Federal Budget for FY 2012 Released

The first major showdown between President Obama and Congress came into focus on Monday with the release of the federal budget for Fiscal Year 2012. The $3.7 trillion budget package was described by the administration as a responsible approach that would lead to less spending, while Republicans attacked the budget as a measure that actually increases spending. Among other things, the administration claims that the budget will either terminate or cut about 200 programs, for a savings of $30 billion.

It is common to view the President's budget as a political document that outlines the direction the administration wants to take the country in upcoming years. As such, very few believe that it will be enacted without major changes in priorities. Among the most important provisions from the propane industry's perspective are:
  • Elimination of oil and natural gas industry tax breaks: The Administration would cut oil and natural gas industry tax breaks, which the Department of Energy (DOE) estimates would save $3.6 billion in fiscal year 2012 and a total of $46.2 billion during the next 10 years. It is important to note that this proposal in no way affects the 50 cent-per-gallon propane fuel tax credit or infrastructure tax credit, enacted by Congress last year.
  • Reduction of LIHEAP funding: Funding for the Low Income Housing Energy Assistance Program is proposed to be reduced by $2.5 billion, from current funding levels of $5.1 billion.
  • Reduction of Environmental Protection Agency (EPA) funding: Funding for EPA would be cut by roughly $1.3 billion, amounting to a budget of $9 billion. $46 million would be budgeted for regulatory efforts in the climate change area and implement greenhouse gas reporting requirements under the Clean Air Act.
  • User fees: The Administration is requesting authority to implement user fees for processing of special permits and approvals, which could add thousands of dollars to each special permit application and each application for a Requalifier Identification Number (RIN).
Debates over the proper extent of federal funding will play out in a variety of ways in the coming weeks.The current Continuing Resolution expires March 4, 2011 and as such another short-term extension may have to be passed to avoid a shutdown of the federal government.
 

 



 

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