The Biden Administration’s Federal Fiscal Year 2023 Proposal
On March 28, 2022, the Biden Administration released their budget proposal for federal fiscal year (FFY) 2023. The proposal includes an increase of $175 million for the Low Income Home Energy Assistance Program (LIHEAP) for a total of $3.975 billion in FFY 2023 up from $3.8 billion in FFY 2022.
The proposed budget includes some significant changes from previous LIHEAP appropriations. First, up to $20.5 million could be used for training and technical assistance, a significant increase over the $4.6 million allowed for FFY 2022. In addition, up to 2.7%, about $107 million, of the proposed funding for LIHEAP could be used for the Low Income Home Water Assistance Program (LIHWAP).
LIHWAP was created as a temporary emergency program as part of the federal response to the COVID-19 pandemic. Congress appropriated a total of $1.1 billion for the program, to be available through FFY 2023. The proposed inclusion of LIHWAP as a percentage of the LIHEAP budget for FFY 2023 is a risky approach to expanding this temporary program. First, $107 million is insufficient to meet the water assistance need across the country. Second, the LIHEAP funding allocation formula is a poor proxy for water need: LIHEAP funds go disproportionately to cold weather states, while LIWHAP need is concentrated in warm weather regions of the country. Third, LIHEAP is already underfunded. While the FFY 2023 proposal raises the LIHEAP allocation sufficiently to provide for the addition of water assistance, there is no guarantee that Congress will provide enough money to adequately fund both programs.
The President’s proposal also includes $100 million for a new LIHEAP Advantage pilot which aims to electrify and decarbonize low income homes. The program would be funded through the Department of Energy’s Weatherization Assistance Program (WAP), so it would not directly impact LIHEAP funding. Details are scarce on this pilot, and NEADA will continue to monitor this proposed program as more information becomes available.
FFY 2023 LIHEAP funding also includes $100 million provided by the Infrastructure Investment and Jobs Act. The IIJA provided $100 million per year to LIHEAP from FFY 2022 through FFY 2026.
Following the release of the President’s budget recommendation, the House and Senate Appropriations committees will draft 2022 budget resolutions.
Expiring Funds
Despite the President’s proposed increase in the regular LIHEAP appropriation for FFY 2023, the program would still experience a decrease in overall funding next year. In addition to the $3.8 billion provided by Congress in FFY 2022 and the $100 million included in the IIJA for 2022, the American Rescue Plan Act (ARPA) provided LIHEAP with $4.5 billion that expires at the end of FFY 2022. These funds have been used by states to help low-income households pay off arrearages and respond to increased energy costs this past winter. The expiration of these funds means that states will have less money next year, unless Congress acts.
The U.S. Department of Health and Human Services (HHS) released $3.37 billion of FFY 2022 regular block grant funding on November 1, 2021, which was 90 percent of the anticipated funding based on FFY 2021 appropriations levels.
In terms of LIHWAP, the $1.1 billion in water assistance funds are available through the end of FFY 2023, but that program is not part of the regular appropriations process and will be eliminated unless Congress passes a bill to make it permanent.
NEADA will continue to provide updates on all of these issues as they progress.