BUDGET-2016-BUD

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40 INVESTING IN AMERICA’S FUTURE as community coordinators on the ground to help those communities maximize the impact of assistance from all sources. In addition, the Budget includes funding to accelerate the availability of geo-coded Federal spending information, so communities and citizens can better understand the Federal funds available to them and put them to effective, prompt use. Through initiatives such as the Strong Cities, Strong Communities program, which strengthens towns, cities and regions by growing the capacity of local governments to develop and execute their local vision and strategies, the Administration is proposing holistic solutions to expand opportunity in the Nation’s most vulnerable communities. The Budget increases the Administration’s placebased efforts through the following investments: • The Upward Mobility Project. The Budget proposes an Upward Mobility Project, which will allow up to 10 communities, States, or a consortium of States and communities more flexibility to use funding from up to four Federal programs for efforts designed to promote self-sufficiency, improve educational and other outcomes for children, and enhance communities’ ability to provide opportunities for families. Projects will have to rely on evidence-based programs or be designed to test new ideas, and will have a significant evaluation component that will determine whether they meet a set of robust outcomes. The funding streams that States and communities can use in these projects are currently block grants—the Social Services Block Grant, the Community Development Block Grant, the Community Services Block Grant, and the HOME Program—that share a common goal of promoting opportunity and reducing poverty, but do not facilitate cross-sector planning and implementation as effectively as they could. The Budget also provides $1.5 billion in additional funding over five years that States and communities can apply for to help support their Upward Mobility Projects. • The Promise Zone Initiative. The Budget supports the Administration’s Promise Zone initiative, which targets communities of concentrated poverty and establishes partnerships between the Federal Government, local communities, and businesses to create jobs, increase economic security, expand educational opportunities, increase access to quality, affordable housing, and improve public safety. Communities are chosen through a competitive process, and each puts forward a plan on how they will partner with local business and community leaders to make investments that reward hard work and expand opportunity. In exchange, the Federal Government partners with these communities to help them secure the resources and flexibility they need to achieve their goals. The President announced the first five Promise Zone communities in 2014, and will designate an additional 15 Zones by the end of calendar year 2016. The Budget also includes Promise Zone tax incentives to stimulate growth and investments in targeted communities, such as tax credits for hiring workers and incentives for capital investment within the Zone. • Choice and Promise Neighborhoods. To support the President’s vision for Promise Zones, the Budget also expands the Department of Education’s Promise Neighborhoods program and HUD’s Choice Neighborhoods program, funding approximately 25 new Promise Neighborhoods and eight new Choice Neighborhoods. • Rural Initiatives. According to a 2014 report by USDA’s Economic Research Service, rural childhood poverty rates are at their highest point since 1986—one in four rural children live in poverty and deep poverty among children is more prevalent in rural areas (12.2 percent) than in urban areas (9.2 percent). To help alleviate this growing disparity, the Budget provides $20 million for demonstration projects to fight childhood poverty in economically distressed rural areas through targeted technical assistance investments in housing, community facilities, small business, and infrastructure. The Budget includes $50 million to expand the Community Facilities Grant Program to address ongo-
THE BUDGET FOR FISCAL YEAR 2016 41 Modernizing Unemployment Insurance and Improving Automatic Stabilizers The Budget proposes a suite of reforms to modernize the Unemployment Insurance (UI) program, which provides critical income support to those who are unemployed through no fault of their own. These reforms would improve the solvency of State programs, reach more workers in need, strengthen the program’s connection to work, and make the UI program more responsive to economic downturns. The UI program is a key stabilizer during economic downturns. It provides an important safety net to workers who lose their jobs, and helps the economy by allowing those workers to maintain economic activity. The Budget proposes reforms to strengthen UI’s economic stabilization function. The current Extended Benefits (EB) program, which provides up to 20 additional weeks of benefits in States with high and rising unemployment, does not provide sufficient help during recessions because it provides too few weeks of additional benefits and its triggers (which in most States are based on the insured unemployment rate) are not responsive enough. As a result, the Congress passes ad hoc emergency UI programs that begin too late to provide the early stimulus that could lessen the severity of a recession. The Budget proposes to fix this by creating a new permanent, federally funded EB program that would respond quickly when State unemployment rates rise and provide more robust Federal assistance. This new program would provide up to 52 weeks of additional federally funded benefits, with the greatest number of weeks in States with higher unemployment rates. The proposal would provide up to 13 weeks of additional benefits each time States hit certain unemployment rates triggers—at 6.5 percent, 7.5 percent, 8.5 percent, and 9.5 percent. Under the proposal, these threshold rates can be lower in States where unemployment is increasing especially rapidly. This new program would ensure that the UI program responds quickly to dampen the effects of recessions and provides a critical safety net for unemployed workers in States where jobs are scarce. For the UI program to be effective, it must be on a strong financial footing. Many States’ UI systems are chronically underfunded, requiring them to borrow funds from the Federal Government to cover benefits during the most recent downturn. Currently, 12 States have outstanding Federal loans, and 11 other States have outstanding debt exceeding their trust fund balances, including borrowing from the private market. The Budget proposes to improve system solvency by helping States rebuild their trust fund balances to repay their loans, cover current benefits, and create reserves so they are better prepared for the next downturn. The Budget accomplishes this by broadening the taxable wage base to equal average insured wages and reducing the Federal unemployment tax rate to help States shore up their trust funds, while not raising Federal UI taxes. Although the taxable wage base expansion would have the effect of raising State UI taxes, States would be free to change their tax rate structures to offset this increase. The Budget also proposes to modernize the UI system by improving its connection to jobs and making sure benefits are available to more workers who need them. To do this, the Budget includes a UI modernization fund that would provide incentive payments to States that adopt measures to expand both program eligibility and work-based learning opportunities and training for unemployed workers. A State can receive incentive payments if it adopts two measures that expand eligibility and two measures that improve connections to training and employment. States that maintain these changes for at least four years would also receive a bonus payment. The Budget also creates a $60 million fund to allow a consortium of States to modernize their outdated UI information technology systems, which would improve administrative efficiency and help businesses and workers interact more easily with the UI system. ing needs and emerging priorities such as Promise Zones, Energy Sector Transition, or Strike Force Communities. These funds will allow USDA to be responsive to new needs in communities across rural American and target them in a flexible way.
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OMB CONTRIBUTORS TO THE 2016 BUDGET
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THE BUDGET FOR FISCAL YEAR 2016 143
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Budget of the U.S. Government, FY 2
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BUDGET-2016-BUD

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