EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

STATEMENT OF ADMINISTRATION POLICY
(THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)

September 22, 1999 (Senate)

S. 1596 - DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 2000 (Sponsors: Stevens (R), Alaska; Bond (R), Missouri)

This Statement of Administration Policy provides the Administration's views on the Veterans, Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 2000, as approved by the Senate Committee. Your consideration of the Administration's views would be appreciated. The Administration issued a senior advisors veto threat on the House version of this legislation due to deep cuts in science and technology programs, reductions in essential housing and environmental programs, inadequate funding for National Service, inadequate funding for FEMA disaster relief and cuts in other important programs. The Administration appreciates the Senate Committee's efforts to develop a bill that makes important improvements to the House bill. However, there continue to be significant problems with the Senate Committee bill that must be satisfactorily addressed before it is presented to the President. Regrettably, the Committee bill under funds important programs for our nations's cities, for the environment, for disaster relief and for National Service. Unless these concerns with the House and Senate bills are addressed in a satisfactory manner in a conference agreement, the President's senior advisors would recommend that he veto the bill. The Administration strongly objects to the Committee's failure to fund the critical housing needs of low-income families and Administration initiatives to invest in our nation's cities. Most importantly, the Administration objects to the Committee's decision not to fund new incremental Section 8 housing assistance vouchers in FY 2000 and to the elimination of the Community Builders Program. If forced to terminate these employees, HUD would have to eliminate local service in almost two dozen communities, leaving up to seven States without any HUD presence. The Administration also strongly opposes the Committee's decision not to fund, or to under fund, a number of the Administration's critical investment initiatives, including the New Markets Initiative, Regional Connections, Regional Empowerment Zones, and the redevelopment of abandoned buildings. In addition, the bill also under-funds Administration priorities such as the Corporation for National and Community Service, Revitalization of Distressed Public Housing (HOPE VI), Neighborhood Reinvestment Corporation, Community Development Financial Institutions (CDFI), Brownfields redevelopment, Community Empowerment Fund, and Housing Opportunities for Persons With AIDS (HOPWA). Finally, the Administration would like to work with the Congress to secure the funding requested for the Round II Empowerment Zone program. The Administration strongly opposes the Committee's $186 million reduction to the request for the Environmental Protection Agency's (EPA) Operating Programs, including the $114 million cut to the Climate Change Technology Initiative (CCTI), elimination of funding for the Montreal Protocol, and the $35 million cut in personnel costs. The Administration also opposes the $100 million reduction to Superfund and the elimination of funding for the Clean Air Partnership Fund. In addition to these severe reductions, the Administration opposes spending $197 million on the 123 earmarked projects in the Committee bill, which were not requested by the President and would come at the expense of important environmental programs. These reductions would severely hamper EPA's efforts to protect public health and the environment and should be restored. The Administration strongly opposes the Committee's failure to fund the request for $2.5 billion in contingent emergency funding for the Federal Emergency Management Agency's (FEMA's) disaster relief fund. This reduction would hinder FEMA's ability to respond quickly and appropriately to disasters as they occur. Detailed discussions of certain of these issues, as well as additional Administration concerns with the Committee bill, are provided in the attachment. We look forward to working with the Congress to address our mutual concerns. Attachment

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Attachment (Senate)

DEPARTMENT OF VETERAN AFFAIRS/HOUSING AND URBAN DEVELOPMENT/INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 2000 (AS REPORTED BY THE HOUSE COMMITTEE)

Housing and Urban Development The Committee's decision to not provide for a single new incremental housing voucher leaves fundamental housing needs unmet, at a time when 5.3 million families have severe housing needs. President Clinton's request for 100,000 new incremental housing vouchers builds on the positive, yet modest, action taken by the Congress and the Administration in FY1999 to provide an additional 50,000 Section 8 housing vouchers. The Administration believes that it is essential to provide incremental vouchers in FY 2000. The Committee bill contains a punitive provision that would fire 410 Housing and Urban Development (HUD) employees -- HUD's Community Builders. Community Builders have been key to the reinvigoration of HUD and a key component of the new outreach to aid our communities. The Committee further restricts HUD's management flexibility with an unusual limitation on staff and contractors and an unrealistic cut in HUD's administrative funding. These provisions would unreasonably hamper efforts to correct management weaknesses identified by the Congress and others. The Committee bill does not fund the President's New Markets Initiative and other economic development programs. The President has requested a multifaceted national New Markets Initiative and other programs for economic revitalization to take advantage of the strength of the economy and help those areas left behind in our economic boom. The Committee has not funded the President's $37 million request for America's Private Investment Companies, which would stimulate $1.5 billion in private investment in these communities. The Revitalization of Distressed Public Housing (HOPE VI) program is funded at $500 million, $125 million below the requested level. This decrease would impair the Administration's ability to remove and replace the Nation's worst public housing. The Committee's $3.5 million reduction to the President's request of $19.5 million for the Office of Federal Housing Enterprise Oversight (OFHEO) would delay implementation of the risk-based capital regulation and strain OFHEO's capacity to conduct its risk-based examinations of Fannie Mae and Freddie Mac effectively. This could have serious implications for the safety and soundness of these large Government-sponsored enterprises. The Administration strongly urges the Senate to fully fund the President's request for Fair Housing initiatives, which are critical to ending housing discrimination in this country. Corporation for National and Community Service The Administration appreciates the funding provided for the Corporation for National and Community Service in the Committee bill. However, the amount provided for AmeriCorps and other programs is inadequate. The Administration strongly urges that additional funding be provided to the Corporation. In its current form, the Committee bill would cut AmeriCorps Grants by $13 million below the FY 1999 level and $78 million below the President's request. This would deny 17,000 Americans the opportunity to join AmeriCorps and serve their communities while earning an educational award. The Administration opposes the Committee's reduction to the Corporation's program administration. This reduction would jeopardize the Corporation's ability to make managerial improvements that the Congress and the Administration believe are critical. In addition, the $80 million rescission from the National Service Trust Fund could endanger the Corporation's ability to pay educational awards earned by AmeriCorps members in the future. We also urge the Senate to adopt the Administration's proposed appropriation language, which would remove the numerous current earmarks and limits that constrain the Corporation's ability to manage its programs efficiently and effectively. Community Development Financial Institutions The Administration strongly opposes the Committee's decision to fund the Community Development Financial Institutions Fund at $80 million, $45 million below the request and $15 million below the FY 1999 enacted level. This would result in approximately 50 fewer banks and 65 fewer CDFIs receiving grants, which would severely reduce the Fund's ability to provide and leverage investments, loans, technical assistance, and financial services in the country's most distressed communities. Likewise, the Administration opposes the Committee's decision not to fund the Program for Investment in Microentrepreneurs initiative, which would provide funding for micro-enterprise development. Environmental Protection Agency The Administration appreciates the Committee's effort to fully fund the Clean Water Action Plan, the Brownfields initiative, and the Children's Environmental Health Initiative. However, we have several major concerns with the funding provided for the Environmental Protection Agency (EPA) in the Committee bill. In particular, the Administration strongly opposes the $186 million reduction to the request for EPA's Operating Program, which is the backbone of the Nation's environmental protection efforts. Likewise, we strongly oppose the Committee's reductions of $114 million to the request for EPA's component of the Climate Change Technology Initiative (CCTI), elimination of funding for the Montreal Protocol, and termination of the final installment of funds to complete the construction of the state-of-the-art research center in North Carolina. The Committee bill would restrict EPA's flexibility in administering environmental programs by including a funding level for personnel of $900 million, a $35 million reduction from the President's request. This reduction to personnel costs would require reducing EPA by more than 400 positions, preventing EPA from undertaking initiatives designed to improve the quality of the Nation's air, water, and food supply. The Administration objects to the elimination of funding for the new Clean Air Partnership Fund, which would provide grants to State and local governments for innovative projects that reduce multiple pollutants, such as air toxics, pollutants that produce soot and smog, and greenhouse gases. We also oppose the Committee's $100 million reduction to the request for the Superfund program, which under this Administration has operated at a record pace to clean up toxic waste dumps. This reduction would needlessly jeopardize the public health for citizens living near affected sites. The Administration further objects to the Committee's proposal to finance half of the Superfund appropriation from general revenue. Such financing is contrary to the "polluter pays" principle and would be unfair to the general public, who would be forced to pay for the irresponsible actions of polluters. The Administration objects to the exceptionally high number of earmarked projects included in the Committee bill for EPA, and the corresponding reduction or elimination of several high-priority environmental programs and initiatives: EPA's Operating Program, CCTI, the Montreal Protocol, the Mexican border wastewater treatment funding program, and Sustainable Development Challenge Grants. We will work with the Congress to restore requested funding as the bill moves forward. We urge the Congress to reduce unrequested funding for lower-priority projects. The Committee bill includes a rider prohibiting implementation of the Kyoto Protocol. Since the Administration has stated that it does not intend to implement the Kyoto Protocol until it is ratified by the Senate, we believe that the language is unnecessary. However, the Administration appreciates the Committee's commitment to the agreement reached last year on this issue. National Aeronautics and Space Administration The Administration appreciates the Committee's full funding of the President's request for the National Aeronautics and Space Administration (NASA). We strongly object, however, to the $120 million reduction in NASA's Space Science programs. As evidenced by the spectacular returns from missions like the Hubble Space Telescope and Mars Pathfinder, Space Science is a top performer and core research function at NASA. We believe that this reduction would cause serious harm to ongoing and planned efforts. We strongly urge the restoration of Space Science funding. The Administration is concerned with the increased number of appropriations accounts for Space Station and other activities. We are dedicated to controlling Space Station costs while also providing the flexibility necessary to deal with unanticipated requirements. We are also concerned about the large number of unrequested, site-specific earmarks, which would have the effect of circumventing the competitive peer-review process. Finally, we strongly object to bill language that would mandate termination, without allowance for further review on the merits, of any program or activity that exceeds its annual budget request or total estimated cost by 15 percent. This mandatory termination requirement could cause ill-advised program management tradeoffs that could place safety and reliability concerns second to small additional cost considerations. This would likely result in program terminations that are not in the best interest of the Government. National Science Foundation The Administration appreciates the Committee's full funding the President's request for the National Science Foundation (NSF). We are concerned, however, that the Committee's report directs NSF to provide $25 million to the Arctic Research Commission to support arctic logistics activities. The Arctic Research and Policy Act of 1984 established the Commission to promote Arctic research and policy. The Act also designated NSF as the lead agency responsible for implementing Arctic research policy. NSF currently has the support infrastructure -- including staff -- and ongoing relationships with other agencies and contractors to support Arctic research. It would be inefficient to move all NSF logistics funding to the Arctic Research Commission. It is also inconsistent with the Act's establishment of responsibilities for the two agencies. FEMA (Emergency Food and Shelter Program) The Administration is concerned that the Committee has provided $15 million less than requested for the Federal Emergency Management Agency's (FEMA's) Emergency Food and Shelter Program. Funding for this program has been frozen at $100 million since FY 1996, when it was cut from its previous level of $130 million. While the 10-percent increase provided by the Committee is helpful, this reduction from the President's request would prevent FEMA from providing almost four million meals and 600,000 shelter nights for less fortunate Americans needing food and shelter. The Administration appreciates the Committee's support of FEMA's mitigation programs but urges the Committee to provide the $12 million requested for the National Flood Mitigation Fund. FEMA's mitigation programs have been shown to reduce the costs of future disasters. Council on Environmental Quality The Administration urges the Committee to fully fund the Council on Environmental Quality (CEQ). We strongly believe that in order to allow CEQ to carry out its environmental mission and reinvention efforts, the full requested level should be provided. We also urge the Committee to delete language prohibiting the use of detailees. American Battle Monuments Commission The Committee bill includes language stating that the American Battle Monuments Commission (ABMC) may borrow up to $65 million from the Treasury for construction of the World War II memorial. This borrowing authority was not proposed by the Administration and would add to the discretionary spending of this bill. The FY 2000 Budget proposed continuation of private contributions as the best approach to completing the World War II Memorial. The Administration opposes this borrowing authority as transition funding because it would undercut solicitation of private contributions. This would undermine rather than expedite the completion of the World War II Memorial. The Administration, however, strongly supports the extension of the authority to establish the Memorial. Neighborhood Reinvestment Corporation The Administration strongly opposes the Committee's decision to fund the Neighborhood Reinvestment Corporation (NRC) at $60 million, $30 million below the request and the FY 1999 enacted level. This cut would eliminate funding for a second round of NRC's "Play-by-the-Rules" homeownership initiative, an initiative designed to create 7,000 additional new homeowners. The cut would also eliminate $10 million requested to help attract $600 million in public and private sector investments to create affordable, multi-family housing in distressed neighborhoods. Selective Service System The Administration continues to support the peacetime draft registration program of the Selective Service System as the third line of defense after the Armed Services and the Reserve and Guard units. The Administration appreciates the Committee's full restoration of this low-cost insurance program, particularly in light of the recruiting and readiness issues that we are addressing. We believe that the Committee is sending a strong, positive signal to our foreign adversaries by rejecting termination and approving the President's budget request for the Selective Service System.