackson steps down and is considered by environmental groups to be a candidate to take over the job on a permanent basis (248 DEN A-2, 12/28/12).

By Patrick Ambrosio  

H.R. 8 is available at http://op.bna.com/der.nsf/r?Open=csaz-93jjh5.

OPM's supplemental guidance document is available at http://op.bna.com/env.nsf/r?Open=fwhe-93ktub.

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