Federal Red Ink Shrinks Money for States
- Streamlining government - The administration hopes to squeeze $15 billion in savings by consolidating or eliminating 141 federal programs. More than one-fifth of those cuts — $ 3.5 billion — are in education, including money for the arts, student loans, early education and adult literacy. Congress cut or eliminated 89 of the 154 programs Bush targeted for savings last year, and several of the survivors — such as loans for low-income college students — are back in the crosshairs this year. ( Click here to read more .)
- Tax cuts - Bush has called again for Congress to make permanent the income tax cuts passed in 2001 and 2003 and is proposing a range of additional cuts and tax breaks. Federal tax reductions could impact states because states often piggyback off the federal tax system.
- National Guard - The administration backtracked from earlier plans to cut the Army National Guard and will fund the citizen-soldier force to the tune of 350,000 members. Last week, word leaked that the administration planned to keep the Army National Guard at its current level of about 333,000 members, rather than budget for a full force of 350,000. A coalition of governors and U.S. senators quickly rallied against the change and convinced the military to alter its plans.
- Medicaid - Besides cuts, Bush's spending plan includes $100 million annually to fund a new program called Cover the Kids that is designed to boost enrollment for children in Medicaid and the State Children's Health Insurance Program (SCHIP), which covers 6.1 million low-income children who don't qualify for Medicaid. It also would change arcane rules governing the flow of Medicaid money between Washington, D.C., and state capitols to keep states from using accounting ploys to get larger shares of federal matching funds. ( Click here to read more .)
- Education - The overall federal education budget would be cut by $3.1 billion or 5.5 percent from 2006 levels by eliminating 42 education programs. The president also wants to launch new initiatives to strengthen math and science achievement and reform America's high schools. ( Click here to read more .)
- Homeland Security - The administration proposed cutting homeland security grants to cities and states by about $400 million, to about $2.57 billion. As part of these cuts, the agency would redirect money to grants that focus more on risk, rather than a high flat rate for every state. Programs for firefighters and police terrorism prevention would be eliminated or reduced. Also, starting in 2007, states must coordinate their emergency communications with the federal government to receive homeland security grants.
- Illegal Immigration - Funding would increase for programs aimed at illegal immigration including: a research service that tracks down citizenship inquiries for state and local authorities and a partnership that trains law enforcement officials in immigration law. In a boon to Southwestern states, the Border Patrol would add 1,500 new agents.
- Energy - With heating and electricity prices soaring, the federal budget proposal would cut $91 million from state grants to help low-income citizens make their homes more energy-efficient — a 29 percent reduction. Research into some new energy technologies is one of the few winners this year, with a proposed increase of $66 million more for solar energy technology, $41 million to develop hydrogen fuel and fuel cells, and $29 million for biofuel research. Other technologies did not fare so well: $23 million to improve geothermal energy would be eliminated along with $1 million for hydropower.
- Environment - State-run environmental programs would be cut by a total $416 million, including a proposed $199 million reduction in money for building sewage and water treatment plants and $35 million less for clean-air programs, said Steve Brown, executive director of the Environmental Council of the States.
- Transportation - States would not see their road and bridge building money cut under the president's budget. Funds for highway building, which come from federal gasoline taxes collected in the states, would rise 9.6 percent to $39.9 billion, according to the American Association of State Highway and Transportation Officials. However, the proposed budget would reduce funding for Amtrak by $394 million and eliminate a $287 million program that lends money for rail improvements.
- Toll roads - The president's budget proposed a $100 million pilot program for five states to study new ways to pay for future transportation projects, especially through tolls. The program is necessary because of predictions that federal gasoline taxes that are used to pay for road and bridge projects will not keep pace with needs, according to the U.S. Department of Transportation.