Impact of President's Budget Proposal on States

Feb. 8, 2005

On Monday, February 7, 2005, the Bush Administration sent to Congress its budget request for fiscal year 2006. Under the proposed budget, discretionary spending would increase overall by 2%. Within
that increase, Pentagon spending would increase by 5% ($19 billion), homeland security by 3% ($1 billion), and all other federally-funded services would be cut by 1%, before taking inflation into account. The Department of Defense increase does not include funding for the wars in Iraq or Afghanistan.

Discretionary spending is the part of the budget which Congress decides on each year. Mandatory spending is guided by funding rules set up by Congress periodically.

Total federal spending (including mandatory) would increase by 2% ($70 billion) under this budget request, before taking inflation into account. Large increases include health ($33 billion), Medicare ($51 billion), and net interest payments on the debt ($33 billion). Cuts include natural resources and the environment; education, training, employment, and social services; community and regional development; and transportation.

Discretionary federal grants to state and local government would be cut by almost 7% (almost 9% after taking inflation into account). Total federal grants (including mandatory) would increase slightly under the budget proposal, but this increase is primarily due to the increases in Medicaid grants to states, driven by rising health care costs.

Federal grants that would be cut include vocational and adult education, a number of programs associated with community development, environmental protection agency grants, low-income home energy assistance, disease control, substance abuse, OSHA, and public safety.

The tables below breakdown the impact of the budget request by state across a variety of issues. The first one indicates the cuts in total discretionary federal grants by state, and the other tables take a look at a particular program or group of programs.


Discretionary Federal Grants to State and Local Governments
Clean Water State Revolving Fund
No Child Left Behind
Low-Income Home Energy Assistance Program
Community and Economic Development

Proposed Total Federal Budget, FY2006
Proposed Discretionary Budget, FY2006