Statement of Administration Policy: H.R. 3603 - Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1997

(House Rules)
(Sponsors: Livingston (R) Louisiana; Skeen (R), New Mexico)

This Statement of Administration Policy provides the Administration's views on H.R. 3603, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1997, as reported by the House Appropriations Committee.

The Administration has previously communicated its strong objection to the overall discretionary funding level assumed in the House- and Senate-passed Budget Resolutions. The revised 602 (b) allocation provided for this bill would reduce discretionary budget authority by $1.2 billion (eight percent) from the President's request and $1.1 billion (eight percent) from the FY 1996 level. Actions proposed by the Committee to achieve this restrictive spending level include reductions in high-priority spending that would adversely affect low-income, farm, and rural families. As a result, the Administration has serious concerns with the bill that must be addressed.

Rural Development and Housing

The Administration is deeply concerned with program funds provided in a number of areas. For example, the Committee bill would cut the program level for water and wastewater loans and grants by 27 percent, or $374 million, from the President's request. This reduction would result in over 350 rural communities -- 230,000 rural Americans -- not receiving needed financial assistance to upgrade or replace water and wastewater systems. Without the additional assistance, some rural residents would continue to have no running water, and more existing systems would continue to violate Safe Drinking Water or Clean Water act requirements. The Administration urges the House to increase funds for this program.

The Administration is concerned about the Committee's reductions to rural housing resources. No funds are provided for direct loans for new construction of multi-family housing or their related rental assistance grants, representing a reduction of over $100 million from the President's request. These projects provide housing opportunities to the most needy individuals and families in rural areas, who have an average annual income of $7,500. The Administration urges the House to provide funds for new multi-family construction, and the Congress to enact reforms to the program, such as those contained in the House-passed version of H.R. 1691.

The Administration is also concerned about the mark for single-family housing direct loans. The request for $110 million in budget authority for the program would permit $1.3 billion in direct loans. However, the Committee bill provides only $83 million in budget authority, which would result in a $320 million (24 percent) cut in direct loans. This reduction would deprive approximately 7,000 low- and very low-income rural Americans of the opportunity for homeownership. When coupled with the unacceptable $36 million cut -in Rural Housing Service salaries and expenses, which would result in an additional 900 reductions- in-force, housing services to rural families and protection of taxpayer liability will erode.

The Administration urges the House to restore funding to the Presidents requested level for these programs. To help offset these increases, the Administration recommends the elimination of funds provided by the Committee for construction of buildings and facilities at universities, and the authorization of $130 million in marketing and inspection user fees proposed in the President's budget.

WIC

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) would be frozen by the Committee bill at the PY 1996 appropriation level -- $150 million below the FY 1997 request. Historically, the Committee and the Administration have shared the bipartisan goal of reaching full participation in WIC. Freezing funding, however, would prevent WIC from reaching the full participation level of 7.5 million women, infants, and children. The Administration strongly opposes any action that would impede WIC from achieving full participation.

The Administration shares the Committee's concern that WIC be able to maintain its successful cost containment efforts. The Administration strongly supports the inclusion of a provision to ensure competitive contracting of infant formula based on the lowest net wholesale cost- Without such a provision, infant formula costs could rise dramatically, increasing WIC's total costs and putting budgetary pressure on other programs funded by Agriculture appropriations.

Food Stamps

The Administration strongly urges the deletion of section 719, which would freeze the Food Stamp standard deduction at the FY 1995 level. The Appropriations Committee anticipates savings in excess of $300 million in FY 1997 due to this action. The Administration is concerned that this proposal is similar to one included in the welfare reform bill (H.R. 3507). The inclusion of section 719 in this bill would put pressure on the authorizing committees to replace the lost mandatory savings by making further unacceptable cuts in agricultural programs or assistance to needy individuals.

Unlike other major Federal entitlement programs such as Supplemental Security Income and Medicaid, the Food Stamp appropriation does not include an indefinite authority that provides funding in case of an economic recession or estimating errors. Instead, the Congress has traditionally provided a benefit reserve, or "cushion." While the Committee bill includes a benefit reserve, it is so small as to jeopardize seriously the Food Stamp program's ability to provide assistance to low-income families and elderly. The Administration strongly opposes risking the well-being of working poor individuals, families, and elderly with an inadequate benefit reserve and urges the Committee to restore the requested level of $2.5 billion, or approximately 10 percent of program costs.

Reductions in Farm Bill Conservation Programs

The Administration objects to the Committee's reductions to mandatory conservation programs that provide important benefits to agricultural producers and to all Americans; and were a crucial factor in the President's decision to sign the Farm Bill. The Committee bill would block direct spending included in the Farm Bill for the Wildlife Habitat Incentives Program and would limit funding for the Farmland Protection Program and the Conservation Farm Option to 25 percent of their authorized levels. The Committee bill also would limit spending on the Wetlands Reserve Program (WRP), reducing the administration's request from 226,000 acres to 130,000 new WRP acres. In light of the Farm Bill's requirement that permanent easements can only be offered after 75,000 non-permanent easements have been enrolled, the appropriations limitation would deny many producers the option of electing permanent easements in FY 1997. The Administration urges the House to allow these programs to function as intended by the Farm Bill.

Food and Drug Administration (FDA)

The Administration is concerned that the Committee has not funded the level requested in the FY 1997 Budget to operate FDA and has not included all of the proposed user fees, some of which would help further reduce FDA review times for medical devices. The Administration also objects to bill language that would interfere with the rule-making process by precluding FDA from implementing a proposed rule that would ensure that consumers receive important information regarding prescription drugs.

Everglades/South Florida Ecosystem Restoration Research

The Committee has not included the $6 million requested for melaleuea research. This research is vital to the Everglades restoration effort and is strongly supported by the interagency South Florida Ecosystem-Restoration Task Force. The Administration urges the House to include funds for this important research.

In addition to the concerns discussed above, the Administration has additional concerns with the bill that were detailed in a June 6th letter to the House Appropriations. Committee.