May 26, 2017

Administration releases FY2018 budget proposal

On Tuesday, May 23, 2017, the White House released its budget proposal for federal Fiscal Year (FY) 2018, which will begin on October 1, 2017.  This proposal follows an initial blueprint released in March, but provides more detail, including information on a proposed 10-year, $1 trillion infrastructure initiative.  Overall, the Administration proposes $4.1 trillion in spending for FY 18, less than a 1 percent increase over current FY 17 levels.  However, it recommends a total of $3.6 trillion in spending reductions over a 10-year period to eliminate budget deficits.  The proposal includes substantial reductions in FY 18 to several transportation, community development, housing, and climate resilience programs of interest to northeastern Illinois.

Mandatory spending, including a new infrastructure initiative

The bulk of the budget proposal, $2.5 trillion, would be devoted to mandatory programs such as Social Security.  This funding level would be a 2 percent reduction from the current FY 17 levels. 

In addition, the proposal includes an initial $5 billion in FY 18 for a new infrastructure initiative under mandatory spending.  Annual funding for this infrastructure initiative would grow in subsequent years, rising to $50 billion in 2021.  Funding would then fall each year, back to $5 billion in 2026, totaling $200 billion over a nine-year period (FY 18-26).  The proposal notes that this $200 billion public infrastructure investment is expected to leverage non-federal spending, resulting in at least $1 trillion in total infrastructure spending over 10 years.

The proposed initiative would span all forms of infrastructure.  For the transportation sector, it recommends privatizing the nation's air traffic control system and reforming the Inland Waterways Trust Fund to emphasize user fees.  It would support the expansion of existing federal programs, such as the Transportation Infrastructure Finance and Innovation Act (TIFIA) credit assistance program and private activity bonds, which encourage public-private partnerships for transportation facilities.  The proposed infrastructure initiative also calls for innovative approaches to reduce congestion in urban areas; removing the current restriction on tolling Interstate highways; new federal tools, including a capital revolving fund for federal facilities and credit assistance programs dedicated to improving federal facilities; and further streamlining the environmental review and permitting process to reduce the costs of delivering infrastructure projects.

Discretionary spending

The budget proposes $1.2 trillion in discretionary spending, divided into defense ($643 billion) and non-defense ($601 billion) categories.  Defense spending would see an 8 percent increase in funding compared to FY 17, while non-defense spending would see a 3 percent reduction compared to the current year.  This reduction in discretionary spending would affect a variety of programs, listed in this document.  Items of particular interest to land use and transportation are profiled below.

Transportation.  Within the Department of Transportation, the budget would provide spending from the Highway Trust Fund as authorized in the FAST Act.  However, it would substantially reduce or eliminate funding for several critical programs, including Transportation Investments Generating Economic Recovery (TIGER), New Starts, and Amtrak.  In justifying the elimination of the TIGER program, the budget cites the Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies (FASTLANE) program, which draws from the Highway Trust Fund, as a substitute. 

  • The proposal would eliminate the popular TIGER grant program, cutting $500 million in funding compared to FY 17.  The CMAP region has secured hundreds of millions of dollars in TIGER grants over the past eight years, including substantial funding for the CREATE program of regional rail improvements, Chicago Transit Authority (CTA) Blue Line improvements, and the reconstruction of 147th Street in the south suburbs.
  • The Capital Investment Grants (also called "New Starts") program would be restricted to current projects with full funding grant agreements, representing a $928 million cut compared to FY 17.  All other New Starts projects, as well as any future projects, would be funded locally, essentially terminating the federal government's involvement in major transit capital expansion projects.  The region has benefitted substantially from New Starts, including the recent $1 billion full funding grant agreement awarded to the CTA for the Red and Purple Line Modernization Program.
  • The proposal would eliminate Amtrak's long-distance routes, cutting $630 million compared to FY 17.  Chicago Union Station is Amtrak's busiest hub outside the Northeast Corridor and serves as the terminus for seven long-distance routes.  These routes provide national connections to local communities, making stops throughout the region, including in Glenview, Homewood, Joliet, Naperville, and Summit.

Housing and community development.  Within the Department of Housing and Urban Development, the budget would eliminate the Choice Neighborhoods, Community Development Block Grant, and HOME Investment Partnership programs, a combined $4 billion reduction in spending compared to FY 17.  HOME provides formula-based funding for affordable housing development, while CDBG offers formula-based assistance for eligible communities to spend on neighborhood revitalization, economic development, and improved services.  The Choice Neighborhoods program provides comprehensive planning and implementation grants to neighborhoods with distressed public or public-assisted housing.  In 2016, Illinois agencies  received about $150 million in CDBG funding, including some $105 million directed to municipalities and counties in northeastern Illinois.  The budget proposal would also reduce rental assistance programs by $1.9 billion compared to FY 17, and eliminate other housing assistance programs, including the Self-Help and Assisted Homeownership Opportunity Program.

Economic development.  Within the Department of Commerce, the budget would eliminate the Economic Development Administration (EDA), Manufacturing Extension Partnership (MEP) program, and Minority Business Development Agency, cutting a combined $371 million compared to FY 17.  In Illinois, the MEP supports the Illinois Manufacturing Excellence Center.  With EDA and MEP support, the CMAP region bolstered its global competitiveness with multi-county economic development strategies, and provided cutting-edge technical assistance to small and medium-sized manufacturers.  Within the Department of Labor, the budget would eliminate or reduce several job training programs, including a $1.3 billion cut to the Workforce Innovation and Opportunity Act job training and employment service programs.  CMAP recommends building the region's human capital, with a focus on growing industries and middle wage jobs.

National Heritage Areas.  Regional partners have made substantial investment in establishing two National Heritage Areas: the Bronzeville-Black Metropolis Heritage Area, stretching from the South Loop to Woodlawn in Chicago; and the Calumet National Heritage Area stretching from the newly designated Pullman National Monument to the Indiana Dunes National Lakeshore.  The proposed budget would eliminate the National Heritage Area program and remove the opportunity for these designations to help bring attention and investment to these areas.  

Environmental protection.  The budget proposal would reduce the Environmental Protection Agency's budget by over 30 percent, falling to $5.7 billion in FY 18 from $8.2 billion in FY 17.  It would eliminate or reduce several programs, including clean air and water grants to state governments, funding to clean up hazardous sites through the Superfund program, the Energy Star program, enforcement activities, and the Great Lakes Restoration Initiative (GLRI).  Local projects that have been funded through the GLRI include a number of stream restoration and stabilization projects, improvements to Northerly Island in downtown Chicago, and prevention measures such as electric barriers intended to keep invasive species from crossing between the Great Lakes and Mississippi River basins.

Coastal, climate, and flooding issues.  Within the Department of Commerce, the budget would eliminate the National Oceanic and Atmospheric Administration (NOAA) grants and educational programs, including the Sea Grant and Coastal Zone Management Program grants, a $262 million cut compared to FY 2017.  It is unclear whether the proposed cuts to NOAA's research programs would affect the Midwest Regional Climate Center, which provides high-quality climate data and applied research on climate-related issues, including threats posed by the West Nile virus.  The Sectoral Applications Research Program at NOAA, which has been a valuable source of grant funds to study how climate change may affect local governments, is also potentially at risk.  Within the Department of Homeland Security, the budget would eliminate the Flood Hazard Mapping Program, cutting $190 million compared to FY 17.

2020 Census.  While the proposed FY 18 budget would provide $1.5 billion to the Census Bureau within the Department of Commerce, representing a modest $51 million increase over FY 17 levels.  Stakeholders have raised concerns that the proposed funding level is inadequate to prepare for the upcoming 2020 census, including a 700,000-household field test planned for next year.  The decennial census affects many facets of planning, including the allocation of numerous public funding sources and the drawing of legislative districts.

Moving forward

The Administration's proposals for FY 18 would substantially reduce federal support for transportation, housing, economic development, and environmental protection programs.  Several programs of particular importance to northeastern Illinois, such as TIGER, would be eliminated or significantly reduced.  CMAP emphasizes that the TIGER and FASTLANE programs are not interchangeable, as the budget suggests.  FASTLANE is dedicated to large, complex freight system improvements, while TIGER supports a broad range of transportation projects.

The overall direction of the budget proposal is inconsistent with GO TO 2040, which supports innovative, future-oriented investments in infrastructure and human capital to sustain the region's long-term prosperity and quality of life.  As outlined in the agency's 2017 Federal Agenda, CMAP calls on federal policymakers to support initiatives and programs that acknowledge the interconnected nature of transportation, land use, and economic development issues, and to provide levels of funding commensurate with the necessary federal leadership in these areas. 

The release of the Administration's budget proposal is one important step in the development of the FY 18 budget.  Over the following months, Congress will develop appropriations bills to define funding levels for the next fiscal year.  CMAP will continue to monitor this process closely, articulate the agency's policy positions to our Congressional delegation and other stakeholders, and outline potential impacts on the region's transportation, land use, housing, environment, and economic development goals.