Statement of Administration Policy: H.R. 2072 - Dire Emergency Supplemental Appropriations and Transfers, Urgent Supplementals, and Correcting Enrollment Errors Bill, 1989

(House Rules)
(Sponsor: Whitten (D), Mississippi)

The bill reported by the Appropriations Committee is unacceptable. The Administration does not support waiving the Congressional Budget Act for a bill that increases the deficit for discretionary programs in FY 1989 by $1.2 billion and in FY 1990 by $0.6 billion.

The bill includes $2.2 billion in discretionary spending, with only $0.1 billion in specific program offsets. Over one-third of this amount is simply forward funding of FY 1990 programs, not FY 1989 dire emergencies, such as:

• $250 million in payments to individuals of Japanese ancestry interned during World War II;
• much of the $822 million for anti-drug activities; and
• most of the $242 million for the homeless and public housing subsidies.

The Administration supports these programs and has requested funds for these in the FY 1990 budget. Other concerns with the bill are addressed in the attachment.

When submitting the Administration's supplemental request, the President included only those proposals that were considered dire emergencies. Moreover, the President included almost $1 billion in proposed offsets to ensure that the net effect of Executive Branch discretionary requests would not increase either the FY 1989 or FY 1990 deficits.

The President and Congress have recently reached agreement on substantive deficit reductions for FY 1990. It is fiscally irresponsible to, at the same time, add substantially to the deficit in FY 1989 and FY 1990. The FY 1990 outlays will make discretionary ceilings much more difficult to attain. This is a bad first step towards meeting the FY 1990 Gramm-Rudman-Hollings target.

The supplemental bill presented to the full House should only contain dire emergency spending and it should be free of all extraneous material. The discretionary funding should be offset to the maximum extent possible. The offsets for domestic discretionary programs should only come from domestic discretionary accounts, not defense or international affairs accounts. If the bill passed by the House does not substantially meet these tests, then the Director of the Office of Management and Budget would have to recommend to the President that he veto the bill.

Attachment

(House Rules)
April 24, 1989
Attachment

H.R. 2072 - Dire Emergency Supplemental Appropriations and Transfers, Urgent Supplementals, and Correcting Enrollment Errors Bill, 1989

A. SIGNIFICANT ISSUES:

Urequested Drug Funding. The bill includes $822 million in unrequested budget authority to support the anti-drug activities of the Departments of Justice (DOJ), the Treasury, the Judiciary, and other agencies. The appropriation of additional resources to fight the war on drugs should be deferred and considered in the context of the President's FY 1990 request of $6.0 billion. The FY 1990 request constitutes an increase of $0.6 billion and $2.1 billion, respectively, over FY 1989 and.FY 1988 enacted levels.

The Director of the Office of National Drug Control Policy is responsible, by statute, for developing a strategy that addresses the national drug problem. Any additional drug funding should follow the release of this strategy.

Finally, a $1 billion FY 1989 supplemental for anti-drug activities was passed just six months ago. Programs supported by that supplemental are now being initiated. It would be premature for the Congress to enact another drug supplemental while the program enhancements that were funded by the last supplemental are still being implemented.

Naval Petroleum Reserve. The language preventing the Administration from "performing studies to aid" in the sale of the Naval Petroleum Reserves 1 and 3 is highly objectionable. Sale of the Naval Petroleum Reserve makes good sense on fiscal, energy security, and economic efficiency grounds. But any decision to sell the Reserve would have to be legislated, thus providing Congress with the full opportunity to. review, amend, approve or disapprove any such proposal. Congressional attempts to limit the President's ability to use funds for studying this or any other legislative or budgetary proposal is an unacceptable infringement on the President's authority.

Japanese Internment Payments. The bill would provide $250 million in FY 1989 appropriations for payments to individuals of Japanese ancestry interned during World War II._r The Administration proposes to initiate payments to individuals in FY 1990. The FY 1990 budget includes $20 million for this purpose. Funds would be provided in subsequent years so that the entire $1.2 billion authorized would be funded within the time limits specified in law.

In addition, the bill provides more funds for administering the program than requested. The increased administrative costs are not required because DOJ has agreed that it can perform the necessary tasks within the Administration's request level.

Funding for the Homeless. The Committee added $153.5 million for the Departments of Housing and Urban Development's and Veterans Affairs' homeless programs, but included no offsets. It is unlikely that these funds could be obligated prudently and efficiently during the remainder of FY 1989. Furthermore, in HUD's homeless programs, alone, there are $154 million in unobligated balances yet to be committed. These supplemental appropriations will simply add to that pipeline and will not help the homeless in the remaining months of this fiscal year. The Administration has requested to fund these programs fully in FY 1990 at the McKinney Act authorized levels. In addition, it has requested funding in FY 1990 for a new non-McKinney initiative, whose purpose is to develop longer-term solutions to this tragic problem.

Public Housing Operating Subsidies. The bill includes $88 million, without offsets, for public housing operating subsidies, of which $80 million is for unfunded formula requirements in FY 1988 and FY 1989, and $8 million is for increased security assistance.

The $80 million is unnecessary because unfunded formula requirements in previous years do not create unpaid debt. Public Housing Authorities (PHAs) reduce staffing or other one-time costs or use operating reserves to eliminate or reduce a shortfall. In any case, PHAs would not have outstanding debt — only foregone expenses or reduced reserves.

The $8 million in funding for security measures can be made available through the public housing modernization program (which was funded at $1.65 billion in FY 1989) and through the regular public housing operating subsidies provided by PHAs.

VA Medical Care. The bill provides an additional $370 million in FY 1989 for the Department of Veterans Affairs' Medical Care program. This increase is $67 million above the Administration's request of $303 million. The increase includes $30 million for the VA homeless program, which is addressed under the preceding homeless funding discussion. The remaining $37 million increase is not needed to maintain quality medical care for veterans and would be used to increase VA staff levels to reach an arbitrary FTE floor of 194,720.

The Administration is also concerned that the requested beneficiary travel provision was not included. We continue to support the reform of beneficiary travel and believe such funds should be made available for the direct medical care of our nation's veterans.

Fire Cost Reimbursement. The bill provides $600 million to repay borrowing from non-fire programs that financed Federal firefighting costs in FY 1987 and FY 1988. This is $350 million above the Administration's request. The increase would not meet any critical or emergency need. Instead, it would raise Federal outlays in the construction and land acquisition programs, and unnecessarily increase unobligated balances in other accounts, from which monies were transferred. Many of these activities are postponable or low-priority. The $250 million requested by the Administration is sufficient to restore the Kenutson Vandenberg Trust Fund to sound operating levels and to meet the need that would be anticipated in any normal fire season.

Agricultural Credit Insurance Fund (ACIF) Operating Loans. The $75 million increase in ACIF operating direct loan authority, which will result in an additional $71.2 million in FY 1989 outlays, is unwarranted. In addition to the $900 million in direct operating loans already available in FY 1989, there is approximately $2.6 billion in guaranteed operating loan authority available. Moreover, the Farmers Home Administration (FmHA) has made loans from commercial lenders, with or without a guarantee, more accessible by allowing the same collateral used to secure previous FmHA loans to be used to secure new operating credit from commercial lenders.

B. OTHER ISSUES:

Restrictions on Department of Transportation (DOT) Grants. A provision was added to the bill that would ensure that States and localities do not lose DOT funds because the grantee has a policy prohibiting the procurement of products manufactured in South Africa. The language is objectionable on policy grounds because it allows State and local law to dictate foreign policy. It would also stand in the way of competitive contracting by protecting discrim- inatory practices.

Direct Agency Reimbursement for Alaskan Cleanup. The bill provides that' any affected Interior and related agencies may receive direct reimbursement for costs incurred with respect to the Alaskan oil cleanup rather than having these funds deposited in the Coast Guard Pollution Fund. An agreement was recently reached between the Departments of Commerce, Agriculture, the Interior, and Transportation to channel these reimbursements through the Pollution Fund. This agreement will ensure a degree of uniformity and consistency in accounting for these reimbursements that will: (1) significantly reduce the likelihood of later disputes over the propriety of specific items of cost; and (2) facilitate the necessary audits that will follow. Currently all cleanup costs are being handled in an identical fashion. While the provision does not mandate reimbursements directly to the Department of the Interior, it is clear that this provision would weaken the current agreement.

Corps of Engineers. The bill includes language that would require: (1) 100% Federal funding for a recreational portion of the Saylorville Lake, Iowa project, and (2) construction of a project in Sims Park, Euclid, Ohio, which is overwhelmingly recreational in nature. Current law requires that the Saylorville Lake project costs should be shared equally between the Federal and non-Federal parties. Moreover, the Administration supports using our scarce Federal resources for high-priority projects (e.g., commercial navigation and flood control). Projects designed primarily for recreational purposes are not consistent with these budgetary priorities.

Exchange of Federal Land with the Blue Tee Corporation. To ensure the equitable value of lands exchanged and to protect the financial interests of both the United States Government and the Blue Tee Corporation, the following language should be added to section 302, subsection 2:

"The values of the lands exchanged by the Secretary under this Act either shall be equal, or if they are not equal, the values shall be equalized by the payment of money to the grantor or to the Secretary as the circumstances require so long as the payment does not exceed 5 per centum of the total value of the lands or interests transferred out of Fedreal ownership. The Secretary shall try to reduce the amount of the payment of money to as small an amount as possible."

Without the inclusion of this language, the Congress would be establishing a financially unsound precedent by which major windfall profits or losses could result for either party in such exchanges.

Funding of VA's Loan Production System (LPS). The Committee incorrectly assumes that the Loan Guaranty Revolving Fund (LGRF) request of $130 million included $9.9 million for the LPS (which it did not), and reduced the supplemental appropriations for LGRF by this amount. The Administration urges that the $9.9 million be restored to the LGRF.

Contributions for International Peacekeeping Activities. While the Administration supports the Committee's action to provide the requested $125 million for UN peacekeeping activities, it is concerned that the Foreign Operations accounts to be used for the transfer are limited to high- priority military assistance accounts. The Administration also notes that the reprogramming requirement inserted in the language will hinder a timely obligation of these funds.

Job Corps. The Committee rejected the Administration's proposed language that would have transferred $13.5 million to Jobs Corps operations from the $36 million earmarked for new center construction in FY 1989. The $13.5 million is needed to finance a shortfall in operating costs at existing Job Corps centers during program year (PY) 1989. Instead, the Committee stated it would provide at least $13.5 million in the FY 1990 appropriation to cover the PY 1989 shortfall. As a result of the Committee's action, spending will increase by several million dollars in FY 1990 and beyond.

Offsets from Defense and International Affairs Programs. The Administration is concerned that defense and international affairs accounts will be used to offset supplemental actions (e.g., refugee assistance). The Administration urges support for its proposed offsets to ensure that these high-priority programs are not cut.