Statement of Administration Policy: H.R. 5158 - Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 1991

(Senate Floor)
(Sponsors: Bvrd (D). West Virginia; Mikulski (D). Maryland)

The Administration supports the timely passage of appropriations bills under the terms of the Budget Summit Agreement. However, the President's senior advisers will recommend that the President veto any appropriations bill that is not fully consistent with the Agreement. This statement provides views on the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 1991, as reported by the Senate Committee.

The Administration opposes in the strongest possible terms the provisions in the Senate Committee bill that do not support the President's housing goals and severely limit the exercise of executive authority by the Secretary of Housing and Urban Development. The President's senior advisers will recommend a veto of the bill unless these and the other issues discussed below are addressed.

The bill fails to appropriate funds for the President's HOPE initiative, which would enable low-income persons to take control of their lives through homeownership. The HOPE homeownership program has been endorsed in both the Senate and House versions of the housing authorization bill; yet HOPE remains unfunded while other new and not yet authorized programs are funded.

While not funding the new HOPE program, the bill continues the failed public housing production programs of the past by funding 10,000 units of new public housing construction.

The bill codifies the program guidance in Committee and Conference Reports into law. Given the level of detail in the Reports, the effective result is that the Committee would unconscionably usurp Executive Branch management discretion. Furthermore, asking Members of Congress and the Administration to accept such codification of reports that are not even written, such as the conference Report, is unacceptable.

The Administration opposes the overall funding level provided by the Committee for NASA. The Committee's action would reduce the President's request by $1.7 billion, to a level that would have a major adverse impact on a wide variety of NASA programs. Specifically, the Administration strongly opposes the reduction of nearly $864 million in funding for Space Station Freedom — a reduction of 35 percent from the request of $2.5 billion. The Committee's proposed level is $164 million lower than the FY 1990 enacted amount of $1.7 billion. This reduction would force a major restructuring of the entire program with substantial delay — perhaps years — in the launch of the first Station elements, with large attendant cost increases. In addition, the Committee proposes to delete funding for critical Space Station facilities and for the development and support of Space Station experiments. The Committee's action is inconsistent with prior-year actions that have provided appropriations of $3.8 billion for development of the Space station.

The Administration opposes the Committee's reduction of $361 million for the President's Space Exploration Initiative. This action would mean the elimination of all proposed new funding. It would also seriously erode ongoing efforts in critical technology areas essential to the nation's future competitiveness, such as advanced power, robotics, and the National Aerospace Plane program.

The Administration opposes the establishment of a new $100 million agency — the Commission on National Service. The creation of the Commission institutes the provisions of s. 1430, the National and Community Service Act of 1989, which has not yet been authorized by Congress. The provisions of S. 1430 are fundamentally incompatible with the President's concept of volunteer service. Previous statements of Administration Policy have indicated that if S. 1430 were presented to the President, his senior advisers would recommend that the bill be vetoed. The Senate is urged to delete this item from the bill.

The Administration opposes the $124 million reduction in the Environmental Protection Agency's Superfund program and the reallocation of an additional $45 million from critical site cleanup work to low-priority activities. These actions would undermine the Administration's efforts to accelerate cleanup of the nation's worst hazardous waste sites and would unnecessarily extend the risks posed by these sites to public health and the environment.

The Administration opposes the elimination of funding for the Federal Emergency Management Agency's Disaster Relief fund, which the Administration considers to be a budget gimmick. The President requested $270 million, which is the historical average, as veil as a reasonable level, for disaster relief, given the highly unpredictable level of disaster relief necessary in any year. Although a carryover balance remains in the fund, it is likely to be insufficient to meet the remaining needs associated with the 39 disasters occurring since Hurricane Hugo and to meet potential needs resulting from new disasters in FY 1991. If insufficient funds are provided, an emergency supplemental appropriation would be required. This process must be avoided if the Federal government is to provide a timely response to human needs in the event of disasters.

These reductions to the Administration's proposals are of particular concern in light of the Committee's additions to a variety of other programs. Many of these programs are low- priority and were not requested in the President's Budget.

The Administration strongly opposes the establishment of new Special Project Grants within the Department of Housing and Urban Development (HUD). These grants, totaling $50 million in FY 1991, would be made by the Appropriations Committees to specifically named projects^throughout the nation. The Congress, in enacting the "Department'of Housing and Urban Development Reform Act of 1989," has begun to restore the public's faith in the open and fair distribution of funds by HUD without "influence peddling." Congress' appropriating funds for particular projects is completely inconsistent with this law and undermines our joint efforts to restore public confidence in HUD.

The Administration opposes the $527 million increase over the President's request for Environmental Protection Agency construction grants for municipal wastewater treatment facilities. The President's request of $1.6 billion would provide capitalization for State revolving funds adequate to return responsibility for sewage treatment funding to States and localities in order to meet municipal compliance requirements. Additional funding is not needed.

The Administration opposes the restrictions on specific staff levels for the Department of Housing and Urban Development, the National Aeronautics and Space Administration, and the Environmental Protection Agency. These limiting provisions severely impinge on the flexibility of the affected agencies to allocate staff resources and carry out programs efficiently. The Senate is urged to delete these limitations.

The Committee proposes to fund Antarctic activities with a separate appropriation using National Defense (function 050) funds. National Science Foundation Antarctic operations are not defense-related and should be funded with resources allocated for domestic discretionary programs.

Attachment

(Senate Floor)

DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 1991

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Federal Deposit Insurance Corporation:

FSLIC Resolution Fund. The Committee provided a $4.4 billion definite appropriation for the FSLIC Resolution Fund? The Administration supports the House version of this appropriation, which gives the FSLIC Resolution Fund a current indefinite appropriation. Flexibility is required because of the substantial uncertainty about the timing and magnitude of payments on past FSLIC agreements and potential restructuring. The Administration is prepared to work with the Congress to maintain appropriate oversight of these expenditures without impeding the Federal Deposit Insurance Corporation's ability to minimize taxpayer costs for these Federal obligations.

National Science Foundation:

Science and Engineering Education Programs. The Senate would fund the National Science Foundation (NSF) at $2.3 billion — $19 million below the President's request. The Senate has increased the Foundation's education programs at the expense of support to individual researchers. The level of funding proposed by the Senate for education programs represents a 58 percent increase over the FY 1990 level, at a time when there are some indications that the rate of research grant awards to individual investigators may be declining. Funds for individual investigators have always been the backbone of American science and the source of America's new knowledge. The Senate's cut in this area is regrettable and would only contribute to the decline in the rate of funded research grants. The Senate is urged to fund NSF at the President's request and to support individual researchers.

Department of Housing and Urban Development:

Public and Indian Housing. The Administration objects to the increase of $967 million for 13,000 new construction units of public and Indian housing. The President's budget provides no funding for such new construction because tenant-based housing vouchers and certificates, which utilize existing private rental housing, can provide housing at less cost and with more choice to tenants. For the same $967 million, the President's Budget proposal would fund over 33,000 housing vouchers — assisting over two and one-half times as many families.

Nehemiah Grants. The Administration objects to the level of funding provided for Nehemiah grants. The goal of promoting more homeownership opportunities is better met by funding HOPE grants.

Public Housing Modernization. The Administration objects to the Senate's funding level of $2.8 billion for public housing modernization — $0.9 billion more than the President's request and $0.8 billion over the FY 1990 funding level of $2.0 billion. With $3 billion in unspent funds available for modernization needs, a $0.9 billion increase above the request is excessive.

Payment for Operation of Low-Income Housing. The Administration objects to funding public housing operating subsidies at $2.0 billion, which is $0.2 billion more than the President's request. The Senate should fund public housing operating subsidies at the President's request, which would already provide 100 percent funding for this formula-driven discretionary account.

Subsidized Housing — Prepayment Assistance/Section 8 Loan Management. The Senate bill does not provide a specific appropriation for preserving affordability for low-income tenants who may be affected by prepayment of HUD subsidized rental housing. The President proposed $412 million for a three-pronged approach. This would provide: 1) the opportunity for current residents to purchase their buildings and become homeowners; 2) limited financial incentives to owners to help keep rental housing affordable to lower-income families; and 3) vouchers or certificates to tenants who do not purchase their project and are adversely affected by prepayment. The Senate bill provides, instead, $441 million for Section 8 loan management assistance, four times more funding than proposed by the President. The Senate report references this subsidy as the principal form of prepayment assistance. However, this assistance, which has traditionally been used for preventing defaults of FHA-insured rental housing, could not be given to resident groups to purchase their projects and become homeowners. Nor could this assistance be given to low-income tenants who live in projects that are prepaid, thereby requiring them to pay more in rent or be displaced from their homes. The Senate is urged to follow the President's three-pronged approach.

Section 202 Elderly and Handicapped Housing. The Senate bill provides over $1.3 billion for 12,000 units of new construction for elderly and handicapped housing — $0.4 billion more than requested by the President. The?6enate bill does not assume any funding for leasing of existing housing. . The Administration proposed to fund approximately 3,000 of the total 6,967 units requested through leasing of existing housing. The Administration believes that leased housing provides greater flexibility at less cost than new construction in providing housing for the elderly and handicapped.

In addition, the bill prescribes a specific new set- aside within handicapped housing of $156 million for 500 units for persons disabled with the human immunodeficiency virus. Set-asides for specific diseases are undesirable and set a bad precedent for additional set-asides for other specific groups in the future, thus undermining the entire allocation process.

Subsidized Housing — Section 8 Property Disposition. The Senate provides over $0.5 billion for costly, project-based, Section 8 property disposition subsidies, which are used for disposing of HUD- acquired multi-family properties. This is $0.2 billion more than requested in the President's Budget for assistance to sell acquired properties. Rather than seeking project-based Section 8 property disposition rental assistance, the President's Budget proposes to assist tenant groups to help them acquire properties from HUD and turn these properties into homeownership cooperatives.

Homeless Programs: HUD. VA. FEMA. The Administration supports the funding provided by the Senate for McKinney Act homeless programs in VA, HUD, and FEMA. Due to lack of authorization, the Senate bill does not provide funds for HUD's new HOPE initiative to assist the homeless. The Administration asks for full support of this vital new program for the homeless as soon as it is authorized.

Community Development Block Grants. The Administration objects to the $3.2 billion funding level provided for Community Development Block Grants (CDBG) in the Senate bill. While the Administration recognizes the importance of the CDBG program to States and local communities, the $2.8 billion requested in the President's Budget is a fiscally responsible level given the need to constrain federal spending and reduce the deficit.

The Administration opposes the $250 million loan limitation for Section 108 loan guarantees. The President's Budget proposed termination of this program because it encourages risky loans.. Local communities eligible for this program already have the ability to borrow funds on a tax-exempt basis. In contrast to loan guarantees, tax-exempt borrowing provides some market discipline (credit rating effects) on the risk local governments will accept.

Urban Homesteading. The Administration objects to the level of funding provided for the Urban Homesteading program. The $13 million Senate funding level falls $37 million short of the $50 million requested for this program. This program successfully provides low- and moderate-income families with homeownership opportunities while also reducing the inventory of Federally owned properties, both important goals of this Administration.

Policy Development and Research — Research and Technology. The Senate level provides only $27 million of the $48 million requested by the Administration for research, evaluation, and monitoring of HUD programs. The increase requested by the Administration to support program evaluation and monitoring is an integral part of the Administration's commitment to reforming the Department.

Congregate Services. The Senate funding level assumes $12 million in continued funding for the Congregate Services program, which is double the 1990 enacted level. The President's Budget proposed to terminate this program. In its place, the President proposed a $44 million demonstration project that would link housing vouchers and supportive services for the frail elderly. The Senate is urged to fund the President's proposal.

Salaries and Expenses. The Senate increases staffing by over 400 FTE and funding by $22 million through two actions: a $6 million increase in directly appropriated funds and a $16 million increase in the transfer from FHA. The Senate also mandates specific resource levels for particular offices and activities. This action is objectionable because it would result in the unwarranted micromanagement of HUD programs.

Environmental Protection Agency:

Inspector General. The Administration opposes the $5 million reduction in the Inspector General account. This will greatly hamper the Inspector General's efforts to eliminate fraud, waste, and abuse which have historically recovered over $20 in costs for each audit dollar spent.

Operating Program. The President's request included a $230 million increase over FY 1990 for EPA's operating program (Salaries and Expenses, Abatement Control and Compliance, Research & Development, etc.) to fund Clean Air Act implementation and high-priority initiatives such as enhanced enforcement. The additional $71 million above the request provided by the Senate is not necessary to carry out EPA's statutory mandates and would fund activities that are primarily State and local responsibilities (e.g. implementation of the non-point source program). Particularly objectionable are the increases that would fund numerous low-priority and special-interest projects at a time when the Senate is reducing funds for Superfund cleanups. The Senate is urged not to fund special interests at the expense of the health and safety of Americans.

Federal Emergency Management Agency:

Flood Insurance Program. The Administration is fully willing to provide the Appropriations Committee with additional information to support the President's proposal to collect $57 million in administrative costs of the flood insurance program from policy holders. However, the Administration objects to the effort, through report language, to hamper FEMA's ability to set premium rates for this program. The flood insurance program benefits its policy holders directly, and it is reasonable that they should bear the administrative costs. This proposal would improve the financial soundness of the flood insurance fund and help ensure that fund resources are adequate to meet future Federal obligations incurred by this program.

Department of Veterans Affairs:

Veterans Benefits Administration. The Administration supports the Committee's deletion of language earmarking staffing and funding levels in the Veterans Benefits Administration, within the Department of Veterans Affairs' General Operating Expenses account. However, the Administration objects to several reductions in that account and to corresponding increases in the Medical and Prosthetics Research account. The Administration believes that these increases are not necessary, because VA researchers have been increasingly successful in receiving research grants '"from the National Institutes of Health, other Federal agencies, and the private sector. The $28 million above the President's request ($10 million above the House mark) is simply not necessary to sustain the VA research program. By contrast, the $23 million reduction in automated data processing, general administration, and National Cemetery System operations, as well as an additional unspecified $12 million reduction, would hamper the Secretary's ability to update outdated benefit delivery systems and effectively deliver benefits.

Grants for Construction of State Extended Care Facilities. The Administration objects to the addition of $28 million to the President's request of $42 million for this program. While the Administration supports increasing the number of state veterans' nursing homes, the request will provide sufficient program expansion during FY 1991.

Minor Construction. The Administration objects to the $15 million reduction in the President's request for minor construction. This reduction will hamper VA's effort to maintain and modernize VA medical centers, regional offices and national cemeteries through smaller renovation and maintenance projects.

Major Construction. The Administration objects to the $14 million reduction for the Indianapolis VA Medical Center's Clinical Improvements project. This project was included in the President's Budget at a cost of $79 million, which would fully finance the complete cost of construction. The Committee's action would not provide full funding, thus understating the Federal government's true obligation for this project. In addition, the Administration objects to the addition of $7 million in the bill for unrequested major construction projects. The addition of unrequested projects ignores VA's orderly system for setting priorities and planning for construction projects, particularly cemetery projects which are inconsistent with VA's regional cemetery policy.

B. Language Provisions

Environmental Protection Agency:

Hazardous Substance Superfund. The Committee bill proposes deriving $861 million of Superfund funding from general revenue instead of from the trust fund. General fund appropriations are not needed to finance the program in FY 1991, and their use for this purpose would be inconsistent with the principle that the polluter pays the cost of cleanup. The Superfund has already received a total of $1.1 billion in non-trust fund financing, including $734 million in borrowing from the general fund. If any additional general fund contribution is to be provided, it should be directed toward repayment of past borrowing, to ensure compliance with the statutory mandate to repay all borrowing by December 31, 1991.

The Administration objects to language in the Senate report that would earmark $5 million to the Koppers Texarkana (TX) Superfund site for relocation assistance that is currently unwarranted. Federal actions already taken at this site, including removal actions, have eliminated any immediate threat to public health. Provisions mandating site-specific cleanup remedies undermine comprehensive Federal government efforts to carry out an effective cleanup program.

Personnel Ceilings. The Administration objects to the inclusion in the Senate bill of specific staff levels for EPA headquarters offices. This kind of congressional micromanagement removes the necessary flexibility to allocate staff resources to the most pressing needs. The Senate should delete this language.

Department of Housing and Urban Development

Departmental Management. The bill contains various provisions that would micro-manage the Department, severely impinging on the Secretary's management discretion. Language in the bill sets maximum ceilings of staff for the Secretary's immediate office and other offices as small as 15 people within the Department. The bill also sets a floor on the staff- years for multifamily insured mortgage programs. Other provisions limit the travel of the Secretary and his Departmental offices, abolish the Office of Public Affairs and prohibit the transfer of its functions to other parts of the Department, and prohibit staff details within the Department to the "Departmental Management" activity. These prescriptive and limiting provisions will 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.

Federal Housing Administration — General and Special Risk Funds. The Senate has rejected an FHA budgetary reform, proposed by the President, to split the FHA into two separate funds. The purpose of the proposed separation is to present more accurately the costs and operating results of the various funds and to facilitate more informed decisionmaking concerning FHA programs. Continuing to present the FHA as one fund simply masks the agency's true financial condition and makes it more difficult to track the performance of FHA programs. The Senate should adopt this technical reform proposal.

Federal Housing Administration: Mutual Mortgage and Cooperative Housing Insurance Fund. The Senate bill includes language to continue the current loan limit in high-cost areas of $124,875 in FY 1991. Such a provision should be considered as part of housing and community development authorizing legislation, which is currently being considered by the House and Senate.

Section 202 — Elderly and Handicapped Program. The Administration opposes the use of rental assistance funds to cover supportive services in these projects. The costs of these services can be funded through other sources, such as HHS programs.

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

Administrative Provisions. The Administration objects to nine HUD administrative provisions. One provision forgives one specific household for a section 312 loan. This and other provisions set a bad precedent of micromanaging HUD programs that could lead other communities to seek similar exceptions to HUD program requirements. The Senate should delete these administrative provisions.

Department of Veterans Affairs:

Medical Care. The Administration supports the Committee's deletion of the restrictive House language that would have earmarked $7.9 billion for personnel compensation and benefits in the Medical Care program. However, we continue to object to the restriction delaying the availability of equipment funds until August 1991. This restriction would infringe upon executive management of the medical care system and would delay the purchase of medical equipment needed to maintain high quality health care for our nation's veterans.

National Aeronautics and Space Administration:

Administrative Provisions. The Administration strongly opposes the restrictions on the number of staff years allocated for individual offices within NASA and particularly opposes the restriction on the detailing of NASA employees to other offices within NASA. This action does not recognize the necessity for flexibility in the assignment of personnel during the year, and would severely and unacceptably restrict the agency's ability to carry out its programs efficiently. The Senate is strongly urged to delete this provision.

Federal Emergency Management Agency:

Rational Fire Academy. The Administration objects to the bill language transferring direction of the National Fire Academy to the U.S. Fire Administration. This provision constitutes an unwarranted intrusion into the prerogatives of the Executive Branch to manage and administer programs as it determines is most appropriate.

National Science Foundation:

Program Development and Management. The Administration opposes the Senate Committee provision that prohibits the National Science Foundation from relocating from its current location. Efforts have been under way for several years, with the approval of the Committee on Public Works, to move NSF. It would be inappropriate to stop the move at this time since arrangements for relocation of the headquarters are almost completed.

General Provisions:

Section 509. The Administration opposes the provision that would restrict funds appropriated for personnel compensation and benefits from being used for otherwise authorized purposes. This Congressional micromanagement would infringe upon the authority of the Executive Branch to operate government programs and hamper efforts to manage funds efficiently. The Senate should delete this provision.

Section 518. The Administration objects to the language found in section 518 of the appropriations bill, which prohibits VA from entering into lease arrangements above $50,000 unless specifically provided for in Appropriation Acts. This language would restrict the Secretary's ability to manage the Department's programs and activities in the most efficient and effective manner.