Appropriations for FY2005: Transportation, Treasury, and Independent Agencies
Released: 2004-12-21T00:00:00

Most Recent Developments

On December 8, 2004, the President signed H.R. 4818 , the ConsolidatedAppropriations Act, 2005 ( P.L. 108-447 ). Congress approved the conference committee report on H.R. 4818 ( H.Rept. 108-792 ), which incorporated the Transportation, Treasury, andIndependent Agencies FY2005 Appropriations bill and eight other appropriations bills, on November20, 2004, but the bill was held for a correcting resolution ( H.Con.Res. 528 , passedDecember 6, 2004) before being sent to the President.

Overview

Legislative Status

Table 1. Status of FY2005 Departments of Transportation and the Treasury and Independent Agencies Appropriations

Data note. Prior to FY2004, appropriations for the Department of Transportation and the Department of the Treasury were in separate bills. Beginning with the FY2004 budget, Congress began considering appropriations for the Departmentof Transportation (DOT) and its related agencies, and the Department of the Treasury, the PostalService, the Executive Office of the President, and General Government provisions, in a singleappropriations bill. This change was a result of the creation of a new federal department, theDepartment of Homeland Security, and the reorganization of the subcommittee structure of theHouse and Senate Committees on Appropriations, creating new subcommittees for HomelandSecurity and combining the former Transportation and Treasury subcommittees into one committee.

As part of the creation of the Department of Homeland Security (DHS), the United States Coast Guard and the Transportation Security Administration were transferred from the Department ofTransportation to DHS. Also, the Bureau of Alcohol, Tobacco, and Firearms, the Customs Service,and the United States Secret Service were transferred from the Department of the Treasury to DHS,and the Office of Homeland Security was transferred from the Executive Office of the President toDHS. Budget numbers for years prior to FY2004 have been adjusted in light of these changes tocompare pre-FY2004 figures with FY2004 and later figures.

FY2004 Appropriations

The FY2004 Transportation, Treasury, and Independent Agencies Appropriation was passed as part of the FY2004 Consolidated Appropriations Act ( P.L. 108-199 ). This Act included a 0.59%across-the-board rescission which applied to most accounts in the Transportation and Treasury andGeneral Government appropriations.

FY2005 Appropriations

The Administration's FY2005 budget request for the Departments of Transportation and the Treasury, the Executive Office of the President, and Related Agencies was $88.9 billion, $1.6 billionbelow the final comparable FY2004-enacted figure. Table 2 shows the allocation of fundingwithinthe overall request.

Table 2. Transportation/Treasury Appropriations, by Title, FY2004-FY2005 (millions of dollars)

Source: Budget table provided by the House Committee on Appropriations. "Total" is from "Netgrand total budgetary resources" line in budget table and reflects scorekeeping adjustments. Totalsmay not add due to rounding and scorekeeping adjustments.

Note: In the FY2004 bill the House put the Postal Service in a separate title; in FY2005, theHouseis following the Senate practice of putting the Postal Service into the "Independent Agencies" Title.

*The FY2004 Omnibus appropriations bill contained an across-the-board rescission of 0.59%; thatrescission is reflected in these figures.

**The House cut approximately $47 billion from Title I (Transportation) funding during floordebate. Since the subcommittee chair assured members that the funding would be restored inconference, that cut is not reflected here.

***The FY2005 Omnibus appropriations bill contains an across-the-board rescission of 0.80%; thatrescission is not reflected in these figures.

The Administration submitted its FY2005 budget request to Congress on February 2, 2004, two weeks after Congress completed the FY2004 appropriation process by passing an omnibusappropriations bill ( P.L. 108-447 ). The House Committee on Appropriations marked up H.R. 5025 , the FY2005 Transportation, Treasury, and Independent Agenciesappropriations bill, on July 23, 2004, but the bill was not officially reported out by the Committeeuntil September 9, 2004 ( H.Rept. 108-671 ). The Committee recommended $89.9 billion. TheHouse of Representatives passed H.R. 5025 on September 22, 2004. During floor debate,the House cut some $47 billion in transportation funding from the $89.9 billion bill, as points oforder were raised against appropriations to programs lacking authorizing legislation. Since, at thatpoint, surface transportation programs had no authorizing legislation for FY2005, virtually allappropriations for highway and transit programs were eliminated; funding for Airport ImprovementProgram grants was eliminated as well. However, the Appropriations subcommittee chair assuredmembers the funding would be restored in conference.

The Senate Committee on Appropriations reported out S. 2806 ( S.Rept. 108-342 ), their FY2005 Transportation, Treasury and General Government Appropriations bill, on September15, 2004. The Committee recommended $90.5 billion, $1.6 billion more than the Administrationrequest. This bill was never taken up by the full Senate.

Fiscal Year 2005 began with the FY2005 transportation-treasury appropriations bill, and most of the other annual appropriations bills for FY2005, unfinished. Congress passed a series ofcontinuing resolutions to fund the government as negotiations on the appropriations bills continued. Appropriators ultimately combined 9 of the bills into an omnibus ( H.R. 4818 ). OnNovember 20, 2004, the House and Senate passed the conference report for H.R. 4818( H.Rept. 108-792 ), one day after its completion. However, controversy arose over a provisioninserted into Division H of the bill, the FY2005 Transportation, Treasury, and Independent AgenciesAppropriations Act, during conference. The provision, intended to aid oversight over the InternalRevenue Service, would have given appropriators and their staff access to the tax returns ofindividuals and corporations, while shielding them from any penalties for disclosing informationfrom those returns. The Senate objected to the provision, a resolution was drafted ordering the clerkto remove the provision, and the resolution was approved on December 6, 2004. The bill was thensent to the President, and was signed into law on December 8, 2004. The bill provides $90.6 billionfor the Departments of Transportation and the Treasury, and the independent agencies included inDivision H, minus a 0.80% across-the-board rescission which applies to the entire omnibus. Officialnumbers reflecting the rescission are not available, so the numbers in this report do not reflect therescission, but unofficially the rescission will reduce the Transportation-Treasury appropriation to$89.9 billion, approximately $460 million below the amount provided for FY2004 but approximately$950 million above the Administration request for FY2005.

Major Funding Trends

Table 3 shows funding trends for Transportation/Treasury Appropriations from FY1999 through FY2004.

Table 3: Funding Trends for Transportation/Treasury Appropriations, FY1999-FY2005 (billions of current dollars)

Source: United States House of Representatives, Committee on Appropriations, ComparativeStatement of Budget Authority tables from fiscal years 1999 through 2004.

a. Figures for Department of Transportation appropriations for FY1999-FY2003 have been adjustedfor comparison with FY2004 figures by subtracting the United States Coast Guard, theTransportation Security Administration, the National Transportation Safety Board, and theArchitectural and Transportation Barriers Compliance Board, and by adding the MaritimeAdministration.

b. Figures for Department of the Treasury appropriations for FY1999-FY203 have been adjustedfor comparison with FY2004 figures by subtracting the Bureau of Alcohol, Tobacco, andFirearms; the Customs Service; the United States Secret Service; and the Law EnforcementTraining Center.

c. Figures for Related Agencies appropriations for FY1999-FY2003 have been adjusted by addingthe National Transportation Safety Board, the Architectural and Transportation BarriersCompliance Board, and the Postal Service.

d. FY2001 figures reflect 0.22% across-the-board rescission.

e. FY2003 figures reflect 0.65% across-the-board rescission.

f. FY2004 figures reflect 0.59% across-the-board rescission.

g. FY2005 figures do not reflect 0.80% across-the-board rescission.

Title I: Transportation Appropriations

Overview

The Administration's FY2005 budget proposed a DOT budget of $58.4 billion -- similar to FY2004's enacted level of $58.4 billion (see Table 4 ). (1) The budget request conforms to the basicoutline of the Transportation Equity Act for the 21st Century (TEA-21; P.L. 105-178 ) whichauthorizes spending on highways and transit, and which the 108th Congress is in the process ofreauthorizing. (See Appendix 2 for more information on this authorizing act.) However, therequestdid propose a few changes to the highway and transit funding structure, in line with theAdministration's reauthorization proposal; see the sections on the Federal Highway Administrationand Federal Transit Administration for details.

The House Committee on Appropriations recommended $58.9 billion for DOT for FY2005, $559 million above FY2004 and $457 million above the Administration request. The major changefrom the Administration request was an additional $900 million for federal highways and anadditional $52 million for the Essential Air Service program, as well as a provision blockingimplementation of a pilot program that would require communities to provide a local match forEssential Air Service funds.

During floor debate, appropriators struck funding for transportation programs that were not authorized for FY2005. This included the federal highway program, federal highway safetyprograms, the federal transit program, and Amtrak. In addition, the Airport Improvement Programwas struck, as was Essential Air Service. These cuts totaled approximately $47 billion of the $58.9billion recommended for transportation by the Committee on Appropriations. The transportationappropriation subcommittee chair assured members that the cuts would be restored in conference. (2)

The Senate Committee on Appropriations recommended $59.5 billion for DOT for FY2005, $1.2 billion more than the Administration request. The major changes from the Administrationrequest were an additional $890 million for federal highways, an additional $492 million for transit,and an additional $317 million for Amtrak. The bill was never taken up by the full Senate.

House and Senate conferees agreed on $58.9 billion for DOT for FY2005, $559 million above FY2004 and $485 million above the Administration request (though after the 0.80% rescission isapplied, the final FY2005 figure will be reduced by around $470 million). The major changes fromthe Administration request were an additional $442 million for transit, an additional $316 millionfor highways, an additional $317 million for Amtrak, and a $322 million cut in Federal AviationAdministration funding for air safety inspectors and air traffic controllers.

Table 4. Title I: Department of Transportation Appropriations (in millions of dollars -- totals may not add)

Note: Figures are from a budget authority table provided by the House Committeeon Appropriations, except Senate figures are from the budget authority table in S.Rept. 108-342 . Because of differing treatment of offsets, the totals will not alwaysmatch the Administration's totals. The figures within this table may differ slightlyfrom those in the text due to supplemental appropriations, rescissions, and otherfunding actions. Columns may not add due to rounding or exclusion of smallerprogram line-items.

*Because the transportation appropriations subcommittee chairman assured Members that the cuts made to transportation programs on the floor would be restored inconference, this table shows the figures recommended by the Committee onAppropriations.

a. These figures reflect the 0.59% across-the-board rescission included in P.L.108-199 .

b. These figures do not reflect the 0.80% across-the-board rescission in P.L.108-447 .

c. These amounts are in addition to the $50 million annual authorization for theEssential Air Service program; thus, the total FY2004 and FY2005 fundingwould be $102 million ($50 million + $52 million).

d. In addition to Amtrak's FY2004 appropriation, Congress postponed Amtrak'srepayment of a $100 million loan from the DOT. For FY2005, Congressrequired Amtrak to repay 20% of the loan during FY2005.

e. The figures do not reflect $14 million in permanent appropriations. Therefore, thetotal resources for RSPA for FY2004 may be seen as $126 million and forFY2005 $131 million.

f. Rescissions of unobligated previous years' contract authority have been subtractedfrom this total. Because rescissions of prior years' contract authority have noimpact on the budgetary resources available for the current fiscal year, the totalresources available could be seen as $59.0 billion for FY2004 enacted.

Federal Aviation Administration (FAA)

http://www.faa.gov/

The Conference Report for FY2005 provides the FAA with $13.83 billion. This is slightly less than the Bush Administration request for FY2005 which was $13.96billion. The conference version of the appropriations bill is very close to the FY2004level of funding of $13.88 billion. The proposal is essentially devoid of major newinitiatives, but contains some program adjustments and shifts a significant amountof funding, $393 million, from the Facilities and Equipment (F&E) program to theOperations and Maintenance (O&M) program.

The House proposal for total FAA funding was $14.3 billion, not including a rescission of $758 million of prior year funds. Depending upon how this rescissionis treated, the House number was slightly above, or slightly below, theAdministration request. The bill provided for a General Fund contribution to O&Mprograms of $1.7 billion, which was slightly below the Administration's request forthis source of funding but was well below the FY2004 level. During floor debate theGeneral Fund contribution level was amended to a level of approximately $2.7billion and the trust fund contribution was reduced accordingly.

The Senate Committee on Appropriations proposed an overall FAA funding level of $13.9 billion, which is roughly the same level as the Administration request(the bill included a rescission of $265 million). The bill proposed no majorprogrammatic changes or initiatives. The bill accepted the Administration'srecommendation to reduce F&E funding and increase O&M funding accordingly.The General Fund contribution to O&M was set at slightly more than $2.5 billion.

The vast majority of FAA funding is provided from the Airport and Airway Trust Fund. Only O&M funding uses a mix of trust fund and Treasury general fundmonies. In FY2002 a Treasury general fund contribution of $1.1 billion wasprovided for O&M funding. While the general fund contribution for FY2002 was onthe low side historically, the FY2003 amount returned to a higher contribution levelof $3.4 billion. The FY2004 Act raised the general fund contribution to $4.5 billion.The FY2005 bill, however, reduces the general fund contribution to $2.8 billionwhich is more in line with the historical contribution level. Historically, this fundingsplit has been an important part of the annual FAA budget debate. The rationalebehind the general fund contribution has been that the public at large realizes somebenefit from aviation whether it uses the system or not. (3)

Operations and Maintenance (O&M). For FY2005, the Administration proposed $7.8 billion intotal spending. This compares with a spending level of $7.5 billion in the FY2004Act. The majority of funding in this category is for the salaries of FAA personnelengaged in air traffic control, certification, and safety-related activities. Much of theincreased funding called for in the FY2005 request is for increased air traffic controlsystem costs and safety-related activities. The House bill included $7.7 billion forthis function, while the Senate bill contained almost $7.8 billion. The Conferencebill at $7.71 billion is more in line with the House bill.

One issue getting attention in this year's appropriations bills is the question of hiring additional air traffic controllers. There is concern that many of the currentcontrollers, who were hired after the air traffic controllers strike of 1981, are nowrapidly approaching retirement age. Controller union representatives contend that theFAA is not taking sufficient action to mitigate against potential future staff shortages. The House bill tries to remedy this situation by providing an additional $9 million tohire and train new controllers, and an additional $4 million to hire and train newcontroller supervisors. The Senate bill also addresses this issue and provides anadditional $10 million to hire and train new controllers. The Conference reportincludes provisions that accommodate new hiring and training, especially forsupervisors.

Facilities and Equipment (F&E). The Administration request for F&E was $2.5 billion, $393 million below theFY2004 enacted figure. F&E funding is used primarily for capital investment in airtraffic control and safety. The Bush Administration request would provide less forsome safety and capacity technology and hardware replacement initiatives than inFY2004. This is potentially the most controversial aspect of the Administration'sFAA proposal. Both the House and Senate bills, however, adopted theAdministration's requested level of $2.5 billion and the Conference Report does thesame.

Research, Engineering, and Development (RE&D). Under the Administration proposal this program wouldhave been subject to a small cut, to $117 million from the $119.4 million in theFY2004 Act. Most RE&D activity is focused on safety/air traffic control activities. No significant new initiatives were proposed in the Bush Administration FAAbudget. The House bill accepts the Administration's requested level, but makes somechanges in the research projects to be carried out during FY2005. The Senate bill alsomakes some project changes and increases overall funding for RE&D to $129.4million. The Conference bill at $129.9 million is slightly more generous than any ofthe bills discussed above.

Essential Air Service (EAS). The EAS program is operated through the Office of the Secretary of Transportation(OST), and receives its funding from designated user fees collected from overflightsof United States territory by foreign aircraft. EAS has had an annual authorizedfunding level of $50 million for the last several years. The overflight fundingmechanism, however, has never provided this much annual funding, so additionalfunding has been provided from other sources. The EAS program continues to enjoysignificant support in Congress.

The FY2004 Act provided $102 million for EAS, $50 million from its regular authorization and $52 million in additional funds from the aviation trust fund. Theact does not, however, rely on the overflight fee as its principal funding mechanism.During the FY2004 debate Congress rejected the Bush Administration's calls toreduce the size of the EAS program by half and require a local contribution at eachairport receiving EAS service.

In its FY2005 request, the Administration was once again proposing that the size of the EAS program be reduced, capping the program at the $50 million level. The Administration was also proposing that there be a local contribution.

In its bill, the House Committee on Appropriations rejected the Administration's proposal. Instead, it provided $101.7 million for FY2005. Of this amount, $51.7million was made available from the airport and airway trust fund, with $14 millionto come from prior year carry over funds, and the remaining $36 million to comefrom other funds available to the FAA. This is essentially the same level of fundingas that provided in FY2004. The House bill also includes a provision that prohibitsimplementation of the local participation program (Title V, Section 525). Duringfloor consideration the $51.7 million to be made available from the trust fund wasremoved on a point of order. Committee leadership expected that these funds wouldbe restored in Conference.

The Senate Committee on Appropriations also rejected the Administration's funding request. The Committee allowed $102 million in total EAS spending forFY2005. Of this total $52 million was a direct appropriation and $50 million wasfrom overflight fees. The Committee did not specifically reject the local participationprogram, rather it chose not to allow for its funding. The Conference bill accepts theSenate funding arrangement and precludes the Administration from pursuing thelocal match provision.

Grants-in-Aid for Airports. The Airport Improvement Program (AIP) provides grants for airport development andplanning. The Bush Administration FY2005 budget proposal requested $3.5 billionfor AIP, roughly $100 million more than the FY2004 enacted level. The proposalwould continue the prohibition of the use of AIP grants to replace baggage conveyorsystems, reconfiguration of terminal baggage area or other airport improvements toaccommodate bulk explosive detection systems (EDS).

The FY2005 Consolidated Appropriations Act ( P.L. 108-447 ) provides an obligation limitation of $3.5 billion for AIP (the 0.80% across-the-board rescissionwould reduce this to roughly $3.47 billion). The rescission makes this total slightlyless than the President's request and roughly $90 million above the FY2004 enactedlevel. The Act rescinds $265 million of F&E contract authority from FY2004, whichwould have been transferred to AIP. This rescission, however, has no programmaticimpact on the FY2005 grants-in-aid for airports program. Like the House and Senatebills, the Act provides $68.8 million for administration and continues the prohibitionon the use of AIP funds for airport improvements made to accommodate theinstallation of EDS equipment, as well as setting aside $20 million for the SmallCommunity Air Service Pilot program. The conference report names 140 airportsand directs FAA to provide not less than the listed funding level for projects at theseairports. The conferees also agreed that state AIP apportionment funds to smallairports could be used as discretionary funds for the purpose of implementingearmarks.

Federal Highway Administration (FHWA)

http://www.fhwa.dot.gov

The FHWA budget provides funding for the Federal-Aid Highway Program (FAHP), which is the umbrella term for nearly all the highway programs of theagency.

There are several sets of highway programs within FHWA. Most of the funding is reserved for the major federal-aid highway programs, which can be thought of asthe core programs. These programs are: National Highway System (NHS), InterstateMaintenance (IM), Surface Transportation Program (STP), Bridge Replacement andRehabilitation (BRR), and Congestion Mitigation and Air Quality Improvement(CMAQ). All of these programs are subject to apportionment on an annual basis byformula and are not subject to program-by-program appropriation.

There is a second category of highway funding. This so called "exempt" category consists mostly of two elements: an additional annual authorization ofminimum guarantee funding ($639 million per fiscal year) and emergency relief($100 million per fiscal year). These funds are not subject to the annual limitationon obligations.

There is a further set of programs, known as the "allocated" programs (also referred to as discretionary programs). These programs are under the direct controlof FHWA or other governmental entities. These programs include the Federal LandsHighway Program, High Priority Projects (former demonstration project category),Appalachian Development Highway System roads, the National Corridor Planningand Border Infrastructure Program, and several other small programs. In recentyears, nearly all discretionary program funding has been earmarked by Congress.

The Administration Request. TEA-21 had not yet been reauthorized when the President's budget was released; thePresident's FY2005 budget assumed that the FY2005 authorization would conformto the President's surface transportation reauthorization recommendations. However,because, when the FY2005 Consolidated Appropriations Act was enacted, surfacetransportation programs had not been reauthorized, the Consolidated Act retained theTEA21 program structure.

For FY2005, the President requested $34.18 billion for FHWA. This represented a decrease of $367 million from the FY2004 enacted appropriation of$34.55 billion. (4) The proposed obligation limitation,which supports most of theFAHP, was set at $33.64 billion, $200 million less than the $33.84 billion enactedfor FY2004. Funding for exempt programs (emergency relief and a portion ofminimum guarantee funding) was set at $835 million, down $96 million fromFY2004's $931 million.

The FY2005 Consolidated Appropriations Act provides $34.86 billion for FHWA (prior the the 0.80% rescission). This is $316 million above the FY2004enacted level and $683 million above the Bush Administration proposal. Theobligation limitation is set at $34.64 billion (prior to the 0.80% rescission). This isroughly $1 billion above the FY2004 enacted obligation limitation. Exemptobligations are set at $835 million, the same as the budget proposal and $96 millionbelow the FY2004 enacted level. An additional $80 million is provided for theAppalachian Development Highway System (ADHS). The Act also provides anadditional $741 million for the Emergency Relief program (to help cover theprogram's backlog of requests and help fund hurricane damage incurred in 2004). The Act rescinds $1.35 billion in unobligated previous year contract authority fromthe core formula programs and $100 million from unobligated TransportationInfrastructure Finance and Innovation Act (TIFIA) funds.

Section 117 of the Act sets aside a 4.1% administrative take-down of Federal Lands Highway program allocations and apportionments to the core formulaprograms, ADHS, and the Minimum Guarantee program. From this take-down, $25million is made available to the Delta Regional Authority and $1.21 billion isearmarked for 795 projects. The earmarked amounts that made available underSection 117 may be used to make grants eligible under U.S. C. Title 23 (Highways)or Title 49 (Transit), are available until expended, have a 100% federal share, and areonly subject to the obligation limitation for the current fiscal year. The ConsolidatedAct also earmarks virtually all the funds provided for FHWA discretionary programs.

Federal Motor Carrier Safety Administration (FMCSA)

http://www.fmcsa.dot.gov/

The FMCSA was created by the Motor Carrier Safety Improvement Act of 1999 (MCSIA), P.L. 106-159 . (5) This agency becameoperational on January 1, 2000, andassumed almost all of the responsibilities and personnel of DOT's Office of MotorCarrier Safety. (6) FMCSA issues and enforces theFederal Motor Carrier SafetyRegulations that govern many aspects of specified commercial truck and busoperations, including the interstate operation and maintenance of commercialvehicles, and specify requirements for commercial drivers. FMCSA also administers grants and programs to help states conduct truck and bus safety compliance activities. Together with the states, FMCSA conducts inspections of Mexican-domiciled driversand vehicles entering the United States, advances Intelligent Transportation Systemsfor commercial operations, and reviews thousands of carriers transporting propertyand passengers. Most of the funds used to conduct FMCSA activities are derivedfrom the Federal Highway Trust Fund.

The FY2005 Administration request for the FMCSA is $455 million. The House Committee on Appropriations recommended $438.5 million; this was eliminatedduring floor debate on a point of order. However, most observers expected thereported figure to be used as the House benchmark during conference discussions. The Senate Committee on Appropriations recommended $450 million. The FMCSAappropriation has two primary components: FMCSA administrative expenses(including operations and research); and financial assistance provided primarily tothe states to conduct various truck and bus safety programs. For FY2005, Congressapproved an appropriation of $447.5 million to FMCSA's account: $257.5 millionfor administrative and research expenses under the FMCSA limitation onadministrative expenses account, and $190 million for motor carrier safety grants andinformation systems.

Administrative and Operations Expenses. The President's budget request for FMCSA'sadministrative and operations expenses in FY2005 is $228 million. The HouseCommittee on Appropriations recommended $248.5 million; this was eliminatedduring the House floor debate on a point of order. Most observers expected thereported figure to be used as the House benchmark during conference discussions. The Senate Committee on Appropriations recommended $260 million for itslimitation on administrative expenses. The FY2005 amount specified by theconferees is $257.5 million. This account includes funds for research and technology(R&T) and regulatory development. Some of the activities that would befundedinclude enforcement to reduce the number of unsafe motor carriers and drivers, andthe funding of a medical review board to assist FMCSA in improving its physicalrequirements for commercial drivers. Some of the core FMCSA activities orexpenses supported by these funds include rent, administrative infrastructure,personnel compensation and benefits and other related staff expenses for more than1,000 employees; outreach efforts to help educate the commercial motor vehicleindustry about the federal safety regulations; and monies to improve truck and bus,as well as driver, standards and oversight. This account also funds agencyinformation systems used to oversee the safety of motor carriers.

Grants to States and Other Activities. The Administration's FY2005 request for these activitiesis $227 million. The House Committee on Appropriations recommended $190million; this was eliminated during House floor debate on a point of order, but wasexpected to be used as the House benchmark during conference discussions. TheSenate Committee on Appropriations recommended the same amount. Theconference report recommended funding for FY2005 at the $190 million level. Thesefunds are used primarily to pay for the Motor Carrier Safety Assistance Program(MCSAP), which provides grants to states to help them enforce commercial vehiclesafety and hazardous materials transportation regulations. MCSAP grants cover upto 80% of the costs of a state's truck and bus safety program. Some 10,000 state andlocal law-enforcement officers conduct more than 2.9 million roadside inspectionsof trucks and buses annually under the program. The FY2005 appropriation included$169 million dedicated to MCSAP, and an additional $20 million for informationsystems and strategic safety initiatives.

National Highway Traffic Safety Administration (NHTSA)

http://www.nhtsa.dot.gov/

NHTSA funding supports behavioral (primarily driver and pedestrian) and vehicle (primarily crash worthiness and avoidance) programs that are intended toimprove traffic safety. More specifically, NHTSA seeks to reduce impaired driving,increase occupant protection, improve police traffic services, enhance emergencymedical responses to crashes, ensure compliance with various federal vehicle safetyregulations, and track and seek to mitigate emerging vehicle safety problems. NHTSA also provides grants to the states for the implementation of various highwaytraffic safety programs.

For FY2005, $689.3 million was requested to carry out NHTSA's mission. Of the total amount requested by the Administration, $456 million was designated tosupport general traffic safety and incentive grants to states. The incentive grants areintended primarily to encourage occupant protection measures and reduce impaireddriving. The remaining $233 million was for NHTSA's operations and researchactivities to reduce highway fatalities and prevent injuries due to traffic crashes. More specifically, the funds proposed would be used for activities including researchand analysis (e.g., collection of crash statistics and research on vehicle performanceand occupant damage during these crashes); highway safety programs (e.g.,developing improved countermeasures to combat alcohol- or drug-impaired driving);safety assurance (e.g., testing of vehicles to ensure compliance with federal motorvehicle safety standards and maintaining a legislatively-required database to trackvehicle defects); and safety performance standards (e.g, conducting crash avoidanceand crash-worthiness testing, and evaluating child safety seats). The HouseCommittee on Appropriations recommended $225 for traffic safety grants and $223.1million for NHTSA's operations and research (this money was stricken during theHouse floor debate on a point of order, but most observers expected the reportedfigures to be used as the House benchmark during conference discussions). TheSenate Committee on Appropriations recommended $225 million for traffic safetygrants and $228.3 million for operations and research. The conference report forFY2005 provides $225 million for traffic safety grants and $233 million foroperations and research.

Federal Railroad Administration (FRA)

http://www.fra.dot.gov

The Administration requested $1.09 billion in funding for the Federal Railroad Administration; this was $357 million (25%) less than the $1.455 billion enacted forFY2004, but was the same amount requested for FY2004. The House Committee onAppropriations recommended $1.09 billion (which was eliminated during Housefloor debate on a point of order). The Senate Committee on Appropriationsrecommended $1.44 billion; the Senate did not pass an FY2005 transportationappropriations bill. Conferees agreed on $1.44 billion. In FY2004, the Houseagreed to $1.09 billion, the Senate agreed to $1.57 billion, and conferees agreed on$1.455 billion. Most of FRA's funding is for Amtrak, and the difference between theHouse and Senate amounts for FY2005, as in FY2004, was almost entirely additionalfunding for Amtrak.

Although most of the debate involving the FRA budget centers on Amtrak, agency safety activities (which receive more detailed treatment following thissection), the Next Generation High-Speed Rail program, and how states might obtainadditional funds for high-speed rail initiatives are also continuing issues.

Railroad Safety. The FRA promotes and regulates railroad safety. Increased railroad traffic volume and densitymake equipment, employees, and operations more vulnerable to accidents. TheAdministration proposed $142.4 million in FY2005 for FRA's safety program andrelated administrative and operating activities. The House Committee recommended$137.7 million; the Senate Committee on Appropriations recommended $139.8million. The conference report specifies $139.8 million for FY2005. Most of thefunds appropriated are used to pay for salaries as well as associated travel andtraining expenses for FRA's field and headquarters staff and to pay for informationsystems monitoring the safety performance of the rail industry. (7) The funds requestedsupport FRA's goals of reducing rail accidents and incidents, reducing grade-crossingaccidents, and contributing to the avoidance of serious hazardous materialstransportation incidents.

The railroad safety statute was last reauthorized in 1994. Funding authority for the program expired at the end of FY1998. FRA's safety program continues using theauthorities specified in existing federal railroad safety law and funds provided byannual appropriations. Though hearings have been held since 1994, the deliberationshave not resulted in agreement on funding for FRA's regulatory and safetycompliance activities or change to any of the existing authorities used by FRA topromote railroad safety. A reauthorization statute changing the scope and nature ofFRA's safety activities would most likely affect budgets after FY2005.

Next Generation High-Speed Rail R&D. This program supports work on high-speed train controlsystems, track and structures technology, corridor planning, grade crossing hazardmitigation, and high-speed non-electric locomotives. The Administration requested$10 million for this program for FY2005; this was $27.4 million (73%) less than theFY2004 appropriation of $37.4 million, and $13.2 million less than theAdministration's FY2004 request ($23.2 million). The Administration request cuthigh-speed train control systems ($10 million enacted for FY2004; $5 millionrequested for FY2005); high-speed non-electric locomotive development ($9.9million enacted for FY2004; $2 million requested for FY2005); grade crossinghazard mitigation ($9 million enacted for FY2004; $2 million requested for FY2005);corridor planning ($2.5 million enacted for three corridors for FY2004; no requestfor FY2005); and maglev ($5 million enacted for FY2004 for four maglev projects;no request for FY2005).

The House Committee on Appropriations recommended $11 million; the additional $1 million was for grade crossing hazard mitigation. The SenateCommittee on Appropriations recommended $20 million; the additional money wasfor corridor planning, maglev projects, and more funding for high-speed train controlsystems. Conferees agreed on $19.7 million.

Amtrak. Beginning with Amtrak's FY2003 appropriation ( P.L. 108-7 ), Congress directed that Amtrak'sappropriation would not go directly to Amtrak, but rather that the Secretary ofTransportation would provide funding to Amtrak quarterly through the grant-makingprocess. Congress also imposed several other requirements on Amtrak beginning inFY2003 which had the effect of reducing Amtrak's discretion with its federalfunding. Among these was a requirement that Amtrak submit a five-year businessplan to Congress, which it did on April 25, 2003. In this plan, Amtrak requestedaverage annual federal support of $1.6 billion for FY2004-FY2008 to both maintainthe current network and begin to address the estimated $6 billion in backloggedmaintenance needs. The plan did not propose expansion of the existing rail network. Amtrak has submitted annual updates of this Strategic Plan to Congress.

The Administration requested $900 million for Amtrak for FY2005. This was $318 million less than Amtrak's FY2004 appropriation of $1.218 billion (8) and $900million less than the $1.8 billion Amtrak requested for FY2005. The HouseCommittee on Appropriations recommended $900 million for Amtrak; the SenateCommittee on Appropriations recommended $1.2 billion, and noted that Amtrakwould receive an additional $330 million in FY2005 from a provision in another bill( S. 1637 , the Senate's version of the export tax repeal legislation),giving Amtrak a total of $1.55 billion for FY2005. (9) However, the export tax repeallegislation passed by Congress ( P.L. 108-357 ) did not include the Amtrak fundingprovision. Conferees agreed on $1.2 billion for Amtrak, virtually identical to theFY2004 level. Conferees also again postponed Amtrak's repayment of a $100million loan provided by the DOT in FY2002; however, conferees directed Amtrakto repay the loan in five equal annual installments, beginning in FY2005.

Conferees also included provisions, originally added by the House Committee on Appropriations, that require Amtrak to develop an operating and capital plan forFY2005 in order to receive FY2005 funding; direct the Secretary of Transportationto retain a consultant to value Amtrak's capital assets and to develop a methodologyto determine the avoidable and fully allocated costs of each Amtrak route, whichAmtrak shall use to report to Congress on the costs of each of its routes; and prohibitAmtrak from submitting an independent budget request after FY2005, insteadrequiring Amtrak to submit its budget request through the DOT, where it will bevetted by the Office of Management and Budget. Conferees also directed theSecretary of Transportation to continue an effort, initiated by the FY2004 conferenceagreement, to establish a procedure for competitive bidding by non-Amtrak operatorsfor state-supported routes currently operated by Amtrak. If a state wishes to contractwith an operator other than Amtrak for service, the state may contract with Amtrakfor use of Amtrak's equipment, facilities, and services necessary to enable thenon-Amtrak operator to provide the service. If Amtrak and a state cannot agree onterms for this use, the Secretary of Transportation is given the power to compelAmtrak to provide the equipment, facilities and services on terms and conditions setby the Secretary.

The Administration also requested $900 million for Amtrak for FY2004, when Amtrak also requested $1.8 billion. The House agreed to $900 million for Amtrak,and added a provision allowing states to apply to FHWA to transfer a portion of theirallocation of an appropriation of $267 million from the Highway Trust Account toAmtrak. (10) The Senate agreed to $1.346 billionfor Amtrak, and extended to allAmtrak routes the requirement (begun for FY2003) that Amtrak's long-distanceroutes be funded through individual grant requests from Amtrak to the DOT. Conferees agreed on $1.225 billion, continued the new funding structure begun inFY2003, and extended to all Amtrak routes the requirement that they be fundedthrough individual grant requests.

Federal Transit Administration (FTA)

http://www.fta.dot.gov/

President Bush's FY2005 budget request for FTA was $7.27 billion, similar to FTA's FY2004 appropriation of $7.27 billion and slightly more than the FY2004request for $7.23 billion. The Administration's request also proposed changes toFTA's program structure, reflecting the Administration's transit reauthorizationproposals. These proposals included grouping all funding into three categories(administrative expenses, formula funds, and capital investment grants), zeroing outthe Bus Discretionary grant program, and creating a New Freedom Initiative programto help assist persons with disabilities with transportation to work. Similar changeswere proposed by the Administration during FY2004, but were not adopted byCongress; Congress did not support these changes for FY2005 either.

The House Committee on Appropriations recommended $7.25 billion for FY2005. During the House floor debate on the FY2005 appropriations bill, FTA'sfunding was eliminated on a point of order. As the funding reported out by theHouse Committee on Appropriations was expected to be the House benchmarkduring conference discussions, those figures were kept in this section. The SenateCommittee on Appropriations recommended $7.76 billion; the Senate bill was nevertaken up by the full Senate. Conferees agreed on $7.7 billion.

FTA Program Structure and Funding. The largest transit programs are the Capital InvestmentGrants and Loans Program and the Urbanized Area Formula Grants Program. Thereare also several smaller formula and discretionary programs.

Capital Investment Grants and Loans Program (Section 5309). This program (formerly known as Section 3) hasthree components: new transit starts, fixed guideway modernization, and bus and busfacilities. The funds are allocated among these three components on a roughly40-40-20 basis, respectively; funds for the fixed guideway component are distributedby formula, while funds for the other components are distributed on a discretionarybasis by FTA or earmarked by Congress. The Administration requested $1.532billion for the new transit starts program, up from $1.324 billion in FY2004 (a 16%increase) and $1.239 billion for fixed guideway modernization, up from $1.207billion in FY2004 (a 3% increase). The Administration requested no funding for thebus and bus facilities discretionary program, which received $677 million in FY2004;instead, the Administration would reallocate the money for that program to the newtransit starts program and the Non-Urbanized Areas Formula Program. The HouseCommittee recommended $1.031 billion for the new transit starts program, a 22%decrease from FY2004; $1.214 billion for fixed guideway modernization, the sameas FY2004; and $607 million for bus and bus facilities (the same amount enacted forFY2004, though the FY2004 appropriation was supplemented with funds transferredfrom other FTA programs, for a total of $677 million). The Senate Committee onAppropriations recommended $1.474 billion for the new transit starts program (11%over FY2004 ); $1.214 billion for fixed guideway modernization (the same asFY2004); and $725 million for bus and bus facilities (7% above FY2004's $677million). Conferees agreed on $1.474 billion for the new starts program (an 11%increase over FY2004), $1.214 billion for fixed guideway modernization (the sameas FY2004, which will result in a cut after the rescission is applied), and $725 millionfor bus and bus facilities ($675 million from capital grants funding, plus $50 milliontransferred from formula grants funding; in total, $48 million more than the FY2004enacted amount).

Urbanized Area Formula Program (Section 5307). This program (formerly known as Section 9) providescapital and, in some cases, operating funds for urbanized areas (population 50,000or more). Elilgible activities include bus and bus-related purchases and maintenancefacilities, fixed guideway modernization, new systems, planning, and operatingassistance. Funds are apportioned by a formula based, in part, on population (areaswith populations over 1,000,000 receive two-thirds of the funding; urbanized areaswith populations under 1,000,000 receive the remaining one-third) and on transitservice data. For FY2005, the Administration proposed $3.444 billion, a $15 millionincrease over the $3.429 billion provided in FY2004 (less than a 1% increase); theHouse Committee recommended $3.633 billion (5.9% over FY2004). The SenateCommittee recommended $3.604 billion (4.9% over FY2004). Conferees agreed on$3.6 billion.

With the enactment of TEA-21, operating assistance funding was eliminated for urbanized areas with populations over 200,000. However, preventive maintenance,generally considered an operating expense, is now eligible for funding as a capitalexpense. Urbanized areas under 200,000 population, and non-urbanized areas(Section 5311), can use formula funds for either capital or operating purposes.

Other Transit Programs.

Non-Urbanized Areas Formula Program (Section 5311), which provides capital and operating needs for non-urbanized areas (areas with populationsunder 50,000) -- $367 million requested for FY2005 ($239 million appropriated inFY2004), the House Committee recommended $253 million, the Senate Committeerecommended $251 million, and conferees agreed on $253million;

Grants for Elderly and Individuals with Disabilities (Section5310) -- $89 million requested for FY2005 ($91 million appropriated in FY2004),the House and Senate Committees recommended $95 million, which confereesagreed on;

Planning and Research programs -- $169 million requested forFY2005 ($126 million appropriated for FY2004), the House Committeerecommended $126 million, the Senate Committee recommended $128 million, andconferees agreed on $128 million; and

Rural Transportation Accessibility Incentive Program (Section3038), also known as the over-the-road bus accessibility program -- $7 millionrequested for FY2005 ($7 million appropriated in FY2004 also), the House andSenate Committees also recommended $7 million, which conferees agreedon.

The President's budget request proposed to create a new formula program, the New Freedom Initiative, which would use alternative methods to promote access totransportation for persons with disabilities. The President's budget requested $148million for this program in FY2005. Congress did not support this request.

Job Access and Reverse Commute Program. TEA-21 authorized a new discretionary Job Accessand Reverse Commute grant program. This program provides funding fortransportation projects that assist welfare recipients and low-income persons to findand get to work in suburban areas. The Administration proposed $153 million for itin FY2005, up from the $125 million appropriated in FY2004; the House Committeerecommended $150 million, the Senate Committee recommended $125 million, andconferees agreed on $125 million.

Table 5. FTA Appropriation, FY2003-FY2005 (millions of dollars)

Note: numbers may not add due to rounding.

Source: Figures were taken from Transportation-Treasury Budget Authority tablesprovided by the House Committee on Appropriations.

*FY2004 figures reflect an across-the-board rescission of 0.59%.

**All FTA funding for FY2005 was eliminated during House floor debate on a pointof order. As the Transportation-Treasury Appropriations subcommittee chair told hiscolleagues that the funding would be restored in conference, the figuresrecommended by the Appropriations Committee have been retained in this table.

***FY2005 figures do not reflect an across-the-board rescission of 0.80%.

****The FY2004 appropriation of $607 million was supplemented with $70 milliontransferred from other FTA programs, for a total of $677 million; the FY2005appropriation of $675 million was supplemented with $50 million transferred fromother FTA programs, for a total of $725 million.

Maritime Administration (MARAD)

http://www.marad.dot.gov

MARAD's mission is to promote the development and maintenance of a U.S. merchant marine capable of carrying the nation's waterborne domestic commerce,a portion of its waterborne foreign commerce, and to serve as a naval and militaryauxiliary in time of war. MARAD administers programs that benefit U.S. vesselowners, shipyards, and ship crews. For FY2005, the President requested $234.4million for MARAD, which is about $13 million more than was enacted in FY2004. In the omnibus appropriations measure for FY2005, Congress provided a total of$305 million for MARAD. Most of the difference between the amount Congressprovided and the amount the President requested has to do with a new program toconstruct U.S.-flagged oil tankers, which is explained further below.

Much of the discussion concerning MARAD's budget focuses on the Maritime Guaranteed Loan Program (the "Title XI" program). This program providesguaranteed loans for purchasing ships from U.S. shipyards and for the modernizationof U.S. shipyards. The purpose of the program is to promote the growth andmodernization of U.S. shipyards. Consistent with its budget requests in prior years,the Administration has requested no funds for additional loans in FY2005, calling theprogram a "corporate subsidy." The Administration has, however, requested $4.8million for the administration of existing loans which Congress agreed to. InFY2004, no funds were provided for additional loans, but $4.5 million was providedfor the administration of existing loans.

The DOT Inspector General issued a report in March 2003 on the Title XI program (CR-2003-031) calling on MARAD to review loan applications moreeffectively, exercise more rigorous financial oversight of borrowers, and use anexternal financial advisor in reviewing loan applications. The IG's investigation wasprompted by the bankruptcy of American Classic Voyages, leaving MARAD with$367 million in bad loans for the construction of two cruise ships. At a June 5, 2003Senate Commerce Committee hearing on the Title XI program, the GeneralAccounting Office also identified weaknesses in the program and maderecommendations for improving the financial oversight of the program(GAO-03-728T). In July 2004, the DOT announced the creation of adepartment-wide Credit Council to enhance the oversight and management of theTitle XI program and other loan and loan guarantee programs administered by otherDOT agencies. (11)

For operations and training, the Administration requested $109.3 million, about $3 million more than Congress enacted in FY2004. In the omnibus appropriationsmeasure, Congress provided $109.5 million. The Senate Appropriations Committeealso directed MARAD to prepare a conditions and performance report and needsassessment of the nation's inland waterway system in order to prepare for ananticipated increase in domestic and international maritime trade. This type of studywas also one of the recommendations made by the Marine Board of theTransportation Research Board. (12) For theMaritime Security Program (MSP), theAdministration requested $98.7 million which is the same amount that Congressprovided in the omnibus appropriations measure and virtually the same amount asCongress provided last year. MSP is a fleet of 47 privately-owned U.S. flagcommercial vessels engaged in international trade that are available to support theDepartment of Defense in a national emergency.

For the disposal of obsolete vessels in the National Defense Reserve Fleet (NDRF), the Administration requested and Congress provided $21.6 million, about$5.5 million more than was enacted for FY2004. There are over 130 vessels in theNDRF that are awaiting disposal because of their age. These vessels have raisedenvironmental concerns due to the presence of asbestos and other hazardoussubstances. MARAD has until 2006 to dispose of these surplus ships, most of whichare located on the James River in Virginia and in Suisan Bay, California.

In the omnibus appropriations measure, Congress provided $75 million in funding for a financial assistance program designed to encourage the construction ofup to five privately owned product tanker vessels. This financial assistance programwas authorized under subtitle D of the Maritime Security Act of 2003 ( P.L. 108-136 ),National Defense Tank Vessel Construction Assistance. The program would provideup to $50 million per vessel for the construction of a commercial tank vessel in aU.S. shipyard, provided that the vessel was also capable of carrying militarily usefulpetroleum products and the shipowner entered into an agreement with theDepartment of Defense to make the ship available for the military's use in time ofwar. The intent of the law is to decrease the Department of Defense's reliance onforeign-flag oil tankers. An aspect of the program that has proved controversial isthe allowance of up to 10% of a vessel's total steel weight to be constructed by aforeign shipyard. Some argue this is necessary to allow U.S. shipyards to importforeign technological expertise, while others argue that it results in subsidies flowingto foreign shipyards. Before the conference agreement was reached on $75 million,the Senate bill had provided $150 million for this program while the House bill hadprovided no funds.

Research and Special Programs Administration (RSPA)

http://www.rspa.dot.gov

The Research and Special Programs Administration (RSPA) includes a variety of operating entities, including the Office of Pipeline Safety and the Office ofHazardous Materials Safety. RSPA also conducts a multimodal research program,helps coordinate and plan for transportation research and technology transferactivities, sponsors educational activities to promote innovative transportation, andmanages DOT's transportation-related emergency response and recoveryresponsibilities.

For FY2005, the Administration requested a budget of $123.25 million for RSPA (not including a limitation on the emergency preparedness fund of $14.3million); most of this funding is for activities that promote transportation safety. ForRSPA's pipeline transportation safety program, $70 million was proposed by theAdministration (an increase of $4 million over the FY2004 appropriation); for thehazardous materials transportation safety program, $25.5 million was requested. TheHouse Committee recommended $115.3 million for RSPA, including $68.5 millionfor the pipeline safety program and $24.9 million for the hazardous materialtransportation safety program. The Senate Committee recommended $120.3 million,including $24.5 million for hazardous materials safety and $71.1 million for pipelinesafety. The conference report provides $117 million for FY2005, which includes$25.2 million for hazmat transportation safety and $69.8 million for pipeline safety.

Title II: Treasury Appropriations

Table 6. Title II: Department of the TreasuryAppropriations (millions of dollars)

Source: Figures are from a budget authority table provided by the House Committeeon Appropriations. Because of differing treatment of offsets, the totals will notalways match the Administration's totals. The figures within this table may differslightly from those in the text due to supplemental appropriations, rescissions, andother funding actions. Columns may not add due to rounding or exclusion of smallerprogram line-items.

*FY2004 figures reflect an across-the-board rescission of 0.59%.

**FY2005 figures do not reflect an across-the-board rescission of 0.80%.

Department of the Treasury Budget and Key Policy Issues

In recent decades, the Treasury Department has performed four basic functions: (1) formulating, recommending, and implementing economic, financial, tax, andfiscal policies; (2) serving as the financial agent for the federal government; (3)enforcing federal financial, tax, counterfeiting, customs, tobacco, alcoholic beverage,and gun laws; and (4) producing postage stamps, currency, and coinage. The creationof the Department of Homeland Security (DHS) in late 2002 and its assumption ofthe authorities transferred to it by executive order in March 2003 significantlychanged Treasury's functional profile. While Treasury still serves as a principalsource of economic policymaking within the executive branch of the federalgovernment and the government's financial manager, revenue collector, and producerof currency, coinage, and stamps, its role in law enforcement is now much morecircumscribed.

At the most basic level of organization, the department consists of departmental offices and operating bureaus. The departmental offices are responsible for theformulation and implementation of policy and the management of the department asa whole, and the operating bureaus carry out specific tasks assigned to thedepartment. The bureaus typically account for more than 95% of the department'spersonnel and funding.

With one notable exception, the bureaus can be divided into those discharging financial responsibilities and those engaged in law enforcement. In recent decades,financial responsibilities have been handled by the Comptroller of the Currency, U.S.Mint, Bureau of Engraving and Printing, Financial Management Service, Bureau ofPublic Debt, Community Development Financial Institutions Fund, and Office ofThrift Supervision; law enforcement has been done by the Bureau of Alcohol,Tobacco, and Firearms (BATF), U.S. Secret Service, Federal Law EnforcementTraining Center, U.S. Customs Service, Financial Crimes Enforcement Network(FinCen), and Treasury Forfeiture Fund. The exception to this ineluctably simplifieddichotomy is the Internal Revenue Service (IRS), whose main responsibilitiescombine the collection of tax revenue and the enforcement of federal tax laws.

The creation of DHS has greatly diminished Treasury's involvement in law enforcement. Under the law establishing DHS ( P.L. 107-296 ), the Secret Service,Customs Service, and Federal Law Enforcement Training Center were transferredfrom Treasury to DHS, while the Treasury Forfeiture Fund and many functions ofBATF were transferred to the Justice Department (DOJ). On January 24, 2003, theTreasury Department announced the establishment of a new bureau to administerlaws governing the use of alcohol and tobacco and implement regulations formerlyhandled by BATF: the Alcohol and Tobacco Tax and Trade Bureau. Its main dutiesconsist of collecting alcohol and tobacco excise taxes, classifying those products fortax purposes, and regulating the operations of industrial users of distilled spirits.

Treasury is taking steps to revamp its involvement in the federal government's inter-agency fight against the financing of international terrorist networks and otherfinancial crimes. In March 2003, the Treasury Secretary announced theestablishment of the Executive Office of Terrorist Financing and Financial Crimes(EOTF). According to the initial plans released at the time, the Office was toco-ordinate and direct Treasury's efforts to combat terrorist financing and otherfinancial crimes and implement certain key provisions of the Bank Secrecy Act andthe USA Patriot Act, and to represent the United States in international organizationsdedicated to uncovering and thwarting terrorist financing and financial crimes. Incarrying out this task, EOTF was to have the authority to oversee and offer policyguidance to FinCen and the Office of Foreign Assets Control (OFAC). But theseplans evidently never came to fruition. In March 2004, the Treasury Secretaryannounced the formation of still another office to oversee and co-ordinate thedepartment's contributions to government efforts to combat terrorist financing andother financial crimes: the Office of Terrorism and Financial Intelligence (OTFI). According to available information, OTFI is to guide and manage Treasury's effortsto uncover, monitor, and disrupt the networks of financial support for internationalterrorist groups, assuming some of the responsibilities held by EOTF. The newoffice is to perform two critical functions: (1) assemble, integrate, and analyzefinancial intelligence through a newly formed Office of Intelligence and Analysis,and (2) offer policy guidance and centralized direction to the Treasury bureausinvolved in the enforcement of laws against money laundering and other financialcrimes through the Office of Terrorist Financing and Financial Crimes.

In FY2004, the Treasury Department received $11.100 billion in appropriated funds. Most of these funds were used to fund the operations of the IRS, whosebudget was set at $10.184 billion. The remainder was distributed as follows amongdepartmental offices and bureaus: departmental offices, $175.1 million;departmental systems and capital investment programs, $36.2 million; Office ofInspector General, $12.9 million; Inspector General for Tax Administration, $127.3million; Air Transportation Stabilization program, $2.5 million; Treasury Buildingand Annex Repair and Restoration, $24.8 million; Financial Crimes EnforcementNetwork, $57.2 million; Financial Management Service, $227.2 million; Alcohol andTobacco Tax and Trade Bureau, $79.5 million; and Bureau of Public Debt, $172.6million. These totals included a 0.59% across-the-board cut imposed on allnon-defense discretionary spending funded through appropriations measures inFY2004. (13)

For FY2005, the Bush Administration requested a budget for Treasury of $11.610 billion, or $510 million above its level of funding in FY2004. Once again,the vast share of this budget request was allocated to the IRS, which would receive$10.674 billion, or $490 million more than it did in FY2004. The remainingdepartmental offices and bureaus would receive the following appropriated amounts: departmental offices, $185.0 million; departmental systems and capital investments,$36.1 million; Office of Inspector General, $14.1 million; Inspector General for TaxAdministration, $129.1 million; Air Transportation Stabilization program, $2.8million; Treasury Building and Annex Repair and Restoration, $20.3 million;Financial Crimes Enforcement Network, $64.5 million; Financial ManagementService, $230.9 million; Alcohol and Tobacco Tax and Trade Bureau, $81.9 million;and Bureau of the Public Debt, $175.2 million. Each account except that fordepartmental systems and capital investments would be funded at a higher level thanin FY2004.

According to budget documents released by the Treasury Department, the FY2005 budget request sought to accomplish the following objectives: (1) makingpermanent the tax relief enacted under the Economic Growth and Tax ReliefReconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Actof 2003; (2) improving individual and business compliance with tax laws; (3)modernizing the IRS's computer and management systems; (4) stepping up the effortto monitor and disrupt terrorist financing; and (5) maintaining and safeguarding theintegrity of federal finances and the U.S. financial system. Recent congressionaltestimony by Treasury officials has suggested that the two highest priorities wereimproving tax compliance and thwarting terrorist financing. Oversight of Treasuryoperations in the current Congress has focused on both activities.

The House Appropriations Subcommittee on Transportation, Treasury and Independent Agencies took the first critical step in the annual appropriations cyclefor Treasury by approving by voice vote on July 15, 2004 a bill ( H.R. 5025 ) to fund its operations in FY2005. One week later the full AppropriationsCommittee favorably reported the bill ( H.Rept. 108-671 ). The House began toconsider the measure on September 14, 2004 and passed it eight days later by a voteof 397-12.

In its report on H.R. 5025 , the Appropriations Committee issued what might be construed as a stern rebuke to the department for creating a new officefor combating terrorist financing and other financial crimes (OTFI). The Committeecharged that "this action is completely contrary to the direction of the 2004appropriation" and noted that it has received neither "adequate information on anynew terrorism office" nor an "official budget amendment from the administration."

Under H.R. 5025 , as passed by the House, Treasury would receive $11.247 billion in funding in FY2005, or $147.1 million more than FY2004 but$362.9 million less than the amount requested by the Bush Administration forFY2005. The IRS would receive the vast majority of the appropriated funds: $10.292 billion, or 92% of recommended appropriations for Treasury in FY2005. While such a budget was $107.3 million above the amount appropriated for the IRSin FY2004, it is $382.5 million below what the Administration requested forFY2005. (More details on the budget for IRS in FY2004 and FY2005 can be foundin the next section.) H.R. 5025 would also provide $177.0 million infunding for Treasury's departmental offices (or $1.9 million more than FY2004 but$8.0 million less than the amount the Bush Administration requested for FY2005),of which $21.8 million was designated for the operations of OFAC; $36.1 million forthe Treasury's systems and capital investments program (or $113,000 less thanFY2004 but identical to the amount requested for FY2005); $16.5 million forTreasury's Office of Inspector General (or $3.6 million more than FY2004 and $2.3million more than the amount requested for FY2005); $129.1 million for Treasury'sInspector General for Tax Administration (or $1.8 million more than FY2004 butidentical to the amount requested for FY2005); $2.0 million for the AirTransportation Stabilization Program (or $523,000 less than FY2004 and $800,000less than the amount requested for FY2005); $20.3 million for Treasury's buildingand annex repair and restoration program (or $4.5 million less than FY2004 butidentical to the amount requested for FY2005); $90.0 million for the FinancialCrimes Enforcement Network (after a House floor amendment added $25.5 million;the $90 million is $32.7 million more than FY2004 and $25.5 million more thanrequested for FY2005); $230.9 million for the Financial Management Service (or$3.7 million more than FY2004 but identical to the amount requested for FY2005);$82.5 million for the Alcohol and Tobacco Tax and Trade Bureau (or $3.0 millionmore than FY2004 and $600,000 more than the amount requested for FY2005); and$175.2 million for the Bureau of the Public Debt (or $2.5 million more than FY2004and identical to the amount requested for FY2005). In addition, H.R. 5025supported the Administration's request to eliminate two current programs --expanded access to financial services and violent crime reduction -- by cancelingtheir unobligated balances from previous fiscal years.

During the floor debate in the House on H.R. 5025 , several contentious amendments were considered. A provision (Section 216 of Title II) inthe version of H.R. 5025 reported by the Appropriations Committee wouldhave prohibited the Treasury Department from issuing or implementing regulationsto allow financial institutions to accept matricula consular cards as a legitimate formof identification for opening new accounts at financial institutions; it was struck byamendment on the House floor. Another amendment approved during the debatespecified that the Treasury Department may use none of the funds appropriated forFY2005 to plan, enter into, or implement contracts for collection of delinquent taxdebt between the IRS and private debt collectors. The House also approvedamendments to prevent any funds appropriated for FY2005 from being used toimplement a directive from the Office of Management and Budget known as CircularA-76 that requires federal agencies to open up to competition from the private sectorany functions or activities that are not "inherently governmental," and to prohibit theTreasury Department from using appropriated funds for FY2005 to attempt tooverturn a 2003 decision by a U.S. district court that certain cash-balance pensionsplans violate federal laws barring age discrimination.

The Senate formally joined the deliberations in Congress over funding Treasury operations in FY2005 when the Senate Appropriations Subcommittee onTransportation, Treasury, and General Government approved an appropriationsmeasure ( S. 2806 ) by voice vote on September 9, 2004. Five days later,the Senate Appropriations Committee favorably reported the bill ( S.Rept. 108-342 )by a vote of 29-0. For a variety of reasons, the full Senate never voted on the bill.

Under S. 2806 , as reported by the Appropriations Committee, Treasury's FY2005 budget would be set at $11.329 billion, or $228.9 million morethan FY2004 but $286.1 million less than the amount requested by the BushAdministration for FY2005. Nearly 90% of this amount, or $10.253 billion -- whichwas $68.8 million more than FY2004 but $421.1 million less than the amountrequested for FY2005 -- would go to the IRS. The measure would also appropriate$161.3 million (or $13.7 million less than FY2004 and $23.7 million less thanFY2005 budget request) for departmental offices; $30.3 million (or $5.9 million lessthan FY2004 and $5.8 million less than the FY2005 budget request) for thedepartment's systems and capital investments program; $16.1 million (or $3.2million more than FY2004 and $2.0 million more than the FY2005 budget request)for the Office of the Inspector General; $129.1 million for the Treasury InspectorGeneral for Tax Administration ($1.8 million more than FY2004 but identical to theFY2005 budget request); $2.0 million (or $523,000 less than FY2004 and $800,000less than the budget request for FY2005) for the Air Transportation StabilizationProgram; $12.3 million (or $12.5 million less than FY2004 and $8.0 million less thanthe budget request for FY2005) for Treasury's Building and Annex Repair andRestoration Program; $72.5 million (or $15.3 million more than FY2004 and $8.0million more than the budget request for FY2005) for FinCen; $230.9 million (or$3.7 million more than FY2004 and identical to the budget request for FY2005) forthe Financial Management Service; $83.0 million (or $3.5 million more than FY2004and $1.0 million more than the budget request for FY2005) for the Alcohol andTobacco Tax and Trade Bureau; and $175.2 million (or $2.5 million more thanFY2004 but identical to the budget request for FY2005) for the Bureau of the PublicDebt.

Contrary to the wishes of the Bush Administration, S. 2806 would also establish a separate appropriation account for OFAC and set aside $22.3 millionfor its operations in FY2005. (In FY2004, funding for OFAC was folded into theappropriation for departmental offices.) Like H.R. 5025 , S.2806 supported the Administration's request to eliminate the initiative toexpand access to financial services and the violent crime reduction program bycanceling unobligated balances from previous fiscal years. But unlike H.R.5025, the bill endorsed the creation of OTFI and recommended that itreceive $12.7 million in appropriated funds in FY2005 and that the TreasurySecretary be given the authority to transfer up to $2.0 million in unobligated balancesto the new office from the funds for departmental offices.

The House and Senate finally agreed on a budget for the Treasury Department in FY2005, in separate votes cast on November 20, 2004. It was included in abroader appropriations measure ( H.R. 4818 , P.L. 108-447 ) known as theConsolidated Appropriations Act, 2005, which covered nine of the 13 regularappropriations bills. Funding for Treasury is set forth in Title II of Division H of theAct. To keep total spending under H.R. 4818 within a discretionaryspending limit of $821.9 billion set by President Bush, the bill incorporates a 0.83percent across-the-board cut in all spending unrelated to national defense andhomeland security. President Bush signed the measure into law on December 8th.

A controversial provision (Section 222 of Title II, Division H) added to H.R. 4818 late in the conference negotiations that would permit thechairmen of the House and Senate Appropriations Committees or designatedmembers of their staff to have access to "Internal Revenue Service facilities and anytax returns or return information contained therein" delayed the signing of the bill. The provision did not explicitly include criminal penalties for violating existingstatutory protections of taxpayer privacy for committee chairmen or their aides. Under current law, members of the House Ways and Means Committee, SenateFinance Committee, and Joint Committee on Taxation have the authority to examinetax return information, as well as designated members of their staff. They facecriminal and civil penalties if they improperly disclose personal tax informationobtained from their research or carelessly lose tax return documents. Republicanleaders in both houses agreed to pass an enrolling resolution( H.Con.Res. 528 ) to delete the provision. The Senate passed theresolution on November 21st, and the House followed suit on December 6th.

Under H.R. 4818 , Treasury is to receive $11.248 billion in appropriated funds, an amount that does not reflect the mandatory 0.83%across-the-board reduction in spending. This total is $147.6 million more than thetotal enacted for FY2004 but $362.0 million less than the amount requested by theBush Administration. Virtually all of this gain (91%) and this shortfall (98%) aretied to approved funding for the IRS, which is set at $10.318 billion in FY2005, or$134.1 million above its funding for FY2004. Other Treasury accounts receivingbudgetary increases in FY2005 are the Office of Inspector General ($16.5 million,or $3.6 million above FY2004), the Treasury Inspector General for TaxAdministration ($129.1 million, or $1.8 million above FY2004), FinCen ($72.5million, or $15.3 million above FY2004), the Financial Management Service ($230.9million, or $3.7 million above FY2004), the Alcohol and Tobacco Tax and TradeBureau ($83.0 million, or $3.5 million above FY2004), and the Bureau of the PublicDebt ($175.2 million, or $2.5 million above FY2004). Three Treasury accounts arereceiving less money than they did in FY2004: Department-Wide Systems andCapital Investments Program ($32.3 million, or $3.9 million below FY2004), the AirTransportation Stabilization Program ($2.0 million, or $0.5 million below FY2004),and Treasury Building and Annex Repair and Restoration ($12.3 million, or $12.5million below FY2004). Contrary to the wishes of the Bush Administration, H.R.4818 creates a separate appropriations account for OFAC and gives it abudget of $22.3 million in FY2005, with the caveat that the funds be used to establishthe equivalent of 138 full-time staff positions. The bill also appropriates $157.6million for Treasury departmental offices in FY2005 and eliminates programs toexpand access to financial services among low-income households and reduce violentcrime by rescinding their unobligated balances.

Internal Revenue Service (IRS). In order to help finance its operations and programs, the federal government leviesindividual and corporate income taxes, social insurance taxes, excise taxes, estate andgift taxes, customs duties, and miscellaneous taxes and fees. The federal agencyresponsible for administering all these taxes and fees, except customs duties, is theIRS. In discharging this duty, the IRS receives and processes tax returns and otherrelated documents, processes payments and refunds, enforces compliance throughaudits and other methods, collects delinquent taxes, and provides a variety of servicesto taxpayers to help them understand their rights and responsibilities and resolveproblems. In FY2003, the IRS collected $1,969 billion before refunds, the largestcomponent of which was individual income tax revenue of $987 billion.

In FY2004, the IRS received $10.184 billion in appropriated funds. Of this amount, $4.009 billion was used for processing, assistance, and management; $4.171billion for tax law enforcement; $1.582 billion for information systems management;$388 million for the business systems modernization program; and $35 million toadminister the health insurance tax credit established by the Trade Act of 2002. Ofthe funds allocated to processing, assistance, and management, $4.1 million wasmandated for the Tax Counseling for the Elderly program and $7.5 million was setaside to pay for grants for low-income taxpayer clinics. None of the fundsappropriated for the business systems modernization program could be spent withoutthe prior approval of the House and Senate Appropriations Committees. The IRSwas also barred from using appropriated funds from FY2004 to issue finalregulations lifting a moratorium on the conversion of corporate pension plans fromtraditional defined-benefit plans to cash-balance plans imposed in 1999.

The Bush Administration requested that the IRS receive $10.674 billion in funding for FY2005, or $490 million more than in FY2004. This amount was to beallocated in the following manner: $4.148 billion for processing, assistance, andmanagement (an increase of $138 million over FY2004); $4.564 billion for tax lawenforcement (+$393 million over FY2004); $1.642 billion for information systemsmanagement (+$60 million over FY2004); $285 million for the business systemsmodernization program (-$103 million from FY2004); and $35 million for theadministration of the health insurance tax credit (virtually the same amount asFY2004). According to budget documents issued by the IRS, this proposal wasintended to achieve three strategic goals: (1) continued improvement of taxpayerservice; (2) strengthened enforcement of the tax laws; and (3) continuedimprovement of the IRS's information infrastructure.

The budget proposal suggested that the Administration assigned a high priority to improving compliance with tax laws. Public disclosures about illegal corporatetax shelters and sharp declines in audit rates for high-income taxpayers and largecorporations in recent years have sparked heightened congressional scrutiny ofagency performance and strategic goals and calls inside and outside of Congress forsubstantial increases in funding for tax law enforcement. The IRS estimates that theoverall gross tax gap in the 2001 tax year, the most recent year for which data areavailable, amounted to $310.6 billion. (14)

A key player in the annual budget cycle for the IRS is the IRS Oversight Board. Under the IRS Restructuring and Reform Act of 1998, the Board is required toreview the agency's annual budget request, submit its own budget recommendationto the Treasury Department, and determine whether the budget submitted by thePresident to Congress is adequate to support the annual and long-term strategic plansof the IRS. (15) The Board recommended a budgetof $11.204 billion for the IRS inFY2005, an amount that would be 10% above the amount enacted for FY2004 and5% above the amount requested by the Bush Administration for FY2005. It foundfault with the administration's request on the grounds that it would produce a $230million shortfall in light of the administration's stated objectives of adding nearly2,000 full-time employees to bolster IRS's resources for tax law enforcement. In theBoard's judgment, if Congress were to enact its recommended budget, the IRS wouldbe able to hire another 3,315 individuals in FY2005 to boost enforcement efforts andeventually collect an additional $5 billion per year in revenue once the newemployees received proper training. (16)

Under H.R. 5025 , as passed by the House in September 2004, the IRS would receive $10.291 billion in funding in FY2005, or $107.3 million morethan in FY2004 but $382.5 million less than the amount requested by the BushAdministration. The measure would funnel $4.072 billion into processing,assistance, and management; $4.278 billion into tax law enforcement; $1.622 billioninto information systems; $285 million into business systems modernization; and$34.8 million into administering the health insurance tax credit. About 75% of thedifference between the budget recommended in the bill and the Administration'srequested budget was due to lower recommended funding for tax law enforcement. In addition, H.R. 5025 would require the IRS to spend $7.5 million of theappropriated funds for processing, assistance, and management on low-incometaxpayer clinics and $4.1 million on the Tax Counseling Program for the Elderly.

Some of the amendments to H.R. 5025 approved during the floor debate in the House would affect IRS operations in FY2005. One would prevent theIRS from using any appropriated funds to plan, enter into, or implement contracts forcollection of delinquent individual income tax debt involving the IRS and privatedebt collectors. As a result of the recently enacted American jobs Creation Act of2004 ( P.L. 108-357 ), the IRS has the authority to hire private debt collectors undercertain conditions for the purpose of collecting overdue taxes. Another amendmentwould prohibit the IRS from using any appropriated funds to attempt to overturn a2003 decision by a U.S. district court that certain cash-balance pension plans violatefederal laws barring age discrimination.

Under S. 2806 as reported by the Senate Appropriations Committee (but not considered by the full Senate), IRS operations would be funded at $10.253billion in FY2005, or $68.8 million more than the FY2004 budget but $38 millionless than the amount recommended in H.R. 5025 and $421.1 million lessthan the amount requested by the Bush Administration. The bill would allocate$4.107 billion for processing, assistance, and management (of which $4.1 millionwould go to the Tax Counseling Program for the Elderly and $7.0 million tolow-income taxpayer clinics), $4.519 billion for tax law enforcement, $1.606 billionfor information systems, $125 million for business systems modernization, and $34.8million for administering the health insurance tax credit. In addition, the bill wouldrescind $140 million in unobligated balances in the account for business systemsmodernization. In its report on S. 2806, the Appropriations Committeeexpressed the concern that the IRS "has consistently used the majority of its newcompliance funding for purposes other than those that Congress intended." In orderto insure that the agency uses most of the funding it receives for tax law enforcementin FY2005 for programs intended to improve compliance among high-incomeindividuals and large corporations, the bill would restrict the IRS's ability to transferfunds from the tax law enforcement account to 3% of the appropriated amount;transfers at higher levels would require the prior consent of the House and SenateAppropriations Committees.

The House and Senate agreed on a budget for the IRS for FY2005 by passing an omnibus appropriations bill ( H.R. 4818 ) in separate votes onNovember 20, 2004. Under the measure, the IRS would receive a total of $10.319billion, or $134.1 million more than in FY2004 but $355.8 million less than theamount requested by the Bush Administration. More than 46% of this latterdifference is due to reduced levels of spending on tax law enforcement. The measureappropriates $4.089 billion for processing, assistance and management ($80.3 millionabove FY2004), $4.399 billion for tax law enforcement ($227.5 million aboveFY2004), $1.590 billion for information systems ($8.9 million above FY2004),$205.0 million for business systems modernization ($182.7 million below FY2004),and $34.8 million for administering the health insurance tax credit ($47 millionabove FY2004). In addition, H.R. 4818 specifies that the IRS spend $4.1million of the funds appropriated for processing, assistance and management on taxcounseling for the elderly and $8.0 million on low-income taxpayer clinics, and thatthe IRS Commissioner submit quarterly reports to the House and SenateAppropriations Committees on the agency's compliance activities. The measure doesnot contain the contentious provision in the House-passed version of H.R. 5025 barring the IRS from spending any appropriated funds on theoutsourcing of certain individual tax debt collection to the private sector.

The decision not to fully fund the Bush Administration's budget request for the IRS is being met with disapproval by some inside and outside Congress. Thesecritics are mainly concerned that the agency will lack the resources needed to addressits highest short-term priorities, including better service to taxpayers, improvedcompliance, and a more modern information system.

Title III: Executive Office of the President and Funds Appropriated to the President

Table 7. Title III: Executive Office of thePresident (EOP) and Funds Appropriated to the PresidentAppropriations (millions of dollars)

Source: Figures are from a budget authority table provided by the House Committeeon Appropriations. Because of differing treatment of offsets, the totals will notalways match the Administration's totals. The figures within this table may differslightly from those in the text due to supplemental appropriations, rescissions, andother funding actions. Columns may not add due to rounding or exclusion of smallerprogram line-items.

*FY2004 figures reflect an across-the-board rescission of 0.59%.

**FY2005 figures do not reflect an across-the-board rescission of 0.80%.

The Transportation, Treasury, and Independent Agencies Appropriations Act funds all but three offices in the Executive Office of the President (EOP). Of thethree exceptions, the Council on Environmental Quality and Office of EnvironmentalQuality, and the Office of Science and Technology Policy are funded under theVeterans Affairs, Housing and Urban Development, and Independent Agenciesappropriations; and the Office of the United States Trade Representative is fundedunder the Commerce, Justice, State, the Judiciary and Related Agenciesappropriations.

The President's FY2005 budget proposed to consolidate and financially realign several annual EOP salaries and expenses appropriations that directly support thePresident into a single annual appropriation, called "The White House." Thisconsolidated appropriation would total $181.0 million in FY2005, a decrease of 3.3%from the $187.2 million appropriated in FY2004, after the 0.59% rescission, (17) for theaccounts proposed to be consolidated. The accounts included in the consolidatedappropriation would be as follows:

Compensation of the President

White House Office (including the Homeland SecurityCouncil)

Executive Residence at the White House

White House Repair and Restoration

Office of Policy Development

Office of Administration

Council of Economic Advisers

National Security Council

According to the FY2005 budget, the consolidation "initiative provides enhanced flexibility in allocating resources and staff in support of the President and VicePresident, and permits more rapid response to changing needs and priorities." (18)

The Administration proposed similar consolidations in the FY2002, FY2003, and FY2004 budgets, but the conference committees for the Treasury and GeneralGovernment Appropriations Act, 2002 ( P.L. 107-67 ) and 2003 ( P.L. 108-7 , DivisionJ), and the Transportation, Treasury, and Independent Agencies Appropriations Act,2004 ( P.L. 108-199 , Division F), decided to continue with separate appropriationsfor the EOP accounts. The Administration reportedly sought to eliminate the"needless complexity [of different accounts] that adds expense, that adds burdens,that adds administrative hurdles that they must go through to accomplish anything." (19) Congressional concern about this proposed consolidation has centered on Congress's"legitimate needs and desires to have oversight over spending of public funds." (20)

Proposed in the FY2005 budget request for consolidation was a Title VI general provision (a similar provision was proposed in FY2004) that would provide authorityfor the EOP to transfer 10% of the appropriated funds among the following accounts:

The White House (Compensation of the President, White House Office (including the Homeland Security Council), Executive Residence at theWhite House, White House Repair and Restoration, Office of Policy Development,Office of Administration, Council of Economic Advisers, National SecurityCouncil)

Office of Management and Budget(OMB)

Office of National Drug Control Policy

Special Assistance to the President and Official Residence ofthe Vice President (transfers would be subject to the approval of the VicePresident)

Council on Environmental Quality and Office of EnvironmentalQuality

Office of Science and Technology Policy

Office of the United States TradeRepresentative (21)

According to the EOP budget submission, the transfer authority would "allow the President to address, in a limited way, emerging priorities and shifting demands"and would "provide the President with flexibility, improve the efficiency of the EOP,and reduce administrative burdens." (22)

In the first session of the 108th Congress, the conference agreement accompanying the FY2004 Consolidated Appropriations Act provided that separateappropriations for the EOP accounts be continued and that the transfer authorityproposal not be accepted. For the FY2005 appropriations for the EOP, the HouseCommittee on Appropriations recommended, the House passed, and the SenateCommittee on Appropriations recommended the same. According to the committeereport accompanying the Senate bill:

The Committee recommends funding for the offices that directly support the President according to the existing structureof accounts. This arrangement has served the Committee's and the public's need fortransparency in the funding and operation of these important functions while alsoproviding the executive branch with the flexibility it needs to reprogram funds withinaccounts to address unforseen budget needs. As noted in discussions withadministration officials in past years, at no time has the Committee rejected anadministration's request to reprogram existing funds within theseaccounts.

The conference agreement and the Consolidated Appropriations Act for FY2005 authorizes the transfers, but continues separate appropriations for the EOP accounts.With regard to the transfers, Section 533 of Title V of Division H of the ConsolidatedAppropriations Act provides that up to 10% of the appropriated funds among theaccounts for the

White House Office (including the Homeland Security Council), Executive Residence at the White House, White House Repair andRestoration, Office of Policy Development, Office of Administration, Council ofEconomic Advisers, National Security Council

Office of Management and Budget

Office of National Drug Control Policy

Special Assistance to the President and Official Residence ofthe Vice President (transfers would be subject to the approval of the VicePresident)

could be transferred to any other such appropriation, "to be merged with and available for the same time and for the same purposes as the appropriation to whichtransferred" by the OMB Director (or such other officer as the President maydesignate in writing). The House and Senate Committees on Appropriations mustreceive 15 days notice of the transfer from the OMB Director. The amount of anappropriation cannot be increased by more than 50% by such transfers.

EOP Offices Funded Through Treasury and General Government Appropriations (23)

The President's FY2005 budget for EOP programs funded under the Treasury and General Government appropriations proposed an appropriation of $774.5million, a decrease of 1% from the $782.0 million appropriated in FY2004, after the0.59% rescission. (24) The FY2005 budget proposalsfor specific accounts (see Table7 ) are discussed below.

Compensation of the President. The President's FY2005 budget proposed an appropriation of $450,000, whichincludes an expense allowance of $50,000. This is the same amount as wasappropriated in FY2004. The salary of the President is $400,000 per annum,effective January 20, 2001. The House and Senate Committees on Appropriationsrecommended, the House passed, and the conference agreement and the law providethe same amount as the President requested.

White House Office (WHO). This account provides the President with staff assistance and administrative services.

The President's FY2005 budget proposed an appropriation of $63.7 million. The FY2004 appropriation was $69.2 million, but after the 0.59% rescission was $68.8million. The requested amount is 7.4% less than the FY2004 funding after therescission. For FY2005, the WHO will participate in the White House CoreEnterprise Pilot Program, under which the Office of Administration (OA) centrallymanages certain operations in an effort to achieve cost savings and administrativeefficiencies. Costs associated with rent payments to the General ServicesAdministration (GSA) ($8.2 million) and after-hours utilities use ($243,000) will berealigned to the OA and, if the pilot program is successful, the costs will bepermanently realigned to that office. (25)

The WHO request also included the transfer of the annual budget for audiovisual support associated with Presidential Diplomatic Missions ($534,000) tothe Department of State.

The House Committee on Appropriations recommended and the House passed an appropriation of $59.5 million. Of this amount, $8.3 million would be availablefor reimbursements to the White House Communications Agency. Therecommended funding is $4.2 million less than the President's request. Accordingto the committee report that accompanies the House bill, the $4.2 million is theamount the President proposed for the Homeland Security Council (HSC) as part ofthe WHO appropriation. The Committee funds the HSC as a separate appropriation(see below).

The Senate Committee on Appropriations recommended the same amount as the President requested ($63.7 million). No more than $9.975 million of this amountwould be available for reimbursements to the White House Communications Agency.

The conference agreement and the law provide an appropriation of $62 million, which is $1.7 million less than the President's request. After the 0.80% rescission,the FY2005 funding is $61.5 million, a reduction of $2.2 million from thePresident's request. Reimbursements to the White House Communications Agencyare provided at the level recommended by the Senate Committee on Appropriations.

Homeland Security Council (HSC). The Homeland Security Council provides support and advice to the President andinteragency coordination of all aspects of homeland security, including theimplementation of the National Strategy for Homeland Security. The HSC's fundingis included in the White House Office request, but the EOP budget submission doesnot specify the amount requested for allocation to the council in FY2005. (TheHouse Appropriations Committee report accompanying the House bill states that thePresident proposed an appropriation of $4.173 million for the HSC.) The FY2004appropriation for the HSC was $7.23 million, but after the 0.59% rescission was$7.19 million.

The House Committee funds the HSC as a separate appropriation, thereby treating it the same as the National Security Council and other policy-related officesfor budgetary purposes. The Committee recommended and the House passed anappropriation of $2.475 million. This amount is $1.7 million less than thePresident's request. According to the committee report, "The recommendedreduction reflects the unobligated balance in this account, which can be partiallyapplied to offset FY2005 activities." (26) The reportalso expresses concern that theHSC did not provide the Committee with a definitive request for staffing orbudgetary resources for FY2005 and notes that the appropriations hearing recordreflected 66 staff for the council -- approximately 40 full-time equivalent staff yearsas direct hires and 26 detailees. The Committee states that this approximate staffinglevel would be significantly above the May 2004 onboard staffing level and tells theEOP that "budget-quality estimates rather than approximations" will be expected infuture budget submissions. Finally, the report expresses the Committee's concernabout the council's high travel budget, particularly "the high proportion that isapplied to travel within the Washington, DC metropolitan area," and states that theCommittee will work with the council to reduce these costs. (27)

The Senate Committee on Appropriations includes the HSC's funding in the White House Office request and does not specify the amount requested for allocationto the council in FY2005. The conference agreement states that the Senate billassumed funding of $4.173 million. (28)

The conference agreement and the law provide an appropriation of $2.475 million and include the funding under the White House Office. This amount is $1.7million less than the President's request. After the 0.80% rescission, the FY2005funding is $2.455 million.

Executive Residence at the White House and White House Repair and Restoration. These accounts provide for the care,maintenance, and operation of the Executive Residence and its repair, alteration, andimprovement.

The President's FY2005 budget proposed an appropriation of $12.8 million for the executive residence. The FY2004 appropriation was $12.5 million, but after the0.59% rescission was $12.4 million. The requested amount is 2.7% more than theFY2004 funding after the rescission. The House and Senate Committees onAppropriations recommended, the House passed, and the conference agreement andthe law provide the same amount as the President requested. After the 0.80%rescission, the FY2005 funding is $12.7 million, a reduction of $100,000 from thePresident's request.

For repair and restoration of the White House, the budget proposed an appropriation of $1.9 million. The FY2004 appropriation was $4.2 million after the0.59% rescission. The requested amount is 55% less than the FY2004 funding afterthe rescission. The EOP budget submission stated that the repair and restorationfunding would be used to replace the existing cooling towers and associatedelectrical, mechanical, and control equipment ($1.7 million); and, with the possiblechange of Administration in 2005, to move and pack items for the outgoing FirstFamily and set up the living quarters for the incoming First Family ($100,000); andredecorate the living quarters in the White House ($100,000). (29)

The House and Senate Committees on Appropriations recommended, the House passed, and the conference agreement and the law provide the same amount as thePresident requested. After the 0.80% rescission, the FY2005 funding is $1.885million, a reduction of $15,000 from the President's request.

Maintenance and repair costs for the White House are also funded by the National Park Service as part of that agency's responsibility for national monuments.Entertainment costs for state functions are funded by the Department of State.Reimbursable political events in the Executive Residence are to be paid for inadvance by the sponsor, and all such advance payments are to be credited to aReimbursable Expenses account. The political party of the President is to deposit$25,000 to be available for expenses relating to reimbursable political events duringthe fiscal year. Reimbursements are to be separately accounted for and thesponsoring organizations billed, and charged interest, as appropriate. The staff of theExecutive Residence must report to the Committees on Appropriations, after theclose of each fiscal year, and maintain a tracking system on the reimbursableexpenses.

Council of Economic Advisers (CEA). The three-member council was created in 1946 to assist andadvise the President in the formulation of economic policy. The council analyzes andevaluates the national economy, economic developments, federal programs, andfederal policy to formulate economic advice . The council assists in the preparationof the annual Economic Report of the President to Congress .

The President's FY2005 budget proposed an appropriation of $4.040 million. The F2004 appropriation was $4.5 million after the 0.59% rescission. The requestedamount is 9.7% less than the FY2004 funding after the rescission. For FY2005, theCEA will participate in the White House Core Enterprise Pilot Program. Costsassociated with rent payments to the GSA ($683,000), after-hours utilities use($4,000), and prorated Medical Unit costs ($4,000) will be realigned to the OA and,if the pilot program is successful, the costs will be permanently realigned to thatoffice. (30)

The House and Senate Committees on Appropriations recommended, the House passed, and the conference agreement and the law provide the same amount as thePresident requested. After the 0.80% rescission, the FY2005 funding is $4.008million, a reduction of $32,000 from the President's request. During considerationof its version of the appropriations bill, the House, by voice vote, agreed to anamendment (incorporated at Section 643) offered by Representative Sherrod Brownto provide that "None of the funds made available in this act may be used by the[CEA] to produce an Economic Report of the President regarding the inclusion ofemployment at a retail fast food restaurant as part of the definition of manufacturingemployment." (31) This provision is Section 524 ofTitle V of Division H of theConsolidated Appropriations Act for FY2005.

Office of Policy Development. The Office supports and coordinates the Domestic Policy Council (DPC) and theNational Economic Council (NEC) in carrying out their responsibilities to advise andassist the President in formulating, coordinating, and implementing economic anddomestic policy, and other policy initiatives.

The President's FY2005 budget proposed an appropriation of $3.6 million. The FY2004 appropriation was $4.1 million. The requested amount is 12.1% less thanthe FY2004 funding after the rescission. The EOP budget submission did not specifythe amounts that would be allocated to the Office of Policy Development's DPC andNEC functions. For FY2005, the Office of Policy Development will participate inthe White House Core Enterprise Pilot Program. Costs associated with rent paymentsto the GSA ($482,000) and after-hours utilities use ($7,000) will be realigned to theOA and, if the pilot program is successful, the costs will be permanently realignedto that office. (32)

The House Committee on Appropriations recommended and the House passed an appropriation of $2.267 million. This amount is $1.3 million less than thePresident's request. According to the committee report accompanying the House bill,"The reduction reflects current unobligated balances in this account appropriated asfar back as FY2000 ... [which] can be applied to FY2005 requirements." (33) TheSenate Committee on Appropriations recommended an appropriation of $2.4 millionwhich is $1.2 less than the President's request. The committee report accompanyingthe Senate bill states that the recommendation was "based on the amount of fundingthat has lapsed in this account in recent years." (34)

The conference agreement and the law provide an appropriation of $2.3 million, which is $1.3 million less than the President's request. After the 0.80% rescission,the FY2005 funding is $2.282 million, likewise, a reduction of $1.3 million from thePresident's request.

National Security Council (NSC). The NSC advises the President on integrating domestic, foreign, military,intelligence, and economic policies relating to national security.

The President's FY2005 budget proposed an appropriation of $8.932 million. The FY2004 appropriation was $10.6 million, but after the 0.59% rescission was$10.5 million. The requested amount is 14.8% less than the FY2004 funding afterthe rescission. Of the total amount requested, $574,000 would fund the President'sForeign Intelligence Advisory Board (PFIAB). (35) For FY2005, the NSC willparticipate in the White House Core Enterprise Pilot Program. Costs associated withrent payments to the GSA ($1.7 million), after-hours utilities use ($45,000), andprorated Medical Unit costs ($5,000) will be realigned to the OA and, if the pilotprogram is successful, the costs will be permanently realigned to that office. ThePFIAB requests realignment of rent payments ($168,000) and communications,utilities, and miscellaneous charges ($4,000) to the OA. (36)

The House and Senate Committees on Appropriations recommended, the House passed, and the conference agreement and the law provide the same amount as thePresident requested. After the 0.80% rescission, the FY2005 funding is $8.861million, a reduction of $71,000 from the President's request. The committee reportaccompanying the House bill notes that "The number of full-time equivalent staffyears remains at the FY2004 enacted level of 71." (37)

Office of Administration (OA). The Office of Administration provides administrative services, including informationtechnology; human resources management; library and records management;financial management; and facilities, printing, and supply, to the Executive Officeof the President.

The President's FY2005 budget proposed an appropriation of $85.7 million. The FY2004 appropriation was $82.8 million, but after the 0.59% rescission was $82.3million. The requested amount is 4.1% more than the FY2004 funding after therescission. Of the total amount requested, $73.6 million is for salaries and expenses;$1.1 million is for cyber security needs; and $12.1 million is for the capitalinvestment plan (CIP). Among the monies in the CIP are $2.0 million for customerservice and desktop systems and $700,000 for information security. The offsite datacenter will be fully operational by FY2005 and funding of $6.0 million for the centerwill be transferred from the capital investment plan to the salaries and expensesbudget. (38)

The House Committee on Appropriations recommended and the House passed an appropriation of $92.7 million. This amount is $7 million more than thePresident's request. Of the total, $12.1 million would fund the CIP for continuedmodernization of the information technology infrastructure within the EOP. Fourmillion of the CIP funds could not be obligated until the EOP has submitted a reportto the Committees on Appropriations that includes an Enterprise Architecture that isreviewed and approved by OMB, reviewed by the GAO, and approved by theCommittees on Appropriations. The Committee would restore the Office ofManagement and Budget (OMB) to the White House Core Enterprise Pilot Programand transfer $8.3 million from the OMB appropriation to the OA appropriation. According to the committee report accompanying the House bill, the Committeecontinues to believe that the OA, under the enterprise pilot program, should makerental payments and pay other administrative expenses for EOP offices, includingOMB.

The Senate Committee on Appropriations recommended an appropriation of $92.9 million which is $7.2 million more than the President's request. Continuedmodernization of the information technology infrastructure within the EOP throughthe CIP would be funded at $12.1 million. The Core Enterprise Services Programwould receive funding of $18.5 million. The committee report accompanying theSenate bill states that "The budget request

proposes to transfer non-discretionary GSA rent and rent-related costs from White House Offices, Office of PolicyDevelopment, Council of Economic Advisors, and National Security Council to theOffice of Administration to provide for central management. To achieve greateradministrative and cost efficiencies, the Committee has included the Office ofManagement and Budget in the core enterprise services program and funding abovethe budget estimate represents OMB's costs for rent, after-hours utilities, andprorated costs of health unit operations. (39)

The conference agreement and the law provide an appropriation of $92.3 million, which is $6.6 million more than the President's request. After the 0.80%rescission, the FY2005 funding is $91.5 million, an increase of $5.8 million abovethe President's request. Funding for the CIP is provided at the level recommendedby the House and Senate Committees. Four million of the CIP funds could not beobligated until the reporting requirements discussed above are met.

Chief Financial Officer (CFO). The Chief Financial Officer oversees all financial management activities of the EOP. TheCFO directs, manages, and provides policy guidance and oversight of the financialmanagement personnel under the EOP. Funding of $5.1 million for the CFO isincluded in the Office of Administration's request. This amount is 1.4% more thanthe $5.0 million provided in FY2004 after the 0.59% rescission. Among other items,this amount "continues funding for travel expenses associated with businessmanagement and information technology support for Presidential and VicePresidential travel." (40) The House and SenateCommittees on Appropriations did notstate, and neither do the conference agreement or the law, what portion of the OAappropriation would be allocated to the CFO.

Office of Management and Budget (OMB). OMB assists the President in discharging budgetary,management, and other executive responsibilities. The agency's activities includepreparing the budget documents; examining agency programs, budget requests, andmanagement activities; preparing the government-wide financial management statusreport and five-year plan (with the Chief Financial Officer Council); reviewing andcoordinating agency regulatory proposals and information collection requirements;and promoting economical, efficient, and effective procurement of property andservices for the executive branch.

The President's FY2005 budget proposed an appropriation of $76.6 million. The FY2004 appropriation was $67.2 million, but after the 0.59% rescission was $66.8million. The requested amount is 15% more than the FY2004 funding after therescission. However, according to the EOP budget submission, after OMB's FY2004budget is adjusted to restore $8.2 million (the House Committee states the amountas $8.3 million) to the Office of Administration for the White House Core EnterprisePilot Program, the increase over the FY2004 amount is 2.1%. The submission alsostated that the request "includes only the resources needed to maintain existingstaffing levels and capabilities .... No new initiatives are proposed." (41)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $67.8 million, of which up to $1,500 would be available forofficial representation expenses. This amount is $8.8 million less than thePresident's request. The House bill would provide that none of the fundsappropriated or made available could be used for any of the following purposes: toreview any agricultural marketing orders or any activities or regulations under theAgricultural Marketing Agreement Act of 1937, to alter the transcript of actualtestimony of witnesses, except for the testimony of OMB officials, before theCommittees on Appropriations or their subcommittees (this provision would notapply to printed hearings released by the Committees on Appropriations), and to paythe salary or expenses of any OMB employee who calculates, prepares, or approvesany tabular or other material that proposes the sub-allocation of budget authority oroutlays by the Committees on Appropriations among their subcommittees. TheCommittee's recommended appropriation includes adjusting OMB staffing to a levelof 500 full-time equivalents (FTEs). The report accompanying the House bill statesthat the Committee reviewed hearing data and found that OMB requested excessstaffing funds for at least the last two years. OMB used 491 FTE in FY2003 and toldthe Committee that the FY2004 request for 510 FTE included "no new staff." OMB'sFY2005 budget estimate assumes that the FY2004 full-time equivalent (FTE) staffinglevel of 510 would be continued. According to the Committee, actual on-boardemployment at OMB was 491 as of June 1, 2004. The Committee believes that thisindicates that the FY2004 budget estimate "was more than needed to maintain aconstant staffing level" and that the same would apply for the FY2005 estimate. (42)

The committee report addresses several other issues related to OMB's appropriation as follows. The funding for the Financial Accounting StandardsAdvisory Board (FASAB) and the Joint Financial Management ImprovementProgram (JFMIP) would be retained in the OMB account because the Committeebelieves that "budget and program accountability and control should go togetherwherever possible." (43) The President's budgetproposed transferring OMB's portionof the funding for the FASAB and the JFMIP to the Department of the Treasury, butkeeping the "lead responsibility" for the activities with OMB. At present, a memberof the Senior Executive Service is on detail from the National Aeronautics and SpaceAdministration (NASA) to the federal enterprise architecture program managementoffice at OMB. The Committee believes that the employee should return to NASAand the office should be closed because it questions whether a one-person officecould have an appreciable impact on the development of government-wideinformation technology policy.

As discussed under the Office of Administration account above, $8.3 million would be transferred to the OA account for the White House Core Enterprise PilotProgram to be used to make rental payments and pay other administrative expensesfor EOP offices. After reviewing spending from previous years, the Committee againlimits reception and representation expenses to $1,500. Also, within 90 days of theact's enactment, OMB is directed by the Committee to provide

a report detailing its blueprint and master plan for realizing substantive reductions in regulatory burdens on industries,which, if achieved, will result in true savings regardless of system efficiencies. Thereport should identify regulatory areas with the greatest time, cost and volumeburden, and note how OMB's blueprint and master plan addresses these areas forsubstantive reduction. The Committee recommends that OMB first direct itsreduction efforts at regulations where the greatest gain can be achieved with the leasteffort. The Committee considers paperwork reduction to be especially crucial in thearea of health care ... The Committee strongly encourages OMB to give priorityattention to the health care area for reducing the paperwork burden on hospitals andphysicians and their staffs .... OMB is urged to convene and coordinate thegovernment-wide task force that includes industry representatives to examine theoriginal intent of the underlying laws ... and determine where regulations could becoordinated and simplified to reduce costs and regulatory burdens .... (44)

The Senate Committee on Appropriations recommended an appropriation of $68.4 million, of which up to $3,000 would be available for official representationexpenses. This amount is $8.2 million less than the President's request. The Senatebill would provide that none of the funds appropriated or made available could beused for any of the following purposes: to review any agricultural marketing ordersor any activities or regulations under the Agricultural Marketing Agreement Act of1937, to alter the transcript of actual testimony of witnesses, except for the testimonyof OMB officials, before the Committees on Appropriations or the Committees onVeterans' Affairs, or their subcommittees (this provision would not apply to printedhearings released by the Committees on Appropriations or the Committees onVeterans' Affairs), and to pay the salary or expenses of any OMB employee whocalculates, prepares, or approves any tabular or other material that proposes thesub-allocation of budget authority or outlays by the Committee on Appropriationsamong their subcommittees.

Additionally, the Senate bill would provide that none of the funds provided in this act, in prior acts, or in subsequent acts would be used, directly or indirectly, byOMB to evaluate or determine if water resource project or study reports submittedby the Chief of Engineers acting through the Secretary of the Army are in compliancewith all applicable laws, regulations, and requirements relevant to the Civil Workswater resource planning process. OMB would have not more than 60 days toperform budgetary policy reviews of water resource matters on which the Chief ofEngineers has reported. The OMB Director would notify the appropriate authorizingand Appropriations Committees when the 60-day review is initiated. If waterresource reports have not been transmitted to the appropriate authorizing andappropriating committees within 15 days of the end of the OMB review period basedon the notification from the director, Congress would assume OMB concurrence withthe report and act accordingly. The committee report accompanying the Senate billexplains the need for these provisions related to OMB review of water resourceprojects. According to the Committee, it is

aware that numerous water resource projects that have been fully vetted through the lengthy water resource planningprocess established by the executive branch are being held up by the [OMB] fortechnical reviews or other policy questions that are unrelated to budgetary matters. The Committee has found that OMB does not have the proper staffing or expertiseto make these types of decisions. In addition, the Committee is deeply concerned thatwater resource matters are being unnecessarily delayed for extended periods of time,sometimes without further action ever being taken because of suchobstinacy. (45)

The committee report accompanying the Senate bill addresses several issues related to OMB's funding as follows. OMB's request to transfer funding for theFederal Accounting Standards Advisory Board (FASAB) and the Joint FinancialManagement Improvement Program (JFMIP) to the Department of the Treasury isdenied. According to the Committee

The justification for consolidating OMB's annual payments to FASAB and JFMIP in the Treasury Department isexceptionally weak and rests on the desire to include the expense in the organizationwhere the services are contracted rather than in the organization that initiates theexpense. This proposal is inconsistent with the manner in which similar paymentsare treated in other agencies' budgets and leaves the impression that the transfer ofthese payments is being requested to mask the actual amount of resources for fiscalyear 2005. The recommendation assumes an adjustment of$639,000. (46)

As for the Core Enterprise Services Program, "The Committee recommendation transfers $7,193,000 back to the Office of Administration to consolidate OMB's rent,after-hour utilities, and health unit costs in the ... program." The committee reportstates that "Keeping as many entities in the ... program reduces the number ofindividual bills that have to be processed and reconciled, reduces the administrativeburden on preparing additional interagency agreements, and also reduces theduplicate administrative structures inherent in a decentralized environment." (47)

Because of budget constraints, the Committee defers $1.6 million requested "to hire additional personnel to reach the currently authorized level of full-timeequivalent positions." (48) With regard to the HarryS. Truman Memorial Scholarships,"The Committee directs the Board of the Truman Scholarship program to strictlyadhere to its statutory mandate to 'assure that at least one Truman scholar shall beselected each year from each State in which there is at least one resident applicantwho meets the minimum criteria established by the Foundation'." (49)

The conference agreement and the law, likewise, provide an appropriation of $68.4 million, of which up to $1,500 shall be available for official representationexpenses. This amount is $8.2 million less than the President's request. After the0.80% rescission, the FY2005 funding is $67.9 million, a reduction of $8.7 millionfrom the President's request. The provisions which discuss the use of theappropriation are the same as recommended by the Senate Committee, except that thereference to the Committee on Veterans' Affairs is removed, and the provisionrelated to water resource reports relates to funds provided in this act or in prior acts,but not in subsequent acts.

Office of National Drug Control Policy (ONDCP). The ONDCP develops policies, objectives, and prioritiesfor the National Drug Control Program. The account also funds general policyresearch to support the formulation of the National Drug Control Strategy.

The President's FY2005 budget proposed an appropriation of $27.6 million. The FY2004 appropriation was $28.0 million, but after the 0.59% rescission was $27.8million. The requested amount is 0.8% less than the FY2004 funding after therescission. Of the total amount requested, $26.3 million is for salaries and expensesoperations and $1.4 million is for policy research. (50) An additional five full-timeequivalent employees are requested.

The House Committee on Appropriations recommended, and the House passed, an appropriation of $28.1 million. This amount is $500,000 more than thePresident's request. Of the total, $1.3 million would be for policy research andevaluation, $25.8 million would be for operations, and $1 million would be used toreduce the demand for methamphetamine. The Committee approves five additionalfull-time equivalent employees for ONDCP, but no additional funding for staff isprovided because of budget constraints. The Office could accept, hold, administer,and utilize gifts (both real and personal, public and private), without fiscal yearlimitation to aid or facilitate its work.

The Senate Committee on Appropriations recommended and the conference agreement and the law provide an appropriation of $27 million, which is $600,000less than the President's request. After the 0.80% rescission, the FY2005 funding is$26.8 million, a reduction of $800,000 from the President's request. Of the totalamount requested, $1.4 million is for policy research and evaluation. TheCommittee's report accompanying the Senate bill lists the funding and number offull-time equivalent employees for specific offices under ONDCP. (51) ONDCP isdirected "to utilize a portion of its policy research funding to explore ways in whichto increase inhalant outreach activities without compromising other ongoingeducational efforts." (52) The Office must reportits findings to the House and SenateCommittees on Appropriations within 180 days of the act's enactment.

The conference report states that the "agreement retains specific funding and staffing levels for ONDCP administrative offices as proposed in the Senate report.In addition, 2.5 new FTE are approved to be allocated to administrative offices at theDirector's discretion." (53)

The Counterdrug Technology Assessment Center (CTAC). The CTAC is the central counterdrug research anddevelopment organization for the federal government.

The President's FY2005 budget proposed an appropriation of $40 million. The FY2004 appropriation was $42 million, but after the 0.59% rescission was $41.8million. The requested amount is 4.2% less than the FY2004 funding after therescission. Of the total amount requested, $18 million is for counternarcoticsresearch and development projects (which shall be available for transfer to otherfederal departments or agencies), and $22 million is for the continued operation ofthe technology transfer program. (54)

The House Committee on Appropriations recommended and the House passed an appropriation of $30 million. This amount is $10 million less than the President'srequest. Of the total, $10 million would fund counternarcotics research anddevelopment projects (which shall be available for transfer to other federaldepartments or agencies), and $20 million would fund the continued operation of thetechnology transfer program.

The Senate Committee on Appropriations recommended an appropriation of $42 million, which is $2 million more than the President's request. Of the total amountrequested, $18 million is for counternarcotics research and development projectswhich would be available for transfer to other federal departments or agencies and$24 million is for the continued operation of the technology transfer program. TheCommittee's report accompanying the Senate bill establishes various reportingrequirements for programs under CTAC as follows.

Prior to the obligation of any of [the CTAC] funds, the Committee directs CTAC's chief scientist to submit to the Houseand Senate Committees on Appropriations a detailed itemization of anticipatedexpenditures. The Committee also directs the chief scientist to continue to providebiannual reports on the priority counterdrug enforcement research and developmentrequirements identified by CTAC and on the status of resulting projects fundedthereby. These reports should continue to provide the same level of detail that wasprovided in the March 1, 2004, CTAC report toCongress.

The Committee ... directs CTAC to complete all ongoing technology acquisition R&D projects with the funding providedin fiscal year 2005. Thereafter, CTAC is directed to adhere its R&D spending tothose research efforts outlined in its demand reduction vision statement as well as itssupply reduction priorities listing included in appendices E and F, respectively, of itsMarch 1, 2004, CTAC report.

The Committee directs CTAC to consider more equally funding all R&D activities in the future and to report on itsprogress in this regard in its next CTAC report.

The Committee ... directs CTAC to expeditiously obligate all of its R&D funding exclusively in pursuit of the functionsfor which it has been appropriated. The Committee further directs CTAC to reportto the House and Senate Committees on Appropriations within 30 days of enactmentof this Act on the reasons for the delay in obligating thesefunds.

[T]he Committee encourages CTAC to work with private industry to make their developed technology available to State andlocal law enforcement agencies and to report on the progress of these efforts in itsnext CTAC report to Congress.

In order to maintain a clear understanding of CTAC's ability to meet demand for the TTP, the Committee directsthat the fiscal year 2006 budget justification include a specific accounting of the totalnumber of grant applications received and the number awarded in the previousyear. (55)

The conference agreement and the law, likewise, provide an appropriation of $42 million, which is $2 million more than the President's request. After the 0.80%rescission, the FY2005 funding is $41.7 million, an increase of $1.7 million abovethe President's request. The counternarcotics research and development projects andthe technology transfer program are funded at the levels recommended by the SenateCommittee. The conference report states that the "agreement retains language ...directing the CTAC chief scientist to submit an expenditures report prior to theobligation of funds ... retains language directing CTAC to complete all on-goingtechnology acquisition projects and adhere to its research and development spendingplan ... [and agrees] with language ... directing CTAC to expeditiously obligate allof its research funding in pursuit of functions for which it was appropriated." (56)

Federal Drug Control Programs. The High Intensity Drug Trafficking Areas (HIDTA) program provides assistance tofederal, state, and local law enforcement entities operating in those areas mostadversely affected by drug trafficking. Funds are disbursed at the discretion of thedirector of ONDCP for joint local, state, and federal initiatives.

The President's FY2005 budget proposed an appropriation of $208.4 million. The FY2004 appropriation was $226.4 million, but after the 0.59% rescission was$225.0 million. The requested amount is 7.4% less than the FY2004 funding afterthe rescission. No less than 51% of the total shall be transferred to state and localentities for drug control activities, which shall be obligated within 120 days ofenactment of the Transportation/Treasury appropriations act. Up to 49% of the totalshall remain available until September 30, 2006, and may be transferred to federalagencies and departments at a rate to be determined by the director, of which not lessthan $2.1 million shall be used for auditing services and associated activities, and atleast $500,000 of the $2.1 million shall be used to develop and implement a datacollection system to measure the performance of the HIDTA Program. (57)

The House Committee on Appropriations recommended and the House passed an appropriation of $215.4 million. This amount is $7 million more than thePresident's request. Of the total, not less than $208 million would be provided asbase funding to HIDTAs. The other provisions related to allocation of the funds arethe same as the President's request, except that $2 million would be used for auditingservices and associated activities. The House bill would provide that prior to theobligation of funds of an amount in excess of the FY2005 budget request, a request,made in compliance with the reprogramming guidelines, would be submitted to theHouse and Senate Committees on Appropriations for approval. The committeereport accompanying the House bill states that the increased appropriation "is to meetrequirements to fully fund existing HIDTA program activity, to expand existingHIDTAs where such expansion is justified, and to fund new HIDTAs asappropriate." (58) The Committee recommends thatincreased funding be consideredfor the North Texas, Appalachian, Central Florida, Central Valley, and Lake CountyHIDTAs and that expansion be considered for the Gulf Coast HIDTA.

The Senate Committee on Appropriations recommended an appropriation of $228.4 million, which is $20 million more than the President's request. The Senatebill includes a provision that HIDTA programs designated as of September 30, 2003,would be funded at no less than the FY2004 initial allocation levels unless theDirector submits to the House and Senate Committees on Appropriations, and theCommittees approve, justification for changes in those levels based on clearlyarticulated priorities for the HIDTA programs and performance measures ofeffectiveness published by the ONDCP. Prior to the obligation of funds of anamount in excess of the FY2005 budget request, a request, made in compliance withthe reprogramming guidelines, would be submitted to the House and SenateCommittees on Appropriations for approval. The Senate bill also would provide thatnone of the funds would be available to support the Consolidated PriorityOrganization Target program. The Committee's report accompanying the Senate billincludes the following directives.

In allocating HIDTA funds, the Committee expects the Director of ONDCP to ensure that the entities receiving theselimited resources make use of them strictly for implementing the strategy for eachHIDTA, taking into consideration local conditions and resource requirements. Thesefunds should not be used to supplant existing support for ongoing Federal, State, orlocal drug control operations normally funded out of the operating budgets of eachagency.

The Committee directs ONDCP to refocus its distribution of HIDTA funding in excess of the initial allocation onenhancing the domestic interdiction of illegal drugs by launching additionalinvestigations, by disrupting and dismantling local mid-level drug traffickingorganizations through a systematic and coordinated effort and by supporting thevarious HIDTA Intelligence Support Centers throughout thecountry. (59)

With respect to specific HIDTAs, the Committee directs the ONDCP

in the Appalachia HIDTA, "to maintain funding at no less than [the] FY2004 initial allocation."

in the New York/New Jersey HIDTA, "to work with the affected counties [in upstate New York] to determine whether they meet the statutorycriteria required for designation as a HIDTA. The Committee directs ONDCP toensure that funding for the New York/New Jersey HIDTA is provided at a level noless than the FY2004 initial allocation and to work with the Executive Board of the... HIDTA to assess the needs of the HIDTA and to provide additional resources ifnecessary."

in the Northwest HIDTA, "to provide adequate resources to combat [the threat of methamphetamine, marijuana, cocaine, and heroin] .... theCommittee notes the value of State and local task forces in addressing these issuesand encourages the continued incorporation of such entities in this and otherHIDTAs." (60)

The conference agreement and the law, likewise, provide an appropriation of $228.4 million, which is $20 million more than the President's request. After the0.80% rescission, the FY2005 funding is $226.5 million, an increase of $18.1 millionabove the President's request. No less than 51% of the total shall be transferred tostate and local entities for drug control activities, which shall be obligated within 120days of enactment of the act. Up to 49% of the total shall remain available untilSeptember 30, 2006, and may be transferred to federal agencies and departments ata rate to be determined by the director, of which not less than $2 million shall be usedfor auditing services and associated activities, and at least $500,000 of the $2 millionshall be used to develop and implement a data collection system to measure theperformance of the HIDTA Program.

HIDTA programs designated as of September 30, 2004, are funded at no less than the FY2004 initial allocation levels unless the Director submits to the House andSenate Committees on Appropriations, and the Committees approve, justification forchanges in those levels based on clearly articulated priorities for the HIDTAprograms and performance measures of effectiveness published by the ONDCP. Prior to the obligation of funds of an amount in excess of the FY2005 budget request,a request, made in compliance with the reprogramming guidelines, must be submittedto the House and Senate Committees on Appropriations for approval. Up to $2million of the funds made available to HIDTAs in excess of the FY2005 budgetrequest shall be available for the Consolidated Priority Organization Target program.The conference report states that "The conferees encourage ONDCP to refocus thedistribution of excess funding on enhancing the domestic interdiction of illegal drugsby launching additional investigations, by disrupting and dismantling local mid-leveldrug trafficking organizations and by supporting the HIDTA Intelligence SupportCenters." (61)

Other Federal Drug Control Programs (formerly The Special Forfeiture Fund). The account, administered by the directorof ONDCP, supports high-priority drug control programs. The funds may betransferred to drug control agencies or directly obligated by the ONDCP director.

The President's FY2005 budget proposed an appropriation of $235 million. The FY2004 appropriation was $229 million, but after the 0.59% rescission was $227.6million. The requested amount is 3.2% more than the FY2004 funding after therescission. Of the total amount requested, $145 million is to support a national mediacampaign, as authorized by the Drug-Free Media Campaign Act of 1998; $80 millionis to continue a program of matching grants to drug-free communities, of which $1million shall be a directed grant to the Community Anti-Drug Coalitions of America;$4.5 million is for the Counterdrug Intelligence Executive Secretariat; $2 million isfor evaluations and research related to National Drug Control Program performancemeasures; $1 million is for the National Drug Court Institute; $1.5 million is for theUnited States Anti-Doping Agency for anti-doping activities; and $1 million is forthe United States membership dues to the World Anti-Doping Agency. (62)

The House Committee on Appropriations recommended and the House passed an appropriation of $195 million. This amount is $40 million less than thePresident's request. The appropriation would be allocated as follows: a nationalmedia campaign ($120 million), matching grants to drug-free communities ($70million) of which $1 million would be a directed grant to the Community Anti-DrugCoalitions of America, the Counterdrug Intelligence Executive Secretariat ($1million), evaluations and research related to National Drug Control Programperformance measures ($1.5 million), the National Drug Court Institute ($500,000),the United States Anti-Doping Agency ($1.5 million), and the United Statesmembership dues to the World Anti-Doping Agency ($500,000). The funds couldbe transferred to other federal departments and agencies to carry out such activities. No less than 78% of the funds appropriated for a national media campaign would beused to purchase advertising time and space for the campaign. ONDCP is directedby the Committee to ensure that the timeline and application processes for releasingfunds to the U.S. Anti-Doping Agency is followed. The release of funds cannot beexpedited by ONDCP unless it submits a justification for such to the House andSenate Committees on Appropriations. The GAO is directed to conduct a study ofgovernment-sponsored public service campaigns and report its findings to theappropriation Committees no later than June 1, 2005. The study should examine "thefederal agencies and other participants involved; the basis and purpose of thesesponsorships; the annual and cumulative federal government and other participantcosts for each campaign; [and] the target audiences, media employed, and resultsachieved for each campaign." (63)

The Senate Committee on Appropriations recommended an appropriation of $195.5 million which is $39.5 million less than the President's request. Theappropriation would be allocated as follows: a national media campaign ($100million), matching grants to drug-free communities ($80 million) of which $2 millionwould be a directed grant to the Community Anti-Drug Coalitions of America, theCounterdrug Intelligence Executive Secretariat ($3.050 million), the National DrugCourt Institute ($1 million), the National Alliance for Model State Drug Laws ($1.5million), the United States Anti-Doping Agency ($7.5 million), the United Statesmembership dues to the World Anti-Doping Agency ($1.450 million), and evaluationand research related to National Drug Control Program performance measures ($1million). The funds could be transferred to other federal departments and agenciesto carry out such activities. Not more than 10% of the amounts appropriated for anational media campaign would be for administering the national media campaign.

The Committee's report accompanying the Senate bill establishes various reporting requirements for programs under this account as follows.

The Committee ... directs ONDCP to utilize the individual [advertising] and overall Campaign assessments provided bythe [media campaign] evaluation study [on drug use] to measure the effectiveness ofits advertisements and to focus and shape the Media Campaign for thefuture.

The Committee ... directs ONDCP to maintain funding for its non-advertising services at no less than the fiscal year 2003level and to re-institute the corporate outreach program as it operated prior to itscancellation.

The Committee directs ONDCP to use its voice and vote as the United States' representative in ... [the World Anti-DopingAgency] to ensure that all countries' athletes are subject to fair and equal standardsand treatment so as to establish and maintain the objectivity and integrity of this ...regulatory organization.

The Committee ... directs ONDCP toprovide the entire amount [of funding for the National Alliance for Model State DrugLaws (NAMSDL)] directly to NAMSDL within 30 days after enactment of thisAct.

[T]he Committee directs ONDCP to submit its planned [Performance Measures Development (PMD)] activities toCTAC's chief scientist for review and then to report to the House and SenateCommittees on Appropriations within 90 days of enactment of this Act providing thechief scientist's findings and explaining why these anticipated PMD functions aremost properly funded within PMD. (64)

The conference agreement and the law provide an appropriation of $213.7 million, which is $21.3 million less than the President's request. After the 0.80%rescission, the FY2005 funding is $212 million, a reduction of $23 million from thePresident's request. The appropriation is allocated (before the rescission) as follows:a national media campaign ($120 million), matching grants to drug-free communities($80 million) of which $2 million would be a directed grant to the CommunityAnti-Drug Coalitions of America, the Counterdrug Intelligence Executive Secretariat($2 million), the National Drug Court Institute ($750,000), the National Alliance forModel State Drug Laws ($1 million), the United States Anti-Doping Agency ($7.5million), the United States membership dues to the World Anti-Doping Agency($1.450 million), and evaluation and research related to National Drug ControlProgram performance measures ($1 million). The funds may be transferred to otherfederal departments and agencies to carry out such activities. Not more than 10% ofthe amounts appropriated for a national media campaign shall be for administration,advertising production, research and testing, labor and related costs of the campaign.

According to the conference report, the "agreement directs ONDCP to maintain funding for nonadvertising services for the Media Campaign at no less than theFY2003 ratio of service funding to total funds and to re-institute the corporateoutreach programs as it operated prior to its cancellation ... direct ONDCP to obligatethe appropriation for NAMSDL expeditiously, although not outside normal grantprocedures [and] ... retain[s] language ... directing ONDCP to submit the plannedperformance measures development plan." (65)

Unanticipated Needs. The account provides funds for the President to meet unplanned and unbudgetedcontingencies for national interest, security, or defense purposes.

The President's FY2005 budget proposed an appropriation of $1 million. The same amount was appropriated in FY2004, but after the 0.59% rescission, thefunding was $994,000. The House and Senate Committees on Appropriationsrecommended, the House passed, and the conference agreement and the law providethe same amount as the President requested. After the 0.80% rescission, the FY2005funding is $992,000, a reduction of $8,000 from the President's request.

Special Assistance to the President (Office of the Vice President). This account funds the Vice President in carryingout the responsibilities assigned to him by the President and by law.

The President's FY2005 budget proposed an appropriation of $4.6 million for salaries and expenses. The FY2004 appropriation was $4.5 million, but after the0.59% rescission was $4.4 million. The requested amount is 3.1% more than theFY2004 funding after the rescission. The House and Senate Committees onAppropriations recommended, the House passed, and the conference agreement andthe law provide the same amount as the President requested. After the 0.80%rescission, the FY2005 funding is $4.5 million, a reduction of $100,000 from thePresident's request.

Official Residence of the Vice President. This account provides for the care and operation of theVice President's official residence and includes the operation of a gift fund for theresidence.

The President's FY2005 budget proposed an appropriation of $333,000 for the operating expenses of the Official Residence. The FY2004 appropriation was$331,000, but after the 0.59% rescission was $329,000. The requested amount is1.2% more than the FY2004 funding after the rescission. The House and SenateCommittees on Appropriations recommended, the House passed, and the conferenceagreement and the law provide the same amount as the President requested. After the0.80% rescission, the FY2005 funding is $330,336, a reduction of some $2,600 fromthe President's request. Advances or repayments or transfers may be made from theappropriation to any department or agency for expenses related to the account. Thecommittee report accompanying the Senate bill states that the budget for theDepartment of the Navy funds renovations at the residence and that the Committee"expects to be kept fully apprized by the Vice President's office of any and allrenovations and alterations made to the residence by the Navy." (66)

Merit Systems Protection Board (MSPB). The MSPB serves as guardian of the federal government'smerit-based system of employment. The agency carries out its mission by hearingand deciding appeals from federal employees of removals and other major personnelactions. The MSPB also hears and decides other types of civil service cases, reviewsOPM regulations, and conducts studies of the merit systems. The agency's efforts areto assure that personnel actions taken involving employees are processed within thelaw and that actions taken by OPM and other agencies support and enhance federalmerit principles.

The President's FY2005 budget proposed an appropriation of $37.3 million for the MSPB. The FY2004 appropriation was $32.9 million, but after the 0.59%rescission was reduced to $32.7 million. In addition, up to $2.626 million foradministrative expenses could be transferred from the Civil Service Retirement andDisability Fund to adjudicate retirement appeals. After the 0.59% rescission, theamount available for transfer was reduced to up to $2.611 million. The requestedamount is 5.7% more than the FY2004 total funding after the rescission.

As in its FY2004 budget proposal, MSPB again proposed that the funding previously provided from the trust fund for adjudication of civil service retirementappeals be requested as part of the agency's regular appropriation. OMBrecommended this change to simplify financial record keeping. The FY2005 budgetproposal does not specify how much of the requested $37.3 million would beallocated as transferred funds for adjudication purposes. The House and SenateCommittees on Appropriations in FY2004 did not agree with the proposal andinstead recommended (with the conferees concurring) that the trust fund transfer becontinued. According to the House committee report accompanying H.R. 2989 , the Committee decided

to continue the practice of appropriating funds to MSPB from the Civil Service Retirement and Disability Fund rather thandiscontinuing this practice as requested by the President; this request has not beenadequately justified. (67)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $34.7 million and a trust fund transfer of up to $2.620 million. The recommended appropriation is $2.6 million less than the President's request. According to the committee report accompanying the House bill, "The decrease ...reflects the Committee's decision to continue the practice of appropriating funds toMSPB from the Civil Service Retirement and Disability Fund rather thandiscontinuing this practice as proposed in the budget request as this proposal has notbeen adequately justified." (68)

The Senate Committee on Appropriations recommended and the conference agreement and the law provide an appropriation of $34.7 million, $2.6 million lessthan the President's request. After the 0.80% rescission, the FY2005 funding is$34.4 million, a reduction of $2.9 million from the President's request. Thecommittee report accompanying the Senate bill states that "The decrease from thePresident's request reflects the Committee's decision to continue the practice ofappropriating funds to MSPB from the Civil Service Retirement and Disability Fundrather than discontinuing this practice as requested by the President; this request hasnot been adequately justified." (69) The Committeerecommended and the conferenceagreement and the law provide the same amount as the President requested for thetrust fund transfer (up to $2.626 million). After the 0.80% rescission, this amountwould be up to $2.605 million, a reduction of $21,000 from the President's request.

Office of Personnel Management (OPM). The budget for OPM is composed of budget authority forboth permanent and current appropriations. This report discusses the budgetauthority for current appropriations. The agency "is the central human resourcesagency for the Federal Government and the primary agency helping the Presidentcarry out his responsibilities in managing the Federal workforce." The StrategicHuman Resources Policy Division "designs, develops, and leads the implementationof innovative, flexible, merit-based human resources policies and strategies thatenable Federal agencies to meet their missions and achieve their goals." (70) TheHuman Capital Leadership and Merit System Accountability Division assistsagencies in implementing and assessing human capital standards. The HumanResources Products and Services Division supports federal agencies by administeringretirement and insurance programs, providing personnel investigation services,managerial and executive training, and other human resources services.

The Office of Inspector General (OIG) conducts audits, investigations, evaluations, and inspections throughout the agency and may issue administrativesanctions related to the operation of the Federal Employees Health Benefits Programthat "debar from participation in the health insurance program those health careproviders whose conduct may pose a threat to the financial integrity of the programitself or to the well-being of insurance program enrollees." (71)

The President's FY2005 budget proposed an appropriation of $18.2 billion for OPM. This total includes discretionary funding of $131.3 million (72) for OPM salariesand expenses and $1.627 million for OIG salaries and expenses. It also includesmandatory funding of $8.1 billion for the government payment for annuitants of theemployees health benefits program, (73) $35 millionfor the government payment forannuitants of the employee life insurance program, and $9.8 billion for payment tothe civil service retirement and disability fund. Included in this total as well are trustfund transfers of $128.5 million (74) to the OPMsalaries and expenses account (foradministrative expenses for the retirement and insurance programs) and $16.461million (75) to the OIG salaries and expenses account(for administrative expenses toaudit, investigate, and provide other oversight of OPM's retirement and insuranceprograms).

According to OPM's budget submission, the $131.3 million requested for salaries and expenses "includes $114.876 million in annual funds, $11.415 millionin no-year funds for e-Government (e-Gov) projects, and $5 million in two-yearfunds to coordinate and conduct program evaluation and performance measurement."The budget submission states that "Annual funds include an increase of $3,042,000...to provide human capital support, hiring solutions, enhanced IT support, competitivesourcing studies, and homeland security and emergency response." (76)

With regard to the OIG, the budget reported that the amount requested

will finance more audit staff, special agent criminal investigators, and improved information systems. OPM expects toreduce the audit cycle to 2.9 years for FEHBP [Federal Employees Health BenefitsPlan] carriers. Total recoveries are expected to increase by $14 million annually. In2005, OPM will add audits of pharmacy benefit managers and expand the scope ofaudits for the largest community-rated health plans (comprehensive medical planscommonly referred to as health maintenance organizations) participating inFEHBP. (77)

The FY2004 appropriation for OPM was $17.5 billion after the 0.59% rescission. The requested amount for FY2005 is 4% more than the FY2004 totalfunding after the rescission. Specifically, it is 10.5% more than the $118.8 millionappropriated in FY2004 for salaries and expenses after the rescission; 9.3% morethan the $1.5 million for OIG salaries and expenses after the rescission; 12.5% morethan the $7.2 billion for the government payment for annuitants of the employeeshealth benefits program; the same amount ($35 million) for the government paymentfor annuitants of the employee life insurance program; 2.2% less than the $10.0billion for payment to the civil service retirement and disability fund; 4.9% less thanthe $135.1 million for OPM salaries and expenses transferred from trust funds afterthe rescission; and 14.8% more than the $14.3 million for OIG salaries and expensestransferred from trust funds after the rescission. (78)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $120.4 million for OPM salaries and expenses, $10.9 million lessthan the President's request. The funds for the enterprise human resourcesintegration project, the government-wide initiative to modernize the federal payrollsystems and service delivery, the e-human resources information system project, andthe e-clearance project would be allocated in the same manner as the Presidentrequested. The recruitment one stop project would be appropriated $3.3 million. Theappropriations recommended for OIG salaries and expenses, the employees healthbenefits program, the employee life insurance program, the Civil Service retirementand disability fund, and the trust fund transfers to the OPM and OIG salaries andexpenses accounts are the same amounts as the President requested. The trust fundsunder the OPM salaries and expenses account would be allocated as the Presidentrequested.

The House Committee on Appropriations' committee report accompanying the House bill lists appropriations for specific programs as follows: performance cultureunder strategic human resources policy should not exceed the FY2004 funding levelof $5.8 million, providing advice to agencies under human capital leadership meritsystems accountability should not exceed the FY2004 funding level of $16.8 million,the compliance program under human capital leadership merit systems accountabilityshould not exceed the FY2004 funding level of $16.5 million, management strategyis funded at $46.2 million, E-gov initiative fees are not funded, completion of thecurrent retirement readiness project is funded at $250,000, and expansion of theproject to non-federal government employees is funded at $500,000. Within 60 daysof the act's enactment, OPM is directed to submit an operating plan for FY2005,signed by the Director, to the House and Senate Committees on Appropriations. Theplan "should include funding levels for the various offices, programs and initiativescovered in the budget justification and supporting documents referenced in the Houseand Senate appropriations reports, and the statement of the managers." According tothe committee report

The Committee finds that the budget justification materials are severely lacking in any real detail about the programsproposed or underway at OPM and the resources involved. Many of the verbosedescriptions in the budget justification did not provide concrete information on theprograms, activities and funding requirements and changes to OPM'swork." (79)

Additionally, OPM is directed "to include with the 'Annual Report on Locality-Based Comparability Payments for the General Schedule' in FY2005 andall future fiscal years a report comparing the total pay and non-pay compensationpackages of the Federal workforce and the private sector" and, within 30 days of theact's enactment, "respond to the formal request of the Butner Low SecurityCorrectional Institution regarding its petition on the CentralCarolina/Richmond-Petersburg wage area." (80) Thecommittee report notes that OPM'sdecision to make health savings accounts a part of the federal employees' benefitspackage is welcomed.

The Senate Committee on Appropriations recommended an appropriation of $130.6 million for OPM salaries and expenses which is $691,000 less than thePresident's request. The total would be allocated as follows: Enterprise HumanResources Integration project ($1.9 million); leading the government-wide initiativeto modernize the federal payroll systems and service delivery ($6.2 million);e-Human Resources Information System project ($748,000); e-Clearance project($1.9 million); and coordination and conduct of program evaluation and performancemeasurement ($5 million would remain available through September 30, 2006). Thecommittee report accompanying the Senate bill states that "no more than $10,724,000is to be used for e-Government projects." (81)

The Committee recommended funding in the same amounts as the President requested for OIG salaries and expenses, the employees health benefits program, theemployee life insurance program, the Civil Service retirement and disability fund,and the trust fund transfers to the OPM and OIG salaries and expenses accounts. Ofthe total transferred from trust funds to the OPM salaries and expenses account($128.5 million), $27.6 million would fund automation of the retirement recordkeeping systems.

The Senate bill also would provide that none of the funds appropriated or made available under this act or any other appropriations act could be used to implementor enforce restrictions or limitations on the Coast Guard Congressional FellowshipProgram, or to implement OPM's proposed regulations, relating to the detail ofexecutive branch employees to the legislative branch, published in the FederalRegister on September 9, 2003. If the proposed regulations are final on this act'senactment date, none of the funds appropriated or made available under this act couldbe used to implement, administer, or enforce such final regulations.

The Senate Committee on Appropriations directs the GAO, in consultation with OPM and the GSA, to study the child care needs of federal employees in executive,legislative, and judicial branch agencies. GAO is "to provide guidance andrecommendations of possible options to develop and evaluate additional child carefacility needs and how best to serve the needs of all Federal employees." OPM isdirected "to reevaluate its efforts to provide information and education to agencies"on programs which provide subsidized child care for lower income employees. (82)

With regard to OPM's ongoing program to automate and streamline the processes for administering the federal retirement program, the Committeerecommends that OPM continue to seek GAO guidance and support. The GAO isdirected "to do a comprehensive audit on the problems and any mismanagement ofthe modernization project." (83)

The conference agreement and the law provide an appropriation of $125.5 million for OPM salaries and expenses, of which $12 million shall remain availableuntil September 30, 2007. This amount is $5.8 million less than the President'srequest. Funding in the same amounts as the President requested is provided for OIGsalaries and expenses, the employees health benefits program, the employee lifeinsurance program, the Civil Service retirement and disability fund, and the trust fundtransfers to the OPM and OIG salaries and expenses accounts. Of the moneyappropriated for the trust fund transfer from the OPM salaries and expenses account,$27.6 million shall remain available until expended for the cost of automating theretirement recordkeeping systems. After the 0.80% rescission, the FY2005 fundingfor OPM salaries and expenses is $124.5 million, for OIG salaries and expenses is$1.614 million, for the trust fund transfer from the OPM salaries and expensesaccount is $127.4 million, and from the OIG salaries and expenses account is$16.329 million. These amounts represent reductions from the President's requestof $6.8 million, $13,000, $1.1 million, and $132,000, respectively.

According to the conference report, the conferees

have not included bill language identifying specific resource levels for various e-gov projects ... but direct the Officenot to exceed the funding levels for the following projects: $1,870,000 for theenterprise human resources integration project, $6,219,000 for the federal payrollproject, $748,000 for the e-human resources information system project, and$1,887,000 for the e-clearance project. To accommodate the obligation rate of theseprojects ... $12,000,000 of the funds are made available until September 30, 2007. No funds are provided for the recruitment one stop project or the program evaluationand performance assessment project.

provide $250,000 to complete the retirement readiness project [and] ... urge the Office to expand the ... project tonon-federal employees.

allow the Director the flexibility to allocate the budget resources consistent with the direction provided in this statementof the managers and the budget justifications. The conferees reiterate the directionin the House report to submit an operating plan within 60 days of enactment of thisAct to the House and Senate Committees on Appropriations detailing programfunding levels for fiscal year 2005.

reiterates the House direction to the Director to respond to the Butner Low Security Correctional Institution petitionwithin 30 days of enactment of this Act.

direct the Director to submit a report by March 4, 2005 comparing the pay and non-pay compensation packages of the Federalworkforce and the private sector.

expect OPM and GSA, with technical assistance from GAO, to work collaboratively to collect data on child care needs,analyze options to meet the identified needs, and provide the data and analysis toGAO. The conferees direct GAO to review the data and analyses and provide anevaluation of the results to the Committees on Appropriations. The conferees expectan update on the status of these efforts 90 days after enactment of this Act ... theconferees reiterate the Senate direction to the Office to reevaluate efforts to informlow-income employees of programs to assist with child careexpenses. (84)

Human Capital Performance Fund. The President's FY2005 budget proposed an appropriation of $300 million for thisfund. The FY2004 appropriation was $1 million, but after the 0.59% rescission was$994,000. The fund

is designed to create performance-driven pay systems for employees and reinforce the value of employee performancemanagement systems. It will provide additional pay over and above any annual,across-the-board pay raise to certain civilian employees based on individual ororganizational performance and/or other critical agency human capital needs. Ninetypercent of funds appropriated are to be distributed to agencies on a pro rata basis,upon OPM approval of an agency's plan. The remainder, and any amount withheldfrom agencies due to inadequate plans, will be allocated at the discretion ofOPM. (85)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $12.5 million. This amount is $287.5 million less than thePresident's request. The House bill would allow the OPM Director to determine andtransfer to federal agencies such amounts as necessary to carry out the purposes ofthe fund. No funds would be obligated or transferred until the Director has notifiedthe relevant subcommittees of the Committees on Appropriations of the approval ofan agency's performance plan and the prior approval of such subcommittees has beenobtained. OPM is directed to report annually to the House and Senate AppropriationsCommittees "on the performance pay plans that have been approved, and theamounts that have been obligated or transferred." (86)

The Senate Committee on Appropriations did not recommend and the conference agreement and the law do not provide funding for the performance fund.The committee report accompanying the Senate bill states that such an initiative"should be budgeted and administered within the salaries and expenses of eachindividual agency." (87)

Office of Special Counsel (OSC). The agency investigates federal employee allegations of prohibited personnelpractices and, when appropriate, prosecutes matters before the Merit SystemsProtection Board; provides a channel for whistle blowing by federal employees; andenforces the Hatch Act. In carrying out the latter activity, the OSC issues bothwritten and oral advisory opinions. The OSC may require an agency to investigatewhistle blower allegations and report to the Congress and the President asappropriate.

The President's FY2005 budget proposed an appropriation of $15.449 million for the OSC. The FY2004 appropriation was $13.5 million, but after the 0.59%rescission was reduced to $13.4 million. The requested amount is 15.1% more thanthe FY2004 funding after the rescission. According to the budget, the funding "willenable OSC to hire the additional staff needed to increase the case closure rate. Without additional staff, case backlogs will continue to increase at OSC." (88)

The House and Senate Committees on Appropriations recommended, the House passed, and the conference agreement and the law provide the same amount as thePresident requested. After the 0.80% rescission, the FY2005 funding is $15.325million, a reduction of $124,000 from the President's request. Aware of OSC'scritical need for more staff to address its case backlog of more than three years, thecommittee report accompanying the Senate bill states that "the Committee expectsOSC to acquire an appropriate mix of new staff that will maximize its ability toreduce this backlog" instead of hiring just attorneys. No later than March 31, 2005,OSC must report to the Committees on Appropriations on "the status of its staffingefforts, particularly describing those new positions hired and how the reduction ofOSC's case backlog has benefitted as a result of the new personnel." (89)

Title IV: Independent Agencies

Table 8. Title IV: Independent AgenciesAppropriations (in millions of dollars)

Source: Figures are from a budget authority table provided by the House Committeeon Appropriations. Because of differing treatment of offsets, the totals will notalways match the Administration's totals. The figures within this table may differslightly from those in the text due to supplemental appropriations, rescissions, andother funding actions. Columns may not add due to rounding or exclusion of smallerprogram line-items.

Note: A newly created independent agency which began operation in FY2004, theElection Assistance Commission, received an appropriation of $1 billion for electionreform grants in a separate division of the FY2004 Consolidated appropriations bill.

*FY2004 figures reflect an across-the-board rescission of 0.59%.

**FY2005 figures do not reflect an across-the-board rescission of 0.80%.

Federal Election Commission (FEC). The FEC administers federal campaign finance law,including overseeing disclosure requirements, limits on contributions andexpenditures, and the presidential election public funding system; the agency retainscivil enforcement authority for the law. The Office of Election Administration,which serves as a clearinghouse for information on voting laws and procedures forstate and local election officers, is another part of the FEC.

The President's FY2005 budget proposed an appropriation of $52.2 million for the FEC, an increase of $919,000 above the fiscal 2004 appropriation of $51.2million; the increase reflects adjustments for inflation and salary and benefitincreases. The FEC endorsed the Administration proposal, with its estimated 391full-time employees. Of the total amount, no less than $4.7 million is to bedesignated for automated data processing systems. In addition, $800,000 isdesignated for use by the Office of Election Administration, which is slated to bemoved to the newly created Election Assistance Commission, along with any fundsleft over at the time of the move.

The House Appropriations Committee recommended, the House passed, and the Senate Committee on Appropriations recommended the $52.2 million requested inthe President's budget. The House added a requirement that the FEC accept noreports and filings from House and Senate Members and candidates in other thanelectronic form. The Senate Committee also added two legislative provisions: oneto enable (excess) federal campaign funds to be donated to state and local candidatesand to be used for other lawful purposes, and the other to clarify that principalcampaign committees of federal candidates are limited to contributions of $2,000 toany authorized committee of another federal candidate. The Omnibus Appropriationsmeasure enacted by Congress authorized $52.2 million for the FEC and included thetwo legislative provisions recommended by the Senate Committee (the Houseprovision was dropped).

Federal Labor Relations Authority (FLRA). The FLRA serves as a neutral party in the settlement ofdisputes that arise between unions, employees, and federal agencies on mattersoutlined in the Federal Service Labor Management Relations Statute; decides majorpolicy issues; prescribes regulations; and disseminates information appropriate to theneeds of agencies, labor organizations, and the public. The FLRA also engages incase-related interventions and training and facilitates labor-managementrelationships. It has three components: the Authority which adjudicateslabor-management disputes; the Office of the General Counsel which, among otherduties, investigates all allegations of unfair labor practices filed and processes allrepresentation petitions received; and the Federal Service Impasses Panel whichresolves impasses which occur during labor negotiations between federal agenciesand labor organizations.

The President's FY2005 budget proposed an appropriation of $29.7 million for the FLRA. The FY2004 appropriation was $29.6 million but after the 0.59%rescission was $29.4 million. The requested amount is 0.81% more than the FY2004funding after the rescission. The House Committee on Appropriations recommendedand the House passed the same appropriation as the President requested.

The Senate Committee on Appropriations recommended and the conference agreement and the law provide an appropriation of $25.7 million, $4 million less thanthe President's request. Three million dollars is rescinded from prior yearappropriations which were unobligated. After the 0.80% rescission, the FY2005funding is $25.5 million, a reduction of $4.2 million from the President's request. The committee report accompanying the Senate bill states that the recommendation"reflects the decline in caseload and the reduction of the FTE level from 215 to 210."A rescission of $3 million of prior appropriations is recommended for salaries andexpenses because "significant amounts of annual appropriations have lapsed at theend of FY2002 and 2003 which reflect salary and benefit surpluses related to thedecline in caseload and actual FTE usage over the same period." (90)

General Services Administration (GSA). The General Services Administration administers federalcivilian procurement policies pertaining to the construction and management offederal buildings, disposal of real and personal property, and management of federalproperty and records. It is also responsible for managing the funding and facilitiesfor former Presidents and presidential transitions.

As agreed to in the conference report ( H.Rept. 108-792 ) on H.R. 4818 , the Consolidated Appropriations Act for FY2005, the House and Senaterecommended an appropriation of $62.1 million for government-wide policy and$92.2 million for operating expenses; $42.4 million for the Office of InspectorGeneral; $3.1 million for allowances and office staff for former Presidents; and $3.0million for the electronic government fund. Due to the outcome of the 2004presidential election, no funds are needed for a presidential transition in FY2005. The conferees did not provide additional funds for activities associated with thePresident's second term of office. They stated that the resources for these activitiesshould be funded out of the agencies and departments as necessary.

S. 2806 recommended an appropriation of $62.1 million for government-wide policy and $85.2 million for operating expenses; $42.4 million forthe Office of Inspector General; $3.1 million for allowances and office staff forformer Presidents; and $3.0 million to remain available until expended for theelectronic government fund. A total of $7.7 million was also recommended for theexpenses associated in the event of a presidential transition. The Senate Committeeon Appropriations ( S.Rept. 108-342 ) denied the request to amend the PresidentialTransition Act to allow $1.0 million for training and briefings for incomingappointees associated with the second term of an incumbent President. TheCommittee stated that it had no objection to funding such training, but believed that"it should be properly budgeted for and requested by the appropriate agencies."

As passed in the House, H.R. 5025 recommended an appropriation of $62.1 million for government-wide policy and $82.2 million for operatingexpenses; $42.4 million for the Office of Inspector General; $3.5 million forallowances and office staff for former Presidents; and $5.0 million to remainavailable until expended for the electronic government fund. A total of $7.7 millionwas also recommended for the expenses associated with a presidential transition. The House Committee on Appropriations ( H.Rept. 108-671 ) stated that itrecommended the provision in the President's budget request to allow $1.0 millionof the total $7.7 million appropriation to remain available for the training andbriefings of incoming appointees associated with the second term of an incumbentPresident. The remaining $6.7 million would be returned to the general fund of theTreasury.

The President's FY2005 budget contained a request of $62.1 million for government-wide policy and $82.2 million for operating expenses; $42.4 millionfor the Office of Inspector General; $3.5 million for allowances and office staff forformer Presidents; $45.0 million for interagency electronic government initiatives;and $17.6 million to be deposited into the Federal Consumer Information CenterFund. In the event of a presidential transition, a total of $7.7 million was requestedin accordance with the Presidential Transition Act, as amended, to provide for anorderly transfer of executive leadership. Of ths total, $1.0 million would be providedfor briefing new personnel associated with the incoming administration. Beginningin FY2005, appropriation language is proposed to amend the Presidential TransitionAct to permit the expenditure of not more than $1.0 million for briefings forincoming appointees associated with the second term of an incumbent President. Ifthere is no presidential transition, no other expenditures of transition funds would bemade available to an incumbent President. The remaining $6.7 million inappropriated funds would be returned to the general fund of the Treasury.

Table 9. General Services Administration Appropriations (in millions of dollars)

Source: Figures are from a budget authority table provided by the House Committeeon Appropriations, except Senate figure is from budget authority table in S.Rept.108-342 . Because of differing treatment of offsets, the totals will not always matchthe Administration's totals. The figures within this table may differ slightly fromthose in the text due to supplemental appropriations, rescissions, and other fundingactions. Columns may not add due to rounding or exclusion of smaller programline-items.

*FY2004 figures reflect an across-the-board rescission of 0.59%.

**FY2005 figures do not reflect an across-the-board rescission of 0.80%.

***The appropriations total does not include the limitations on obligations figure forthe Federal Buildings Fund.

Federal Buildings Fund (FBF). Revenue to the FBF is the principal source of funding. Congress, however, directsthe GSA as to the allocation or limitation on spending of funds.

As agreed to in the conference report ( H.Rept. 108-792 ) on H.R. 4818 , the Consolidated Appropriations Act for FY2005, the House and Senaterecommended that $708.5 million remain available for new construction projectsfrom the $7.2 billion Federal Buildings Fund. An additional $980.2 million is toremain available for repairs and alterations. The conferees also recommended that thefollowing amounts be made available from the FBF: $161.4 million for installmentacquisition payments; $3.7 billion for rental of space; and $1.7 for buildingoperations.

The Senate Committee on Appropriations recommended that $710.9 million remain available until expended for new construction projects from the FederalBuildings Fund, which totals $7.2 billion. An additional $980.2 million was toremain available until expended for repairs and alterations. This amount included$20.0 million to implement a glass fragmentation program; $13.0 million toimplement a chlorofluorocarbons program; and amounts necessary to providereimbursable special services such as fencing, lighting, and guard booths on privateor other property not owned by the federal government as may be appropriate toenable the U.S. Secret Service to perform its protective functions. The Committeealso recommended that the following amounts be made available from the FBF:$161.4 million for installment acquisition payments; $3.7 billion for rental of space;and $1.7 billion for building operations.

As passed in the House, H.R. 5025 directs that $522.3 million remain available until expended for new construction projects from the FBF. Anadditional $931.2 million was to remain available until expended for repairs andalterations. This amount also included $20.0 million to implement a glassfragmentation program; $13.0 million to implement a chlorofluorocarbons program;and amounts necessary to provide reimbursable special services such as fencing,lighting, and guard booths on private or other property not owned by the federalgovernment, as may be appropriate to enable the U.S. Secret Service to perform itsprotective functions pursuant to 18 U.S.C. 3056. H.R. 5025 also directedthat the following amounts be made available from the FBF: $161.4 million forinstallment acquisition payments; $3.7 billion for rental of space; and $1.7 billion forbuilding operations.

The President's FY2005 budget requested that $650.2 million remain available until expended for new construction projects from the Federal Buildings Fund, whichtotals $7.2 billion. This amount included $381.0 million for the construction of threenew courthouses. An additional $980.2 million was to remain available untilexpended for repairs and alterations. This amount included $135.1 million forrepairs to five existing courthouses; $20.0 million to implement a glass fragmentationprogram; $13.0 million to implement a chlorofluorocarbons program; and amountsto provide such reimbursable fencing, lighting, guard booths, and other facilities onprivate or other property not in Government ownership or control as may beappropriate to enable the United States Secret Service to perform its protectivefunctions pursuant to 18 U.S.C. 3056.

Electronic Government Fund (E-gov Fund). The fund was ultimately allocated $3 million in theconsolidated appropriations legislation approved by both houses of Congress. Thiswas $2 million less than the $5 million requested by the President. The House hadprovided the amount requested by the President, but the Senate had approved the $3million allocation recommended, without any explanation for the reduction, by itsCommittee on Appropriations.

Although the President had requested $5 million for the e-gov fund for FY2005, the account statement in the appendix to the President's proposed FY2005 budgetstated: "In addition to the $5 million requested for this appropriation, it is proposedthat an additional $40 million will be made available for this activity from surplusrevenues generated in the General Supply Fund." (91) Those two figures equal the $45million requested for FY2004, but were $42 million more than the $3 million actuallyallocated by Congress for FY2004. The fund received an appropriation of $5 millionin both FY2002 and FY2003.

The account statement for the General Supply Fund explains that it "finances certain activities within the Federal Supply Service (FSS) and the FederalTechnology Service (FTS)" of GSA. The "FSS offers Federal agencies an extensiverange of commercial services and more than 4 million commercial products." Theseservices and products are "provided by commercial suppliers through more than10,000 FSS contractors. In FY2003, FSS' business volume was $33.8 billion, andis projected to be $38.5 billion in FY2005." (92)

Funding for the Electronic Government Fund has been a somewhat contentious matter between the President and Congress. On February 28, 2001, in advance of hisproposed budget for FY2002, the President released: A Blueprint for NewBeginnings: A Responsible Budget for America's Priorities . Intended as a 10-yearbudget plan, the Blueprint , among other innovations, proposed the establishment ofan electronic government account seeded with "$10 million in 2002 as the firstinstallment of a fund -- that will grow to a total of $100 million over three years --to support interagency electronic Government (e-gov) initiatives."

Managed by OMB, the fund was foreseen as supporting "projects that operate across agency boundaries," facilitating "the development of a Public KeyInfrastructure to implement digital signatures that are accepted across agencies forsecure online communications," and furthering "the Administration's ability toimplement the Government Paperwork Elimination Act of 1998, which calls uponagencies to provide the public with optional use and acceptance of electronicinformation, services and signatures, when practicable, by October 2003." (93) Aboutone month later, on March 22, OMB announced that the Administration had decidedto double the amount to be allocated to the e-gov fund, bringing it to $20 million. (94)

As included in the President's FY2002 budget, the fund was established as an account within the General Services Administration (GSA), to be administered by theAdministrator of General Services "to support interagency projects, approved by theDirector of the Office of Management and Budget, that enable the FederalGovernment to expand its ability to conduct activities electronically, through thedevelopment and implementation of innovative uses of the Internet and otherelectronic methods."

The President's initial request for the fund was $20 million, to remain available until September 30, 2004. Congress, however, appropriated $5 million for the fundfor FY2002, to remain available until expended. Appropriators specified thattransfers of monies from the fund to federal agencies could not be made until 10 daysafter a proposed spending plan and justification for each project to be undertakenusing such monies had been submitted to the Committees on Appropriations. Expressing general support for the purposes of the fund, they also recommended, andboth chambers agreed, that the Administration work with the House Committee onGovernment Reform and the Senate Committee on Governmental Affairs to clarifythe status of its authorization.

The President's budget for FY2003 recognized "GSA as operator of the official federal portal for providing citizens with one-stop access to federal services via theInternet or telephone" and, therefore, a key agency in implementing the President'se-gov vision, which will "require cross-agency approaches that permit citizens,businesses, and state and local governments to easily obtain services from, andelectronically transact business with the federal government." In this regard, anAdministration interagency Quicksilver E-Gov Task Force, according to the budget,had "identified 23 high priority Internet services for early development."

Seeking $45 million for the e-gov fund, the budget acknowledged that this amount was "a significant increase over the $20 million requested in 2002," butnoted that the request "is supported by specific project plans developed by theQuicksilver Task Force." (95) Furthermore,according to the fund account statement,these monies "would also further the Administration's implementation of theGovernment Paperwork Elimination Act (GPEA) of 1998, which calls upon agenciesto provide the public with optional use and acceptance of electronic information,services, and signatures, when practicable, by October 2003."

The House appropriators again rejected the amount requested by the President and recommended $5 million for the fund, reiterating, as previously, that transfers ofmonies from the fund to federal agencies could not be made until 10 days aftersubmission of project information to the Committees on Appropriations. The HouseCommittee also declined to recommend an appropriation for the fund as a GSAaccount, but did fund it as an account under the jurisdiction of OMB. (96) Senateappropriators, however, recommended the full $45 million requested by thePresident. Their report stated that OMB "would control the allocation of the fundand direct its use for information systems projects and affect multiple agencies andoffer the greatest improvements in access and service." (97) Final funding, nonetheless,was $5 million.

The President again requested $45 million for the fund for FY2004. House appropriators provided $1 million, offered no report language regarding this reducedamount, but noted that the fund had been authorized by the E-Government Act of2002, which had previously been a matter of concern for appropriators. (98) Thisallocation was subsequently approved by the House. The Senate approved $5 millionfor the fund, as recommended by its appropriators. Ultimately, a midpointcompromise of $3 million was set by conferees and adopted by each chamber.

National Archives and Records Administration (NARA). The custodian of the historically valuable records of thefederal government since its establishment in 1934, NARA also prescribes policy andprovides both guidance and management assistance concerning the entire life cycleof federal records. It also administers the presidential libraries system; publishes thelaws, regulations, and presidential and other documents; and assists the InformationSecurity Oversight Office (ISOO), which manages federal security classification anddeclassification policy; and the National Historical Publications and RecordsCommission (NHPRC), which makes grants nationwide to help nonprofitorganizations identify, preserve, and provide access to materials that documentAmerican history.

The funds ultimately allocated to NARA by the consolidated appropriations legislation, as approved by both houses of Congress, were a little over $321 million,an amount very close to the funds recommended by Senator appropriators. Thisamount, however, was almost $20 million more than those provided by the House,and $17 million more than the President's request. Of this $321 million, thefollowing distributions were specified: $266.9 for operating expenses, $35.9 for theelectronic records archives, $13.4 for repairs and restoration, and $5 for the NHPRC. Within the repairs and restoration account, $3 million was specified for a newregional archives facility in Anchorage, AK, and $2 for repairs and restoration at theLyndon B. Johnson presidential library in Austin, TX.

The House had earlier approved the $302.2 million recommended by the Committee on Appropriations for NARA, a reduction of a little less than $2 millionfrom the amount sought by the President. This reduction largely fell in the operatingexpenses account, for which $264.2 million had been recommended. Amountsproposed for the electronic records archive and the NHPRC were at the levelrequested by the President. An additional $1 million had been recommended abovethe $6.1 million requested for repairs and restoration.

The Senate Committee on Appropriations had recommended a little over $320 million for NARA, exceeding the President's request by $16 million. Of the amount,$266.9 million was allocated for operating expenses; $35.9 million for electronicrecords archives; $12.1 for repairs and restoration; and $5 million for the NHPRC.

The President had requested $304 million for NARA for FY2005, which was approximately $2.6 million less than the $306.6 million appropriated for FY2004. The bulk of this new amount, $266.9 million, was sought for operating expenses,which is approximately $10 million more than the $255 million allocated to thisaccount for FY2004. In addition, of the requested amount, $6.1 million would havefunded repairs and restoration and $3 million would have been provided to theNHPRC. These requests were significantly lower than the $13.6 million appropriatedfor repairs and restoration and the almost $10 million provided to the NHPRC forFY2004. When Congress approved $35.7 million for FY2004 for the new electronicrecords archive account, $22 million of this amount was designated to remainavailable until the end of FY2006. The President requested $35.9 million for thisaccount for FY2005.

Merit Systems Protection Board (MSPB). The MSPB serves as guardian of the federal government'smerit-based system of employment. The agency carries out its mission by hearingand deciding appeals from federal employees of removals and other major personnelactions. The MSPB also hears and decides other types of civil service cases, reviewsOPM regulations, and conducts studies of the merit systems. The agency's efforts areto assure that personnel actions taken involving employees are processed within thelaw and that actions taken by OPM and other agencies support and enhance federalmerit principles.

The President's FY2005 budget proposed an appropriation of $37.3 million for the MSPB. The FY2004 appropriation was $32.9 million, but after the 0.59%rescission was reduced to $32.7 million. In addition, up to $2.626 million foradministrative expenses could be transferred from the Civil Service Retirement andDisability Fund to adjudicate retirement appeals. After the 0.59% rescission, theamount available for transfer was reduced to up to $2.611 million. The requestedamount is 5.7% more than the FY2004 total funding after the rescission.

As in its FY2004 budget proposal, MSPB again proposed that the funding previously provided from the trust fund for adjudication of civil service retirementappeals be requested as part of the agency's regular appropriation. OMBrecommended this change to simplify financial record keeping. The FY2005 budgetproposal does not specify how much of the requested $37.3 million would beallocated as transferred funds for adjudication purposes. The House and SenateCommittees on Appropriations in FY2004 did not agree with the proposal andinstead recommended (with the conferees concurring) that the trust fund transfer becontinued. According to the House committee report accompanying H.R. 2989 , the Committee decided

to continue the practice of appropriating funds to MSPB from the Civil Service Retirement and Disability Fund rather thandiscontinuing this practice as requested by the President; this request has not beenadequately justified. (99)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $34.7 million and a trust fund transfer of up to $2.620 million. The recommended appropriation is $2.6 million less than the President's request. According to the committee report accompanying the House bill, "The decrease ...reflects the Committee's decision to continue the practice of appropriating funds toMSPB from the Civil Service Retirement and Disability Fund rather thandiscontinuing this practice as proposed in the budget request as this proposal has notbeen adequately justified." (100)

The Senate Committee on Appropriations recommended and the conference agreement and the law provide an appropriation of $34.7 million, $2.6 million lessthan the President's request. After the 0.80% rescission, the FY2005 funding is$34.4 million, a reduction of $2.9 million from the President's request. Thecommittee report accompanying the Senate bill states that "The decrease from thePresident's request reflects the Committee's decision to continue the practice ofappropriating funds to MSPB from the Civil Service Retirement and Disability Fundrather than discontinuing this practice as requested by the President; this request hasnot been adequately justified." (101) TheCommittee recommended and the conferenceagreement and the law provide the same amount as the President requested for thetrust fund transfer (up to $2.626 million). After the 0.80% rescission, this amountwould be up to $2.605 million, a reduction of $21,000 from the President's request.

Office of Personnel Management (OPM). The budget for OPM is composed of budget authority forboth permanent and current appropriations. This report discusses the budgetauthority for current appropriations. The agency "is the central human resourcesagency for the Federal Government and the primary agency helping the Presidentcarry out his responsibilities in managing the Federal workforce." The StrategicHuman Resources Policy Division "designs, develops, and leads the implementationof innovative, flexible, merit-based human resources policies and strategies thatenable Federal agencies to meet their missions and achieve their goals." (102) TheHuman Capital Leadership and Merit System Accountability Division assistsagencies in implementing and assessing human capital standards. The HumanResources Products and Services Division supports federal agencies by administeringretirement and insurance programs, providing personnel investigation services,managerial and executive training, and other human resources services.

The Office of Inspector General (OIG) conducts audits, investigations, evaluations, and inspections throughout the agency and may issue administrativesanctions related to the operation of the Federal Employees Health Benefits Programthat "debar from participation in the health insurance program those health careproviders whose conduct may pose a threat to the financial integrity of the programitself or to the well-being of insurance program enrollees." (103)

The President's FY2005 budget proposed an appropriation of $18.2 billion for OPM. This total includes discretionary funding of $131.3 million (104) for OPMsalaries and expenses and $1.627 million for OIG salaries and expenses. It alsoincludes mandatory funding of $8.1 billion for the government payment forannuitants of the employees health benefits program, (105) $35 million for thegovernment payment for annuitants of the employee life insurance program, and $9.8billion for payment to the civil service retirement and disability fund. Included inthis total as well are trust fund transfers of $128.5 million (106) to the OPM salaries andexpenses account (for administrative expenses for the retirement and insuranceprograms) and $16.461 million (107) to the OIGsalaries and expenses account (foradministrative expenses to audit, investigate, and provide other oversight of OPM'sretirement and insurance programs).

According to OPM's budget submission, the $131.3 million requested for salaries and expenses "includes $114.876 million in annual funds, $11.415 millionin no-year funds for e-Government (e-Gov) projects, and $5 million in two-yearfunds to coordinate and conduct program evaluation and performance measurement."The budget submission states that "Annual funds include an increase of $3,042,000...to provide human capital support, hiring solutions, enhanced IT support, competitivesourcing studies, and homeland security and emergency response." (108)

With regard to the OIG, the budget reported that the amount requested

will finance more audit staff, special agent criminal investigators, and improved information systems. OPM expects toreduce the audit cycle to 2.9 years for FEHBP [Federal Employees Health BenefitsPlan] carriers. Total recoveries are expected to increase by $14 million annually. In2005, OPM will add audits of pharmacy benefit managers and expand the scope ofaudits for the largest community-rated health plans (comprehensive medical planscommonly referred to as health maintenance organizations) participating inFEHBP. (109)

The FY2004 appropriation for OPM was $17.5 billion after the 0.59% rescission. The requested amount for FY2005 is 4% more than the FY2004 totalfunding after the rescission. Specifically, it is 10.5% more than the $118.8 millionappropriated in FY2004 for salaries and expenses after the rescission; 9.3% morethan the $1.5 million for OIG salaries and expenses after the rescission; 12.5% morethan the $7.2 billion for the government payment for annuitants of the employeeshealth benefits program; the same amount ($35 million) for the government paymentfor annuitants of the employee life insurance program; 2.2% less than the $10.0billion for payment to the civil service retirement and disability fund; 4.9% less thanthe $135.1 million for OPM salaries and expenses transferred from trust funds afterthe rescission; and 14.8% more than the $14.3 million for OIG salaries and expensestransferred from trust funds after the rescission. (110)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $120.4 million for OPM salaries and expenses, $10.9 million lessthan the President's request. The funds for the enterprise human resourcesintegration project, the government-wide initiative to modernize the federal payrollsystems and service delivery, the e-human resources information system project, andthe e-clearance project would be allocated in the same manner as the Presidentrequested. The recruitment one stop project would be appropriated $3.3 million. Theappropriations recommended for OIG salaries and expenses, the employees healthbenefits program, the employee life insurance program, the Civil Service retirementand disability fund, and the trust fund transfers to the OPM and OIG salaries andexpenses accounts are the same amounts as the President requested. The trust fundsunder the OPM salaries and expenses account would be allocated as the Presidentrequested.

The House Committee on Appropriations' committee report accompanying the House bill lists appropriations for specific programs as follows: performance cultureunder strategic human resources policy should not exceed the FY2004 funding levelof $5.8 million, providing advice to agencies under human capital leadership meritsystems accountability should not exceed the FY2004 funding level of $16.8 million,the compliance program under human capital leadership merit systems accountabilityshould not exceed the FY2004 funding level of $16.5 million, management strategyis funded at $46.2 million, E-gov initiative fees are not funded, completion of thecurrent retirement readiness project is funded at $250,000, and expansion of theproject to non-federal government employees is funded at $500,000. Within 60 daysof the act's enactment, OPM is directed to submit an operating plan for FY2005,signed by the Director, to the House and Senate Committees on Appropriations. Theplan "should include funding levels for the various offices, programs and initiativescovered in the budget justification and supporting documents referenced in the Houseand Senate appropriations reports, and the statement of the managers." According tothe committee report

The Committee finds that the budget justification materials are severely lacking in any real detail about the programsproposed or underway at OPM and the resources involved. Many of the verbosedescriptions in the budget justification did not provide concrete information on theprograms, activities and funding requirements and changes to OPM'swork." (111)

Additionally, OPM is directed "to include with the 'Annual Report on Locality-Based Comparability Payments for the General Schedule' in FY2005 andall future fiscal years a report comparing the total pay and non-pay compensationpackages of the Federal workforce and the private sector" and, within 30 days of theact's enactment, "respond to the formal request of the Butner Low SecurityCorrectional Institution regarding its petition on the CentralCarolina/Richmond-Petersburg wage area." (112) The committee report notes thatOPM's decision to make health savings accounts a part of the federal employees'benefits package is welcomed.

The Senate Committee on Appropriations recommended an appropriation of $130.6 million for OPM salaries and expenses which is $691,000 less than thePresident's request. The total would be allocated as follows: Enterprise HumanResources Integration project ($1.9 million); leading the government-wide initiativeto modernize the federal payroll systems and service delivery ($6.2 million);e-Human Resources Information System project ($748,000); e-Clearance project($1.9 million); and coordination and conduct of program evaluation and performancemeasurement ($5 million would remain available through September 30, 2006). Thecommittee report accompanying the Senate bill states that "no more than $10,724,000is to be used for e-Government projects." (113)

The Committee recommended funding in the same amounts as the President requested for OIG salaries and expenses, the employees health benefits program, theemployee life insurance program, the Civil Service retirement and disability fund,and the trust fund transfers to the OPM and OIG salaries and expenses accounts. Ofthe total transferred from trust funds to the OPM salaries and expenses account($128.5 million), $27.6 million would fund automation of the retirement recordkeeping systems.

The Senate bill also would provide that none of the funds appropriated or made available under this act or any other appropriations act could be used to implementor enforce restrictions or limitations on the Coast Guard Congressional FellowshipProgram, or to implement OPM's proposed regulations, relating to the detail ofexecutive branch employees to the legislative branch, published in the FederalRegister on September 9, 2003. If the proposed regulations are final on this act'senactment date, none of the funds appropriated or made available under this act couldbe used to implement, administer, or enforce such final regulations.

The Senate Committee on Appropriations directs the GAO, in consultation with OPM and the GSA, to study the child care needs of federal employees in executive,legislative, and judicial branch agencies. GAO is "to provide guidance andrecommendations of possible options to develop and evaluate additional child carefacility needs and how best to serve the needs of all Federal employees." OPM isdirected "to reevaluate its efforts to provide information and education to agencies"on programs which provide subsidized child care for lower income employees. (114)

With regard to OPM's ongoing program to automate and streamline the processes for administering the federal retirement program, the Committeerecommends that OPM continue to seek GAO guidance and support. The GAO isdirected "to do a comprehensive audit on the problems and any mismanagement ofthe modernization project." (115)

The conference agreement and the law provide an appropriation of $125.5 million for OPM salaries and expenses, of which $12 million shall remain availableuntil September 30, 2007. This amount is $5.8 million less than the President'srequest. Funding in the same amounts as the President requested is provided for OIGsalaries and expenses, the employees health benefits program, the employee lifeinsurance program, the Civil Service retirement and disability fund, and the trust fundtransfers to the OPM and OIG salaries and expenses accounts. Of the moneyappropriated for the trust fund transfer from the OPM salaries and expenses account,$27.6 million shall remain available until expended for the cost of automating theretirement recordkeeping systems. After the 0.80% rescission, the FY2005 fundingfor OPM salaries and expenses is $124.5 million, for OIG salaries and expenses is$1.614 million, for the trust fund transfer from the OPM salaries and expensesaccount is $127.4 million, and from the OIG salaries and expenses account is$16.329 million. These amounts represent reductions from the President's requestof $6.8 million, $13,000, $1.1 million, and $132,000, respectively.

According to the conference report, the conferees

have not included bill language identifying specific resource levels for various e-gov projects ... but direct the Officenot to exceed the funding levels for the following projects: $1,870,000 for theenterprise human resources integration project, $6,219,000 for the federal payrollproject, $748,000 for the e-human resources information system project, and$1,887,000 for the e-clearance project. To accommodate the obligation rate of theseprojects ... $12,000,000 of the funds are made available until September 30, 2007. No funds are provided for the recruitment one stop project or the program evaluationand performance assessment project.

provide $250,000 to complete the retirement readiness project [and] ... urge the Office to expand the ... project tonon-federal employees.

allow the Director the flexibility to allocate the budget resources consistent with the direction provided in this statementof the managers and the budget justifications. The conferees reiterate the directionin the House report to submit an operating plan within 60 days of enactment of thisAct to the House and Senate Committees on Appropriations detailing programfunding levels for fiscal year 2005.

reiterates the House direction to the Director to respond to the Butner Low Security Correctional Institution petitionwithin 30 days of enactment of this Act.

direct the Director to submit a report by March 4, 2005 comparing the pay and non-pay compensation packages of the Federalworkforce and the private sector.

expect OPM and GSA, with technical assistance from GAO, to work collaboratively to collect data on child care needs,analyze options to meet the identified needs, and provide the data and analysis toGAO. The conferees direct GAO to review the data and analyses and provide anevaluation of the results to the Committees on Appropriations. The conferees expectan update on the status of these efforts 90 days after enactment of this Act ... theconferees reiterate the Senate direction to the Office to reevaluate efforts to informlow-income employees of programs to assist with child careexpenses. (116)

Human Capital Performance Fund. The President's FY2005 budget proposed an appropriation of $300 million for thisfund. The FY2004 appropriation was $1 million, but after the 0.59% rescission was$994,000. The fund

is designed to create performance-driven pay systems for employees and reinforce the value of employee performancemanagement systems. It will provide additional pay over and above any annual,across-the-board pay raise to certain civilian employees based on individual ororganizational performance and/or other critical agency human capital needs. Ninetypercent of funds appropriated are to be distributed to agencies on a pro rata basis,upon OPM approval of an agency's plan. The remainder, and any amount withheldfrom agencies due to inadequate plans, will be allocated at the discretion ofOPM. (117)

The House Committee on Appropriations recommended, and the House passed, an appropriation of $12.5 million. This amount is $287.5 million less than thePresident's request. The House bill would allow the OPM Director to determine andtransfer to federal agencies such amounts as necessary to carry out the purposes ofthe fund. No funds would be obligated or transferred until the Director has notifiedthe relevant subcommittees of the Committees on Appropriations of the approval ofan agency's performance plan and the prior approval of such subcommittees has beenobtained. OPM is directed to report annually to the House and Senate AppropriationsCommittees "on the performance pay plans that have been approved, and theamounts that have been obligated or transferred." (118)

The Senate Committee on Appropriations did not recommend and the conference agreement and the law do not provide funding for the performance fund.The committee report accompanying the Senate bill states that such an initiative"should be budgeted and administered within the salaries and expenses of eachindividual agency." (119)

Office of Special Counsel (OSC). The agency investigates federal employee allegations of prohibited personnelpractices and, when appropriate, prosecutes matters before the Merit SystemsProtection Board; provides a channel for whistle blowing by federal employees; andenforces the Hatch Act. In carrying out the latter activity, the OSC issues bothwritten and oral advisory opinions. The OSC may require an agency to investigatewhistle blower allegations and report to the Congress and the President asappropriate.

The President's FY2005 budget proposed an appropriation of $15.449 million for the OSC. The FY2004 appropriation was $13.5 million, but after the 0.59%rescission was reduced to $13.4 million. The requested amount is 15.1% more thanthe FY2004 funding after the rescission. According to the budget, the funding "willenable OSC to hire the additional staff needed to increase the case closure rate. Without additional staff, case backlogs will continue to increase at OSC." (120)

The House and Senate Committees on Appropriations recommended, the House passed, and the conference agreement and the law provide the same amount as thePresident requested. After the 0.80% rescission, the FY2005 funding is $15.325million, a reduction of $124,000 from the President's request. Aware of OSC'scritical need for more staff to address its case backlog of more than three years, thecommittee report accompanying the Senate bill states that "the Committee expectsOSC to acquire an appropriate mix of new staff that will maximize its ability toreduce this backlog" instead of hiring just attorneys. No later than March 31, 2005,OSC must report to the Committees on Appropriations on "the status of its staffingefforts, particularly describing those new positions hired and how the reduction ofOSC's case backlog has benefitted as a result of the new personnel." (121)

Postal Service. The U.S. Postal Service (USPS) is self-supporting; it generates nearly all of its funding -- about $69billion annually -- by charging users of the mail for the costs of the services itprovides. It does receive a regular appropriation from Congress, however, tocompensate for revenue it forgoes in providing, at congressional direction, freemailing privileges for the blind and visually impaired and for overseas voting. Theappropriation is termed for "revenue forgone," because it is intended to reimburseUSPS for the revenue it would have collected from the blind and state voting officesif Congress had not chosen to subsidize these services through appropriations. Theterrorist attacks in the fall of 2001, however, including use of the mail for deliveryof anthrax spores to congressional and media offices, generated new funding needsfor bio-terrorism detection that USPS contends should be met through appropriations.

Under the Revenue Forgone Reform Act of 1993, Congress is authorized to reimburse USPS $29 million each year until 2035, for services provided below costto non-profit organizations at congressional direction in the 1990s, but not paid forat the time. For the past 11 years, the Postal Service appropriation has consisted ofthat amount, plus an estimate of the amount needed to pay for mail for the blind andoverseas voters for the current year. There is also a reconciliation adjustmentreflected in the current year budget to bring actual payments into line with pastestimates. (For more information, see CRS Report RS21025 , The Postal RevenueForgone Appropriation: Overview and Current Issues , by [author name scrubbed].)

In FY2004, USPS received a revenue forgone appropriation of $65.5 million, including $36.5 million for revenue forgone in FY2004 but not payable until October1, 2004, and the $29 million due annually under the Revenue Forgone Reform Actof 1993. The actual estimate for revenue forgone in FY2004 was $55.7 million, butit was reduced by $19.2 million as a reconciliation adjustment to reflect actual versusestimated free mail volume in 2001.

In its FY2005 Budget, the Administration proposed an appropriation of $61.7 million, including $55.6 million for revenue forgone in FY2005. The Postal Serviceestimated that the FY2005 amount would be $69.8 million, or $14.2 million morethan OMB requested, and asked Congress to appropriate that amount. Either amountwould be supplemented by a $6.1 million reconciliation adjustment reflecting thatactual use of the subsidy in FY2002 was underestimated by that amount. TheAdministration's budget proposed that the $61.7 million would not be available forobligation until October 1, 2005, which is in FY2006. However, USPS will haveavailable for obligation during FY2005 the $36.5 million provided for revenueforgone in fiscal 2004. In its FY2002 Budget, the Bush Administration had proposedto "reverse the misleading budget practice of using advance appropriations simplyto avoid [annual] spending limitations." The Administration has not renewed theproposal in its three subsequent budgets.

The Postmaster General, in testimony before the House Appropriations Subcommittee on Transportation, Treasury, and Independent Agencies on February26, 2004, complained about the $14.2 million cut proposed by OMB in FY2005revenue forgone. He said that it would "only compound the financial burden caused"by the recent practice of delaying the revenue forgone payment until the year afterthat in which the services are rendered.

Of greater consequence was the fact that the Administration's FY2005 budget did not include the usual $29 million annual payment for revenue forgone in pastyears that is set forth in the Revenue Forgone Reform Act. As explained above, theact authorized annual payments to USPS of $29 million through the year 2035. For11 years the payment was provided as a matter of course. In its FY2005 budget,however, the Bush Administration proposed to provide no funds for the payment, andincluded it in the list of 65 "terminations to discretionary programs" in the budget.In response to questions on the matter, OMB pointed out that the Revenue ForgoneReform Act of 1993 only authorized the appropriations, and many programs acrossgovernment are not funded at the levels contemplated in authorization acts.

OMB also mentioned that Congress and the Administration had relieved USPS of the obligation (in P.L. 108-18 , the Postal Civil Service Retirement SystemFunding Reform Act of 2003) to pay $3 billion per year for pension costs and that,as a result, USPS had $3.8 billion in net income in 2003. (For more on relievingUSPS of this obligation, which would have over-funded postal pensions by $78billion, see CRS Report RL31684, Funding Postal Service Obligations to the CivilService Retirement System, by [author name scrubbed] and [author name scrubbed], and CRS Report RL32346, Pension Issues Cloud Postal Reform, by [author name scrubbed].) USPS, on theother hand, argues that cancelling the payment could result in the whole 30-yearobligation, totaling $899 million, being written off as a bad debt and charged tocurrent postal ratepayers. (This issue is discussed further in CRS Report RS21025 , The Postal Revenue Forgone Appropriation: Overview and Current Issues , by NyeStevens.)

In its detailed justification of its FY2005 budget request, USPS asked Congress for an additional $779 million in emergency response funds to protect the safety ofemployees and customers from threats such as the 2001 anthrax attack. The fundswould be used to continue acquisition and deployment of ventilation and filtrationequipment that was begun with $762 million provided in FY2002 specifically foremergency response. The Administration's FY2005 Budget does not include anyadditional funds for emergency preparedness for the Postal Service.

The House Committee on Appropriations recommended, and the House passed, the amounts requested in the President's budget, including $61.7 million as anadvance appropriation not available until FY2006, and elimination of theappropriation for revenue forgone in past years. In its report, the House Committeeon Appropriations expressed concern that OMB had not given sufficient attention tothe safety and security of the nation's mail system in its FY2005 budget request, anddirected OMB to report within 90 days of the bill's passage on the amount of federal(i.e. budgetary) funding necessary to complete work on securing the mail system. Postal issues were not brought to the House floor preceding the passage of the HouseTransportation, Treasury and General Government appropriations bill( H.R. 5025 ) on September 22.

The Senate Committee on Appropriations, in its report on S. 2806 , was more generous toward the Postal Service than either the Administration or theHouse in its bill. In addition to the amounts requested by the Administration andreflected in the House bill, the Senate Committee recommended that the $29 millionpayment for past revenue forgone be continued in FY2005. It also recommended theappropriation of $507 million to an Emergency Preparedness Account for USPS toreimburse it for past and future expenditures on a biohazard detection program,ventilation and filtration equipment, and the construction of a mail irradiation facilityin Washington, DC, for the local irradiation of government mail that is now shippedto a contractor facility in Bridgeport, NJ, and back.

Conferees provided $598 million for the Postal Service for FY2005, an increase of $502 million over FY2004. This appropriation includes $507 million forbiohazard protection.

Title V: General Provisions

This section of the report discusses, briefly, general provisions such asgovernment-wide guidance on basic infrastructure and overhead policies that arecustomarily included in the Transportation, Treasury, and Independent Agenciesappropriation legislation. Examples are provisions related to the Buy America Act,drug-free federal workplaces, and authorizing agencies to pay GSA bills for spacerenovation and other services. In the past provisions have been included which relateto specific agencies or programs. For both Transportation- and Treasury-relatedgeneral provisions and government-wide general provisions, with noted exceptions,the sections discussed here will be those which are new in the FY2005 budget orwhich contain modified policies. There are also general provisions at the end of eachindividual title within the bill which relate only to agencies and accounts within thattitle.

The Administration's proposed language for government-wide general provisions can be found in the FY2005 Budget Appendix . (122) Most of the generalprovisions continued language which has appeared under that title for several years. For an array of reasons, Congress has determined that reiterating the language ispreferable to placing the provisions in permanent law.

The Administration recommended dropping several such provisions. The provisions are shown in Table 10 .

Table 10. Summary of Proposed Changes to Government-wide General Provisions

1 Unless otherwise indicated, all references to sections in the "2004 Act" in this table refer to the General Provisions in Division F, Title VI of the FY2004 ConsolidatedAppropriations Act ( P.L. 108-199 ).

Federal Personnel Issues

General Schedule Pay. Under the Federal Employees Pay Comparability Act of 1990 (FEPCA), federal white-collaremployees, paid under the General Schedule (GS) and related salary systems, are toreceive pay adjustments each year based on two separate mechanisms. The first isan adjustment to base pay which is based on changes in private sector wages andsalaries as reflected in the Employment Cost Index (ECI). The annual payadjustment is set at the percentage rate of change in the ECI, minus 0.5, which forJanuary 2005 would be 2.5%. The second adjustment is a locality-basedcomparability payment, the size of which is determined by the President, and is basedon a comparison of non-federal and GS salaries in 29 pay areas nationwide. By law,the disparity between non-federal and federal salaries is to be reduced to 5% inJanuary 2005. If the ECI and locality-based comparability payments were grantedas required by FEPCA in 2005, the nationwide average net pay increase would be13.06% and the net pay increase for the Washington, DC, pay area would be15.94%. (123)

The Administration's FY2005 budget proposed a 1.5% federal civilian pay adjustment, but did not state how the increase would be allocated between the annualand locality adjustments.

Concurrent resolutions introduced in the House of Representatives by Representative Steny Hoyer ( H.Con.Res. 356 ) and in the Senate bySenator Paul Sarbanes ( S.Con.Res. 88 ) expressed the sense of theCongress that there should continue to be parity between the pay adjustments for theuniformed military and federal civilian employees. The resolutions noted thelongstanding policy of parity between both the military and civilian pay increases.

The Concurrent Resolution on the Budget for FY2005 ( S.Con.Res. 95 ) as agreed to by the Senate, at Section 505, includes a Sense of the Senateprovision regarding pay parity that states that "the rate of increase in thecompensation of civilian employees should be equal to that proposed for the militaryin the President's Fiscal Year 2005 Budget." S.Con.Res. 95 , as agreedto by the House of Representatives, does not include the provision, and theconference report to accompany the concurrent resolution ( H.Rept. 108-498 ) alsodoes not include it. The House version of the Concurrent Resolution on the Budget( H.Con.Res. 393 ), as agreed to by the House of Representatives, doesnot include a Sense of the House provision on pay parity. An amendment to providesuch, offered by Representative James Moran during House Budget Committeemarkup of the concurrent resolution, was not agreed to by a 21 to 15 vote. Oneargument against supporting the pay parity amendment was that the job of a memberof the uniformed military is more demanding than that of a civilian employee and thepay adjustment should reflect this difference.

During discussions surrounding the vote on H.Con.Res. 393 , the Speaker of the House, Representative Dennis Hastert, agreed to allow a separate votein the House of Representatives on a pay parity resolution ( H.Res. 581 )offered by Representative Tom Davis and 22 cosponsors. As agreed to by the Houseby a 299 to 126 vote, the resolution states the Sense of the House that "in FY2005,compensation for civilian employees ... should be adjusted at the same time, and inthe same proportion, as are rates of compensation for members of the uniformedservices." Section 640 of Title VI of Division H of the Consolidated AppropriationsAct for FY2005 provides a 3.5% pay adjustment for civilian employees, includingthose employed by the Departments of Defense and Homeland Security. Section 636of the House bill would have prohibited funds in the bill from being "used toimplement or enforce regulations for locality pay inconsistent with recommendationsof the Federal Salary Council," (124) but thisprovision is not included in theConsolidated Appropriations Act.

Federal Wage System. The Federal Wage System (FWS) is designed to compensate the federal blue-collar, orskilled labor, force at rates prevailing in local wage areas for like occupations. If thestatutory system were allowed to be administered as enacted, the wage rates and therates of adjustment in the over 130 wage areas would vary according to labor costsand compensation in the private sector. Since 1979, Congress has limited the ratesof pay adjustment for blue-collar workers to the average percentage pay adjustmentreceived by federal white-collar employees (for FY2004, the limitation is at Section613 of P.L. 108-199 and for FY2005, the limitation is at Section 613 of Title VI ofDivision H of the Consolidated Appropriations Act for FY2005). Part of therationale for the limitation is that, in certain high cost areas, some FWS wages wouldexceed the salaries paid to General Schedule supervisors. Wages in the lower costareas will be allowed to increase according to the findings of the wage surveys butthose in the high cost areas will be capped. Notwithstanding the cap, under Section640(b) of P.L. 108-199 , for 2004 the blue-collar pay adjustment in a particularlocation will be no less than the increase received by GS employees in that location. Blue-collar workers in Alaska, Hawaii, and other non-foreign areas will receive a payadjustment that is no less than the increase received by GS employees in the "rest ofthe United States" locality pay area. Language to continue this provision for 2005is included in Section 640(b) of Title VI of Division H of the ConsolidatedAppropriations Act for FY2005.

P.L. 107-117 extended the application of out-of-area wage survey data (known as the Monroney Amendment) to Department of Defense personnel.

Senior Executive Service Salaries. Changes to the SES pay system -- eliminating the six-tier system, changing thesalary setting authority from the President to the Office of Personnel Management,removing members of the SES from the locality pay system, and capping pay ratesat Level II of the Executive Schedule -- were enacted under the National DefenseAuthorization Act for FY2004. (125) OPMpublished regulations to implement the lawon January 13, 2004. For January 2005, the minimum SES salary is $104,927 andthe maximum salary for most members of the SES is $145,600. Those employeesin agencies with performance appraisal systems certified by OPM, will be able toreceive a maximum SES salary of $158,100, an amount equal to that of Members ofCongress and U.S. District Court judges. (126) Proposed regulations to establish a newperformance-based pay system for the SES and a higher aggregate limitation on payfor SES members were published by OPM on July 29, 2004. (127) The final regulationswere published by OPM on December 6, 2004. (128)

Human Capital Performance Fund. The Administration's FY2005 pay proposal would combine a 1.5% across-the boardincrease with a performance component. A $300 million fund would be set asidegovernment-wide to allow managers to reward top-performing individuals withadditional pay over and above any annual across-the-board pay raise. (129) See thesection on the Office of Personnel Management above for a discussion. P.L. 108-199 provided an FY2004 appropriation of $1 million for the fund. The ConsolidatedAppropriations Act for FY2005 does not provide an appropriation for the fund.

Members of Congress, Judges, and Other Officials. If Congress is silent on this issue in legislation, the annualadjustment for Members of Congress and other officials becomes effectiveautomatically. For judges, the annual pay increase must be specifically authorized. ( P.L. 108-167 provided the January 2004 judicial pay adjustment and Section 306 ofTitle III of Division B of the Consolidated Appropriations Act for FY2005 providesthe January 2005 pay adjustment.) Since the authorization has been required, judgeshave not received lower pay adjustments than the other officials. (130) Under the EthicsReform Act of 1989, as amended, pay adjustments for federal officials, includingMembers of Congress and judges, also are based on ECI calculations, but for adifferent 12-month period. The ECI calculations require a pay adjustment of 2.5%in January 2005. The law limits the size of the adjustment, however, to the rate ofadjustment for General Schedule base pay.

President. Pursuant to the Treasury and General Government Appropriations Act, 2000 ( P.L. 106-58 ), thePresident's salary was increased to $400,000 per annum effective January 20, 2001.Since 1969, Presidents had been paid a salary of $200,000. Former Presidentsreceive a pension equal to the rate of pay for Cabinet Secretaries (currently $175,700)and the pension is adjusted automatically as those pay rates are changed. (131)

Cuba Sanctions (132)

Since 2000, either one or both houses have approved provisions in the annual Treasury appropriations bill that would ease U.S. economic sanctions on Cuba. Thisyear, the House-passed version of the FY2005 Transportation/Treasuryappropriations bill, H.R. 5025 , and the Senate AppropriationsCommittee-reported version of the bill, S. 2806 , had provisions thatwould have eased Cuba sanctions in various ways. In its statement of policy on H.R.5025, the Administration indicated that the President would veto themeasure if it contained provisions weakening Cuba sanctions. (133) Ultimately, theCuba provisions were not included in the FY2005 omnibus appropriations measurethat included the Treasury/Transportation appropriations measure (Division H of H.R. 4818 , H.Rept. 108-792 ).

Since the early 1960s, U.S. policy toward Communist Cuba under Fidel Castro has consisted largely of efforts to isolate the island nation through comprehensiveeconomic sanctions, including a near total trade embargo and prohibitions on U.S.financial transactions with Cuba. Under U.S. sanctions, commercial medical and foodexports to Cuba are allowed, but with numerous restrictions and licensingrequirements. Exporters are denied access to U.S. private commercial financing orcredit, and all transactions must be conducted in cash in advance or with financingfrom third countries. Restrictions on travel have been a key and often contentiouscomponent in U.S. efforts to isolate the Cuban government. The embargoregulations, known as the Cuban Assets Control Regulations (CACR), are issued bythe Treasury Department's Office of Foreign Assets Control (OFAC). Theregulations have not banned travel itself, but have placed restrictions on any financialtransactions related to travel to Cuba. Cash remittances to Cuba -- estimated to be$400-$800 million annually -- are also regulated by the CACR.

The Bush Administration has tightened travel restrictions on travel and remittances significantly. In March 2003, the Administration eliminated the categoryof people-to-people educational exchanges unrelated to academic coursework. InJune 2004, through new OFAC regulations amending the CACR, the Administrationeliminated the category of fully-hosted travel, restricted family visits to once everythree years under a specific license to visit only immediate family members, andfurther restricted travel for educational activities, including the elimination of travelfor secondary schools. The authorized per diem allowed for a family visit wasreduced from the State Department per diem rate, previously $167 per day, to $50 perday. At the same time, cash remittances to Cuba were restricted to members of theremitter's immediate family. The amount allowed is still $300 per quarter, althoughauthorized travelers are limited to carrying $300 in remittances as opposed to $3,000previously allowed.

There have been mixed reactions to the Bush Administration's tightening of Cuba travel and remittance restrictions. Supporters maintain that the increasedrestrictions will deny the Cuban government dollars that help maintain its repressivecontrol. Opponents argue that the tightened sanctions are anti-family and will onlyresult in more suffering for the Cuban people.

The House-passed version of H.R. 5025 had three provisions that would have eased Cuba sanctions. During floor consideration on September 21,2004, the House approved a Davis (of Florida) amendment ( H.Amdt. 769 ) by a vote of 225-174, which provided that no funds could be used to administer,implement, or enforce the Bush Administration's June 2004 tightening of restrictionson visiting relatives in Cuba -- this became Section 647 of the bill. On September22, 2004, the House approved two additional Cuba amendments by voice vote: a Leeamendment ( H.Amdt. 771 ) that prohibited funds from being used toimplement, administer, or enforce the Bush Administration's June 2004 tighteningof restrictions on travel for educational activities -- this became Section 648; and a Waters amendment ( H.Amdt. 770 ) that prohibited funds from beingused to implement any sanction imposed on private commercial sales of agriculturalcommodities or medicine or medical supplies to Cuba -- this became Section 649. The House also rejected a Rangel amendment ( H.Amdt. 772 ) onSeptember 22, 2004, by a vote of 225-188 that would have more broadly prohibitedfunds from being used to implement, administer, or enforce the economic embargoof Cuba. During September 15, 2004 House floor consideration of H.R.5025, Representative Jeff Flake announced his intention not to offer anamendment, as he had for the past three years, that would have prohibited funds frombeing used to administer or enforce restrictions on travel or travel-relatedtransactions.

The Senate version of the FY2005 Transportation/Treasury appropriations bill, S. 2806 , as reported out of the Senate Appropriations Committee( S.Rept. 108-342 ) on September 15, 2004, had a provision (Section 222) that wouldhave prohibited funds from administering or enforcing restrictions on Cuba travel ortravel-related transactions. That provision, which was proposed by Senator ByronDorgan, was unanimously approved by the Subcommittee on Transportation,Treasury and General Government on September 9, 2004.

For additional information, see CRS Report RL31139 , Cuba: U.S. Restrictions on Travel and Remittances and CRS Report RL31740 , Cuba: Issues for the 108thCongress .

Appendix 1: List of Transportation Acronyms

ARC: Amtrak Reform Council

AIP: Airport Improvement Program (FAA)

AIR21: the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century ( P.L. 106-181 ), the current aviation authorizing legislation

ARAA: the Amtrak Reform and Accountability Act of 1997 ( P.L. 105-134 ), the current Amtrak authorizing legislation

ATSA: the Aviation and Transportation Security Act ( P.L. 107-71 ), legislation which created the Transportation Security Administration within the DOT

BRR: Bridge Replacement and Rehabilitation program (FHWA)

BTS: Bureau of Transportation Statistics

CG: Coast Guard

CMAQ: Congestion Mitigation and Air Quality program (FHWA)

DOT: Department of Transportation

EAS: Essential Air Service (FAA)

F&E: Facilities and Equipment program (FAA)

FAA: Federal Aviation Administration

FAHP: Federal-Aid Highway Program (FHWA)

FAIR21: the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century ( P.L. 106-181 ), the current aviation authorizing legislation

FHWA: Federal Highway Administration

FRA: Federal Railroad Administration

FTA: Federal Transit Administration

Hazmat: Hazardous materials (safety program in RSPA)

HPP: High Priority Projects (FHWA)

HTF: Highway Trust Fund

IM: Interstate Maintenance program (FHWA)

ITS: Intelligent Transportation Systems (FHWA)

MCSAP: Motor Carrier Safety Assistance Program (FMCSA)

New Starts: part of the FTA's Capital Grants and Loans Program which funds new fixed-guideway systems or extensions to existing systems

NHS: National Highway System; also a program within FHWA

NHTSA: National Highway Traffic Safety Administration

NMCSA: National Motor Carrier Safety Administration

O&M: Operations and Maintenance program (FAA)

OIG: Office of the Inspector General of the DOT

OST: Office of the Secretary of Transportation

RABA: Revenue-Aligned Budget Authority

RD&T: Research, Development and Technology program (FHWA)

RE&D: Research, Engineering and Development program (FAA)

RSPA: Research and Special Projects Administration

SCASD: Small Community Air Service Development program (FAA)

STB: Surface Transportation Board

STP: Surface Transportation Program (FHWA)

TCSP: Transportation and Community and System Preservation Program (FHWA)

TEA-21: Transportation Equity Act for the 21st Century ( P.L. 105-178 ), the current highway and transit authorizing legislation

TIFIA: Transportation Infrastructure Finance and Innovation Act program (FHWA)

TSA: Transportation Security Administration

Appendix 2: The Transportation Appropriations Framework

Transportation is function 400 in the annual unified congressional budget. It isalso considered part of the discretionary budget. Funding for the DOT budget isderived from a number of sources. The majority of funding comes from dedicatedtransportation trust funds. The remainder of DOT funding is from federal Treasurygeneral funds. The transportation trust funds include the highway trust fund, whichcontains two accounts, the highway trust account and the transit account; the airportand airway trust fund; and the inland waterways trust fund. All of these accountsderive their respective funding from specific excise and other taxes.

In FY2002 trust funds accounted for well over two-thirds of total federal transportation spending. Together, highway and transit funding constitute the largestcomponent of DOT appropriations. Most highway and transit programs are fundedwith contract authority derived by the link to the highway trust fund. This is verysignificant from a budgeting standpoint. Contract authority is tantamount to, butdoes not actually involve, entering into a contract to pay for a project at some futuredate. Under this arrangement, specified in Title 23 U.S.C., authorized funds areautomatically made available at the beginning of each fiscal year and may beobligated without appropriations legislation; although appropriations are required tomake outlays at some future date to cover these obligations.

Where most federal programs require new budget authority as part of the annual appropriations process, transportation appropriators are faced with the oppositesituation. That is, the authority to spend for the largest programs under their controlalready exists, and the mechanism to obligate funds for these programs also is inplace.

Transportation Equity Act for the 21st Century (TEA-21)

During the 105th and 106th Congresses, major legislation changed the relationships between the largest transportation trust funds and the federal budget.The Transportation Equity Act for the 21st Century (TEA-21) ( P.L. 105-178 ) linkedannual spending for highway programs directly to revenue collections for thehighway trust fund. In addition, core highway and mass transit program funding wasgiven special status in the discretionary portion of the federal budget by virtue of thecreation of two new budget categories. The act thereby created a virtual "firewall"around highway and transit spending programs. The funding guarantees were set upin a way that makes it difficult for funding levels to be altered as part of the annualbudget/appropriations process. Additional highway funds can be provided annuallyby a mechanism called "Revenue Aligned Budget Authority" (RABA); RABA fundsaccrue to the trust fund as a result of increased trust fund revenues. For FY2003,however, the RABA adjustment, if it had been applied during the appropriationsprocess, would have led to a significant and unexpected drop in the availability ofhighway obligational funding. Congress set the RABA adjustment for FY2003 to $0(in a provision in P.L. 107-206 ) and appropriators ultimately provided FY2003highway funding at the same level as provided for FY2002 (which was $4 billionhigher than the FY2003 authorized level). RABA was not included in the FY2004appropriations calculations.

TEA-21 changed the role of the House and Senate appropriations and budget committees in determining annual spending levels for highway and transit programs.The appropriations committees are precluded from their former role of setting anannual level of obligations. These were established by TEA-21 and are adjusted byan annual RABA computation. In addition, it appears that TEA-21 precludes, at leastin part, the House and Senate appropriations committees from exercising what someMembers view as their once traditional option of changing spending levels forspecific core programs or projects. In the FY2000 appropriations act, theappropriators took some tentative steps to regain some of their discretion overhighway spending. The FY2000 Act called for the redistribution of some fundsamong programs and added two significant spending projects. In the FY2001appropriations act, the appropriators continued in this vein by adding funds for largenumbers of earmarked projects. Further, the FY2001 Act called for redirection of alimited amount of funding between programs and includes significant additionalfunding for some TEA-21 programs. This trend continued, and even accelerated, inthe FY2002 Act as appropriators made major redistributions of RABA funds and, insome instances, transferred RABA funds to agencies that are not eligible for RABAfunding under TEA-21.

Appendix 3: Transportation Budget Terminology

Transportation budgeting uses a confusing lexicon (for those unfamiliar with theprocess) of budget authority and contract authority -- the latter, a form ofbudgetauthority. Contract authority provides obligational authority for the funding of trustfund-financed programs, such as the federal-aid highway program. Prior to TEA-21,changes in spending in the annual transportation budget component had beenachieved in the appropriations process by combining changes in budget/contractauthority and placing limitations on obligations . The principal function of thelimitation on obligations is to control outlays in a manner that corresponds tocongressional budget agreements.

Contract authority is tantamount to, but does not actually involve, entering into a contract to pay for a project at some future date. Under this arrangement, specifiedin Title 23 U.S.C., which TEA-21 amended, authorized funds are automatically madeavailable to the states at the beginning of each fiscal year and may be obligatedwithout appropriations legislation. Appropriations are required to make outlays atsome future date to cover these obligations. TEA-21 greatly limited the role of theappropriations process in core highway and transit programs because the actenumerated the limitation on obligations level for the period FY1999 throughFY2003 in the Statute.

Highway and transit grant programs work on a reimbursable basis : states pay for projects up front and federal payments are made to them only when work iscompleted and vouchers are presented, months or even years after the project hasbegun. Work in progress is represented in the trust fund as obligated funds andalthough they are considered "used" and remain as commitments against the trustfund balances , they are not subtracted from balances. Trust fund balances,therefore, appear high in part because funds sufficient to cover actual and expectedfuture commitments must remain available.

Both the highway and transit accounts have substantial short- and long-term commitments. These include payments that will be made in the current fiscal yearas projects are completed and, to a much greater extent, outstanding obligations tobe made at some unspecified future date. Additionally, there are unobligatedamounts that are still dedicated to highway and transit projects, but have not beencommitted to specific projects.

Two terms are associated with the distribution of contract authority funds to the states and to particular programs. The first of these, apportionments, refers to fundsdistributed to the states for formula driven programs. For example, all nationalhighway system (NHS) funds are apportioned to the states. Allocated funds, arefunds distributed on an administrative basis, typically to programs under directfederal control. For example, federal lands highway program monies are allocated;the allocation can be to another federal agency, to a state, to an Indian tribe, or tosome other governmental entity. These terms do not refer to the federal budgetprocess, but often provide a frame of reference for highway program recipients, whomay assume, albeit incorrectly, that a state apportionment is part of the federal budgetper se.