The House of Representatives passed the Sequester Replacement Reconciliation Act (H.R. 5652) May 10 by a 218–199 vote.
The bill cancels the Jan. 2, 2013 automatic across-the-board cuts (known as sequestration) in discretionary programs included in last year’s Budget Control Act (BCA) deal. It also incorporates approximately $300 billion in mandatory program cuts known as reconciliation. The Senate is not expected to take up the House bill, leaving the decision on whether to change the sequester requirement to the post-election lame duck session.
Under H.R. 5652, there would not be separate specified limits for defense and non-defense programs. However, the budget resolution that passed the House March 29 shows that the intent was to cut non-defense discretionary programs by a lesser amount than if the sequester were in place ($27.3 billion rather than $37.2 billion) and increase defense spending by $8.2 billion above the BCA deal.
In order to make up for cancelling sequestration in 2013, H.R. 5652 makes deeper mandatory cuts in several programs that affect counties, including Medicaid, the Prevention and Public Health Fund, the Social Services Block Grant and the Supplemental Nutrition Assistant Program (SNAP). The bill does not, however, include the proposed block grants for Medicaid and SNAP as originally proposed in the budget bill. NACo opposes turning these programs into block grants because they could result in cost shifts to counties.
Cuts to Medicaid include lowering to 5.5 percent from 6 percent the amount of the non-federal match that states can raise by taxing health care providers; extending the Affordable Care Act’s Medicaid disproportionate share hospital (DSH) cuts through 2022; and repealing the ACA’s Medicaid maintenance of effort (MOE) requirement, allowing states to restrict eligibility standards. NACo opposes cuts to Medicaid that are likely to shift costs to counties.
The bill also contains a full repeal of the Prevention and Public Health Fund (PPHF) for an estimated savings of about $11 billion over 10 years. The PPHF was authorized and fully funded at $16 billion over 10 years by ACA, and $5 billion was previously taken from the PPHF to pay for the Medicare “doc fix” and other popular tax extensions back in February. NACo strongly supports the PPHF and opposes cutting it for any purpose.
Another program that would be repealed is the Social Services Block Grant (SSBG), which is currently funded at $1.7 billion. SSBG is an entitlement to states, but several states pass the funds through to counties. It can be used for multiple activities, including adult protective services, child welfare and services to the disabled.
The rationale given for eliminating the program is that it is duplicative. However, there is no other source of federal funds for adult protective services, and child welfare services provided by SSBG often go to children who are not eligible for federal programs.
Additionally the bill goes beyond eliminating the funding. It strikes the program from the statute. This means that states would no longer be able to transfer funds from the Temporary Assistance for Needy Families Block Grant — and that SSBG will no longer be available as the conduit for disaster relief funds. SSBG was used to distribute funds after Hurricane Katrina and other disasters because its flexibility allowed federal aid to move quickly.
The SNAP cuts would amount to over $30 billion over 10 years and in some cases would make program administration more complicated. Even though the Senate is not expected to consider reconciliation, some or all of these cuts could come up during the House Farm Bill debate. The cuts include:
- eliminating SNAP performance bonuses
- reducing the state allocation for SNAP employment and training in FY13 from $90 million to $79 million
- reducing categorical eligibility to households receiving cash assistance through other low-income programs
- moving the elimination of the increased SNAP benefit included in the American Recovery and Reinvestment Act of 2009 from 2013 to July 1, 2012, and
- eliminating the requirement that states that use the standard utility allowance to provide the allowance to households that receive Low Income Energy Assistance payments. Known as “heat and eat,” this provision is often used to help apartment dwellers whose utilities are included in the rent.