Statement of Administration Policy: H.R. 3756 - Treasury, Postal Service, and General Government Appropriations Bill, FY 1997

(House Rules)
(Sponsors: Livingston (R), Louisiana; Lightfoot (R), Iowa)

This Statement of Administration Policy provides the Administration's views on H.R. 3756, the Treasury, Postal Service, and General Government Appropriations Bill, FY 1997, as reported by the House Appropriations Committee. For the reasons stated below, the Administration believes that the bill, as reported by the Committee, is unacceptable.

Internal Revenue Service

The Administration strongly opposes the Committee's reduction in funding for the Internal Revenue Service (IRS) - $1.4 billion below the President's request. Inadequate funding levels for the IRS, together with highly restrictive language limiting Treasury Department management of the tax enforcement program, would cripple our tax systems and result in unacceptable damage to the immediate collection of revenue, the long-term health of voluntary compliance, and delay refunds to millions of Americans. The Administration urges the Committee to fund the IRS at the level necessary to maintain an efficient and functioning IRS.

The Committee bill includes highly objectionable provisions that would unduly restrict IRS administration and operational effectiveness and could ultimately impede collection of tax revenue. These provisions go far beyond oversight - they would affect the basic operation of the Service. Coupled with the Committee's proposed FY 1997 funding level, IRS would be unable to undertake properly the necessary restructuring and downsizing in a staged, moderate approach necessary for an organization of this size.

The reductions in finding for tax compliance would have an adverse effect on revenue collection. The magnitude of this effect could be as much as four dollars of lost revenue for every dollar of reduced funding, according to IRS estimates.

The Committee bill proposes to reduce requested funding by $180 million, or 22 percent, below the FY 1996 level for the current operating systems that process more than 200 million tax returns annually and issue timely refunds to over 80 million taxpayers. In addition, the Committee's recommended funding level would eliminate electronic filing for 17 million tax returns and would severely reduce die extremely successful Internet access for self-service assistance. This would inconvenience taxpayers and overload the paper processing system, in turn delaying refunds for millions of taxpayers. At least 95 million toll-free customer assistance calls from taxpayers as well as about 100 million letters and bills to taxpayers would be adversely affected as well. Finally, the Committee mark would significantly reduce funding for basic operational administrative systems such as accounting, travel, and payroll personnel.

The Administration believes that the Committee's recommended funding level for Tax Systems Modernization (TSM) is inadequate. The Administration vehemently opposes the rescission of prior-year balances included in the Committee bill and restrictions on the availability of TSM funds. The Committee bill would require that the Department of Defense be responsible for contracting decisions on tax systems modernization. The Administration, and in particular the Department of Defense and Treasury Department, opposes such a bifurcated arrangement and is willing to work with the Appropriations Committees to develop a strategy for IRS to conduct an effective competition faster. Moreover, the bill would fence TSM funds until IRS "restructures contractual relationships with the commercial sector." While the Administration agrees with the need to increase dramatically the use of outside contractors, this fencing proposal would significantly delay IRS' ability to correct the technical and management weaknesses identified by the General Accounting Office; to achieve near-term improvements to critical business performance measures; and, to design and implement a fully-integrated, modernized system.

Federal Employees Health Benefits Program

The Administration strongly opposes the provision contained in the Committee bill that restricts Federal Employees Health Benefits Program (FEHBP) coverage for abortions except in situations where the life of the mother is endangered or the pregnancy is the result of rape or incest. While the President believes that abortion should be safe, legal, and rare, the Administration does not believe that Federal employees and their families should be precluded from choosing to purchase health insurance that includes broader coverage. The Administration believes that the decision to cover abortion should be left to each health plan participating in the FEHBP. Thus, Federal employees who wish to purchase health coverage that does not include abortion services would have that choice. The provision in the Committee bill does not allow Federal employees and their families to make that choice.

Anti-Drug Funding

The Administration requested $250 million in FY 1996 supplemental funding for drug law enforcement, treatment, and prevention efforts. As part of last year's agreement to resolve FY 1996 appropriations issues, the Appropriations Committees, in the Conference Report accompanying P.L. 104-134, the Omnibus Consolidated Rescissions and Appropriations Act of 1996, expressed their intent to fund these additional requirements through the FY 1997 appropriations bills. To date, Congress has not done so. Of the $250 million requested, $ 1 IS million was requested to be provided through the Office of National Drug Control Policy. The Committee has provided only $8 million of this $118 million component of the request.

Firearms Petitions

The Administration opposes any change in the existing appropriations provision that prohibits the Bureau of Alcohol, Tobacco and .Firearms from investigating or acting upon petitions to restore firearms rights to individuals otherwise prohibited, including convicted felons, under 18 U.S.C. 925(c). The Committee bill would permit courts to review petitions from persons other than those convicted of violent crimes, firearms violations, or drug-related crimes. This would be a waste of scare judicial resources and require the courts to act without die benefit of thorough background investigations. Felons deserving relief from firearms disabilities can use existing Federal or State pardon or restoration processes without burdening the courts.

In addition to the concerns discussed above, the Administration has additional concerns with the bill concerning Treasury and GS A that were detailed in a June 27th letter to the House Appropriations Committee.