May 25, 2017

The budget request for fiscal 2018 largely spares Transportation Security Administration and U.S. Coast Guard programs from cuts. However, the budget does propose to cut port security and mass transit security grants in half.

Coast Guard. The budget requests a total of $10.45 billion for the Coast Guard in 2018, an amount almost identical to last year. Within the biggest account (Operating Expenses), a proposed increase for Military Pay and Allowances is misleading – the $167 million increase is matched by a $163 million cut in the separate Overseas Contingency Operations fund for such purposes. There is a significant cut in the Centrally Managed Accounts activity, which the budget justifications say “is primarily driven by the $188 million transfer and centralization of existing information technology maintenance funding to the Intermediate and the Depot Level Maintenance PPA to facilitate efficient execution and improved oversight of information technology funding.”

Within the procurement account (Acquisition, Construction and Improvements), the big change is in the Aircraft program, where the budget proposes to take what is in essence a one-year pause in the HC-130J aircraft acquisition/conversion/sustainment program.

FEMA Security Grants. The budget proposes to cut FEMA’s port security grant and mass transit and rail security grant programs in half, from $100 million per year in 2016 and 2017 to $47.8 million in 2018. The budget also proposes to get rid of the transit/rail grant set-asides for Amtrak and for over-the-road buses.

Transportation Security Administration. The budget proposes $7.1 billion in appropriations for TSA in 2018, down $225 thousand from 2017. The Administration also assumes that the existing aviation security fee rates will bring in $2.4 billion in offsetting collections (up $256 million from 2017) and is also proposing to raise the fees by $1 per one-way trip “in order to raise the cost recovery of the fee to 75 percent of total aviation security costs.” They estimate the increase will bring in an additional $530 million in 2018. These would offset the net discretionary TSA appropriation down to a total of $4.1 billion.

Interestingly, the budget does not propose to extend the dedication of part of the security fee to deficit reduction past the expiration of that set-aside in 2025. But the budget out-years do not assume a corresponding reduction in the net TSA side of the budget, so OMB apparently forgot about the money ($1.6 billion per year in 2026-2027).

Par for the course, the biggest reduction (percentage-wise) in any TSA activity is “aviation regulation” which receives a 29 percent cut in the budget. TSA fundamentally changed its budget structure last year and is still working out the kinks – what looks like an elimination in the air cargo activity under the new procurement account is really a transfer to a similar activity in the operations account. The budget estimates are particularly hard to follow in the new format, which attempts to use standard account structure across multiple components of Homeland Security.

The following table shows the TSA budget request by program, project and activity. It does not show the $250 million per year in aviation security capital spending outside the appropriations process.