Statement of Administration Policy: H.R. 2519 - VA/HUD and Independent Agencies Appropriations Bill, FY 1992

(Senate Floor)
(Byrd (D), West Virginia; Mikulski (D), Maryland)

The purpose of this Statement of Administration Policy is to express the Administration's views on H.R. 2519, the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 1992, as reported by the Committee.

The Administration supports enactment of H.R. 2519, as reported by the Committee. The Committee bill provides full funding for Space Station Freedom and provides partial funding for the President's HOPE homeownership grants. The Administration believes that, in these respects, the Committee bill is an improvement from the bill that was passed by the House.

However, in its consideration of this bill, the Senate is respectfully urged to address the Administration's concerns with the Committee-reported bill, noted below. If the Senate were to adopt an amendment that substantially reduces funding for Space Station Freedom from the level provided by the Committee, the President's senior advisers would recommend that he veto the bill.

Space Station Freedom

The Administration strongly supports the Committee action to fund fully Space Station Freedom. Space Station Freedom is a critical clement in planned future space exploration and space science and technology programs. It is a major contributor to long-term U.S. economic growth, and it is an important element in international cooperation in science and technology. Space Station Freedom is a visible manifestation of the nation's commitment to investment in the future.

The Administration strongly supports the 10-percent increase in funding provided for Space Science programs. This action will enable continued progress on major space science projects and will maintain a balanced space program.

HOPE and Housing Programs

The Administration notes that the Committee bill provides a higher funding level than the House-passed bill for HOPE, but recommends funding at the President's requested funding levels for new housing programs, authorized in the Cranston-Gonzalez National Affordable Housing Act — especially for HOPE homeownership grants and Shelter Plus Care for the homeless.

The Administration objects to language in the Committee bill that would waive the non-Federal matching requirement for the new HOME program in FY 1992. The Department of Housing and Urban Development (HUD) already has the authority to waive up to 75 percent of the match if necessary for the local jurisdiction to carry out the HOME program. Eliminating the entire match ls unnecessary and counter to one of the goals in the HOME legislation — to encourage States and cities to bring their own funds to the table to assist more low-income families.

Unauthorized Special Purpose Projects

The Administration strongly opposes the $72.8 million in new funding grants the Committee bill provides for community-based projects. These unauthorized grants are inconsistent with the HUD Reform Act's efforts to provide open and fair competition for scarce HUD funds without "influence peddling." The Administration urges deletion of these unauthorized special projects, which undermine cur joint efforts to restore public confidence that all communities can compete for funds equally on the basis of published selection criteria.

FEMA Disaster Relief

Of the $275 million requested by the Administration for disaster assistance, the Committee bill would provide only $185 million. The Committee has denied the $90 million budget amendment request, which was transmitted to the Congress on June 28th. The amended request is the result of an intensive review of disaster funding needs, which has led the Administration to conclude that funding the average, historical level of activity for this program of $320 million ls essential to the efficient operation of the program. The Administration proposes to meet this funding requirement with $275 million in budget authority, $25 million in recoveries, and $20 million in program reforms. Without full funding of the requested $275 million in budget authority and the requested language permitting program reforms, FEMA could again be forced to suspend disaster assistance in FY 1992.

It is important to note that the Administration's request of $275 million for 1992 is predicated on the assumption that the pending supplemental will provide significant resources for FEMA for 1991 (with appropriate offsets). If the supplemental does not prove satisfactory, the shortfall for 1992 will be correspondingly increased.

HUD-Section 8 Expiring-Contract Renewals

HUD has recently provided the Office of Management and Budget and the Committee with a new estimate of the cost of renewals based on a just-completed survey of expiring Section 8 contracts. This estimate indicates that an additional $1.25 billion in FY 1992 budget authority, above the amount requested in the President's budget, will be required in order to renew all expiring subsidy contracts in FY 1992 and the first month of FY 1993. The Department's new survey discovered, for example, that contracts covering an additional 23,897 units will expire and need to be renewed in FY 1992, on top of the 250,389 units that HUD had projected in its FY 1992 budget submission to OMB and to the Congress.

The Administration shares the Senate's concern about the lack of adequate financial management systems in the Section 8 program and the continuing estimating problems that have resulted from inadequate systems. Although HUD is working to overcome these problems, these expiring contracts must still be renewed in order to prevent low-income tenants from being forced to leave their homes. The Administration stands ready to work with the Congress to ensure that this problem is addressed and that the needed budget authority is provided before the bill is sent to the President for his signature.

Scoring Conversions of Section 202 Loans to Grants

The Committee bill assumes conversion of HUD's Section 202 construction loans into grants. The Administration has had very little time to review this complex proposal. The Committee assumes that the conversion could make available up to $1.2 billion in previously appropriated funds to finance higher spending for other low-income housing programs in FY 1992.

The Administration is reviewing the scoring of the offsets to finance these grants, and is willing to work with the Committee to fund the proposed conversions.

Additional concerns of the Administration with the Committee-reported bill are outlined in the attachment.

Attachment

(Senate Floor)

ADDITIONAL CONCERNS
H.R. 2519 — VA/HUD AND INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 1992

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Department of Housing and Urban Development (HUD)

Subsidized Housing — Public Housing Modernization. The Committee bill provides $3 billion for public housing modernization, $238 million more than the President's request. Funding this program at $3 billion in FY 1992 would only exacerbate an already excessive backlog of $6 billion. Subsidized Housing — Public and Indian Housing New Construction. The Administration objects to the Committee's providing $817.4 million for Public and Indian housing development. Public housing new construction costs twice as much as rental assistance (rental certificates, housing vouchers) and offers less choice. The President's Budget would fund Indian housing units through a set-aside of $125 million in the new HOME grant program. The HOME set-aside would provide more flexibility to Indian tribes to develop housing programs that they believe are most effective. Tenant-based housing vouchers, which utilize existing private housing, can provide housing at less cost and with more choice to tenants.

Subsidized Housing — Contract Amendments. The Committee provides only $1.3 billion for contract amendments, $l.2 billion less than requested in the President's Budget. This underfunding may jeopardize HUD's ability to assure adequate funding to all Section 8 contracts. In addition, this underfunding would need to be made up through additional budget authority in future years.

Subsidized Housing — Elderly and Handicapped New Construction. The Committee provides nearly $1.3 billion, $1 billion more than requested by the Administration.

Public Housing Operating Subsidies. The Administration objects to the Committee bill's funding level of $2.5 billion for public housing operating subsidies, a $344 million increase over the President's request. The President's $2.2 billion request would more than adequately cover the operating subsidy needs in FY 1992 for two reasons. First, utility costs are now projected to be less than those assumed in the FY 1992 Budget. Second, HUD estimates that a significant portion of the FY 1991 supplemental appropriation will be available for obligation in FY 1992.

Community Development Block Grants. The Committee bill provides $450 million above the President's request for this program. The President's request should be more than sufficient given the start-up of the new HOME program.

Shelter Plus Care: Homeless Rental Housing Assistance. In its provision of funding for the Shelter Plus Care: Section 8 moderate rehabilitation, single room occupancy, and section 202 initiatives, the Committee bill recognizes the importance of these programs ln providing help to the homeless. However, the bill fails to fund the Shelter Plus Care Homeless Rental Housing Assistance program and, in doing so, frustrates HUD's strategy to meet the varied needs among the homeless. In particular, the tenant-based assistance established by Homeless Rental Housing Assistance would add a critical degree of flexibility in assisting those who not only lack a stable living environment, but are also burdened by physical or mental afflictions.

Federal Emergency Management Agency (FEMA)

Emergency Management and Planning Assistance. The Administration objects to the $8 million increase above the requested level. Over 80 percent of the increase is earmarked for activities benefitting specific localities. There is no rationale provided for the funding of these earmarked projects to indicate that their needs are either more urgent than the needs of other localities or that they make more programmatic sense than other requirements.

Department of Veterans Affairs (VA)

Medical Care. The Committee-reported bill includes an unnecessary $336 million increase above the President's request for VA medical care. Most of this increase is attributable to personnel costs, such as physician pay, and unrequested program enhancements, such as increased nursing staff. Any increases in personnel costs in VA medical care can be accommodated within the 7.5-percent increase over the FY 1991 level that was requested by the Administration for FY 1992. It is the Administration's view that the additional funds for program enhancements included in the Committee bill are simply not justified at this time.

General Operating Expenses. The Committee provides $39 million above the President's request for the General Operating Expenses and National Cemetery System accounts, and designates $14 million as emergency funding. If the additional $14 million were needed, it would not be classified as an emergency because FY 1992 needs can be foreseen and funded now. However, these funds and other additional funding provided by the Committee are not necessary. The President's request is adequate to process veterans' claims, including claims of veterans returning from Operation Desert Storm. Changes in DoD's discharge policies and eligibility changes enacted in the Omnibus Budget Reconciliation Act of 1990 have reduced the workload that will be carried over from FY 1991 to FY 1992. These reductions would offset any potential increases in workload due to Operation Desert Storm.

Construction. Major Projects. The Administration supports the Committee action to delete three unrequested projects ($72 million) added by the House and objects to the Committee's addition of $7.3 million for design of a major clinical addition in Reno, Nevada.

Environmental Protection Agency (EPA)

Construction Grants. The Administration strongly objects to the deletion of $300 million requested for high priority coastal secondary treatment facilities. These facilities are needed to solve significant water quality problems. Finally, the Administration objects to deletion of funding to treat Tijuana sewage. This funding is authorized under Section 510 of the Water Quality Act of 1987, and is necessary to fulfill U.S. commitments to Mexico.

Operating Program. The President's request includes a $191 million, or eight-percent, increase over FY 1991 for EPA's Operating programs (Salaries and expenses, Abatement, control and compliance, Research and development, and Buildings and facilities) to fund Clean Air Act implementation and initiatives such as Great Lakes cleanup. Despite an overall increase of $67 million over the President's request, the Committee provides less funding than requested for several priority activities, including the President's initiatives on Coastal America and the U.S. Global Climate Change Research Program. The Administration opposes the addition of numerous special interest projects included in the Committee bill for activities that are primarily State and local responsibilities (e.g., implementation of the non-point source program, and asbestos loans and grants).

Superfund. The Administration agrees fully with the Committee that direct site cleanup and enforcement efforts should receive top priority for funding within Superfund and appreciates the Committee's full funding of the President's request of $896 million for direct site cleanup. However, the Administration objects to the Committee's reallocation of an additional $50 million from critical-site cleanup work to fund low- priority activities. The reduction of $l34 million in the total Superfund program could make lt extremely difficult to administer the program.

Office of Science and Technology Policy

Critical Technologies Institute. The Administration urges the Senate to delete the $5 million provided for the Critical Technologies Institute. The Administration has underway a number of initiatives to assist critical technologies, including a major FY 1992 budget initiative in High Performance Computing and Communications, R&D budget crosscuts of materials R&D and biotechnology, and a planning effort for increased government/private sector collaboration in advanced manufacturing R&D. The FY 1991 Department of Defense Appropriations Act provided $5 million for the Institute. These funds have not yet been obligated or expended.

National Aeronautics and Space Administration (NASA)

The Committee has provided $32 million of the requested $94 million for exploration science, technology and mission studies, and $50 million of the requested $175 million for the New Launch System. The Administration believes that these levels represent the minimum levels necessary to sustain progress in these areas.

Research and Development. Although the Committee bill provides an increase of $l7 million for commercial space programs, the funding level is insufficient to meet the projected requirements. This would require a significant restructuring of the program, resulting in delay or termination of several innovative commercial space ventures. Even more importantly, this could have a chilling effect on the ability and desire of the private sector to enter into any new long-term commitments for commercial space ventures. In addition, the Administration objects to the Committee's changes to the House language on multi-year contracts for commercial space ventures. While the Administration does not object to language that would require inclusion of specific contracts in appropriations acts, it does object to the Committee's change that would limit NASA's flexibility to enter into such contacts outside of the appropriations cycle.

National Science Foundation (NSF)

Academic Research Facilities and Instrumentation Program. The Administration strongly urges that the $46 million provided in this account is used to support investments in research instrumentation. The need for high cost scientific instruments is severe and is growing more so each year. The Federal Government already provides over $1 billion per year for academic research facilities through the recovery of use charges and operations and maintenance expenses included in indirect cost recovery payments. It is the Administration's view that this is the proper way to fund academic research facilities. The Administration understands that universities have not always invested these payments for renovation and modernization of buildings and equipment, and has proposed changes in the rules governing indirect costs to address this situation.

Traineeships. The Administration opposes $20 million that the Committee has included for a new program of graduate traineeships. The traineeship programs apparently are justified by concerns over possible "shortages;" however, serious questions have recently been raised about the validity of these alleged "shortages." The Senate is urged not to provide funding for this lower-priority program.

Research and Related Activities. The Senate is urged to delete earmarking of funds within Research and Related Activities. These earmarks, totaling $25 million, are not generally oriented toward increasing direct support of principal investigators in high-priority areas of research, which was a major goal of the President's request.

B. Language Provisions

Environmental Protection Agency

User Fees. The Administration objects to the Committee's failure to include language proposed in the President's Budget that would allow user fees deposited in the Environmental Services Fund to be used to finance the programs for which the fees are collected. This language is consistent with — and needed to fully implement — the EPA fee provisions in the Omnibus Budget Reconciliation Act of 1990. Further, it would provide an incentive for quick establishment of the fees and ensure that they are used to support the programs for which the fees are charged.

Lead Regulations. EPA is currently implementing an aggressive lead strategy in coordination with HHS, HUD, and OSHA. The Committee bill would require a range of new lead abatement, training, and certification activities that would significantly expand EPA's authorities in this area. A proposal of this magnitude should be subject to a more comprehensive review and discussion with all interested and affected parties.

Personnel Earmarking. The Administration opposes the Committee's stipulation of specific staffing levels for various EPA headquarters offices. Congressional micromanagement of this nature eliminates the necessary flexibility to allocate staff resources to the most pressing needs. The Administration urges the Senate to delete this provision.

Department of Housing and Urban Development

Administrative Provisions. The Administration objects to a number of provisions of the Committee bill that would forgive certain repayments and loans to HUD, and would transfer HUD-owned property free-of-charge. These provisions would allow the cities of Malden and Newburyport, Massachusetts; Jefferson City, Missouri: and New London, Connecticut to retain land disposition proceeds; would allow Calhoun Falls, South Carolina and Soddy Dalsey, Tennessee to avoid repaying public facilities loans; and would title a HUD-repossessed property to Davenport, Iowa free-of-charge. These provisions would set an undesirable precedent as other communities could seek similar exceptions to HUD program requirements.

Section 8 Fees for Certificates and Vouchers. The Administration opposes the provision in the Committee bill that would raise administrative fees paid to local housing authorities from 7.65 percent to 8.2 percent. Research by GAO and HUD has determined that the current fee of 7.65 percent is sufficient to cover the costs of local housing authorities.

Departmental Management. The Committee bill sets maximum ceilings on staffing within 10 offices in HUD's Washington headquarters, which range from a low of 13 staff to a high of 1,068. The bill would prohibit details of any HUD employees to augment the staff of Departmental Management. These prescriptive and limiting provisions would hamper the efforts of the Secretary and his staff to manage the Department and to respond quickly and flexibly to emerging problems. The Administration strongly opposes these limitations.

Department of Veterans Affairs

Medical Care. The Administration supports the Committee in its deletion of House language that would restrict funds to be used only for personnel. However, the Committee would require that VA comply with regulations to be issued by HHS pursuant to the Clinical Laboratory Improvement Amendments (CLIA) of 1988. VA and HHS are working together to ensure that VA's laboratories meet the goals of CLIA. Therefore, this language is unnecessary.

National Aeronautics and Space Administration (NASA)

Research and Program Management. The Administration urges the Senate to delete the limitations on staffing levels for NASA Headquarters offices. These limitations unacceptably constrain NASA's ability to make necessary organizational changes to manage efficiently its resources. Further, they make no provisions for personnel details such as training or short-term critical assignments.

Federal Emergency Management Agency (FEMA)

FEMA User Fees. The Committee bill fails to include requested language to allow the full recovery of costs associated with FEMA's Radiological Emergency Preparedness program from operators of nuclear power facilities.

Consumer Product Safety Commission (CPSC)

Private industry currently receives CPSC advice, expertise, and safety "certification" free-of-charge. The President's FY 1992 Budget proposes to begin to recover the costs of these services through user fees. The budget proposal follows the directive in the recent CPSC reauthorization (P.L. 101-608) that the CPSC should conduct a one-year study on the feasibility of user fees. It is the Administration's view that, in failing to adopt proposed user fee language, the Committee has missed an opportunity to improve the operation and equity of Federal services. The Administration urges the Senate to adopt the proposed user fee language.