Statement of Administration Policy: H.R. 4800 - HUD/Independent Agencies Appropriations Bill, 1989

(REVISED)

(House Rules)
(Sponsors: Whitten (D), Mississippi; Boland (D), Massachusetts)

The HUD-Independent Agencies Appropriations Bill approved by the full Appropriations Committee provides funding which is excessive overall, which contains too much funding for low priorities and not enough for high priorities, and which contains objectionable language provisions. If the bill were presented to the President in its current form, the Director of the office of Management and Budget would recommend that he veto it.

The budget authority provided by the Committee for discretionary programs is $1.1 billion in excess of the President's request. Some of the increases would provide for the expansion of low-priority services at the expense of reductions to higher national priority programs.

The following increases in budget authority relative to the President's request are either inappropriate or unnecessary:

—    $787 million for subsidized housing. The Committee's proposed subsidized housing program mix would serve 24 percent fewer low-income families in 1989 — 82,176 versus 108,000 in the President's Budget. In addition, the Administration strongly objects to the diversion of scarce low-income rental housing resources to the new moderate-income "Nehemiah" home ownership program.

—    $450 million for EPA sewage treatment construction grants. This excessive funding is not necessary to meet municipal compliance requirements and would fund many lower priority projects.

—    $150 million for Community Development Block Grants (CDBG). The Administration proposed $2.5 billion in BA, augmented with a transfer of $200 million from the Section 312 rehabilitation loan fund account. While the Committee is to be commended for not funding the "pork barrel" Urban Development Action Grants (UDAG) program, the total CDBG funding level of $3 billion (including $150 million transfer from the Flexible Subsidy Fund) exceeds the amount the Administration feels is sufficient for 1989.

—    $250 million for the Veterans Administration (VA) primarily to increase staffing by 3,513 FTE beyond that which is warranted. The Administration believes that with its expected increase in productivity, the VA can continue to provide timely and effective delivery of benefits and quality medical care to all veterans expected to apply for care without these increases.

On the other hand, the Committee reduces funds for priority programs significantly below the Administration's request:

—    The general reduction of $205 million from the Shuttle funds could seriously affect NASA's ability to achieve an adequate Shuttle flight-rate build-up, further delaying national security missions and increasing costs to other programs.

—    The reduction of $110 million (over one-half of the funds requested) for NASA's procurement of expendable launch vehicle services will reduce needed access to space for important scientific missions already delayed by at least three years, thus exacerbating the effect of the reduction in Shuttle funding.

—    The Committee reduces the President's FY 1989 increase for all of the National Science Foundation's proposed research programs by almost 60 percent. Such action will hinder efforts to strengthen the nation's scientific and technological base.

—    The Committee's $175 million reduction to the Hazardous Substance Superfund account may prevent EPA from meeting statutory deadlines and unnecessarily delay the clean up of 10-15 sites ready for clean up.

The enclosed material more fully describes these and other funding and language provisions that are objectionable.

The Administration urges the House to redirect the excessive increases in low-priority programs to more important national priorities, thereby providing a FY 1989 HUD-Independent Agencies Appropriations Bill that I could recommend the President sign. In particular, we would oppose any amendment to transfer funds away from NASA.

Enclosure

FY 1989 HUD/INDEPENDENT AGENCIES APPROPRIATIONS BILL
OBJECTIONABLE PROVISIONS

I. FUNDING LEVELS

Department of Housing and Urban Development (HUD)

Subsidized Housing. The BA level for subsidized housing Is $787 million higher than requested in the President's Budget. At the same time, the House's subsidized housing program mix would serve 24 percent fewer low-income families in 1989; — 82,176 versus 108,000 in the President's Budget. The most objectionable components within the subsidized housing program funded by the House include: (1 $35 million for Nehemiah, a new moderate-income housing subsidy program; (2) 2,000 subsidies funded under the new handicapped program rather than under Section 202/8; (3) 5,000 Section 8 Moderate Rehabilitation units; (4) $343.3 million for the construction of 5,000 new public housing units; and (5) $1.6 billion for public housing modernization, $600 million higher than in the President's 1989 request.

Community Development Action Grants (CDBG). The House Appropriations Committee proposes $2.6 billion in new BA for CDBG. Additionally, the Committee proposes augmenting CDBG with a transfer of $200 million from the Section 312 rehabilitation loan fund account in addition to a proposed transfer of $150 million from the Flexible Subsidy Fund. The proposed total FY 1989 funding level for CDBG (new BA and transfer authority) would be $3 billion.

While we commend the Committee for endorsing the President's Budget request in not funding UDAG, the $2.5 billion in BA proposed in the President's Budget (together with a $200 million transfer from the Section 312 account) is sufficient funding for this program in 1989. The Committee also continues the unneeded Section 108 loan guarantee program.

A more effective use of the transferred Flexible Subsidy resources is to augment the already limited NASA programs.

Payments for Low-Income Housing Projects. The House Appropriations Committee has provided $1.62 billion for public housing operating subsidies. This BA level exceeds the President's request of $1.52 billion which fully funds the operating needs of public housing projects, as projected by the Performance Funding System formula.

Management and Administration, Salaries and Expenses. The Committee bill increases HUD staffing by 643 staff-years, an amount well in excess of the President's request and of that justified by estimated program activity. In addition, the Committee funds the higher staffing level through budget gimmickry to avoid the discretionary funding ceiling. This entire staffing increase is paid for with FHA Fund resources (which are not subject to the discretionary cap), even though only a fraction (38 percent) is to be used for FHA-related activities. A scorekeeping adjustment of $13.7 million will be added to the Committee's discretionary total.

Environmental Protection Agency (EPA)

Construction Grants. The Administration strongly opposes the increase of $450 million for sewage treatment construction grants. Excessive funding for this program was one of the primary reasons for the President's veto of the 1987 Water Quality Act. Funding above the President's Budget is not necessary to meet municipal compliance requirements and would fund many lower priority projects. The Administration also objects to the unjustified funding of projects in Iowa, Massachusetts, and New York under special rules not available to other projects and outside the normal state allocation process.

Asbestos Program. The $65 million added by the Committee for the Asbestos School Loan and Grant Program is not necessary. It was not contained in the President's Budget because prior year appropriations have reduced the asbestos problem greatly. This additional funding would go to State and local agencies that are capable financially of addressing the problem themselves, or to low-priority projects that do not represent an environmental threat. Approximately $153 million in Federal funds have been provided to complete 1,767 projects in local educational agencies showing the greatest financial and environmental needs. The financial responsibility for asbestos abatement now rests with States and localities. Thirty-two states have enacted more than 60 asbestos-related laws and nearly half of the States have financing provisions in these laws.

Hazardous Substance Superfund. The Administration opposes the $175 million reduction to the President's Budget for the Hazardous Substance Superfund. This reduction may prevent EPA from meeting statutory deadlines and unnecessarily delay the cleanup of 10-15 sites ready for cleanup.

Operating Program: Abatement, Control and Compliance: Salaries and Expenses; Research and Development. The Committee bill would add $45 million (excluding asbestos loans and grants) and 7 0 FTEs to the President's Budget spread across EPA's operating program. These increases would either fund low-priority activities or special interest projects, or would increase current-resources beyond levels consistent with Administration policy. The Administration urges the Senate to reduce this funding -to the requested level.

National Aeronautics and Space Administration (NASA)

Space Flight, Control and Data Communications (SFCDC); Research and Program Management (R&PM). The general reduction of $205 million from the Shuttle funds could seriously affect NASA's ability to achieve an adequate shuttle flight-rate buildup. Delays in Shuttle flight-rate buildup could result in further delays in important national security missions and in increased costs to other programs. The reduction of $110 million, (over half of the funds requested) for the procurement of expendable launch vehicle services will reduce needed access to space for important scientific missions, already delayed by at least three years, thus exacerbating the effect of the reduction in Shuttle funding. The reduction in research and program management ($60 million) will likely require some adverse personnel actions and will seriously affect operational support activities related to the buildup of Space Shuttle flight activity. We urge the Senate to restore funding for these important activities.

Research and Development (R&D). In light of the recent action by the House Committee on Science, Space and Technology regarding the Commercially-Developed Space Facility, the rescission of $25 million of FY 1988 funds (originally intended for the Industrial Space Facility) is premature. We urge the Senate not to rescind these funds.

National Science Foundation (NSF)

The Committee has reduced the President's fiscal year 1989 increase for all of NSF's proposed research programs by almost 60 percent. Such an action would forestall the proposed doubling of the Foundation's budget and hinder efforts to strengthen the nation's scientific and technological base. Since FY 1985, the Foundation has had essentially a level research budget. This has forced the deferral of important research initiatives — including increasing the number of research awards; improving undergraduate science and engineering programs; and establishing new Science and Technology Centers — all ingredients essential for improvements in the nation's economic competitiveness.

Veterans Administration (VA)

In total, the Committee recommendation would add $225 million and 3,513 FTE to the President's 1989 request for the Veterans Administration (VA). The Administration believes that with its expected increase in productivity, the VA can continue to provide 1) high quality medical care to all veterans who are expected to seek VA care and 2) timely and effective delivery of benefits without these increases.

These objectionable increases include:

—     $240 million and 2,782 FTE for VA medical care;

—     $3 million and 601 FTE for the General Operating expenses account, earmarking 590 of that additional FTE to the Department of Veterans Benefits; and,

—     $6 million and 130 FTE for medical research.

In summary, these increases would enlarge the VA's staff beyond that warranted by current services, rather than achieving the staffing reductions and associated dollar savings resulting from the enhanced productivity anticipated in the President's Budget.

The Committee would also shift $12 million from minor construction to major construction and reallocate the funds to different projects in the major construction account. The Committee would add four nursing homes and design funds for a clinical addition in Dallas, Texas, while denying funds for construction of a regional office in Montgomery, Alabama and funding the design, but not the full construction, of a clinical addition in Nashville, Tennessee. The allocation of $31.7 million for a parking garage and nursing home in New Orleans, Louisiana is particularly objectionable as this is over four times the average cost to construct a 120 bed VA nursing home and parking lot ($7.5 million). The addition of funding for the four new nursing homes will result in permanent increases to operating costs in the out-years of more than $20 million per year. This is over 50 percent more than it would cost to provide nursing home care in these locations through VA's other nursing home programs. Splitting the funding for the design and construction of the Nashville clinical addition is an inappropriate way to budget for capital expenditures. This action, in effect, would shift the allocation of the $37.8 million requested for construction of the Nashville clinical addition to be used for construction and design of other projects, ignoring VA's priorities.

Budget authority of $8.4 million contained in the Administration's request for the General Operating Expenses account, to pay state Approving Agencies, will continue to be scored as a discretionary expenditure. The President signed P.L. 100-323, which requires that this expenditure be paid from an entitlement account. The scoring as a discretionary expenditure is in accordance with the Bipartisan Budget Agreement. The Committee does not score it as a discretionary expenditure (nor is it added to the entitlement appropriation). The $8.4 million will be scored as an adjustment to the Committee's discretionary total.

Defense-Related Agencies

Selective Service System (SSS). The Committee has provided a 1.0 percent increase beyond the President'.s request for this account, for allocation at the agency's discretion. This iricrease is in addition to the 2.6 percent increase over its FY 1988 budget, received by all Defense-related agencies. The SSS can meet its current mission requirements within the funding level requested by the President.

II. LANGUAGE PROVISIONS

Department of Housing and Urban Development (HUD)

Subsidized Housing: Vouchers. The Committee 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.

Subsidized Housing. The Committee bill raises fees for the costs incurred by housing authorities in administering the Section 8 certificate and housing voucher programs to the level authorized for such fees in Section 8 (q) of the 1987 Housing Act. The Administration opposes this language provision because recent research by GAO and HUD indicates that current fees paid to local housing authorities are actually in excess of incurred costs.

Management and Administration, Salaries and Expenses. The Committee establishes an administratively burdensome and overly prescriptive staffing floor for Public and Indian housing programs. Despite recommending cuts from last year's level for public and Indian housing development, the Committee mandates a floor that is 50 staff-years greater than the one required in 1988.

Environmental Protection Agency (EPA)

Pesticides Indemnification (Administrative Provision). The Committee bill includes language that has the effect of requiring the Claims and Judgment Fund, rather than EPA, to pay pesticide indemnification claims. This could automatically add to FY 1989 outlays without further Congressional oversight and takes pressure off the authorizing committees to address the indemnification issue. It also reduces EPA's incentive to find ways to minimize or contest the amount of these claims and runs counter to recent Justice Department and GAO efforts to limit use of the Judgment Fund.

Veterans Administration

The Committee would continue the cap on staffing for administrative support funded within the VA medical care appropriation that was imposed by the Congress for the last two years. In the 1989 Budget, the Administration had requested that the cap be deleted as an unwarranted intrusion into the day-to-day management of the VA medical care system.

The Committee would also continue to earmark $512 million and 12,898 FTE for the Department of Veterans Benefits. These earmarks unnecessarily restrict the Administrator's ability to manage the agency.

The Committee has not deleted appropriation language in the Major Construction account, as requested in the President's FY 1989 Budget dealing with section 1015 of the Impoundment Control Act of 1974 (title X of Public Law 93-344), by which the Comptroller General can classify impoundments and trigger whatever statutory procedures and time tables the 1974 Act provides. To the extent that consequences follow from such action by the Comproller General, constitutional questions may be raised.