Statement of Administration Policy: H.R. 2916 - VA, HUD, and Independent Agencies Appropriations Bill, FY 1990

(Senate Floor)
(Sponsors: Byrd (D), WV; Mikulski (D), MD)

The FY 1990 VA, HUD, and Independent Agencies Appropriations Bill as reported by the Senate Appropriations Committee is consistent with the Senate 302(b) allocation for discretionary outlays. Under CBO scoring, the bill is also consistent with the 302(b) allocation for discretionary budget authority. However, the Office of Management and Budget (OMB) estimates that the Senate bill is $427 million above the 302(b) allocation for discretionary budget authority.

Most of the scoring increase is a result of VA lease-purchase arrangements. The Administration is opposed to the Senate Committee's lease-purchase contracting arrangements for five VA construction projects. The lease-purchase arrangements are a more costly way to fund these projects than federally financed construction. Moreover, these arrangements are not consistent with the Administration's general position that Federal construction should be financed up front nor do they take into account the results of the OMB-GSA study of the Federal Building Fund.

The Administration strongly opposes the inclusion of authorizing language raising the Federal Housing Administration (FHA) loan limits on insured single-family loans. The recent dramatic increases in defaults and losses in the FHA fund indicate that FHA activity over the last few years has not been on an actuarially sound basis. Expanding FHA business across the board without first achieving the reforms necessary to reestablish FHA actuarial soundness will only compound FHA's basic financial problems. Given the complexity and severity of these problems, the necessary reforms will require careful and full deliberation by the Administration and Congress.

The Administration urges the Senate to prevent windfall housing payments to private landlords that are required as a result of the decision of the Ninth Circuit Court of Appeals on the Ranier case. This case has added $150 million to OMB's estimate of FY 1S>90 HUD outlays, and thus would increase the threat of a 1990 sequester. Moreover, if this court decisioi were extended nationwide, it would cost $1 billion or more in additional FY 1990 outlays. While the Administration intends to pursue vigorously legislation overriding Ranier, we also urge the adoption of language in this bill to prevent such unnecessary payments of taxpayer funds.

The Administration commends the Senate for providing $1.85 billion for the Space Station. This level of funding is the minimum acceptable level necessary to continue a stable and sustainable program. The Space station represents an important investment in the future of long-term space exploration.

The Senate Committee has not funded the National Aerospace Plane Program. This program is critical to future space transportation options for the Nation. We urge the Senate to restore the funding for this important project.

The Senate Committee has sharply reduced the President's request for National Science Foundation (NSF) supported research to an increase below the rate of. inflation. We believe this reduction seriously erodes the ability of NSF to support important fundamental research that will be the key to the long-term economic competitiveness of the Nation. We urge the Senate to restore this important investment in the Nation's future.

In addition, the Committee has provided $20 million for an academic research facilities program at the expense of NSF research activities. It is the Administration's position that the building of research facilities is a significantly lower-priority activity, relative to the support of research personnel and equipment. Thus, we urge the Senate to delete this program.

The Administration supports the funds provided for HUD subsidized housing contract renewals. However, the Administration opposes the other funding increases for HUD's subsidized housing programs, including the additional $1 billion for modernization of public housing. Although the funding level for assisted housing exceeds the President's request, the Senate's program would actually serve 28 percent fewer new low-income families in 1990 — 78,572, as opposed to 109,000 in the President's budget. This lower number of families served results from reliance on higher-cost new construction programs instead of lower-cost housing vouchers, which were proposed in the President's budget.

The Administration supports the funding provided by the Senate for McKinney Act homeless programs in VA, HUD, and FEMA. However, the Senate did not fully fund the new $50 million HUD initiative to combat homelessness and to create low-income home- ownership opportunities. This new initiative would fill in any gaps in the McKinney Act by providing resources on a flexible basis for communities to meet specific needs of homeless people. The Administration also appreciates the Senate's full funding of the President's September 5th request for an additional $50 million to reduce "drug use in and around public housing projects.

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