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Clinton 2001 Budget Reflects Conference Priorities

By Larry Jones and Legislative Staff


President Clinton submitted to Congress on February 7 the first budget of the new millennium and the last one of his Administration. Boasting about the strength of the nation’s economy in his budget message, the President said his commitment to balancing the federal budget and fiscal discipline have resulted in the “longest peace time economic expansion in American history.” He pointed out that the expansion has produced more than 20 million jobs and the lowest unemployment rate in a generation.

Under the proposal, the federal government is expected to take in slightly more than $2 trillion in revenues, and spend an estimated $1.835 trillion to keep federal agencies operating and to fund numerous grant and aid programs in Fiscal Year 2001. Although they differ somewhat on the size of the projected surplus, the White House Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) predict the economy will continue to expand over the next decade producing huge budget surpluses.

Assuming economic growth will remain relatively strong and spending on discretionary programs will be allowed to grow at or near the rate of inflation after FY’00, the OMB predicts a $2.2 trillion surplus over the next ten years from the Social Security Trust Fund, and a $746 billion surplus in Non-Social Security surpluses. Adjusting for inflation in discretionary programs, the CBO, on the other hand, predicts a total surplus of $3.15 trillion for the same period, compared to OMB’s total of $2.946 trillion. If discretionary spending is frozen at the spending level approved for 2000, the CBO estimates that the surplus could reach $4.18 trillion.

While the President and Republican leaders in Congress differ over how the Non-Social Security surplus should be spent, they agree that all of the Social Security surplus should be used to ensure the solvency of Social Security. Both sides have also indicated they will not adhere to the stringent spending limits set in the 1997 Budget Act.

The President has also proposed using all of the Social Security surplus and $350 billion of the Non-Social Security surplus to eliminate the national debt by 2013. By reducing and eventually eliminating the national debt, the federal government will save huge amounts from reduced interest payments. Under the President’s proposal, these savings will be used in the out years to support Social Security beneficiaries. His budget also calls for a $351 billion tax cut. Of this amount, $256 billion will be paid for out of the Non-Social Security surplus and $96 billion will be paid for by adjusting the tax code to close corporate loopholes.

The President is also requesting increases for a number of domestic discretionary programs supported by The U.S. Conference of Mayors. For law enforcement these proposal includes $1.355 billion for the Community Oriented Policing Services Program and a $280 million increase for gun safety initiatives. To fulfill his commitment to reduce classroom size for children in grades 1-3, the President requested $1.75 billion for the third installment on his plan to recruit and hire 100,000 new teachers, an increase of $450 million. His proposal also calls for $22 billion over the next two years to fund a 15-year School Modernization Bond program, which would provide tax credits to eliminate the interest costs of construction bonds. Further, the budget calls for a $1 billion increase for the Head Start program, the largest funding increase ever proposed for the program.

To expand assistance to families and youth, the President requested $375 million for Youth Opportunity Grants, a $125 million increase over last year; a new $255 million “Fathers Work/Families Win” grant program to promote responsible fatherhood; a $817 million increase to expand access to health care for children under the Children’s Health Insurance Program (CHIP). His proposal would also provide a $119 million increase for Community Development Block Grants; a $50 million increase for the Home Investment Partnership Program; and a $690 million new Section 8 Housing Vouchers program, which will provide 120,000 vouchers for rental assistance.  It also requests $468 million for a new inter-city high speed passenger rail project.

The proposal also includes a package of tax credits and loan guarantees that would more than double the New Markets Tax Credits from last year. The new proposal calls for $5 billion over ten years to spur $15 billion in new investments in economically distressed communities. The Administration is also requesting $2.15 billion in tax credits to support the “Better America Bond” initiative, which will provide new resources to state and local governments to clean up brownfields, improve water quality and preserve open space.

The following is a detailed summary of some of the key programs of interest to cities and our nation’s mayors.

Arts and Recreation (Staff Contact: Tom McClimon)

Parks – The President proposes $20 million for the Urban Park and Recreation Recovery Program (UPARR). This represents a ten-fold increase over the amount appropriated by Congress this year ($2 million) and is far greater than any amount previously proposed by the Administration. While the President is proposing $150 million for the state and local assistance program of the Land and Water Conservation Fund, this request is tempered by the request that 50% of the funds be for national competitive grants for major land acquisition, with the remaining 50% be allocated to the states on a formula basis with a requirement that 25% of these funds be used for recreation purposes. Thus, only about 12% of the requested amount for the total LWCF would be available for local recreation needs.

Arts, Humanities & Museums – The Administration is requesting $150 million for the National Endowment for the Arts, a 50% increase over the amount Congress appropriated last year. Part of the new funding would go for arts programs targeted to after-school programs for children. The President has also requested an additional $23 million for arts education in the Department of Education’s budget. The National Endowment for the Humanities would be funded at $150 million and the Institute for Museum Services and Libraries at $33 million.

Millennium – The President is also requesting $30 million for the “Save America’s Treasures” program which provides funds to public and private entities for preservation of historical and cultural objects to commemorate the Millennium.

Community Development and Housing (Staff Contact: Eugene T. Lowe)

Community Development Block Grants (CDBG) – This program would be increased from $4.78 billion to $4.9 billion, a $119 million increase. CDBG set-asides would be reduced from $546 million to $414 million.

HOME Investment Partnership Program (HOME) – This successful housing program would be funded at $1.650 billion, an increase of $50 million over last year’s funded level.

New Section 8 Housing Vouchers – The budget requests an additional 120,000 vouchers for rental assistance at $690 million. The total includes 60,000 incremental vouchers, 32,000 Welfare to Work Vouchers and 10,000 Housing Production Program Vouchers, and 18,000 Homeless Vouchers.

Homeless Assistance Grants – The budget would fund this program at $1.2 billion, a $180 million increase over last year’s level.

Public Housing – Public housing operating support would increase by $54 million to $3.192 billion, and the public housing capital fund would increase by $86 million to $2.955 billion. HOPE VI, the severely distressed public housing revitalization program, would be increased to $625 million, an increase of $50 million over last year’s level.

Elderly Housing – This program which creates housing for senior citizens would increase by $19 million to $779 million.

Urban Empowerment Zones – The fifteen empowerment zones designated in Round II in 1998 and which were to receive $150 million each year for 10 years have not been fully funded the first 2 years. The budget requests that the 15 empowerment zones be funded at $150 million, and that FY 2001 be the second of 10 years of funding. The request, as in previous years, calls for the funds to come from Title XX, on the mandatory side of the budget.

Economic Development Initiative (EDI)/Community Empowerment Fund (CEF) – This program, which creates jobs and promotes economic development in distressed areas, would be funded at $100 million, a $76 million increase.

America’s Private Investment Companies – Funded last year at $20 million, the budget would increase the appropriation for this program to $37 million. A component of the Administration’s New Market Initiative, APIC is expected to stimulate $1.5 billion in private investment to low- and moderate-income areas.

New Initiatives

Urban Empowerment Zones – The budget proposes a third round that would designate 10 new urban zones.

Community Gun Safety and Violence Reduction Initiative – This $30 million program, which would be funded out of the Drug Elimination Grants for Low-Income Housing, will help communities reduce gun deaths and lower crime. The initiative would fund public education, outreach programs, and provide technical assistance. The Gun Buy-Back and Violence Reduction Initiative would also be funded out of the Public Housing Drug Elimination Grant.

Crime and Drug Control (Staff Contact: Ed Somers)

21St Century Policing Initiative – The budget proposes $1.335 billion for the next generation of the Community Oriented Policing Services (COPS) program. Included in the new program is:

  • $650 million to hire and redeploy additional officers, including $25 million for the purchase of bullet-proof vests and $20 million to combat violence in schools. The proposal does not include the FY 2000 request of $50 million to help “economically-distressed communities” retain officers;

  • $350 million for crime-fighting technology, including $199 million for discretionary grants;

  • $200 million for a “Community Prosecution Program,” of which $150 million is for grants to states and local governments to address gun violence “hot spots”; and

  • $135 million for various community-based crime prevention initiatives including $10 million for police gun destruction grants.

Local Law Enforcement Block Grant – As in previous years, the Administration’s budget contains no funding for the Local Law Enforcement Block Grant, a program which provides funds through a highly targeted formula directly to local governments for a variety of law enforcement activities. The program received $523 million in FY 2000.

Gun Safety – The budget includes a $280 million budget increase related to gun safety initiatives including:

  • $150 million to hire or redeploy over 1,000 community prosecutors in regions designated by the Justice Department as High Gun Violence Areas;

  • $53 million for 500 new Bureau of Alcohol, Tobacco and Firearms (ATF) agents and inspectors to target violent gun criminals and illegal gun trafficking;

  • $14.5 million for over 100 additional federal gun prosecutors and new enforcement teams;

  • $30 million to create the first nationally-integrated ballistics testing system and expand crime gun tracing to help catch more gun criminals;

  • $10 million for local media campaigns to discourage gun violence and send a tough message on penalties for breaking gun laws;

  • $10 million to expand development of “smart gun” technologies; and

  • expansion of the Youth Crime Gun Interdiction Initiative, which allows for crime gun tracing, from 38 to 50 cities.

Drug Control – Overall drug control funding would increase to $19.2 billion, $1.7 billion more than provided in FY 2000. Of this total, $9.8 billion is for drug-related domestic law enforcement, $774 million more than in FY 2000.

Zero Tolerance Drug Supervision – The budget includes a request of $215 million to help break the cycle of drug use and its consequences. Of this total, $100 million would help states and local governments implement or expand tough systems of drug testing, treatment, and graduated sanctions for prisoners, parolees, probationers, and assist ex-offenders re-entering society. In addition, $50 million, a 25 percent increase, is provided for drug courts, and $65 million is provided for drug treatment in prisons.

Education (Staff Contact: Joan Crigger)

100,000 Teachers/Class Size Reduction – The FY 2001 budget proposes $1.75 billion, an increase of $450 million over FY 2000, as the third installment of the plan to help schools recruit, hire, and train 100,000 new teachers by 2005 and reduce class size in the early grades. This will bring the total number of new teachers to 49,000. The budget also proposes that a portion of the 2001 funds be matched by states and localities in order to sustain momentum for this initiative.

21st Century Learning Centers – The 2001 budget proposes to more than double this program to $1 billion, as part of a comprehensive approach to fix failing schools by providing children in these schools the extra help they need to meet challenging academic standards. This will provide grants to over 10,000 schools primarily in districts that commit to use these funds as part of a comprehensive effort to improve learning in low-performing schools.

School Modernization Bonds – The President in his FY 2001 budget is again seeking approval for School Modernization Bonds which would provide tax credits to eliminate the interest costs of construction bonds. The Federal Budget would subsidize the issuance of $22 billion in special 15-year bonds over the next two years, $11 billion in 2001 and $11 billion in 2002. One-half of this bond authority would be allocated by formula to states and one-half to the 100-125 local educational agencies with the largest number of poor children.

Qualified Zone Academy Bonds – The budget proposes extending these bonds by authorizing an additional $1 billion in bonding authority in 2001 and $1.4 billion in 2002. The program subsidizes bonds issued by school districts for the purpose of school renovations and repairs, as well as equipment purchases, and both curriculum and professional development. The bonds can be used for schools that are located in Empowerment Zones and Enterprise Communities, or schools at which at least 35 percent of students are eligible to participate in the school lunch program.

Safe and Drug-Free Schools – The FY’01 budget proposes an increase of $50 million to $650 million, including $122 million in competitive grants under the inter-agency Safe Schools/Healthy Students initiative, in conjunction with the Departments of Health and Human Services, Justice, and Labor for grants for Safe and Drug-Free Schools, such as grants to states with improved targeting to quality programs.

Safe and Drug-Free Schools Coordinators Initiative – The budget proposes $50 million for the newly established Coordinator Initiative to ensure that over 1300 middle schools have a director of drug and violence prevention programs.

Community Technology Centers – The budget proposes $100 million for grants to public housing facilities, community centers, libraries and other community facilities to make educational technology available to residents of low-income urban and rural communities. This is an increase of $67.5 million over FY 2000.

New Education Initiatives

School Renovation – Included in the budget proposal is a request for $1.3 billion for grants and loans to high-need local education agencies (LEAs) that have little or no capacity to fund urgent repairs. Grants would be provided to the neediest LEAs, including $50 million to LEAs in which 50 percent or more of the students reside on certain Indian lands, and $125 million to school districts. The loan subsidy would generate approximately $6.5 billion in 7 years through providing no-interest loans for school renovation in high-need LEAs. Renovation funded through these loans and grants could include projects as repairs to roofs, climate control systems or plumbing.

Employment and Training (Staff Contact: Joan Crigger)

Youth Training Formula Grants (including summer youth employment) - The budget calls for $1.022 billion in FY’01, an increase of $22 million above the FY’00 funding level, to provide comprehensive services to all youth served, including summer youth. This increase does not make up for the shortfall of funds due to additional requirements under the Workforce Investment Act, which calls for comprehensive services and year-round follow up for all youth served. According to USCM estimates, this level of funding will result in a significant decrease in the number of youth employed in the summer of 2000, with some cities predicting a cut of as much as one-third to one-half in their summer youth program.

Youth Opportunity Grants – The President’s FY’01 budget proposes $375 million, an increase of $125 million over FY’00, to fund competitive grants for out-of-school youth, especially in inner cities and other areas where unemployment rates are high.

Safe Schools/Healthy Students – The budget proposal requests a total of $100 million, $40 million from the U.S. Department of Labor, for this initiative under WIA, which will be operated in conjunction with the Departments of Education, Health and Human Services ($50 million from SAMHSA), and Justice. This program will provide competitive grants to local communities to promote healthy childhood development and prevent school violence. These grants will also help build local partnerships among Youth Councils to improve opportunities for at-risk youth.

Adult Employment and Training – The proposal includes $950 million to train adults, the same level approved for FY’00.

Dislocated Worker Program – The President requested a $181 million increase for the dislocated worker program which would provide $1.8 billion in FY’01 to serve 836,000 workers. This will help ensure every dislocated worker can get the job training he or she needs.

Welfare to Work – The President has proposed to extend the Welfare -to-Work program for an additional two years with no additional funding. Changes from the original law that would ease eligibility requirements were passed in the FY’00 budget. These changes do not become effective until October 2000 for formula funds and on January 1, 2000 for Competitive Grants.

New Job Training Initiatives

Fathers Work/Families Win – The proposal includes $255 million for a new “Fathers Work/Families Win” initiative in FY’01 to promote responsible fatherhood and support working families. These new competitive grants will be awarded to local and state workforce investment boards. Under the new program, $125 million would be provided for new “Fathers Work” grants which will help approximately 40,000 local income non-custodial parents (mainly fathers) work, pay child support and reconnect with their children. This initiative builds on non-custodial parent initiatives that were developed as part of the Welfare-to-Work program. To ensure that “Families Win” the budget proposes $130 million in new grants to help hard-pressed working families get the support and skills they need to succeed on the job and avoid welfare. These funds will leverage existing resources to help families retain jobs and upgrade skills, and get connected to critical work supports, such as child care, child support, health care, food stamps, housing and transportation.

Responsible Reintegration for Young Offenders – The proposed budget also includes a $75 million initiative which builds on a FY’00 congressional youth offender initiative. It will link workforce development system resources to the criminal justice system services for youth and young adults (up to age 35), and test new approaches for reintegrating those young ex-offenders into the mainstream economy.

Environment (Staff Contact: Kevin McCarty)

Better America Bonds – The President is again proposing a budget which includes the “Better America Bonds” initiative to provide cities, counties and states with new resources to cleanup brownfields, improve water quality and preserve open space. This initiative relies on the enactment of tax credits to provide about $2.15 billion in FY’01 for these eligible activities, with the funds dispersed to cities and others governmental units on a competitive basis.

Brownfields – The President is requesting $92 million for the clean up of brownfields in FY’01, the same level approved for FY’00.

Clean Air – The Administration is also requesting funds for the Clean Air Partnership Fund, an initiative that would direct $85 million in FY’01 to cities, state and public/private partnerships to stimulate investment in innovative air technologies.

Health and Human Services (Staff Contact: Crystal Swann)

CHIP – The President proposes to accelerate and expand access to the Children’s Health Insurance Program, for which he has requested $2.11 billion for FY’01, an increase of $817 million over FY’00. This is the initial installment in the President’s overall plan to provide $50 billion over ten years for the program. One of the reasons for the increase is to expand eligibility to 19-20 years-old.

Head Start – The Administration requested $6.3 billion for Head Start in FY’01, a $1.0 billion increase over FY’00.

HIV/AIDS – The President has also requested a $66 million increase for the Centers for Disease Control and Prevention (CDC) HIV/AIDS program which would increase the funding level to $795 million in FY’01. Ryan White funds have seen an overall increase of $125 million, to $1.72 billion. Of these, $554 million are earmarked for the state AIDS Drug Assistance Program (ADAP), and $587 million, a $40 million increase, for Title I funding, which provides assistance directly to Eligible Metropolitan Areas (EMAs).

Other Health – Other areas of interest include a $20 million increase for childhood immunization, which would bringing the FY’01 total to $530 million, and a $5 million increase for breast and cervical cancer prevention, which would bring the FY’01 total to $171 million.

LIHEAP – The President has again requested $1.1 billion in FY’01 for the Low Income Home Energy Assistance Program (LIHEAP).

Food and Nutrition Assistance – The President’s budget request increases the Supplemental Women, Infants, and Children (WIC) Program to $4.278 billion, approximately a $137 million increase from FY’00. The President has also requested a $521 million increase for Child Nutrition Program, which would bring the FY’01 total to $10.36 billion.

Substance Abuse Block Grant – On the treatment and prevention side, the Substance Abuse Block Grant to states has been increased by $31 million, bringing the FY2001 request to $1.63 billion. The Targeted Capacity Treatment Expansion Program has been funded at $163 million, an increase of $49 million for FY 2001. The FY 2001 budget request continues funding of $78 million for Knowledge Development and Application (KDA) projects included by the Congress in FY 2000 for Youth Violence Prevention activities and $50 million of these resources will fund approximately 70 second and third year grants for the Safe Schools/Healthy Students program.

New Initiatives

Prescription Drug Benefit – The President has requested $38.1 billion over five years to provide prescription drug benefits to Medicare beneficiaries.

The FamilyCare Program – The budget proposal provides $10 billion for The FamilyCare Program from Medicaid funding and $3.6 billion from CHIP funding over five years, which will give States the option to expand health care coverage to parents of children eligible for Medicaid or the Children’s Health Insurance Program.

Natural Disaster and Terrorism (Staff Contact: Gene Lowe)

FEMA Terrorism Initiatives – The budget requests $34.5 million for terrorism initiatives in the Federal Emergency Management Agency (FEMA), a $5.9 million increase over FY’00. The funds would be used for training, exercising, and planning for state and local governments and first responders, Federal interagency planning and coordination activities, and to further train Urban Search and Rescue teams.

Pre-Disaster Mitigation Fund – The budget would provide $30 million for pre-disaster mitigation to expand FEMA’s Project Impact initiative to change the way America deals with disasters, by building disaster resistant communities throughout the nation. This is an increase from FY’00 of $5 million.

Transportation (Staff Contact: Kevin McCarty)

Aviation – The new budget request for FY’01 factors in the Administration’s proposal for renewing the nation’s aviation law, with this year’s request calling for substantial increases for FAA’s programs, as compared to last year’s request. The budget calls for funding of FAA’s operations at $6.6 billion, up by 12 percent from the current level of $5.9 billion. The budget increases funding for FAA’s facilities and equipment (F&E) by 22 percent, requesting $2.495 billion, up from $2.045 billion. However, grants under the Airport Improvement Program (AIP) only grew modestly, with the budget calling for $1.95 billion, up from $1.846 billion.

TEA21 – Overall funding for the highway programs under TEA21 is $29.3 billion, up from the current level of $27.5 billion. For public transit investment, the budget calls for $6.3 billion, up from $5.8 billion. These highway and transit funding levels are largely the guaranteed spending levels set forth in the TEA21 law. One of the Conference’s top priorities for transportation is the Federal Transit Administration’s “New Starts” program, which provides capital funds to local agencies for the construction of local and regional rail and other fixed guideway transit projects. The Administration’s budget again requests no additional funds for the “New Starts” program above what is guaranteed in TEA21, leaving $400 million in FY 2001 spending authorizations unfunded. The budget also calls for funding of $150 million for DOT’s welfare-to-work/reverse commute program, one of the new initiatives under TEA21.

Amtrak/High Speed Rail – The budget calls for a decrease in funding for AMTRAK, requesting $521 million, down from $571 million. However, the request does include a new initiative for intercity high speed passenger rail, providing $468 million to be awarded to selected corridors under the Federal Railroad Administration’s High Speed Rail Initiative.

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