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Inside Trump's Budget: 6 Things State and Local Governments Should Know

The president's 2020 proposal would slash domestic spending by nearly 10 percent and increase defense spending by 5 percent.

A House staffer holding a copy of President Trump's budget request for fiscal year 2020.
A House staffer holding a copy of President Trump's budget request for fiscal year 2020.
(TNS/Olivier Douliery)


  • President Trump's 2020 budget proposes major cuts for the Environmental Protection Agency, Medicaid, food stamps, cash welfare, public housing, transportation, clean energy and economic development.
  • State and local organizations are noticeably quiet in response.
  • It would run a $1 trillion federal deficit for the next four years.
This week, President Trump introduced his vision for the federal government’s 2020 budget. It proposes slashing domestic spending by 9 percent, including a 31 percent cut to the Environmental Protection Agency (EPA). Defense spending, on the other hand, would increase by 5 percent, or $34 billion.

Here are six things state and local officials should consider when reviewing the administration’s proposal.


Trump’s Budget Is Dead on Arrival

Nobody expects Trump’s proposal to go anywhere. Congress sets the budget, and the president’s document -- no matter whose it is -- is largely viewed as a window into his spending priorities.

But it does indicate where he’s likely to pressure members of his party, particularly in the Republican-controlled Senate.

The Center for American Progress, a fierce Trump critic, warns that “Trump’s priorities and policies reveal his sheer contempt for the ‘forgotten men and women’ for whom he pledged to fight.” Case in point: Trump's budget cuts Medicare and Social Security, two entitlement programs for the elderly that he promised voters he wouldn't touch.


'A Plan Only Water Polluters Can Love'

Those are the words of Natural Resources Defense Council’s Jon Devine, who says slashing the EPA’s budget puts more onus on states to ensure clean waterways while giving them less money to do it.

Among other things, the budget would eliminate the $16.8 million in funding that pollution control agencies receive for basic research needs like evaluating water for safe swimming or fish consumption. It also eliminates funding for beach monitoring and contamination notification efforts.

It would severely cut federal funding for bodies of water with a history of major environmental and health problems. The Chesapeake Bay and the Great Lakes would lose 90 percent of their funding, while funding would be eliminated for the Gulf of Mexico, Lake Champlain, Long Island Sound and Puget Sound.

“It would mean more polluted drinking water supplies, make restoring the fisheries of the Chesapeake Bay and other waters harder, delay needed fixes to failing sewer systems, [and hamper programs that] monitor beach water quality and warn beachgoers about conditions that can make them sick,” said Devine.


Major Health-Care and Welfare Cuts

Trump’s budget reflects his continued desire to shift Medicaid from an entitlement program to a grant-based one by arguing that the latter gives states more flexibility. His proposal cuts $777 billion, over 10 years from Medicaid, the nation's health insurance program for the poor. 

He would also cut the Supplemental Nutrition Assistance Program (commonly referred to as food stamps) by 30 percent, or $220 billion, over 10 years. Temporary Assistance for Needy Families, what most refer to as cash welfare, would be cut by $21 billion.

The budget also calls for deep cuts in public housing and would raise rents for millions of low-income households receiving rental assistance.


Infrastructure and Economic Development a Mixed Bag

The proposal would substantially cut transportation funding (by 19 percent) while squeezing the budget for economic development. Of note, Trump has renewed his proposal to eliminate the $3 billion Community Development Block Grant (CDBG) program, which funds a wide range of community projects, and the HOME Investment Partnerships Program, which promotes homeownership, for cities and counties.

The budget would also kill funding for federal programs that drive investment in clean energy innovation. Bob Keefe, executive director of Environmental Entrepreneurs, which advocates for business-friendly environmental policies, says hundreds of small companies depend on that funding and that “local governments in turn rely on those clean tech entrepreneurs and incubators to create the local companies and jobs of tomorrow.”

On the positive side for infrastructure advocates, the plan includes about $200 billion over 10 years for infrastructure spending, which the White House says could leverage $1 trillion from private, state and local sources. It also doubles funding to $2 billion for the Infrastructure for Rebuilding America grant program for roads and bridges.


We’ve Seen This Before, But...

Many of Trump’s proposed cuts are reprisals of his first two budgets. What’s notably different this time around is the lack of outcry from state and local organizations.

Trump’s proposed elimination of CDBG and HOME programs, for instance, elicited fiery statements and press conferences early on in his administration, but the silence this week has been palpable.

For what it’s worth, Trump’s budget release came during the middle of the National League of Cities’ Congressional City Conference in Washington, D.C. The conference includes an advocacy day on Capitol Hill, so more than 200 city leaders and advocates were already scheduled this week to speak with members of Congress about the importance of federal funding, particularly for infrastructure.


Impact on the Federal Deficit

Trump’s budget would spend more than the federal government brings in, not balancing out for another 15 years. It would run a $1 trillion deficit each year for the rest of his term.

Those projections are based on the White House's assumption that the economy will continue to grow at a healthy clip, or 3 percent. But objective organizations like the Federal Reserve and the Congressional Budget Office are projecting growth at or below 2 percent.

Trump’s chief economic adviser, Larry Kudlow, pointed out this week that there were plenty of naysayers last year about the administration’s projected economic growth who were proven wrong. (GDP growth last year was 2.9 percent.)

“So far, we won round one,” Kudlow said on PBS NewsHour. “I'm going roll the dice again, and I'm going to take the over and suggest that we will be right again this year, and many of our critics will not be.”

This appears in "The Week in Public Finance" newsletter. Subscribe for free.

Liz Farmer is a former GOVERNING fiscal policy writer.
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