Statement of Administration Policy: H.R. 2099 - Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 1996

(Senate Floor)
(Sponsors: Hatfield (R), Oregon; Bond (R), Missouri)

This Statement of Administration Policy provides the Administration's views on H.R. 2099, the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill. FY 1996. as reported by the Senate Appropriations Committee.

The Administration is committed to balancing the Federal budget by FY 2005. The President's budget proposes to reduce discretionary spending for FY 1996 by $5 billion in outlays below the FY 1995 enacted level. The Administration does not support the level of funding assumed by the House or Senate 602(b) allocations and must evaluate each bill both in terms of funding levels provided and the share of total resources available for remaining priorities. This bill is over $9 billion below the President's request.

While the Committee mark makes many improvements to the House-passed bill, the Administration strongly opposes several aspects of the Committee bill. The President would veto the bill if it were presented to him as reported by the committee.

Corporation for National and Community Service

The Committee bill would terminate the Corporation for National and Community Service, one of this Administration's top priorities. The Administration strongly opposes the Committee's decision to eliminate this important initiative and urges the Senate to provide funding at the requested level of $819 million. If the program were to be eliminated, nearly 50,000 young Americans would lose the opportunity to help their communities, through AmeriCorps, to address vital local needs such as health care, crime prevention, and education while at the same time earning a monetary award to help them pursue additional education or training. In addition, some 580,000 children, adolescents, and college students would lose the chance to serve their communities through the Learn and Serve program.

Housing and Urban Development (HUD)

Compared to the House-passed bill, the Committee bill represents substantial progress on overall funding levels for HUD, and some progress in the consolidation of HUD's functions. The bill contains a series of provisions that would provide incentives to work to poor families receiving housing assistance, and help the Department and public housing authorities weed out the most distressed projects.

However, the Administration strongly opposes the excessive overall reduction of $4 billion made by the Committee to the President's request for HUD and is especially concerned over cuts in new incremental housing vouchers and homeless assistance. The Administration urges continuation of the 20-year bipartisan commitment to meet low-income housing needs by expanding the number of people receiving rental assistance. The Committee bill would provide less than one-half of the requested funding for new assistance. Moreover, the use of these funds would be largely restricted to families already receiving some form of assistance, and spending would be deferred until FY 1997. By the end of FY 1996, the effect of this delay would be a five-percent reduction in the number of families assisted.

The Committee bill would also reduce grants to assist communities in providing services to the homeless by $360 million, or 32 percent, relative to the FY 1995 level. The Administration is particularly troubled that funds would be severely reduced at the very moment that Congress, for the first time, would allow the funds to be distributed to States by formula.

As drafted, the Committee's proposal to convert severely distressed, obsolete public housing developments to tenant-based assistance would vest too much discretion in public housing authorities, with the likely outcome that most of the distressed housing would not be converted. Instead, the Secretary should have authority to require the conversion of public housing to vouchers in these limited cases as well as to recapture budget authority for those units and reuse it for replacement assistance.

The Administration also strongly objects to the provision that would prohibit HUD from spending funds to enforce fair housing laws against property insurance discrimination. See attachment for further details.

Environmental Protection Agency (EPA)

While the Committee bill contains significant improvements over the crippling reductions and environmental roll-backs included in the House bill, the Administration opposes the 23-percent overall reduction to the President's request for EPA. This reduction would significantly hamper the Federal Government's ability to protect public health and the environment.

Particularly objectionable is the 36-percent reduction in the Superfund program, which could result in continued risk of exposure to dangerous chemicals for hundreds of thousands of citizens living near hazardous waste sites. The Administration is also concerned about the Committee's 37-percent reduction in funding for Clean Water State Revolving Funds in light of a $137 billion backlog of wastewater funding needs.

In addition, the Administration strongly objects to the proposed reductions to the President's investment program for climate change, Montreal Protocol, and environmental technology. The 74-percent reduction in the climate change programs (including elimination of the "green programs"), would undermine EPA's highly successful voluntary and cooperative energy efficiency programs, which are integral to the Nation's effort to reduce air pollution and stabilize greenhouse gas emissions. The elimination of Montreal Protocol funding would slow efforts to restore the ozone layer, with major public health impacts. The reduction of more than 80-percent to environmental technology would virtually eliminate this program that is designed to reduce environmental control costs and stimulate U.S. export markets for environmental technology.

While less numerous than in the House-passed bill, the Administration objects to the Committee's inclusion of legislative riders in the bill. The Administration opposes the use of appropriations bills to overturn existing law in order to eater to special interests without any hearings on the national environmental impact of these riders.

Veterans Affairs

The Administration has serious concerns about the Committee's overall funding recommendation for the Department of Veterans Affairs (VA), which is $1.3 billion below the President's request and almost $400 million below the level provided by the House bill. Over $1 billion of the Committee's cut would come from VA's medical programs, primarily Medical Care and Major Construction. The $511 million cut in Medical Care would impede VA's ability to provide quality medical care to thousands of veterans. The cut of $517 million in Major and Minor Construction would prevent VA from making necessary improvements to older facilities that no longer meet VA's patient care standards. It would also preclude VA from constructing two new hospitals, one at Travis Air Force Base in Fairfield, California, and one in Brevard County, Florida.

The Administration also strongly objects to the provision that would eliminate compensation to incompetent veterans with no dependents and estates over $25,000. See attachment for further details.

National Aeronautics and Space Administration (NASA)

The Administration prefers the Committee's proposed level of funding for NASA over the level provided by the House-passed bill. In particular, the Administration is pleased with the Committee's support for NASA's Mission to Planet Earth program. However, the Administration is concerned about the impact that the Committee's additional cuts would have on the shuttle program and the effect of delayed obligations on the space station. The Congress must realize that the delay of obligations means a delay in the overall station program. The Administration objects to this delay, not only because of international agreements, but also because of the adverse cost and schedule impacts. By introducing artificial and avoidable delay, the Committee's approach would also run counter to the Administration's policy to streamline this program.

The Administration would strongly oppose any amendment that would terminate, significantly reduce, or restrict funding for the space station, particularly with respect to cooperation with Russia. Such action would jeopardize over 30,000 space station- related jobs located in Florida, Texas, California, and Alabama. It would also significantly undermine the critical international partnerships that the U.S. has developed on this important, cooperative project.

Community Development Financial Institutions (CDFIs)

The Administration strongly urges the Senate to reconsider the Committee's decision to terminate one of the most promising initiatives to aid distressed communities. The requested $144 million appropriation for Community Development Financial Institutions would leverage an estimated $600 million in investments, loans, and financial services.

Council on Environmental Quality (CEQ)

The Administration supports the Committee's view that CEQ should not be terminated but strongly opposes the more than 50-percent reduction to the President's request. Such a reduction would severely hamper CEQ's ability to provide the President with advice on environmental policy issues and carry out its responsibilities under the National Environmental Policy Act.

Additional Administration concerns with the bill as reported by the Committee are contained in the attachment.

Attachment

Attachment (Senate Floor)

ADDITIONAL CONCERNS

H.R. 2099 — DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS BILL. FY 1996

(AS REPORTED BY THE SENATE FULL COMMITTEE)

The Administration looks forward to working with the Congress to address the following concerns.

Department of Housing and Urban Development

• Fair Housing. The Administration strongly opposes the proposed transfer of all Fair Housing Act administration and enforcement activities to the Department of Justice. HUD's housing and investigatory expertise are critical to the efficient, sensitive handling of fair housing complaints and in settling disputes before they reach litigation. Developing a new organization at the Department of Justice would be duplicative and costly. The Administration also strongly objects to the provision that would prohibit HUD from spending funds to enforce fair housing laws against property insurance discrimination. Since the enactment of regulations that explicitly prohibit discrimination in the provision of property insurance, four Federal district courts and two circuit courts have concluded that the Fair Housing Act applies to property insurance. Exempting an entire industry from coverage under the Fair Housing Act is an extremely troublesome precedent and seems especially unwarranted given continued evidence of red-lining.
  
  
• Mark-to-Market. The Committee bill includes a demonstration designed to test methods of limiting costs for FHA-insured and assisted multi-family properties. In contrast to the Administration's Mark- to-Market proposal, the demonstration as currently drafted would replace the current over-subsidization of many FHA-insured assisted projects with a more costly approach. The demonstration would provide a new debt service subsidy to owners, ensuring them a profit regardless of market conditions. This is the opposite of the Administration's approach, which would expose properties to the market and give residents market power. A new subsidy program to preserve certain multi-family projects as low-income housing is similarly flawed. Delaying the effect of these provisions until the following fiscal year would avoid the immediate scoring problem but would fail to correct the underlying problems of excessive cost and poor incentives.
  
  
• Office of Federal Housing Enterprise Oversight. The Committee bill would transfer the functions of the Office of Federal Housing Enterprise Oversight (OFHEO) from the Department of Housing and Urban Development to the Treasury. OFHEO's responsibilities for overseeing the activities of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), and ensuring their safety and soundness, are important to the stability of the Nation's housing finance system. There are no savings associated with the transfer because OFHEO is funded by assessments from Fannie Mae and Freddie Mac. In its present form, OFHEO is small, cost-effective, task-specific, and talented. There is no basis for changing its structure.

Department of Veterans Affairs

• Compensation for Incompetent Veterans. The Administration objects to the savings provision that would eliminate compensation to incompetent veterans with no dependents and estates over $25,000. This provision would unfairly single out a group of severely disabled veterans for diminished benefits based on their lack of close family and modest accumulation of assets.

Environmental Protection Agency

• Superfund. The Administration opposes the Committee's proposed $560 million decrease in funding for Superfund cleanups, a 36-percent reduction from the President's request. The Committee's action could eliminate planned funding for about 120 new, long-term cleanup projects and jeopardize 160 actions to address more immediate public health threats. These drastic cuts would mean continued exposure to dangerous chemicals for the hundreds of thousands of citizens living near these cleanup sites. Further, particularly in light of the drastic reductions in proposed funding, the Administration opposes the Committee's allocation of funds to specific Superfund activities. With the limited level of funding recommended by the Committee, EPA would need maximum flexibility to allocate its resources to ensure as efficient and effective a program as possible.
  
  
• Drinking Water State Revolving Funds. The Administration is concerned that the Committee bill would transfer $500 million in new budget authority and $225 in budget authority from prior years to the Clean Water State Revolving Funds if the Drinking Water State Revolving Funds are not authorized by December 31, 1995. The Administration does not oppose this transfer by a date certain. However, the date specified in the Committee bill is too soon, given the lack of action on drinking water legislation in this Congress.
  
  
• Wastewater Funding. The Administration objects to the Committee's $587 million, or 37-percent, reduction to the President's request for Clean Water State Revolving Funds. This program provides a permanent source of wastewater funding that can generate four times the original level of funding over a twenty-year period. Municipalities still have needs for water quality protection that will require $137 billion in funding. The Administration also objects to the elimination of funding for communities with special wastewater needs, including those in the Needy Cities Program, New Orleans, and Bristol County.
  
  
• GLOBE Program. The Administration urges restoration of funding for the GLOBE program, an innovative environmental education project that involves students from around the world collecting environmental data.

Federal Emergency Management Agency (FEMA)

• Disaster Relief. The Administration regrets the decision of the Committee to eliminate funding for FEMA disaster relief. While there are unobligated balances as a result of the recent Northridge Earthquake supplemental, the Administration continues to believe that it is necessary and appropriate to set aside funds each year in anticipation of future disasters.

Office of Consumer Affairs

• The Administration opposes the termination of the Office of Consumer Affairs. This agency represents consumer needs and viewpoints across the Federal Government by coordinating Federal consumer policy and providing information to consumers through a help line and a consumer's handbook.