1. FY14 Appropriations Bill Unveiled

Since returning from the holiday recess last week, Congress has been racing against the January 15 deadline to finalize the $1.012 trillion FY14 omnibus appropriations bill, as agreed to under the budget deal reached in December.  Last evening, Appropriators filed the final spending package that includes all 12 annual appropriations bills, including State-Foreign Operations.  The measure will be taken up by the House on Wednesday and by the Senate later in the week. In the interim, both chambers will take up a 3-day Continuing Resolution (CR) today in order to avert the expiration of the current CR on Wednesday.

The overall funding levels for the International Affairs Budget fared relatively well in the final spending package and generally tracks much closer to the Senate’s proposed funding levels as opposed to the House levels that would have resulted in draconian cuts to many International Affairs accounts. Notably, base International Affairs discretionary appropriations grow by 6.1% ($2.5 billion) over FY13 post-sequestration levels compared with only a 2.6% increase in total discretionary amounts for all defense and non-defense spending.

Overall, the total FY14 International Affairs appropriation (including the Overseas Contingency Operations (OCO) and the international food aid funding in the Agriculture bill) comes to $50.6 billion – about 3.1% ($1.6 billion) below current levels. The reason for the overall cut in the International Affairs Budget is a $4.1 billion (-39%) reduction for OCO, the account that largely funds U.S. support for the Frontline states of Afghanistan, Pakistan, and Iraq.  As American forces withdraw from Afghanistan, the demands for OCO funding are declining.

Despite the modest and welcomed increase in overall base funding, there are some concerns of decreases to specific accounts.  A full detailed analysis will be forth coming in the next few days. In the meantime, a few top-line highlights in the omnibus for International Affairs programs include:

Increases:

• Humanitarian Assistance: The bill provides significant increases –$723 million or 12.5% — for humanitarian assistance at a time when demands in Syria, South Sudan, the Central African Republic, and elsewhere continue to mount.
• Diplomatic Security: The measure fully funds the Administration’s request and provides additional resources for upgrades of temporary missions, including in Benghazi.
• Global Health: The omnibus includes $8.4 billion for HIV/AIDS, malaria, TB, maternal and child health, nutrition, and other global health activities, 4.7% higher than in FY13.
• Multilateral Assistance: The bill provides nearly $3 billion for the World Bank, other regional financial institutions, and voluntary international organization contributions — a 3% increase.

Decreases:

• Assessed Contributions to International Organizations and Peacekeeping: The measure reduces dues to the U.N. and other international organizations by 8%.
• IMF Reform and Quota Increase: The bill does not permit a re-balancing of the U.S. quota in the International Monetary Fund (IMF), a top Administration priority in order to institute reforms at the IMF.
• USAID Operating Expenses (OE):  The $1.14 billion appropriation falls 10.8% below current amounts, something that normally would be very difficult for the Agency to absorb.  Appropriators note that additional funds are available from trust funds and carry-in resources from FY13.  However, how these trust fund and carry-in amounts compare with what was available last year is not detailed so it is unclear how serious this cut to USAID OE will turn out to be.
• Development Assistance (DA):  The Omnibus sets USAID Development Assistance programs at $2.5 billion, the same as enacted since FY10.  Congress, however, transferred $325 million into the Development Assistance account for FY13, making the FY14 level 7.8% less than total DA funding available last year.

Aid to Egypt: Appropriators fund aid to Egypt, including $1.3 billion in military assistance and $250 million in development assistance, but conditions the support on a number of steps Egypt must take towards democracy.

USGLC issued a statement today that applauds the bipartisan leadership of Chairwoman Mikulski, Chairman Rogers, and State-Foreign Operations leaders for crafting a fair bill that increases base funding for development and diplomacy programs, but the statement expresses concerns about the reductions to specific accounts.

2. President’s FY15 Budget Request Delayed

Due to the delay in finalizing FY14 appropriations, the Administration’s FY15 budget request – normally released the first Monday in February — will be delayed at least one month. This will be the second year in a row the Administration’s budget submission has been behind schedule; last year the FY14 budget request wasn’t unveiled until April 10th.

After Congress agreed in December to discretionary spending levels for FY14 and FY15, the Office of Management and Budget (OMB) suspended further inter-agency consultations on the FY15 budget, opting instead to wait until lawmakers concluded appropriations for FY14 in mid-January. Prior to the December deal, OMB had been poised to deliver “pass-backs” — the final White House guidance on agency budget requests. Those are now expected to come on January 20th or shortly thereafter. Normally, it takes another two months to completely finalize the President’s budget after pass-backs are circulated.

The late submission will compress the time Congress will have to review and act on FY15 appropriations, although House Republicans will likely draft their competing Budget Resolution prior to receiving the President’s proposal.