State and local leaders are condemning the Obama administration’s proposal to cut the budget of a program that helps poor people pay their heating and cooling bills, arguing that if the cut is successful, more than 1 million families could lose their aid.

President Barack Obama earlier this week proposed cutting the Low-Income Home Energy Assistance Program (LIHEAP) by 13 percent from its FY 2012 level, to about $3 billion for the upcoming fiscal year. That comes on the heels of a budget he signed in December that cut the program by about 25 percent from its FY 2011 level (the cut was steep, but not as drastic as his own proposal earlier in the year).

The move has left some advocates scratching their head, wondering why the president has targeted a program that serves such a basic need. “We’ve got a great president,” said Rep. Peter Welch (D-Vt.) at a media event on Capitol Hill this week. “But this is a bad recommendation.”

All total, the president’s latest cuts would represent a 40 percent drop in LIHEAP funding since FY 2010, when it was funded at $5.1 billion. Those latest cuts were revealed just weeks after Welch and more than 100 other members of Congress wrote a letter to Obama urging him to boost funding for the program.

LIHEAP provides federal money to states, which in turn send the money to local agencies that use it to pay utility companies and heating oil providers on behalf of low-income residents. Last fiscal year, about 8.9 million low-income families received assistance through the program, and about 10 million are expected to apply for assistance during this fiscal year, according to the National Energy Assistance Directors' Association (NEADA). If the latest cuts are enacted, about a million families would lose aid, according to the association.

States already enacted tougher eligibility standards and reduced aid as a result of the last cut. Only about 20 states contribute their own funds toward energy assistance, said Mark Wolfe, head of NEADA. Just a handful of states have plugged the holes created by the feds’ recent cuts to the program. “This is a federal program and a federal problem,” said Wolfe.

St. Paul, Minn. Mayor Chris Coleman told Governing that the cuts concern local officials nationwide, and the only reason their impact wasn't seen as dramatic this winter was because of the unusually mild temperatures. “We haven’t noticed it today, but we also know it will have a dramatic effect in the future,” Coleman said.

In the Boston area, thousands of residents have already exhausted the LIHEAP benefits they’ll get this winter, said John Drew, head of Action for Boston Community Development, Inc., which administers the funds in the region. The average benefit his group was able to distribute was $500 to $600, but it currently costs more than $1,000 to fill a tank of home heating oil. The cuts, Drew says, are “basically taking money out of households who need it most.”

The organization is distributing coats, blankets and shoes to those who’ve exhausted their benefits. Many of his clients will likely move in with relatives, stay in shelters, or use space heaters once they run out of benefits. Two-thirds of LIHEAP users surveyed by NEADA said that without the aid, they'd keep their homes at unhealthy temperatures.

The president’s proposed budget states that “with constrained resources, the budget targets limited LIHEAP assistance to where it is needed most.” The $3 billion request comes with a formula that favors colder states with a greater portion of residents that rely on home heating oil, which is more expensive than other fuel types. A spokeswoman for the Office of Management and Budget said that contingency funds for the program would be made available if fuel prices increase.

In the past, proposed cuts have been justified by noting the vast expansion LIHEAP underwent from FY 2008 to FY 2009 as energy prices increased. Some of those prices have come down, but the cost of home heating oil is on the rise.

Several New England legislators are supporting a bill that would authorize LIHEAP funding at $7.6 billion annually through 2016 and give states the option of expanding eligibility for the program. But in a Congress focused on spending cuts, it could have difficulty gaining steam.

But some critics say there are plenty of other things that should be cut before LIHEAP. “We have the money,” said Rep. Rosa DeLauro (D-Conn.) at the Capitol Hill event. “Our priorities are misplaced."

(See chart below of LIHEAP funding by fiscal year)