Across the board federal budget cuts that hit the federal budget on March 1 will trim spending on a number of initiatives between now and the end of the fiscal year, though the ultimate impact of the cuts will be somewhat less than initially feared.
According to the sequester order released by the White House on March 1, most discretionary, non-defense departments and agencies will have their FY13 budgets reduced by five percent. Earlier predictions had said that these cuts could reach 8.2 percent, but those estimates were made before Congress voted to delay the sequester by two months – from January until March – and reduce the overall amount of FY13 cuts from $109 billion to $85 billion.
Under the updated figures, EPA must reduce its budget by $472 million this year, including $210 million that must come from State and Tribal Assistance Grants. Earlier estimates had pegged EPA’s overall reduction at roughly $700 million, with $293 million coming from the STAG account.
The sequester order does not specify the precise cut to Clean Water and Drinking Water State Revolving Funds (SRFs), but the earlier estimates had projected those programs suffering a cut of $196 million this year. Based on the updated numbers, the final SRF reduction is likely to fall in the range of $140 million.
In other areas of the federal budget, the sequester will cut the Army Corps of Engineers Construction account by $250 million to $4.757 billion, and the Operations and Maintenance account will be reduced to $122 million to $2.236 billion. The Bureau or Reclamation will see its funding reduced by $55 million to $1.041 billion. All of these examples represent five percent cuts to current operating budgets.
Also impacted are subsidy payments from the federal government to municipal issuers of popular Build America Bonds. The sequester reduces federal Build America Bond payments by 5.1 percent, or $171 million, over the course of the year. But because the fiscal year is already half over, IRS reported on March 4 that bond issuers will actually see an 8.7 percent reduction in payments between now and the end of the 2013 fiscal year on September 30.
This year’s sequester cuts represent the first step in a nine-year process, established by the Budget Control Act of 2011, to reduce the federal budget deficit by $1.2 billion. Going forward, the spending reductions will be preemptively factored into agency budgets each year.