Statement of Administration Policy: H.R. 2916 - VA, HUD, and Independent Agencies Appropriations Bill, FY 1990

(House)
(Whitten (D/MS) and Traxler (D/MI))

The Administration opposes the VA, HUD, and Independent Agencies Appropriations Bill as reported by the House Appropriations Committee.

Although under CBO scoring this bill would fall within the 302(b) allocation, the Administration believes that an appropriate scoring of the bill would provide $261 million in domestic discretionary budget authority and $477 million in outlays more than the 302(b) allocation. The bill would violate the limits set forth in the Bipartisan Budget Agreement, unless other bills that provide domestic discretionary appropriations are below their House 302(b) allocation.

The Administration is concerned that the Committee has reduced the funding for NASA by over $1 billion from the President's request, including a reduction of $395 million for the Space Station and $400 million from the Space Shuttle. The Administration is further concerned that the Committee has also reduced the funding for NSF research activities by almost $90 million from the President's request. The science and technology programs of both NASA and NSF represent an important investment in the future of the Nation — an investment that must be made if the United States is to remain competitive in global markets.

The Administration strongly opposes the Schumer amendment, which would cut $714 million from the Space Station to use for other programs in the bill.

The Administration is strongly opposed to the shift of the first pay date in FY 1990 into FY 1989 for VA, EPA and NASA. This action violates section 202 of the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987, which prohibits the scoring of shifts in outlays or receipts between fiscal years.

The Administration also opposes the Committee's shift of funding for the U.S. Antarctic program from NSF to the Department of Defense, which is in violation of the scorekeeping guidelines of the Bipartisan Budget Agreement.

The Administration opposes the $1.6 billion increase in budget authority over the President's Budget for subsidized housing. Although the Subcommittee's funding is greater than the President's ^.request, the Subcommittee's subsidized housing program mix' would actually serve 28 percent fewer new low-income families in 1990 — .78,350 versus 109,000 in the President's Budget. This is a result of the Subcommittee's reliance on higher-cost new construction programs instead of lower-cost housing vouchers proposed in the President's Budget.

The House is urged to pass a bill that funds essential programs without using scorekeeping devices or violating the Bipartisan Budget Agreement scoring rules.

The Administration is concerned about a number of other provisions as outlined in the attachment.

Attachment

VA/HUD AND INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 1990

1. CONFORMANCE WITH BIPARTISAN BUDGET AGREEMENT AND 302(b) ALLOCATIONS

Under CBO scoring the FY 1990 VA, HUD and Independent Agencies Appropriations bill is consistent with the 302(b) allocation for discretionary budget authority. However, the Administration believes that the actual domestic discretionary spending levels in the bill are higher than indicated by CBO scoring. The attached table shows that the scoring of the bill provides a total of $48,653 million in discretionary budget authority and $53,602 million in outlays, which includes $342 million in budget authority and $344 million in outlays for the defense function. This is $261 million in budget authority and $477 million in outlays more than the 302(b) discretionary allocation.

2. MAJOR PROVISIONS SUPPORTED BY THE ADMINISTRATION

NASA, Research and Development. The Administration is pleased that the Committee agreed not to fund the Advanced Communications Technology Satellite (ACTS).

National Institute of Building Sciences. The Administration supports the inclusion of an annual direct appropriation for the National Institute of Building Sciences (NIBS) provided that it does not exceed $500 thousand and that it must be matched by contributions from private sources.

3. MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Pay Date Shift. The Administration objects to the provision that would shift the final salary payment from FY 1990 to FY 1989 for NASA, EPA, and VA. This action violates the G-R-H sectipn 202 prohibition against scoring shifts in outlays or receipts between fiscal years as deficit reduction. None of the criteria for exempting such shifts from this prohibition established in the G-R-H statute justify this change. Therefore, OMB would not score this change under G-R-H.

U.S. Antarctic Program. The Committee has reduced th« funding for the U.S. Antarctic Program (USAP) by $82 million, which represents the sum of reimbursement to DOD for logistics support services ($72 million) and funding requested to alleviate critical environmental, safety and health problems ($10 million). The Committee assumes that the funding for these activities would be absorbed by DOD. This is a clear violation of the Bipartisan Budget Agreement since it has the effect of forcing DOD to fund domestic discretionary activities. With this action, the U.S. would be the only superpower on the Antarctic continent to revert to a major militarily controlled presence there. More seriously, if the requested funding is not provided, NSF would be forced to cancel the FY 1989-90 Antarctic program (except for minimal caretaker operations), and would have to delay award of an $800 million, 10-year support contract.

National Aeronautics and Space Administration (NASA)

Research and Development and Space Flight. The Committee has delayed until April 15, 1990 the obligation of $384 million in funds for Space Transportation Capability Development R&D, and $1,400 million for shuttle production and operations. The Committee has scored outlay savings stemming from this action of $30 million and $120 million respectively. Given the overall level of funding for these programs, as well as the historical month to month outlay experience, no major disruption of funding is estimated to result from the delay and no real outlay sayings will occur.

Research and Program Management. The reduction of $27.5 million from the increase requested for personnel is inconsistent with the Committee's action in funding the Space Station, since the Committee targeted the reduction to be applied to the increase of 529 FTE requested for the Space Station program. The reduction will seriously impair the ability of NASA to manage the Space Station program effectively and to ensure cost discipline through adeouate oversight.

Research and Development. The Committee has reduced funding for the National Aerospace Plane (NASP) program by $49 million, to a total of $78 million. The program could not proceed at this funding level. NASP is important both to promote U.S. industrial competitiveness and space leadership, and it will benefit the civil, commercial and national security space sectors. The National Space Council has just completed a review of this program and has recommended that an appropriate joint NASA/DOD management structure and joint NASA/DOD funding be maintained. It is imperative that NASA's share of the funding for NASP be retained at the requested level so that this important national program can continue to make progress toward its ultimate goal of single-stage-to-orbit flight.

The Committee has reduced the funding for the Pathfinder project by $25 million. This is the second year that funding has been significantly reduced for this project. The Pathfinder program is intended to develop technology that is vital to the Nation being able to makevintelligent decisions on how and when to carry out the Nation's long range space goal of expansion of human presence into the solar system. The reduction in Pathfinder again this year would delay those decisions almost indefinitely, and would send a strong, negative signal to young scientists and engineers about the future of the U.S. space program.

The Committee has reallocated $22 million to the Gravity Probe B project for which funding was not requested by the President. While we believe that this project has merit, it was judged to be of a lower priority within the strategic plan for Space Science and Applications. This plan has been carefully crafted by NASA and reviewed by the scientific community. The Committee's action disrupts this process for setting priorities in space science research, artd funds this project at the expense of other, higher priority science projects.

Veterans Administration (VA)

Major Construction. The Administration objects to the addition of $51.7 million for unrequested major construction projects, including a Clinical Improvement project at the Nashville, TN, Department of Veterans Affairs Medical Center (VAMC); a Psychiatric Building at Gainesville, FL, VAMC; a Geropsychiatric Facility at Marion, IN; and a Bed Addition at Temple, TX, VAMC. The addition of these projects ignores VA's orderly system of prioritizing and planning for construction projects. Of particular concern is the split funding provided for three projects (funding only design, not design and construction), requiring future construction funding of $138 million.

Also objectionable is the funding fo.r an Environmental Impact Statement for a new national cemetery in Dallas, Texas. The Dallas area is already served by a large Regional National Cemetery in Houston, Texas.

The Administration also objects to the earmarking of $9.3 million in design funds for specific projects. This action restricts the VA's ability to manage and clan its construction program.

Parking Garage Revolving Fund. Tne Administration objects to the addition of $22.3 million for a new parking facility in downtown Detroit. The parking facility is planned to serve a new VA replacement hospital, for which construction will not begin until FY 1991, at the earliest. Funding the garage in FY 1990 is prematurely beginning the project; construction phasing should be left to the contractor who gets the bid for the parking garage and new hospital.

Medical/Prosthetic Research. The Administration objects to the Committee adding $13.7 million for Medical aind Prosthetic Research. The Administration's request of $197.3 million combined with VA's demonstrated ability to compete for National Institutes of Health grants and other federal and non-federal grants provides sufficient resources to support VA researchers.

Environmental Protection Agency (EPA)

Hazardous Substance Superfund. The Administration opposes a $315 million reduction from the President's request for the Superfund. The reduction will result in delaying projects ready for cleanup, missing statutory deadlines, and seriously hampering the EPA Administrator's efforts to speed up the program. Since this is the second year that Congress would impose redactions to needed program levels, it will not be possible to get the program back on the mandated path in future years.

Construction Grants. The Administration opposes the $776 million increase above the President's request for construction grants. The President's request is part of a $12 billion phaseout program designed to return responsibility for sewage treatment funding to States and localities while providing sufficient funding to meet municipal compliance requirements. Funding above the request will be low priority sewer projects used to promote development and new unauthorized set-asides unrelated to sewage treatment. Consequently, funding should be reduced to the President's request and used for higher priority activities that are more properly a Federal responsibility, such as the space station or the Superfund.

Operating Program. The Committee would provide an additional $112 million for EPA's operating program (Salaries and Expenses, Abatement Compliance and Control, Research and Development) for unrequested increases and unnecessary projects. These increases would fund many low priority activities and special interest projects that are either not a Federal responsibility or violate established fundina allocation procedures.

Operating Program. The Administration objects to unrequested language in EPA's Salaries and Expenses account authorizing EPA to lease/purchase the Ann Arbor Motor Vehicles Laboratory. Lease/purchase agreements are contrary to Administration policy and result in violations of the Anti-Deficiency Act. An adjustment has been made to the Committee's scoring to correct the understatement of the impact of this bill on domestic discretionary spending.

FEMA, Disaster Relief. The Committee reduced the request for replenishment of FEMA's Disaster Relief fund from $270 million to $100 million. This level is below the historical norm and will require a supplemental appropriation if there is a normal level of disasters. We urge full restoration in order to have adequate funds on hand to respond quickly to human needs in a large disaster. The Office of Management and Budget will add $170 million to its scoring of the bill to fully recognize the impact of FEMA within the domestic discretionary ceiling of the Bipartisan Budget Agreement.

Housing and Urban Development (HUD)

Subsidized Housing. The BA level for subsidized housing is $1*6 billion higher than requested in the President's Budget. The Committee's higher subsidized housing funding level would actually serve 28 percent fewer new low-income families in 1990 — 78,350 versus 109,000 in the President's Budget. This is a result of the Committee's reliance on higher-cost new construction programs instead of the lower-cost housing vouchers proposed in the Administration's Budget.

Subsidized Housing. The bill raises the amounts paid to local housing authorities for administering the Section 8 Certificate and Housing Voucher programs from 7.65 percent to 8.2 percent. The Administration opposes this increase because recent research by GAO and HUD indicates that current fees paid to local housing authorities are sufficient to cover administrative costs.

Homeless Programs. The Administration appreciates the full funding provided by the Committee for McKinney Act homel-ess programs in VA, HUD and FEMA. However, the Committee did not fund the new $50 million HUD initiative to combat homelessness. This new initiative would fill in any gaps in the McKinney Act by providing resources on a flexible basis for communities to meet specific needs of homeless people. For example, this initiative would provide for a special effort to help homeless families and children move out of welfare hotels.

Public Housing New Construction. The BA level for subsidized housing includes $528 million for 7,500 public housing new construction units. The President's Budget provides zero funding for public housing new construction and would instead fund housing vouchers, utilizing existing private housing, for the same $528 million in BA, the Administration proposes to fund 21,000 housing vouchers — serving almost threevtimes as many families.

Community Development Block Grants. The Committee level does not assume funding for the Administration's proposed homeownership initiative. The request of $44 million for the Secretary's discretionary fund would assist low-income persons to become homeowners. The Administration reguests fundina for this initiative t«-> be restored.

Payment for Operation of Low Income Housing. The Committee added $75 million in BA to the President's request of $1.7 billion for public housing operating subsidies. However, the President's request already provides 100 percent funding for this formula-driven discretionary account. The Committee argues that funds would go towards insurance costs and a drug elimination program, but insurance costs are already included in the formula and the drug program received only $8.2 million in 1989.

Public Housing Modernization. The Committee provides $2 billion for public housing modernization within the total for subsidized housing. This is $1 billion more than the President's request, and $350 million over the FY 1989 funding level of $1.65 billion. Recent analyses of'public housing estimate backlog repair needs at $10 billion and new needs accruing at over $1 billion annually. With a pipeline of $3 billion in unspent funds for backlog and accrual of modernization needs, a $1 billion increase above the President's Budget appears excessive.

Housing Counseling. The Administration opposes continuation of funding for this program. The President's 1990 Budget did not request funds for this program, since communities may use community development block funds for this purpose.

B. Language Provisions

NASA, Research and Development. The Administration opposes language that targets portions of funds appropriated for the Space Station to special groups. Each agency in the Federal Government is already committed to awarding a certain percentage of its contract dollars to socially and economically disadvantaged business concerns. This goal can be met in the National Aeronautics and Space Administration in part by contracts awarded for the Space Station. Mandatory set-aside goals on the basis of individual projects, however, greatly reduces agency flexibility, increases costs to the taxpayer and sets a bad precedent for all Federal agencies attempting to meet procurement goals in the most cost-effective way.

Veterans Administration (VA)

Medical Care. The Administration objects to the restrictions placed on the management of the VA Medical Care program. These restrictions earmark funds for personnel compensation and benefits and delay availability of equipment funds until August 1990. such restrictions interfere with the Secretary's ability to use resources to meet the health care needs of veterans in the most effective and efficient manner.

Veterans Benefits Administration (VBA). The Administration objects to the earmarking of funding and staffing levels for VBA. The FY 1989 supplemental enacted by Congress contained a provision, requested by the Administration, removing a similar restriction which had been in previous appropriations. Based on the experience of the last two years, this earmarking significantly hampers the Secretary's discretion in allocating resources within both VBA and the GOE aooropriation.

Minor Construction. The Administration objects to the inclusion of reprogramming authority of $15.0 million from Minor Construction to the General Operating Expenses (GOE) account. Given that the spend-out rate for the first year for GOE (92 percent) is more than double that of Minor Construction (44 percent), this provision permits a possible increase of FY 1990 outlays without charging it to any appropriations bill.

FEMA, Disaster Relief. The Committee denied language permitting up to $10 million to be borrowed for developing and exercising emergency response plans at nuclear power plants for non-participating State and local governments.

Without this provision, the Federal government will be forced to require an advance of funds by nuclear power plants before the Federal effort can begin. We urge restoration of the borrowing authority to permit the Federal government to operate like other businesses by completing part of the work before requiring payment.

Housing and Urban Development

Public Housing New Construction. The Administration opposes a language provision that raises the cap on total development costs (TDC) for public housing new construction. This needlessly permits increased costs in an already expensive housing program.

Management and Administration. The Administration opposes a general provision that limits the number of noncareer SES and appointed positions within agencies funded by this appropriation. The effect of this provision will be to eliminate Schedule C political appointees from holding Deputy Assistant Secretary-equivalent positions. This is a significant infringement on the authority of the executive branch to operate government programs

Salaries and Expenses. Bill language is included that reestablishes a minimum staffing level of 1,368 for Public and Indian housing (PIH) programs. This provision unnecessarily requires HUD to maintain a specific staffing level in PIH, regardless of program need. In-addition, understaffing of other program areas in HUD may result in order to meet the PIH requirement, which is especially onerous given current concerns about management problems in these program areas.

Subsidized Housing: Vouchers. The bill mandates that highest priority in the distribution of vouchers shall be given to families who as a result of rental rehabilitation activities pay rents in excess of 35 percent of their incomes. This means that families with greater rent burdens living elsewhere will be given lower priority. This provision is inconsistent with the desired policy of giving those families who are most in need priority in receiving housing assistance.

Administrative Provisions. The Administration objects to two HUD administrative provisions allowing the cities of Hartford and College Park to retain urban renewal recaptures. The Administration also objects, to a third provision forgiving the repayment of interest on public housing development funds for the city of Pittsburgh. These provisions could set a bad precedent, as other communities seek similar exceptions to HUD program requirements.