The proposals expected this year to reduce domestic discretionary spending are likely to be in addition to the BCA reductions. If the caps in the 2011 Budget Control Act (BCA), which were lowered by sequestration, remain in place, these grants will likely be cut further. Similarly, discretionary (annually appropriated) grants to state and local governments in federal fiscal year 2015 were 1.05 percent of GDP, lower than in all but one year since 1980. Grants from the mandatory (ongoing) portion of the federal budget for purposes other than Medicaid and the Children’s Health Insurance Program (CHIP) were at a lower share of the economy in 2015, at 0.42 percent of gross domestic product (GDP), than in any year since 1980. Grants are already at historically low levels.
The grants support health care, public education, housing, community development, child care, job training, transportation, and clean water, among other programs.
Considering state and local budgets together, federal funding provides 22 percent of spending. Federal grants provide approximately 31 percent of state budgets. Federal spending in the form of mandatory and discretionary grants accounts for a large share of state and local government revenues. Grants matter to state and local budgets. These programs are too important, particularly to low- and moderate-income people, to be considered as available resources that can be cut - either immediately or over time - to reduce the overall budget, to pay for greater defense spending, or to finance other Administration priorities such as deep tax cuts for high-income people. These grants, and the programs they support, are at serious risk of being substantially diminished or eliminated, based on proposals from President Trump and congressional Republicans. These programs are too important to be considered as available resources that can be cut. Federal funds that go to state and local governments as grants help finance critical programs and services on which residents of every state rely.
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