OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 491
Date: September 2, 1999

1. LAW NUMBER: P.L.106-53 (S. 507)
2. BILL TITLE: Water Resources Development Act of 1999
3. BILL PURPOSE: (1) Authorizes construction of 44 significant new Army Corps of Engineers water resources projects for flood control, navigation, beach erosion control, and environmental restoration; (2) modifies over 100 previously authorized projects; and (3) contains numerous other water resources project-related provisions.
4. OMB ESTIMATE:

	(Fiscal years; in millions of dollars)
	1999	2000	2001	2002	2003	2004
Net costs.....................	0	-21	4	4	4	2

P.L. 106-53 authorizes the prepayment of outstanding debts for certain water projects. In total, OMB estimates that $20 million of prepayments will be received in 2000. For each year 2000 through 2004, payments forgone as a result of the early payment are estimated to be $2 million per year. Through 2003, the Act also allows the Corps of Engineers to spend recreations fees above $34 million per year on maintenance and enhancement of sites where they were collected. Currently, appropriations action is required before these fees can be spent. Because baseline estimates of these receipts are $36 million per year, OMB estimates that $2 million in direct spending per year will result from this provision.

In addition, the P.L. 106-53 directs the Corps of Engineers to sell certain properties yielding an estimated $5 million in receipts. The Act also exempts State and local governments from fees for the use of Outer Continental Shelf (OCS) sand, gravel and shell resources for certain projects. OMB estimates the net loss in receipts from this provision will be less than $500,000 per year.

5. CBO ESTIMATE:

	(Fiscal years; in millions of dollars)
	1999	2000	2001	2002	2003	2004
Net costs....................	0	-19	6	6	6	3

6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

OMB and CBO estimates differ on provisions related to recreation fees and exemption of State and local governments from certain OCS fees. Although CBO's baseline estimate of recreation fee receipts is $36 million per year, identical to the OMB estimate, CBO scores $3 million per year in costs associated with the provision to allow spending of receipts above $34 million. CBO notes that there is a probability that receipts could be higher or lower than the baseline assumes and calculates an expected value for the loss of receipts. OMB scores based on the existing baseline. OMB and CBO have different baseline estimates for fees paid by State and local governments for OCS resources and thus differ on the loss associated with the fee exemption.

7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:

	(Fiscal years; in millions of dollars)
	1999	2000	2001	2002	2003	2004
Outlay effect..............	1	748	949	594	870	2
Receipt effect............	-5	3,659	1,779	769	1,985	37
Net costs....................	6	-2,911	-830	-175	-1,115	-35

* $500,000 or less