March 2006

Lean White House Health Budget Faces Uncertain Future

March, 2006
The White House sent its FY 2007 budget to Congress on February 6, 2006, as required by law. There are two alternative theories about the impact of the budget. The first is that it presages larger and more serious cuts in public health funding than Congress enacted for FY 2006. The second theory is that it will make no difference at all in what Congress does during this election year.

Overall, the budget lacked a certain credibility among members of both parties because it excluded large anticipated expenditures related to Iraq, Afghanistan, and Hurricane Katrina recovery. The public health budget was predictably leaner than last year, as were many categories of federal discretionary (non-entitlement) spending. The big questions are whether Congress will set budget caps for itself this year, whether the Administration budget will itself function as a de facto budget cap, or whether Congress will mostly ignore it. Public health advocates must, for the moment, assume the worst case and address head-on the serious implications of a budget that would force further funding cuts in programs of the Department of Health and Human Services.

What the Administration Wants to Cut
The President's budget would impose an overall cut of 2.6 percent on the Centers for Disease Control and Prevention (CDC) and a cut of 3.9 percent on the Health Resources and Services Administration. Indeed, if one-time emergency funding and the Vaccines for Children program (which is an entitlement) are eliminated from the arithmetic, the cut to CDC's on-going discretionary programs would be 4.5 percent.

Once again, the Preventive Health and Health Services block grant, which was cut in FY 2006 from $131 to $99 million, is slated for extinction. The Administration offered an alternative method for enabling states to have some flexible public health funds. It proposed to permit states to reallocate up to five percent of other public health categorical funds (whether localities would have the same permission is not specified) to support primary prevention and preventive health services. Reallocation would require CDC approval. This proposed change in the rules for categorical programs could not take effect without legislative action.

The funds for state and local public health preparedness would be as the FY 2006 level, $823 million, which was a cut from the FY 2005 funding of $919 million. Elsewhere at HHS, the President has proposed to eliminate the Community Services Block Grant, a $630 million program, and to reduce by significant amounts the social services block grant, rural health programs, and health professions education programs. The complete HHS budget is available on NACCHO's website at http://www.naccho.org/advocacy/washington/upload/2007HHSBudgetInBrief_000.pdf.

Yet another strain on available public health funding this year will be Congressional pressure to restore earmarks. An earmark is a designation of funding for a specific program in a specific jurisdiction. A less polite term for earmarks is "pork." In the FY 2006 funding bill for HHS, Congress eliminated all earmarks, resulting in a savings of $60 million in CDC funding and $483 million in HRSA funding. Overall, the eliminated earmarks for health, social services and education programs totaled about $1 billion. The upcoming election will result in great pressure by Members of Congress to restore earmarks for their states and districts. No one knows where that extra $1 billion might come from.

What Happens Next
Congress' own rules require it to pass a budget resolution by March 15. A budget resolution specifies overall limits on spending, broken down by broad categories. There is great doubt whether both House and Senate can pass their respective budget resolutions and compromise on the differences to produce a final version by that self-imposed deadline. Indeed, there is some reason to be skeptical that they will be able to agree on a budget resolution at all. However, the public health community is joining in an aggressive effort to prevent enactment of budget caps that would require cuts in public health funding. This is a relatively new activity, but one that circumstances require.

Budget caps are important and directly affect the funds that ultimately flow to local health departments. Once they are set, the Appropriations Committees begin work to divide up available funds among various programs. The Appropriations Committees have told advocates clearly that they would like to prevent further public health program cuts, as well as cuts in education that the President has proposed. However, a budget resolution ties their hands by putting a strict limit on what they can spend. That necessitates very difficult decisions about which programs, among a host of worthy ones, will be cut.

That is why advocating vigorously for a budget resolution that is big enough to accommodate stable or increased funding for all health programs is important. Think of the budget resolution as a pie. Think of each public health program as a slice of that pie. The bigger the pie, the more room there is for bigger slices. If the pie shrinks, so must the slices. So too, then, must federal funding streams for local health departments. The budget resolution, as arcane as it may seem, is critically important. Watch for action alerts from NACCHO, which will be coordinated with those of our many partners.