April 15, 2021

Treasury Establishes New Office to Lead Implementation of COVID-19 Relief and Recovery Programs

On April 14, the Treasury Department announced the establishment of the Office of Recovery Programs, which will lead the Department’s implementation of economic relief measures under the recently enacted American Rescue Plan Act (ARPA; PL 117-2) and previous COVID-19 relief laws. The new office, which will be led by Chief Recovery Officer Jacob Leibenluft, will be responsible for administering a number of programs, including the State and Local Fiscal Recovery Fund, Emergency Rental Assistance, the Homeowner Assistance Fund, the Capital Projects Fund, the Coronavirus Economic Relief for Transportation Services (CERTS) Program, and others. Leibenluft will report directly to Deputy Treasury Secretary Wally Adeyemo and will work closely with White House American Rescue Plan Coordinator Gene Sperling.

It should be noted that the implementation of the recovery programs disbursed through the tax code, including Economic Impact Payments and the enhanced Child Tax Credit, will continue to be led by the Office of Tax Policy, the Internal Revenue Service, and the Bureau of Fiscal Service, in coordination with the Office of Recovery Programs.

Stakeholders have been invited to reach out to OfficeOfRecoveryPrograms@treasury.gov with any questions.

Treasury Releases Guidance on Homeowners Assistance Fund (HAF); State to Receive Nearly $1.06 Billion

On April 15, the Treasury Department released guidance on the Homeowners Assistance Fund (HAF) – a program that was established by ARPA to mitigate financial hardships for homeowners impacted by COVID-19. Specifically, the HAF program will provide funds to eligible entities for assistance with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes. Funding will be prioritized for those who have experienced the greatest hardships. Pursuant to ARPA, homeowners will be eligible to receive assistance for their primary residence if they experienced financial hardship after January 21, 2020, and their income is equal to or less than 150 percent of the area median income.

It should be noted that Treasury will distribute the funds directly to states, with California set to receive nearly $1.06 billion of the $9.4 billion available for the program. Finally, according to the guidance, ten percent of the funds will be released initially, with the remainder disbursed after the state’s HAF plan is submitted and approved. The plan must be submitted before June 30, 2021

Additional information on this program can be accessed here.

Biden Administration Unveils FY 2022 Budget Outline

On April 9, President Joe Biden released an abbreviated, 58-page budget request that lays out the administration’s topline funding recommendations for the fiscal year that begins on October 1. The White House is expected to release a more comprehensive proposal later this spring that will include detailed discretionary and mandatory funding proposals, as well as proposed tax reforms.

In total, the so-called “skinny budget” calls for more than $1.5 trillion in discretionary spending. This includes $769 billion for non-defense discretionary programs – a nearly 16 percent increase over current levels. According to the White House, that level of investment would return this category of spending to 3.3 percent of Gross Domestic Product (GDP). Under the budget plan, nearly every agency would see a funding boost, with the Department of Education (+41 percent), the Department of Health and Human Services (+23 percent), and the Environmental Protection Agency (+21 percent) among some of the biggest beneficiaries.

With regard to the defense budget, the president is proposing $753 billion for the Pentagon, or a 1.7 percent increase over the fiscal year 2021 enacted level. It should be noted that the plan would halt the use of off-budget Overseas Contingency Operations (OCO) funding. While the account has been tapped for past military operations, it has been increasingly used to pay for more routine expenses.

The political reaction to President Biden’s budget proposal was largely as expected, with GOP lawmakers expressing reluctance to the higher domestic discretionary funding levels. Meanwhile, progressives have signaled their displeasure with the proposed increases in defense spending, calling instead for large cuts in the Pentagon’s budget.

To follow is a brief summary of some of the top-line funding levels.

Department of Health and Human Services

The president’s budget requests nearly $132 billion for HHS, a $25 billion increase from the 2021 enacted level. The National Institutes of Health (NIH) would experience the largest increase, seeing its funding increase by $9 billion. In addition, the Centers for Disease Control and Prevention (CDC) would be in line for an additional $1.6 billion to support core public health activities at all levels of government, including county public health agencies. According to the administration, the spending would amount to the biggest increase for the CDC’s budget authority in nearly two decades.

Furthermore, the president is calling on Congress to more than double spending on Community Mental Health Services Block Grants, as well as provide additional funding to cover expanded suicide prevention efforts and partnerships between mental health providers and law enforcement officials.

With regard to combatting the opioid epidemic, the budget proposes an additional $3.9 billion to support research, prevention, treatment, and recovery support services, with targeted investments to support populations with unique needs, including older Americans, and rural populations.

To help expand access to child care, the discretionary budget request includes $7.4 billion for the Child Care and Development Block Grant, an increase of $1.5 billion over fiscal year 2021. It also would provide $11.9 billion for Head Start, or an increase of $1.2 billion. Furthermore, the Home and Community Based Care Services program under the Older Americans Act would receive $551 million – a 40 percent increase. The spending blueprint also provides $100 million for a new competitive grant program to address racial disparities in child welfare. In addition, the budget calls for $200 million for states and community-based organizations to respond to and prevent child abuse.

Finally, the budget would provide $4.3 billion for the Office of Refugee Resettlement to support resettling up to 125,000 migrants in the U.S, which would be the highest number admitted in 30 years.

Department of Housing and Urban Development

The White House is proposing $68.7 billion to fund the Department of Housing and Urban Development (HUD) in fiscal year 2022 – a $9 billion or 15 percent increase over current levels. Among other things, the budget would dramatically expand the Housing Choice Voucher program to provide subsidies to an additional 200,000 households, with vouchers prioritized for those who are homeless or fleeing domestic violence. The spending blueprint also includes $3.5 billion (an increase of $500 million) for Homeless Assistance Grants. In addition, the proposal would boost funding by nearly 10 percent, to $3.8 billion, for the Community Development Block Grant (CDBG) program, with funding targeted for investments in public infrastructure and facilities in historically underfunded and marginalized communities. Finally, the HOME Investment Partnerships Program would be in line to receive an additional $500 million, bringing its total funding to $1.9 billion.

Department of Transportation

The budget request includes $25.6 billion for the Department of Transportation (DOT) – a $3.2 billion (or 14 percent) increase. It remains unclear, however, how much of the increase is attributable to funding that is proposed in Biden’s infrastructure plan. While the budget does not enumerate mandatory formula levels, it does stress the importance of reauthorizing surface transportation programs before the end of the current fiscal year.

Among other things, the budget requests $625 million for a new competitive grant program for passenger rail, as well as $110 million for a new grant program to help communities improve access to destinations and foster community vibrancy. Significant funding increases have also been proposed for Amtrak (+35 percent) and Capital Investment Grants (+23 percent).

Department of Homeland Security

The White House is requesting level funding ($52 billion) for the Department of Homeland Security (DHS). Included within the DHS budget is a $1.2 billion proposal for border infrastructure projects, which includes the modernization of land ports of entry, investments in modern border security technology, and efforts to ensure the safe and humane treatment of migrants. It should be noted that no additional funding would be designated for border wall construction. In addition, the budget requests an additional $540 million (above the fiscal year 2021 enacted level) to incorporate climate impacts into pre-disaster planning and resilience efforts.

Department of the Interior

The Biden administration has proposed increasing the Department of the Interior’s (DOI) fiscal year 2022 budget to $17.4 billion, which would amount to a $2.4 billion increase. To reduce the growing risk of wildfires, the White House is requesting $340 million for hazardous fuels management and burned area rehabilitation projects. This funding would support efforts at both DOI and the Forest Service to manage vegetation and reduce the intensity, severity, and negative effects of wildfire. The budget also requests an additional $200 million for land and water conservation efforts. Such an investment would help support the administration’s goal of conserving 30 percent of land and water by 2030, including through voluntary actions and incentives that support the stewardship efforts of farmers, ranchers, and other private landowners.

U.S. Department of Agriculture

The president’s budget includes $27.8 billion for the U.S. Department of Agriculture (USDA), a $3.8 billion or 16 percent increase from the fiscal year 2021 enacted level. It should be noted that the blueprint mirrors many of the rural priorities in Biden’s infrastructure plan. Among other things, it requests additional federal resources for broadband, rural water infrastructure, and helping rural communities move to cleaner power sources. The proposal also includes $1.7 billion for high-priority hazardous fuels and forest resilience projects, an increase of $476 million over the 2021 enacted level.

Department of Justice

The administration has outlined $35.2 billion in spending for the Department of Justice (DOJ) – a $1.8 billion increase from fiscal year 2021. The request includes $2.1 billion (+$232 million) to address gun violence, with over $400 million designated for grants to state and local governments. The White House is also seeking a significant increase (+$487 million) for Violence Against Women Act (VAWA) programs. Increased funding is also proposed for a range of programs supporting police-community relationships, including the Community Oriented Policing Services hiring program and programs that support community-oriented policing policies and practices, such as racial sensitivity and implicit bias training and additional support for hate crime training and police innovation programs.

In addition to these investments, the request proposes administrative action to apply new priority preferences and grant conditions to ensure resources are used to further reform efforts. The request also provides $1.5 billion (+$554 million) for grants that support efforts to reform State and local criminal justice systems, including funding to support Juvenile Justice Programs, drug courts and alternative court programs, public defenders, and Second Chance Act programs.

Environmental Protection Agency

The budget blueprint proposes a significant increase (+$2 billion) for EPA, raising the agency’s budget to $11.2 billion. According to the White House, $1.8 billion would be dedicated for climate programs, including a $100 million boost to state and tribal air quality grants, $936 million would go toward a new environmental and economic justice initiative, and $3.6 billion would be designated for the agency’s water infrastructure programs. The administration is also proposing a $100 million boost to the Agriculture Department’s rural water and wastewater program, which would bring it to $717 million, with portions of the funding targeted at environmental justice communities.

U.S. Army Corps of Engineers

While President Biden has proposed increased spending for nearly every federal agency, the budget outlines steep cuts to the annual budget for the Army Corps of Engineers. Specifically, the proposal would provide $6.8 billion for the Corps’ Civil Works program, a decrease of nearly 13 percent from current levels. While popular with Congress, presidents of both parties have typically proposed funding reductions to the Corps to help offset proposed spending increases in other parts of the budget. It should be noted that the proposal includes no specifics about how the cuts would be spread across the Corps’ budget.