Appropriations for FY2003: Treasury, Postal Service, Executive Office of the President, and General Government
Released: 2003-03-26T00:00:00

Most Recent Events

On March 25, 2003, the President sent a FY2003 supplemental request to Congress, withrequests for additional funding in support of actions in the Middle East. Accounts within theExecutive Office of the President, as well as the Department of Homeland Security would beaffected.

With the enactment of the Consolidated Appropriations Resolution, 2003 ( P.L. 108-7 , Division J), the accounts covered by the Treasury and General Government appropriations legislation arefunded through the end of FY2003. P.L. 108-7 requires an across-the-board rescission at a rate of0.65%. During the interim period between the close of FY2002 and February 20, 2003 the accountswere funded at FY2002 enacted levels under a series of continuing resolutions.

H.R. 5120 and S. 2740 were the legislative vehicles under which the regular appropriations were being considered for the affected accounts in the 107th Congress. TheHouse passed H.R. 5120 ( H.Rept. 107-575 ) on July 24, 2002 and the Senate Committeeon Appropriations reported S. 2740 ( S.Rept. 107-212 ) on July 17, 2002. No furtheraction was taken on either measure prior to 107th Congress adjournment in November.

Introduction

The President, through the Office of Management and Budget (OMB), is required to submit toCongress annually the Budget of the United States Government. The FY2003 budget was submittedto Congress on February 4, 2002. (1) In late February2001, the President and the Office ofManagement Budget had released A Blueprint for New Beginnings, A Responsible Budget forAmerica's Priorities . (2) It is intended to presenta 10-year budget plan and provides more of anoverview than details on specific accounts. (3) Insummary, the FY2003 proposed budget would fundthe accounts in the Treasury and General Government appropriations legislation at $18.7 billion(discretionary). (4) This is just under $1 billion overthe estimated FY2002 funding levels, not takinginto consideration the supplemental funding subsequently enacted. Additionally, it must be kept inmind that terrorist and security events since early September 2001 have had enormous impact onplanning, spending, and funding for the federal government. All comparison of figures between thefiscal years should take these circumstances into account.

The House passed H.R. 5120 on July 24, 2002, on a vote of 308-121. The bill, as passed, would fund the discretionary accounts at $18.5 billion, for a total of $35.1 billion. TheHouse Committee on Appropriations had presented its recommendations in H.Rept. 107-575 . (5) TheSenate Committee on Appropriations issued a report to accompany S. 2740 . S.Rept.107-212 shows that the bill, as reported, would fund the discretionary accounts at $18.5 billion, fora total of $34.8 billion. (6) No further action was takenon either measure prior to adjournment of the107th Congress on November 22, 2002. The accounts were funded through a series of continuingresolutions which funded them at FY2002 levels. With enactment of P.L. 108-7 , (7) the accounts arefunded through the close of the fiscal year.

On March 25, 2003, the President sent a FY2003 supplemental request to Congress, with requests for additional funding in support of actions in the Middle East. Accounts within theExecutive Office of the President, as well as the Department of Homeland Security would beaffected.

Usually under the budget procedures, Congress adopts a concurrent resolution establishing the congressional budget for the government and setting forth budgetary levels for several years in thefuture. The House and Senate Appropriations Committees then allocate the discretionary fundinglevels (302(b)) allocations to each of the subcommittees. Those allocations are subject to change. The House and Senate have yet to reach agreement on such a congressional budget resolution forFY2003.

Appropriations for the Department of the Treasury, in addition to funding the operations of the department, fund the work of a group of law enforcement organizations, which include the Bureauof Alcohol, Tobacco, and Firearms; the Customs Service; the Secret Service; the Financial CrimesEnforcement Network; and the Federal Law Enforcement Training Center. Treasury appropriationsalso cover the Internal Revenue Service, the Financial Management Service, and the Bureau of the Public Debt. Several of those entities have transferred to the Department of Homeland Security andthe Department of Justice.

For the most part, the U.S. Postal Service operates outside federal funding support. Federal contributions are normally limited to payments to the Postal Service Fund to compensate forrevenues forgone ( e.g ., free postal service for the blind.) However, the Postal Service is receivingsignificant funding during the FY2002 period to support recovery costs subsequent to the terroristattacks, including the anthrax attacks.

Appropriations for the Executive Office of the President provide salaries and expenses for the White House Office, operations of the residences of the President and Vice President, and most otheragencies within the Executive Office of the President (EOP). Organizations such as the Council ofEconomic Advisers, the National Security Council, the Office of Management and Budget, and theOffice of National Drug Control Policy (ONDCP) are funded through these provisions. Specificfunding for drug control initiatives is appropriated for distribution to other entities by the ONDCP. In FY2003, the Office of Homeland Security is a new entity in this category.

Among the independent agencies financed through this appropriation are the Federal Election Commission, the General Services Administration, the National Archives and RecordsAdministration, the Office of Personnel Management, the Office of Special Counsel, and the UnitedStates Tax Court.

The Treasury and General Government appropriation always has at least two titles in addition to the four covering the funding for specific agencies. These general titles apply restrictions or "rulesof the road" governmentwide and, quite often, contain authority for defined actions. For example,each year, there is standard language which prohibits the use of any appropriated funds for thepurpose of employing individuals who are not U.S. citizens or citizens of nations either specified inthat section of the act or on the State Department list of nations covered by treaties; which requiresthat all agencies maintain drug-free workplaces; and which authorizes the expenditure of fundsappropriated under any act to be used to pay the travel expenses of immediate family members if afederal employee serving overseas has died or has a life-threatening illness. (8)

The Committee on Appropriations in both the House and Senate have reorganized to reflect the funding needs for the Department of Homeland Security. There will be 13 appropriations bills. However, the funding for the Treasury, Postal Service, Executive Office of the President, and theindependent agencies will be consolidated into a subcommittee with the Department ofTransportation. That subcommittee carry the name Transportation, Treasury and IndependentAgencies.

P.L. 108-7 Rescission

As passed by the Senate and coming out of conference, the omnibus funding bill for FY2003 requires the application of a rescission to accounts within the bill. (9) Although there were a fewprograms specifically exempted from the rescission, none of the accounts in the Treasury andGeneral Government division were so affected. On February 21, 2003, the Office of Managementand Budget released a bulleting for the purpose of providing instructions and guidelines to the headsof departments and agencies in the application of the rescission. The agencies were given one weekto submit their proposed rescissions and then required that the approved rescissions be reflected intheir FY2003 funding reapportionments by March 7. The guidance reflects the statutoryrequirements that the rescission be applied, proportionally, to all

budget authority provided (or obligation limitation imposed) forFY2003 forany discretionary account in divisions A through K of P.L. 108-7 ;

budget authority provided in any advance appropriation for FY2003 for anydiscretionary account in any prior fiscal year appropriations act; and

contract authority provided in FY2003 for any program subject to limitationcontained in P.L. 108-7 . (10)

Effects of Funding under Continuing Resolutions

From October 1, 2002, the beginning of the fiscal year, until enactment of P.L. 108-7 the accounts covered by the Treasury and General Government appropriations were funded at FY2002levels under a series of continuing funding resolutions (CR). As far as can be determined, noprograms have been cancelled due to the lack of regular appropriations of the Treasury and GeneralGovernment accounts. Agencies were forced to restrain spending on activities such as training,travel, supplies, and new hiring. These restraints, in turn, hampered efforts by the agencies toenhance activities already in place. For example, the Internal Revenue Service could not bolster itscapability to crack down on tax fraud, combat corporate tax shelters, and assist low-incometaxpayers, in particular.

Accounts Affected by Homeland Security Act of 2002

The Homeland Security Act of 2002 ( P.L. 107-296 , November 25, 2002) requires the transfer of major components from the Department of the Treasury and the General Services Administrationto other federal organizations. For example, the U.S. Secret Service and the U.S. Customs Servicewill transfer from the Department of the Treasury to the Department of Homeland Security. TheBureau of Alcohol, Tobacco, and Firearms will be renamed the Bureau of Alcohol, Tobacco,Firearms, and Explosives and will be transferred to the Department of Justice. The FederalProtective Service will move from the Public Buildings Service in the General ServicesAdministration to the Department of Homeland Security. Other functional responsibilities or partsof activities will also move to the Department of Homeland Security.

P.L. 107-296 , the Homeland Security Act of 2002, provides that the funds appropriated for entities moving to the Department of Homeland Security will be transferred to the new departmentbut under the proviso that they be used for the purposes for which they were appropriated. P.L.107-294 , a continuing resolution, provides the Secretary of Homeland and the Office of Managementand Budget with the authority to transfer unobligated funds from those accounts, up to $140 million,for the purpose of establishing the department. On December 20, 2002, the Director of the Officeof Management and Budget, Mitchell E. Daniels, Jr., sent a letter to the chairs and ranking membersof the House and Senate Committees on Appropriations. The communication proposed the transferof $125 million in unobligated funds from eight accounts, including $30 million from the U.S.Customs Service Operation, Maintenance and Procurement/Air and Marine account and $4.5 millionfrom the salaries and expenses account of the U.S. Secret Service. Further discussion of homelandsecurity issues is found later in this report.

Performance Plans

The funding decisions for agencies are increasingly referencing the performance plans, goals, and measures set by the agencies. Specific goals and measures can be found in the Budget Appendix for some of the agency accounts. For example, the Internal Revenue Service sets out a substantialseries of "Key Operational Measures and Performance Indicators" and the Bureau of Alcohol,Tobacco and Firearms provides the information under "Performance and Workload Measures."These are organized by FY2001 actual, the FY2002 Performance Plan, and the FY2003 President'sBudget. (11)

Status and Legislative History

Bills are introduced in the House and Senate when the Committees on Appropriations havecompleted markup on the provisions. Usually the subcommittees draft legislation and theaccompanying reports. The full committees use these documents as a basis for discussion and markup. From the time legislation is introduced, and through enactment, the status will be noted in Table1 .

107th Congress

Hearings. Hearings in the House subcommittee began February 27, 2002, with nine scheduled between then and April 23. (12) The Senate hearingschedule was unavailable as of this writing.

House Committee Action. On June 26, 2002, theSubcommittee on Treasury, Postal Service, and General Government, by voice vote, approved aspending measure. The full House Committee on Appropriations, also by voice vote, approved themeasure on July 9, 2002. H.Rept. 107-575 was filed July 15, 2002 to accompany H.R. 5120 .

Committee Amendments. There were four major amendments, as noted in the Committee's press release: (13)

Chairman Young: Requires OMB to submit a letter to the Committee taking responsibility for their recent violation of the Anti-Deficiency Act.

Rep. Northup: Prohibits funds in the bill to be used to issue regulations relating to the determination that real estate brokerage is an activity that is financial in nature orincidental to a financial activity. (14)

Rep. DeLauro: Prohibits funds in the bill for payment on any new federal contract to a subsidiary of a publicly traded corporation if the corporation is incorporated in a tax havencountry but the United States is the principal market for the public trading of thecorporation's stock.

Rep. Pastor: Provides $2 million for the Morris K. Udall Scholarship and Excellence in National Environmental Policy Foundation.

House Rules Committee and Floor Action on Rule. On July 17, 2002, the House Committee on Rules issued a special rule forthe consideration of H.R. 5120 . H.Rept. 107-585 (15) is a report to accompany H.Res. 488 . The rule waives all points of order against bill provisions, with threeexceptions noted. The rule also included an amendment, related to travel to Cuba, as being part ofthe bill and waives points of order against that amendment. (See discussion of Cuban travel below.)

Points of order can be brought against the provision withholding funds for any transfer of the Bureau of Alcohol, Tobacco, and Firearms during FY2003, some language in Sec. 605 related tofederal employment of foreign nationals, Sec. 615 relating to construction of law enforcementtraining facilities, and Sec. 646 relating to corporate expatriates.

During floor consideration of the rule, the discussion centered on allowing points of order against Sec. 646. The minority position was that the provision will be defeated because it will notbe protected under the rule. (16) The rule wasadopted on a vote of 224-188. (See discussion under"Department of the Treasury," below.)

House Floor Action. The House took up H.R. 5120 and began debate and amendment on July 23, 2002. (17) Considerationcontinued on July 24 with passage on a final vote of 308-121 (Roll no. 341). (18)

There were numerous amendments offered to the legislation:

Agreed to --

Rep. Mike Rogers ( H.Amdt. 548 ) -- An amendment that prohibits the use of funds in the bill by the Customs Service to permit the importation of municipal solid wasteoriginating in Canada for deposit in Michigan.

Rep. Juanita Millender-McDonald ( H.Amdt. 549 ) -- An amendment that reserves $600,000 of the bill's $250 million appropriation for the National Archives and RecordsAdministration for the preservation of the records of the Freedmen's Bureau.

Rep. Dennis J. Kucinich ( H.Amdt. 550 ) -- An amendment to strike the section that exempts health insurance companies that have contracts with the Federal EmployeesHealth Benefits Program from complying with the cost accounting standards that applyto other federal contracts.

Rep. Jeff Flake ( H.Amdt. 552 ) -- An amendment to prohibit funds in the bill from being used for administration or enforcement of part 515 of title 31, Code of FederalRegulations , with respect to any travel or travel-related transaction; and to provide that thelimitation established shall not apply to the issuance of general or specific licenses fortravel or travel-related transactions, and shall not apply to transactions in relations to anybusiness travel covered by such regulations.

Rep. Jeff Flake (H.Amdt 553) -- An amendment to prohibit funds in the bill from being used to enforce any restriction on remittances to nationals of Cuba covered by the Code ofFederal Regulations .

Rep. Jerry Moran ( H.Amdt. 554 ) -- An amendment to prohibit the use of any funding to implement sanctions imposed by the United States on private commercial salesof agricultural commodities, medicine, or medical supplies to Cuba.

Rep. James Moran ( H.Amdt. 556 ) -- An amendment to prohibit any funding to be used to establish or enforce any numerical goal or quota for subjecting the employeesof an agency to public-private competitions or converting the employees or the work theyperform to private contractor performance under OMB Circular A-76 or any otheradministrative regulation, directive, or policy (Roll No. 336: 261-166).

Rep. Bernard Sanders ( H.Amdt. 562 ) -- An amendment to prohibit any funding to be used by the Internal Revenue Service for activities that contravene current tax,Employee Retirement Income Security Act (ERISA) pension or age discrimination statutes(Roll No. 339: 308-121).

Rep. Bob Barr ( H.Amdt. 563 ) -- An amendment to prohibit the use of national anti-drug media campaign funding to pay any amounts pursuant to a specific contract witha company currently under investigation.

Rejected --

Rep. Porter Goss ( H.Amdt. 551 ) -- An amendment to require the President to certify to Congress that the government of Cuba does not possess biological weapons, isnot developing or providing terrorist states or terrorist organizations the technology todevelop biological weapons, and is not providing support or sanctuary to internationalterrorists before any limitation on funding is applied to the enforcement and administrationof travel restrictions to Cuba (Roll No. 330: 182-247).

Rep. Charles Rangel ( H.Amdt. 555 ) -- An amendment to prohibit use of any funding to implement, administer, or enforce the economic embargo of Cuba (Roll No.333: 204-226).

Rep. Joel Hefley ( H.Amdt. 559 ) -- An amendment to reduce funding for the allowance and office staff for former presidents by $339,000 (Roll No. 337: 165-265).

Rep. Joel Hefley ( H.Amdt. 559 ) -- An amendment to reduce each amount appropriated or otherwise made available by 1% (Roll No. 338: 147-282).

Other amendments, withdrawn, would have prohibited any funding to be used to enforce or implement discounts for the statistical value of a human life estimated during regulatory reviewsthrough implementation of OMB Circular A-94; prohibited any funding to be used to prevent therehabilitation of urban and rural post offices; prohibited any funding to be used by entities unlessspecifically identified by name as a recipient in the Act; established a centralized reporting systemto enable agencies to generate reports on efforts regarding both contracting out and contracting in;and prohibited any funding to be used by the Customs Service to require reports on repairs to U.S.flag vessels on the high seas.

Senate Committee Action. On July 11, 2002, theSubcommittee on Treasury and General Government, by voice vote, approved the FY2003 spendingprovisions. S. 2740 was introduced with the Committee report, S.Rept. 107-212 , filedJuly 17, 2002 (19) . The committee communicationsdid not include information on amendments to thesubcommittee's recommendations.

Continuing Resolutions. The accounts were funded after the close of FY2002 through a series of continuing funding resolutions which held thefunding for these accounts at the FY2002 enacted levels.

Adjournment. The 107th Congress adjournedNovember 22, 2002.

108th Congress

House Action on Funding Resolution. In the early days of the 108th Congress, it was necessary to enact a further continuing resolution until apermanent funding solution for FY2003 could be developed. H.J.Res. 1 was introducedand passed for that purpose. In addition, the House passed H.J.Res. 2 on January 8,2003. H.J.Res. 2 contained language identical to H.J.Res. 1 and wasconsidered to be a shell vehicle which would be amended by the Senate to provide permanentfunding for the accounts in the 11 FY2003 appropriations bills still pending.

Senate Action. On January 15, 2003, the Senate began consideration of H.J.Res. 2 . The first order of business was to agree to anamendment ( S.Amdt. 1 ), offered by the Chairman of the Senate AppropriationsCommittee, in the nature of a substitute. At the close of the sixth day of consideration, the measurewas approved, amended, on a vote of 69-29. (20)

Conference. The conference for H.J.Res. 2 was relatively extensive because it was a matter of reconciling the Houselanguage for the bills that had previously passed with the new language from the Senate. Althoughthe conferee held only 3 days of formal meetings, there was considerable discussion outside thosemeetings. The conferees reported on February 13, 2003, House Report 108-10. (21) Both the House(vote: 338-83, Roll no. 32) and Senate (vote: 76-20, recorded vote no. 34) agreed to the conferenceon that evening.

Table 1. Status of FY2003 Appropriations for the Treasury, Postal Service, Executive Office of the President, and General Government (See Table 5 for breakdown of accounts within bills)

Treasury and General Government Appropriations, FY2003

Budget and Key Policy Issues

Department of the Treasury

In recent decades, the Department of the Treasury has performed four basic functions: (1) formulating, recommending, and implementing economic, financial, tax, and fiscal policies; (2)serving as the financial agent for the federal government; (3) enforcing federal financial, tax,tobacco, alcoholic beverage, and gun laws; and (4) producing all postage stamps, currency, andcoinage. With the creation of the Department of Homeland Security (DHS) late in 2002, however,this operational profile is undergoing a major revision.

Reduced to its most basic level of organization, the department consists of departmental offices and operating bureaus. The departmental offices are responsible for the formulation andimplementation of policy and the management of the department as a whole, while the operatingbureaus carry out specific duties assigned to the department. The bureaus typically account for anoverwhelming share of Treasury Department employment and funding. With one notable exception,the bureaus can be separated into those having financial duties and those engaged in lawenforcement. In recent decades, financial duties have been handled by the Comptroller of theCurrency, U.S. Mint, Bureau of Engraving and Printing, Financial Management Service, Bureau ofPublic Debt, Community Development Financial Institutions Fund, and Office of Thrift Supervision;while law enforcement has been done by the Bureau of Alcohol, Tobacco, and Firearms, U.S. SecretService, Federal Law Enforcement Training Center, U.S. Customs Service, Financial CrimesEnforcement Network, and Treasury Forfeiture Fund. The sole exception to this simple dichotomyhas been the Internal Revenue Service (IRS), which performs both financial functions and lawenforcement through its administration of federal tax laws. As a result of the creation of the DHS,the department's law enforcement functions are likely to shrink substantially. Under the lawestablishing the new department, the Secret Service, Customs Service, and Federal Law EnforcementTraining Center are being transferred from the Treasury Department to DHS, while the Bureau ofAlcohol, Tobacco, and Firearms and the Treasury Forfeiture Fund are being transferred to the JusticeDepartment.

Under P.L. 107-67 , funding for Treasury operations in FY2002 totaled $15.042 billion, which was about $1 billion more than the department received in FY2001. Continuing a longstandingtrend, the IRS constituted the single largest account in the department's FY2002 budget, accounting- as it did in FY2001 - for 63% of total enacted funding. Other major accounts were the budgetsfor the Customs Service (18% of total funding), Secret Service (6%), and Bureau of Alcohol,Tobacco, and Firearms (5%). Compared to FY2001, the largest percentage increase in funding wasfor the Financial Crimes Enforcement Network (FinCen), whose budget expanded by 41%. Largeincreases were also enacted for the Customs Service (18% greater), Secret Service (11% greater),and Treasury Department Systems and Capital Investments Programs (11% greater). SeveralTreasury Department accounts were funded at reduced levels in FY2002 compared to FY2001. Thelargest percentage cuts were for spending on the Expanded Access to Financial Services (or FirstAccounts) program (80% smaller), the Counterterrorism Fund (17% smaller), and the FinancialManagement Service (17% smaller).

In its budget request for FY2003, the Bush Administration proposed that the Treasury Department be authorized to spend $16.903 billion at the program level, or about $400 million morethan the amount appropriated in FY2002. These figures excluded the imputed cost of accruedpension and health benefits under the Federal Employee Retirement System and the old Civil ServiceRetirement System. Of this amount, $10.418 billion (or about 60%) was go to the IRS, $2.869billion (or 17%) to the U.S. Customs Service, and $1.0 billion (or 6%) to the U.S. Secret Service.According to budget documents released by the administration, requested funding for the Departmentreflected two priorities: (1) an increase in the resources available for strengthening "security at homeand abroad, as an outgrowth of the events of September 11, 2001; and (2) an increase in funding forefforts to modernize the Customs Service and the business information systems at the IRS. Other important objectives in the FY2003 budget request for Treasury included upgradingthe capabilities and raising the productivity of the Department's workforce, expanding the electronicservices offered by Treasury bureaus, furthering the integration of bureau performance goals intobudgetary decision-making, and improving customer service and compliance enforcement at the IRS.

On July 9, 2002, the House Appropriations Committee approved by unanimous consent a bill ( H.R. 5120 ) funding the Treasury Department in FY2003. The appropriations measurewould give Treasury a total of $16.168 billion, or about $523 million more than the amountappropriated in FY2002 and $303 million more than the amount requested by the BushAdministration for FY2003. Of the amount approved for FY2003, $9.899 billion would go to theIRS, $3.128 billion to the U.S. Customs Service, and $1.021 billion to the U.S. Secret Service. Thecommittee adopted several amendments to the bill, including a controversial one (Section 646 of thebill) that would deny federal government contracts to a subsidiary of any publicly traded corporationthat is incorporated in a country deemed a tax haven but whose stock is traded mainly throughexchanges in the United States.

The House passed H.R. 5120 by a vote of 308 to 121 on July 24, 2002. Although the House made no changes in the amounts appropriated for Treasury bureaus approved by theAppropriations Committee, it did remove on a point of order the amendment that would have barredpublicly traded corporations that are incorporated in nations designated as tax havens but whosestock is traded mainly on U.S. exchanges from winning federal government contracts.

The Senate Appropriations Committee approved a similar measure ( S. 2740 ) on July 16, 2002. It would have funded Treasury operations at a level of $16.304 billion in FY2003,or $1.262 billion more than the amount appropriated for FY2002 and $438 million more than theamount requested by the Bush Administration. The biggest chunk by far was allotted to the IRS,which was to receive $9.995 billion, followed by the Customs Service at $3.141 billion and theSecret Service at $1.020 billion. Proposed funding for the Treasury Department in FY 2003 was$135 million greater under S. 2740 than under H.R. 5120 . Appropriationsfor the IRS accounted for about 71% of this difference. The Senate bill would have permitted theagency to spend more on tax law enforcement, business system modernization, and an initiative toimprove taxpayer compliance with the rules for the earned income tax credit. The full Senate nevervoted on the measure.

Owing to disagreements between the Congress and the Bush Administration over spending priorities and levels, the 107th Congress adjourned before passing 11 of the 13 appropriationsmeasures required to fund the operations of the federal government in FY2003. From October 1,2002 until mid-February 2003, Treasury offices and bureaus were funded at FY2002 levels undera total of eight continuing resolutions. On February 13, 2003, the House and Senate approved anomnibus appropriation measure ( H.J.Res. 2 , the Consolidated AppropriationsResolution for FY2003); and President Bush signed it into law on February 20 ( P.L. 108-007 ). Under the measure, the Treasury Department is funded at $16.171 billion, or $535 million more thanthe total spending authorized for FY2002. Increased appropriations for the IRS and Customs Serviceaccounted for 90% of this rise.

Bureau of Alcohol, Tobacco, and Firearms (ATF). The ATF is a law enforcement agency that regulates the manufacture, importation, and distributionof alcohol, tobacco, firearms, and explosives. The ATF also enforces federal laws related to arson. ATF's mission is focused on three goals: (1) reducing crime, (2) collecting revenue, and (3)protecting the public. Among ATF's activities, the regulation and enforcement of laws related tofirearms commerce and possession have been the most controversial. (22) In FY2000, ATF collected$14,100,000,000 in taxes, penalties, fines, and other related revenues. From FY1992 to FY2001,Congress increased ATF's direct appropriations from $336,040,000 to $772,673,000, an 130%increase. For FY2002, Congress appropriated $854,747,000 (23) in direct funding for ATF, an 11%increase over the agency's FY2001 appropriation. The FY2002 appropriation supports 5,106 fulltime equivalents. (24)

The Administration's FY2003 budget request includes $883,775,000 for ATF, a 3% increase over the agency's FY2002 appropriation. The Administration's request anticipates reductions innon-recurring costs and other savings in the base budget of $27,797,000 that would partially offsetincreases over the agency's base budget of $30,836,000 and 77 additional full time equivalents. Among other things, this budget increase includes (1) $9,136,000 to cover costs associated withannualizing new positions provided by Congress in the FY2002 emergency supplemental and otheradjustments associated with World Trade Center bombings, (2) $10,700,000 for the construction ofa new ATF National Headquarters and improved security for the agency's workforce, and (3)$11,000,000 to increase the Integrated Violence Reduction Strategy/Youth Crime InterdictionInitiative.

The 107th Congress House-passed bill would provide ATF with $891,034,000, or $7,259,000 more than the Administration's FY2003 request for certain non-pay inflation costs associated witha proposal (that has not been enacted) to integrate Federal Employees Compensation Actadministrative and benefit costs. The Senate-reported bill would provide ATF with $899,753,000,or $66,006,000 more than the Administration's request. Among other things, this amount includes$13,000,000 to continue the Gang Resistance Education and Training (GREAT) program, part ofthe Integrated Violence Reduction Strategy. To improve regulation of explosives, it also includesan increase of $10,000,000 for the creation of explosives enforcement teams to work with state andlocal law enforcement.

As the Senate passed H.J.Res. 2 , the account would have been funded at $888,430,000. The conference agreed upon $886,430,000. A sum of $3,000,000 was included foran explosives enforcement initiative. The bureau is being reconstituted in the Department of Justiceas the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The conferees also noted that$2,500,000, the same amount as in FY2002, would continue to be available for the purpose ofmanagement and technological enhancements.

Customs Service. The U.S. Customs Service, thefederal government's oldest revenue collecting agency, is responsible for regulating the movementof persons, carriers, merchandise, and commodities between the United States and other countries.The U.S. Customs Service has been transferred to the Department of Homeland Security.

In FY2001, Customs collected $22,325,323,000 in trade-related duties, taxes, and fees. (25) FromFY1992 to FY2001, Congress has increased direct appropriations for the U.S. Customs Service from$1,454,337,000 to $2,314,500,000, a 59% increase. In addition to appropriated funding, theCustoms Service collects COBRA fee receipts that are available to the agency for expenditure($305,251,257 in FY2001). For FY2002, Congress appropriated $3,116,729,000 (26) , supporting18,595 full time equivalents. This amount represents a 35% increase over the agency's FY2001appropriation.

The Administration's FY2003 request includes $2,834,113,000 for the Customs Service. This amount included: (1) $2,224,952,000 for the salaries and expenses account, (2) $170,829,000 for theair and marine interdiction account, (3) $435,332,000 for the automation modernization account, and(4) $3,000,000 from the harbor maintenance fee account. While this request represents a netdecrease of 10% in funding as compared to the agency's FY2002 appropriation, the Administrationanticipates that raising the COBRA air passenger inspection fee from $5 to $11 dollars will generatean additional $249,750,000 in offsetting revenues. With these new revenues and a complicatedseries of reductions in non-recurring costs and other offsets, the Administration's request envisions$158,239,000 in FY2003 budget enhancements for Customs. These budget enhancements include(1) $77,797,000 and 114 full-time equivalent positions to secure the northern border and increaseterrorism-related investigations, (2) $57,991,000 and 148 full-time equivalent positions to providegreater maritime port security, (3) $8,651,000 and 52 full-time equivalent positions for the southwestborder, and (4) $13,800,000 for communication systems replacement and upgrades.

The House-passed bill in the 107th Congress would have provided Customs with $3,128,497,000, or $294,384,000 more than the Administration's FY2003 request. This amountincludes: (1) $2,496,165,000 for the salaries and expenses account, (2) $190,000,000 for air andmarine interdiction, (3) $439,332,000 for the automation modernization account, and (4) $3,000,000for the harbor maintenance fee account. For salaries and expenses, the House bill would provide$104,213,000 more than the Administration's request. Among other things, this increase includesfunding for base operations that the Administration proposed funding through an increase in theCOBRA air passenger inspection fee. House report language addresses multiple concerns aboutCustoms operations that include northern border staffing and infrastructure, personnel searchprocedures, enforcement of U.S. trade law pertaining to steel, the sea cargo container securityinitiative, and automated cargo manifests.

The Senate-reported bill would have provide Customs with $3,141,614,000, or $307,501,000 more than the Administration's FY2003 request. This amount includes: (1) $2,525,453,000 for thesalaries and expenses account, (2) $177,829,000 for the air and marine interdiction account, (3)$435,332,000 for the automation modernization account, and (4) $3,000,000 for the harbormaintenance fee account. Unlike the House bill, the Senate bill assumes an increase in twounspecified fees that will provide Customs with an additional $250,000,000 for the agency'sday-to-day operations. According to the Senate Appropriations Committee press release, however,Congress has yet to authorize those fee increases. The Senate bill would also provide Customs withan increase of $18,000,000 for the sea cargo container security initiative. Senate report languageaddresses many of the same concerns as in the House report language.

The 108th Congress funded, for FY2003, the Customs Service at $3,147,316, 000, an increase over both versions in the 107th Congress. The funding includes $18,377,000 for non-pay inflation;$15,115,000 to fully fund FY2003 operations; $150,000 for the Vermont World Trade Center;$750,000 for the Center for Agricultural Policy and Trade Studies; $3,000,000 for port andnonintrusive inspection technology research and development; $1,250,000 for steel tariffenforcement; $1,000,000 for a curriculum for canine detection of chemical and biological threats;$12,000,000 for the container security initiative; $1,000,000 for a bulk outbound currency initiative;$1,400,000 to expand the intellectual property rights initiative; $200,000 for a University of Texasborder protection management program; and $125,000 for a smart border technology program at theTexas Transportation Institute.

Internal Revenue Service (IRS). The federal government levies individual and corporate income taxes, social insurance taxes, excise taxes, estateand gift taxes, customs duties, and other miscellaneous taxes and fees. The federal agencyresponsible for administering these taxes and fees is the IRS. In carrying out thatresponsibility, it receives and processes tax returns and other related documents, processes paymentsand refunds, enforces compliance through audits and other methods, collects delinquent taxes, andprovides a variety of services to taxpayers in an effort to help them understand their responsibilitiesand resolve problems. In FY 2001, the most recent year for which data are available, the IRScollected $2,129 billion before refunds, the largest component of which was individual income taxrevenue of $1,178 billion.

Under P.L. 107-67 , the IRS received $9.437 billion in funding in FY2002, or $548 million more than it received in FY2001. With this increase, the agency gained the authority to add 600individuals to its staff in FY2002. Of the total amount appropriated, $3.798 billion was for taxprocessing, assistance, and management; $3.538 billion for tax law enforcement; $1.563 billion forinformation systems; and $146 million for the earned income tax credit (EITC) compliance initiative. In addition, the IRS obtained $391.6 million for its Information Technology Investment Account(ITIA) through September 30, 2004. Funds can be drawn from the account only with the priorapproval of the House and Senate Appropriations Committee, and are allocated on a project ormilestone basis. In June 2001, the committees authorized the release of $128 million from the ITIAto enable the IRS to continue its program to modernize its information system. No additional moneywas provided for the Staffing Tax Administration for Balance and Equity initiative (STABLE) inFY2002, however, contrary to the wishes of the Bush Administration. STABLE was intended toimprove the IRS's customer service and bolster its capability to enforce federal tax laws; Congressapproved initial funding for the initiative in FY2001. P.L. 107-67 also gave the Treasury InspectorGeneral for Tax Administration $123.7 million in FY2002, $500,000 of which was to be used forbimonthly audits of IRS taxpayer assistance centers. The Act also directed the IRS to improve itscustomer service by increasing its staffing of its toll-free help-line service, and to take added stepsto safeguard the confidentiality of taxpayer information.

The Bush Administration asked Congress to fund the IRS at a level of $10.418 billion in FY2003. This amount included imputed costs for accrued pension and health benefits for IRSretirees and was $482 million (or nearly 5%) greater than its budget in FY2002. The proposedfunding was to be allocated as follows: $4.150 billion for processing, assistance, and management;$3.988 billion for tax law enforcement; $1.676 billion for information systems; $450 million for theITIA; and $154 million for the EITC compliance initiative. With the funding increase, the IRSexpected to hire an additional 1,179 employees in FY2003, increasing total agency employment to101,080 individuals. Nearly 70% of the IRS budget typically covers personnel costs.

On July 9, 2002, the House Appropriations Committee approved by unanimous consent a measure ( H.R. 5120 ) providing funding for the IRS in FY 2003. It gave the agency$9.899 billion, or $429 million above the amount enacted for FY 2002 but $16 million below theamount requested by the Bush Administration. Of this total, $3.956 billion was to be allocated totax processing, assistance, and management; $3.729 billion to tax law enforcement; $1.632 billionto information systems; $146 million to the EITC compliance initiative; and $436 million to thebusiness systems modernization effort known as PRIME. Most of the difference between theAdministration's budget request and the funding level endorsed by the committee related to fundingfor PRIME: the committee approved $14 million less than the Administration requested, mainly outof a concern about the ability of the IRS to manage the program efficiently. In its report to the fullHouse on the measure ( H.Rept. 107-575 ), the Committee expressed concern about recent reporteddeclines in compliance activity by the IRS and the agency's priorities in combating taxpayer fraudand errors. It noted that the "IRS recently testified that the amount of revenue lost due to tax errorsand fraud is about $250 billion a year." The Committee also directed the IRS to accelerate its effortsto collect reliable data under the national Research Program on tax compliance among corporationsand partnerships, two categories of tax revenue "in which the highest noncompliance rates occureach year."

On July 24, 2002, the full House passed H.R. 5120 . It made no changes in the funding for the IRS approved by the Appropriations Committee. During debate on the bill, theHouse did approve one amendment related to the IRS. The amendment, introduced byRepresentative Bernie Sanders, sought to curtail age discrimination in the conversion of employeedefined-benefit pension plans to cash-balance plans.

One week later, the Senate Appropriations Committee approved a similar measure ( S. 2740 ). It granted to the IRS $9.995 billion in FY2003, or $524 million more thanthe amount enacted for FY2002 and $79 million more than the amount requested by the BushAdministration. Of this total, $3.985 was go to processing, assistance, and management; $3.774 totax law enforcement; $1.639 billion to information systems; $147 million to the EITC complianceinitiative; and $450 million to PRIME. Most of the difference between the Administration's budgetrequest and the amount endorsed by the committee related to processing and assistance and to taxlaw enforcement: in both cases, the committee sought a larger budget than the Administrationrequested. In the report accompanying H.R. 5120 ( S.Rept. 107-212 ), the committeedirected the IRS to devote $4.3 million to a program to assist low-income taxpayers in filing theirtax returns known as the Volunteer Income Tax Assistance, $9 million to a program to assistlow-income taxpayers in resolving disputes with the IRS known as Low-Income Taxpayer Clinics,and $10 million to an enhanced effort to investigate and combat "abusive tax shelters." The fullSenate never voted on S. 2740 .

After being funded at its FY2002 level under a series of continuing resolutions starting October 1, 2002, the IRS received a budget of $9.889 billion for FY 2003 with the enactment of H.J.Res. 2 on February 20, 2003. Of this amount, $3.956 billion is intended forprocessing, assistance, and management; $3.729 billion for tax law enforcement; $146 million forthe EITC compliance initiative; $1.632 for information systems; $366 million for PRIME; and $70million to administer a tax credit for health insurance enacted as part of the Trade Act of 2002. Thebudget is $424.7 million more than the amount appropriated in FY2002 but $16.6 million below theamount requested by the Bush Administration, largely because of lower enacted spending onPRIME. A total of $7 million is provided for low-income taxpayer clinic grants, and at least $60million is to be spent on combating abusive tax shelters. The conference agreement on H.J.Res. 2 ( H.Rept. 108-10 ) directs the IRS to focus its resources on conducting "baseoperations" rather than undertaking new initiatives. This emphasis may partly explain why theagreement takes away $70 million in funding for PRIME in FY 2003 that Congress earlier hadapproved through the ITIA. As a result, the IRS is expected to curtail or drop five long-termtechnology development projects, including the customer account management program and a filingand payment software project.

U. S. Secret Service. The U.S. Secret Service ismandated by statute to carry out two distinct missions: the protection of designated governmentofficials and individuals, and criminal investigations. It is also responsible for the enforcement oflaws relating to counterfeiting. The U.S. Secret Service has been transferred to the Department ofHomeland Security.

P.L. 108-7 provides a total appropriation of $1,032,669,000, a sum in excess of either the House or Senate version in the 107th Congress. The conferees provided $6,824,000 for non-pay inflation;$6,475,000 to fully fund FY2003 operations; $4,200,000 to fund annualization of the costs of theworkload rebalancing and retention initiative; $3,519,000 for acquisition, construction, improvementand related expenses; $1,633,000 for forensic support to the national Center for Missing andExploited Children (NCMEC); and $4,583,000, for grants to NCMEC, including $300,000 forsupport of the Web-Wise Kids program.

H.R. 5120 (107th Congress), as passed, would authorize an appropriation of $1,017,892,000, of which $1,633,000 shall be available for forensic support of investigations ofmissing and exploited children, and $4,000,000 to be made available as a grant for activities relatedto missing and exploited children. Up to $18,000,000 is provided for protective travel until Sept.30, 2004, and $3,519,000 for necessary construction and repair expenses. H.R. 5120 ,as introduced and reported, authorized an appropriation of $1,017,892,000, which is an increase of$7,457,000 above the President's request. This increase included $6,824,000 for non-pay inflation;$991,000 in additional support to the National Center for Missing and Exploited Children. It alsoreflected a reduction of $358,000 for the administrative costs associated with the Federal Employees'Compensation Act (FECA).

S. 2740 (107th Congress), as introduced and reported, would authorize an appropriation of $1,016,947,000. This would be an increase of $6,475,000 above the President'srequest for pay parity, and an additional $395,000 for the National Center for Missing and ExploitedChildren.

For FY2003, the President requested $1,044,070,000 for salaries and expenses related to protective functions, research and development, and the purchase of vehicles, an increase of$123,455,000 over FY2002 enacted. Of this total, $1,633,000 was to be available for support ofinvestigations of missing and exploited children, and $3,009,000 to be available as a grant foractivities related to investigations of exploited children. Up to $18,000,000 was provided forprotective travel to remain available until September 30, 2004. Funds appropriated in this accountwere also be made available to the Director of the Secret Service for the training of federal, PostalService, state and local law enforcement officers, as well as private sector security officials on aspace-available basis.

Under P.L. 107-38 , an additional $104,769,000 is to remain available until expended for emergency salaries and expenses associated with the September 11, 2001, terrorist attacks.

U.S. Postal Service

The U.S. Postal Service (USPS) generates nearly all of its funding through the sale of products and services. It does receive a regular appropriation from Congress, however, to compensate forrevenue it forgoes in providing, at congressional direction, free mailing privileges for the blind andvisually impaired and for overseas voting. Under the Revenue Forgone Reform Act of 1993,Congress is required to reimburse USPS $29 million each year until 2035, for services performedbut not paid for in the 1990s. (See also, CRS Report RS21025 , The Postal Revenue ForgoneAppropriation: Overview and Current Issues. ) The terrorist attacks in the fall of 2001, however,including use of the mail for bio-terroristic delivery of anthrax spores to congressional and mediaoffices, generated new funding needs that USPS argues should be met through appropriations.

In FY2002, USPS received a revenue forgone appropriation of $76,619,000, including $47,619,000 for revenue forgone in FY2002 but not payable until October 1, 2003, and the $29million due annually under the Revenue Forgone Reform Act of 1993. In addition, USPS receiveda total of $675,000,000 to compensate it for extraordinary expenses arising from the terrorist attacks.The President allocated $175,000,000 from the Emergency Response Fund authorized by P.L.107-38 , the Emergency Supplemental Appropriations Act for Recovery From and Response toTerrorist Attacks on the United States, FY2001. Another $500,000,000 was allocated to USPS bythe FY2002 Emergency Supplemental Act, Division B of P.L. 107-117 , the Department of DefenseAppropriations Act, 2002. The conference report explaining this appropriation noted that "the PostalService has not received a direct appropriation for operations for nearly two decades.... In providingthese emergency funds, the conferees do not intend to set a precedent for operational subsidies ...[and] continue to support current law requirements that the Postal Service operate on aself-sustaining basis." Obligation of the $500,000,000 was to be withheld until USPS submitted toits oversight and appropriations committees an emergency preparedness plan to combat the threatof biological and chemical substances in the mail. USPS issued its plan on March 6, 2002. (27)

In its FY2003 Budget, the Administration proposed an appropriation of $48,999,000 for revenue forgone in fiscal 2003, and $29 million for the FY2003 installment under the RevenueForgone Reform Act of 1993, reduced by $17,985,000 as a reconciliation adjustment to reflect actualversus estimated free mail volume in 2000, for a total of $60,014,000. The $48,999,000 is proposedas an advance appropriation, payable on October 1, 2003. However, USPS will also have availablefor obligation during FY2003 the $47,619,000 provided for revenue forgone in fiscal 2002, for atotal of $76,619,000. In its FY2002 Budget, the Bush Administration had proposed to "reverse themisleading budget practice of using advance appropriations simply to avoid [annual] spendinglimitations." The Senate agreed to this proposal, but the House and the conferees did not. TheAdministration did not renew the proposal in its FY2003 Budget.

In its detailed justification of its FY2003 budget request, USPS asked for an additional $928,174,000 (above the OMB proposal of $60,014,000) as an accelerated payment of the amountsdue for FY1994 through FY2035 under the revenue Forgone Reform Act of 1993. The postmastergeneral, in his statement at the March 13, 2002 House Appropriations Subcommittee hearing on itsbudget, said the extra funds would be used for facilities improvements, which have been frozen fortwo years. (28)

Neither the Administration's FY2003 Budget nor the USPS detailed justification included any funds for emergency preparedness. The Budget does reflect, however, in the column on FY2002appropriations, the $500,000,000 appropriated to USPS by P.L. 107-117 . The March 6, 2002emergency preparedness plan did identify substantial needed appropriations in addition to the$675,000,000 already appropriated: $87,000,000 as a supplemental for FY2002; $799,800,000 forFY2003; and $897,500,000 for FY1994. Apparently USPS expects these needs to be discussed inthe context of a broader supplemental appropriations request for homeland security. H.R. 4775 , the FY2002 Supplemental Appropriations bill for Further Recovery Fromand Response To Terrorist Attacks, does provide the $87 million that the USPS plan says it needsin FY2002.

P.L. 108-7 provides, as would both the House bill as passed on July 25 ( H.R. 5120 ), and the Senate Appropriations Committee's version ( S. 2740 ) of the FY2003Act, $76,619,000 to USPS. This is exactly what is contained in the Bush Administration's budgetrequest, with nothing added to accelerate payments under the Revenue Forgone Reform Act asrequested by USPS. The bills differ in the timing of the appropriation, however. H.R. 5120 would make the $31,014,000 for FY2003 revenue forgone an advance appropriation to be paidin FY2004. S. 2740 does not propose an advance appropriation, but would have thewhole amount paid in FY2003. Thus the Senate report (107-212) recommends a total of$107,633,000 to be paid in FY2003: $29,000,000 for past revenue forgone, $31,014,000 for netrevenue forgone in FY2003, and $47,619,000 appropriated in the FY2002 Act as an advanceappropriation.

P.L. 108-7 require several reports from the Postal Service. With regard to utilizing electronic commerce technology in their procurement processes, the conferees and suggest testing, with specificrestrictions and require a report of on any such test or pilot project no later than six months followingenactment. No later than 90 days after enactment, there is a report required on steps taken to addressthe quality of service at the Jensen Drive Postal Station in Houston, Texas. Also, no later than 120days following enactment, the USPS is to expand its investigation on delivery problems in theBronx, New York and to report its findings and recommendations for corrective action.

Executive Office of the President and Funds Appropriated to the President

The Treasury and General Government appropriations act funds all but three offices in the Executive Office of the President (EOP). Of the three exceptions, the Council on EnvironmentalQuality and Office of Environmental Quality, and the Office of Science and Technology Policy arefunded under the Veterans Affairs, Housing and Urban Development, and Independent Agenciesappropriations; and the Office of the United States Trade Representative is funded under theCommerce, Justice, State, and the Judiciary and Related Agencies appropriations.

The President's FY2003 budget proposed consolidation of 12 annual EOP salaries and expenses appropriations into a single annual appropriation which would total $336,228,000 in FY2003. Thiswould be an increase of 21.5% over the $276,819,000 (29) appropriated in FY2002 for these programs. The 12 programs included in the consolidated account would be:

Compensation of the President/White House Office

Executive Residence/White House Repair andRestoration

Special Assistance to the President (Office of the Vice President)/OfficialResidence of the Vice President

Council of Economic Advisers

Office of Policy Development

National Security Council

Office of Administration/Capital Investment Plan

Office of Management and Budget

Office of National Drug Control Policy (Salaries andExpenses)

Council on Environmental Quality

Office of Science and Technology Policy

U.S. Trade Representative

Resources for common acquisition-related goods and services would be consolidated into the Office of Administration. A separate appropriation would be continued for Unanticipated Needs.

According to the Budget, "This proposal would give the President maximum flexibility in allocating resources and staff in support of his office and is intended to: permit a more rapid responseto changing needs and priorities; allow the President to address emergent national needs; producegreater economies of scale and other efficiencies in procuring goods and services; and enhanceaccountability for performance." Additionally, the budget states that "this initiative would enable thePresident to effectively manage and align EOP resources consistent with decision making in anefficient and straightforward manner, while enhancing the accuracy of the financial systems andsignificantly reducing the administrative volume and cost of processing transactions through theUnited States Treasury." (30)

The Administration proposed the consolidation of 10 accounts into one account in the FY2002 budget, but the conference committee for the Treasury and General Government Appropriations Act,2002, H.R. 2590 , agreed to continue with separate accounts for the EOP programs.

P.L. 108-7 retained the funding for the accounts as separate accounts within the Executive Office of the President, as had been reported by the House Committee on Appropriations and passedby the House through H.R. 5120 (107th Congress) and reported by the SenateCommittee on Appropriations.

On March 25, 2003, the President sent a FY2003 supplemental request to Congress, with requests for additional funding in support of actions in the Middle East. Accounts within theExecutive Office of the President, as well as the Department of Homeland Security would beaffected. As part of general homeland security requirements, $250 million is requested for the EOPunanticipated needs account to "support immediate and emerging terrorism-related prevention andresponse requirements throughout the federal government. The Director of the Office ofManagement and Budget would be required to provide Congress with 15 days notice before any suchtransfer were made. An Iraq Relief and Reconstruction Fund of $2.4 billion would be establishedwithin the Executive Office of the President. The document supporting the supplemental requestindicate that $543 million would be for humanitarian assistance, up to $200 million would beavailable to reimburse accounts from which food relief was drawn, and $1.7 billion would be forreconstruction efforts. (31)

EOP Offices Funded Through Treasury and General GovernmentAppropriations. As noted in H.Rept. 107-575 and S.Rept. 107-212 , the amount ofmoney requested for FY2003 for EOP programs and funds appropriated to the President, under theTreasury and General Government appropriations is $786 million an increase of 1.5% less than the$797.6 million appropriated in FY2002.

The figures shown are from P.L. 108-7 , H.Rept. 108-10 . The figures from the President's request and the 107th Congress are not shown unless there are differences. The requested and Houserecommended funding for specific programs discussed below are taken from H.Rept. 107-575 . TheSenate recommended funding is from S.Rept. 107-212 .

Compensation of the President. The account is funded for FY2003 at $450,000, which includes an expense allowance of $50,000. This is the same amountas was appropriated in FY2002. The salary of the President is $400,000 per annum , effectiveJanuary 20, 2001.

Office of Homeland Security. P.L. 108-7 funds the account at $19,398,000.

The Senate had set the H.J.Res. 2 funding at $24,844,000. The House committee hadrecommended and the House had passed an appropriation of $24,061,000 and the Senate committeehad recommended $25,301,000. P.L. 108-7 retained the language directing the office to submit areport identifying estimated obligations for each function assigned to the office to the HouseCommittee on Appropriations no later than November 1, 2002 [sic]. (See section on "HomelandSecurity" below for further details.)

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

The amount of money requested for FY2003 is $84,595,000, an increase of 54.8% over the $54,651,000 appropriated in FY2002. The budget also proposes a gain of 46 positions, as measuredby full-time equivalent (FTE) employment, (32) forthe White House Office in FY2003. Accordingto the EOP budget submission, "The bulk of the funding increase and 40 of the additional FTE aredirectly related to the establishment of the Office of Homeland Security created in the wake of theterrorist attack on September 11, 2001." The submission also states that "Increased funding and 6additional FTE are also requested for the newly established U.S. Freedom Corps Office that willpromote public service opportunities for all Americans." (33)

P.L. 108-7 funds this account at the level passed, during the 107th Congress, by the House of $50,715,000, $33,880,000 less than the President's request. The conferees, in support of a pilotprogram for procurement centralization, agreed to transfer $9,020,000 to the Office ofAdministration.

The Senate Committee on Appropriations had recommended an appropriation of $60,212,000 and the Senate had passed H.J.Res. 2 with a funding level of $59,735,000.

Executive Residence (White House) and White House Repair and Restoration. This account provides for the care, maintenance, and operationof the Executive Residence.

The amount of money enacted for FY2003 is $13,428,000 for this account, a decrease of 33.9% from the $20,320,000 appropriated in FY2002. For the executive residence, the budget proposes anappropriation of $12,228,000, an increase of 4.6% over the $11,695,000 appropriated in FY2002. For repair and restoration of the White House, the budget proposes an appropriation of $1,200,000,a decrease of 86.1% from the $8,625,000 appropriated in FY2002. The EOP budget submissionstates that the decrease in repair and restoration "is attributed to less costly projects scheduled forFY2003." (34)

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 statefunctions are funded by the Department of State. Reimbursable political events in the ExecutiveResidence are to be paid for in advance by the sponsor, and all such advance payments are to becredited to a Reimbursable Expenses account. The political party of the President is to deposit$25,000 to be available for expenses relating to reimbursable political events during the fiscal year. Reimbursements are to be separately accounted for and the sponsoring organizations billed, andcharged interest, as appropriate. The staff of the Executive Residence must report to the Committeeson Appropriations, after the close of each fiscal year, and maintain a tracking system on thereimbursable expenses.

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

The amount of money enacted for FY2003 is $4,066,000 for salaries and expenses, an increase of 3.6% over the $3,925,000 appropriated in FY2002. (35) The EOP budget submission states that theincrease is for "increased per diem costs of staff accompanying the Vice President following theterrorist attack on September 11, 2001." (36)

In the 107th Congress, the House Committee on Appropriations recommended and the House passed an appropriation of $3,160,000, $906,000 less than the President's request. The SenateCommittee on Appropriations recommended an appropriation of $4,093,000.

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

The amount of money enacted for FY2003 is $324,000 for the operating expenses of the Official Residence, an increase of 1.9% over the $318,000 appropriated in FY2002. Passage of theSenate committee recommended version in the last Congress would have increased the account by$1,000.

Council of Economic Advisers (CEA). The three-member council was created in 1946 to assist and advise the President in the formulationofeconomic policy. The council analyzes and evaluates the national economy, economicdevelopments, federal programs, and federal policy to formulate economic advice . The councilassists in the preparation of the annual Economic Report of the President to Congress.

P.L. 108-7 funds the account at $3,763,000, the same as that passed by the House in the last Congress. The Senate approved the level requested by the President, $4,405,000, an increase of4.6% over the $4,211,000 appropriated in FY2002. According to the EOP budget submission, "Theincrease provides funding to attract and retain top-quality professional economists." The submissionstates: "Current salary levels for CEA economists are lower than comparable positions both in othergovernment agencies and in the academic community. This increase will provide an equivalentsalary level and allow CEA's job offers to be competitive with those of other Government agencies."

The Senate Committee on Appropriations had recommended an appropriation of $4,444,000 in the 107th Congress bill.

Office of Policy Development. The Office supports the National Economic Council and the Domestic Policy Council in carrying out theirresponsibilities to advise and assist the President in formulating, coordinating, and implementingeconomic and domestic policy. The Office also supports other domestic policy development andimplementation activities.

The amount of money requested for FY2003 was $4,221,000, an increase of 1.9% over the $4,142,000 appropriated in FY2002. The Senate version would have provided full funding. P.L.108-7 follows the House-passed level and appropriates $3,251,000, $970,000 less than thePresident's request.

The Senate Committee on Appropriations, in the 107th Congress had recommended an appropriation of $4,254,000.

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

P.L. 108-7 funds the account at $7,821,000. The Senate would have provided the full requested amount of $9,525,000, an increase of 27.1% over the $7,494,000 appropriated in FY2002. Thebudget also proposes a gain of 11 positions, as measured by FTE employment, for the NSC inFY2003. The EOP budget submission states that "Both funding and FTE increases are attributedto the ongoing operations of the new Office of Combating Terrorism created in response to theterrorist attack on September 11, 2001." (37)

In the 107th Congress, the House Committee on Appropriations recommended and the House passed an appropriation of $7,803,000, $1,722,000 less than the President's request. The SenateCommittee on Appropriations recommended an appropriation of $9,600,000.

Office of Administration. The Office of Administration provides administrative services, including financial, personnel, library and recordsservices, information management systems support, and general office services, to the ExecutiveOffice of the President.

P.L. 108-7 funds the account at $91,505,000, considerably higher than the requested amount of $70,128,000, a decrease of 27.7% over the $96,995,000 appropriated in FY2002. (TheSenate-passed version would have funded the account at the requested level.) Of the total request,$53,353,000 is for salaries and expenses and $16,775,000 is for the Capital Investment Plan. (InFY2002, the salaries and expenses appropriation was $35,180,000 and the Capital Investment Planappropriation was $11,775,000.) The budget also proposes a gain of 20 positions, as measured byfull-time equivalent (FTE) employment, for the Office of Administration in FY2003. According tothe EOP budget submission:

Of the $23.2 million increase, $21 million and all of the additional FTE are directly attributed to the ongoing costs of the numerous security measures takenin the aftermath of the terrorist attack on September 11, 2001. These ongoing costs include the GSArent for the EOP offices that were relocated outside of the White House complex, increasedtelephone service, information systems disaster recovery measures including the addition of a remotedata center, expanded mail service and additional personnel to support the dispersed offices. Theremaining $2.2 million increase is for start up costs for a new 5 year facilities contract and EOPcommon software maintenance to upgrade operating systems.

(38)

P.L. 108-7 comes closer to the funding level passed by the House in the 107th Congress of $92,681,000 than to the Senate committee recommendation equal of $70,338,000. The Houseprovided more detail related to the increase stating that $17,495,000 would remain available untilexpended for the Capital Investment Plan for continued modernization of the information technologyinfrastructure within the Executive Office of the President. The EOP would be directed to submita report to the House Committee on Appropriations that would be reviewed and approved by theOffice of Management and Budget and reviewed by the General Accounting Office. The reportwould include a current description of the Enterprise Architecture, the Information Technology (IT)Human Capital Plan, the capital investment plan for implementing the Enterprise Architecture, andthe IT capital planning and investment control process.

The conference report provides additional detail related to the transfer of funds for the procurement consolidation effort:

The conferees agree to transfer $21,377,000 from the White House Office, the Office of Homeland Security, the Office of Management and Budget, theOffice of Policy Development, the National Security Council, and the Council of Economic Advisersto the Office of Administration to establish a pilot project for centralized procurement andmanagement of information technology, rent, printing and reproduction, supplies and materials andequipment. The conferees expect that the Office of Administration will achieve economies of scaleusing centralized procurement practices and directs the Office of Administration to identify thesesavings within 120 days of enactment of this Act. The conferees direct the Office of Administrationto submit a description of this pilot project, including a description of the standards established forthe procurement of each commodity included in this project no later than 60 days after enactmentof this Act.

(39)

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

P.L. 108-7 funds the account at $62,394,000, a level less than the request and all of the earlier versions. The Senate-passed version would have funded the account at the requested level of$70,752,000, the same amount as was appropriated in FY2002. The budget also proposes the lossof 17 positions, as measured by full-time equivalent employment, at OMB in FY2003. The EOPbudget submission states that the proposal "holds spending to last year's levels, while funding newinitiatives including emphasis on government-wide information technology and E-government, andmaintains resources to fund OMB's responsibilities." (40)

In the 107th Congress, the House Committee on Appropriations recommended and the House passed an appropriation of $61,492,000, $9,260,000 less than the President's request. The SenateCommittee on Appropriations recommended an appropriation of $71,370,000.

Electronic Government Fund. This account supports interagency projects that enable the federal government to expand its ability to conduct activitieselectronically, through the development and implementation of innovative uses of the Internet andother electronic methods. The conferees concurred in the House Committee on Appropriationsrecommendation that the account be moved from the General Services Administration account to"more closely associate the funding with the decision-making mechanism for these funds," andappropriated $5,000,000. These funds could be transferred to federal agencies to carry out thepurposes of the fund. The Senate Committee recognized the expanded role of OMB but kept thefunding under GSA. (For further discussion, see the "GSA" section below.)

Election Administration Reform and Related Expenses. P.L. 108-7 addresses election reform in Division N and providesfunding to the General Services Administration. (41) In the 107th Congress, the House Committee onAppropriations had recommended and the House had passed an appropriation of $200,000,000. TheOMB director would be required to transfer funds to federal entities specified by the legislation onelection administration reform which is pending. The only mention of this account in the Senatereport is an entry in the summary table showing no funding requested or recommended.

Office of National Drug Control Policy (ONDCP). The ONDCP develops policies, objectives, and priorities for the National Drug Control Program. The account also funds general policy research to support the formulation of the National DrugControl Strategy.

P.L. 108-7 reflects the Senate-passed funding level of $26,456,000 for salaries and expenses. The President had requested $25,458,000 for salaries and expenses, an increase of 0.8% over the$25,263,000 appropriated in FY2002. According to the EOP budget submission, "The increasereflects the realignment of the National Alliance of Model State Drug Laws from Salaries &Expenses (S&E) to the Special Forfeiture Fund," resulting in a $1 million dollar reduction in S&E. The submission also states that "The operations portion of the S&E budget has increased by $1.2million and will fund higher graded staff supporting the ONDCP Director." (42)

In the 107th Congress, the House Committee on Appropriations recommended and the House passed an appropriation of $24,458,000, $1,000,000 less than the President's request. Of this total,$2,350,000 would remain available until expended, consisting of $1,350,000 for policy research andevaluation, and $1,000,000 for the National Alliance for Model State Drug Laws. The SenateCommittee on Appropriations had recommended an appropriation of $26,605,000.

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

P.L. 108-7 funds the Counterdrug Technology Assessment Center at $48,000,000. The amount of money requested for FY2003 is $40,000,000, a decrease of 5.4% from the $42,300,000appropriated in FY2002. Of the total request, $18,000,000 is for counternarcotics research anddevelopment projects (which shall be available for transfer to other federal departments or agencies)and $22,000,000 is for the continued operation of the technology transfer program. (43)

In the 107th Congress, the House Committee on Appropriations had recommended and the House had passed an appropriation of $55,800,000, $15,800,000 more than the President's request. Of this total, $26,064,000 would be for counternarcotics research and development projects andwould be available for transfer to other federal departments or agencies, and $29,736,000 would befor the continued operation of the technology transfer program. The Senate Committee onAppropriations had recommended an appropriation of $40,000,000.

Federal Drug Control Programs. The High Intensity Drug Trafficking Areas (HIDTA) program provides assistance to federal, state, and local lawenforcement entities operating in those areas most adversely affected by drug trafficking. Funds aredisbursed at the discretion of the director of ONDCP for joint local, state, and federal initiatives.

P.L. 108-7 funds the account at $226,350,000. No less than 51% of the total shall be transferred to State and local entities for drug control activities, which shall be obligated within 120 days ofenactment of the Treasury appropriations act. Up to 49% of the total shall remain available untilSeptember 30, 2004 and may be transferred to federal agencies and departments at a rate to bedetermined by the director of which not less than $2,100,000 shall be used for auditing services andassociated activities, and at least $500,000 of the $2,100,000 shall be used to develop and implementa data collection system to measure the performance of the High Intensity Drug Trafficking AreasProgram. (44)

The Administration had requested $206,350,000, a decrease of 8.8% from the $226,350,000 appropriated in FY2002. In the 107th Congress, the House Committee on Appropriations hadrecommended and the House had passed an appropriation of $246,350,000, $40,000,000 more thanthe President's request. The Senate Committee on Appropriations had recommended anappropriation of $226,350,000.

The conferees on H.J.Res. 2 expressed concern for the manner in which the HIDTA program is being managed.

The conferees provide that existing HIDTAs shall be funded at no less than the fiscal year 2002 levels prior to the obligation of the $20,000,000 inadditional funds provided for fiscal year 2002, unless the Director submits to the Committees onAppropriations and the Committees approve, justification for changes in those levels based onclearly articulated priorities for the HIDTA program, as well as published ONDCP performancemeasures of effectiveness. The conferees also provide that no funds in excess of the fiscal year 2003budget request shall be obligated without the prior approval of theCommittees.

(45)

In the language which follows, the conferees express continued concern by the lack of ONDCP's progress in developing performance measures of effectiveness and restrict $5,000,000 in obligationsuntil the submissions are made to the Committees.

The Special Forfeiture Fund. The Fund, administered by the director of ONDCP, supports high-priority drug control programs. The funds may betransferred to drug control agencies or directly obligated by the ONDCP director.

P.L. 108-7 provides funding of $223,200,000. The amount of money requested for FY2003 was $251,300,000, an increase of 5% over the $239,400,000 appropriated in FY2002. Of the enactedtotal, $150,000,000 is to support a national media campaign, as authorized by the Drug-Free MediaCampaign Act of 1998; $60,000,000 is for a program of assistance and matching grants to localcoalitions and other activities, as authorized in chapter 2 of the National Narcotic Leadership Actof 1988, as amended; $3,000,000 is for the Counterdrug Intelligence Executive Secretariat;$2,000,000 is for evaluations and research related to National Drug Control Program performancemeasures; $1,000,000 is for the National Drug Court Institute; $6,400,000 is for the United StatesAnti-Doping Agency for anti-doping activities; $800,000 is for the United States membership duesto the World Anti-Doping Agency; and $2,000,000 of the Drug Free Communities funds will be usedfor a grant to the Community Anti-Drug Coalition Institute. (46)

In the 107th Congress, the House Committee on Appropriations had recommended and the House had passed an appropriation of $240,800,000, $10,500,000 less than the President's request.The Senate Committee on Appropriations recommended an appropriation of $172,700,000, the sameas the Senate-passed version of H.J.Res. 2 .

Unanticipated Needs. The account provides funds for the President to meet unanticipated needs in furtherance of the national interest, security, or defense.

P.L. 108-7 provides $1,000,000 for this account. This is the same amount as was appropriated in FY2002, requested by the President and recommended by both chambers.

Independent Agencies

Federal Election Commission (FEC). The FEC administers federal campaign finance law, including overseeing disclosure requirements, limits oncontributions and expenditures, and the presidential election public funding system; the agencyretains civil enforcement authority for the law. The Office of Election Administration, which servesas a clearinghouse for information on voting laws and procedures for state and local election officers,is another part of the FEC .

P.L. 108-7 funds the FEC at $49,866,000, a level higher than any of the earlier versions, including the $45,244,000 requested by the President in 2002 and passed by the Senate in 2003. Atleast $5,866,700 is to be used for internal automated data processing systems. The funding includes$4,198,000 to implement the Bipartisan Campaign Reform At and $424,000 to fully fund FY2003operations. See "Election Reform" in the section on the General Services Administration, below,for further discussion of election reform funding.

The Administration had requested $45,244,000 for the FEC in FY2003, a $1.6 million increase over the $43,689,000 appropriated for FY2002. Of the requested amount, no less than $5,128,000was slated for internal automated data processing systems and no more than $5,000 for reception andrepresentational expenses. The budget called for a full-time equivalent staffing authorization of 362,the same as for FY2002.

The initial request in the President's January budget submission ($46.7 million) and the proposed staffing levels were the same as those proposed by the FEC in its initial, separatesubmission to OMB and Congress. As the FEC noted, the initial request represented a continuationof the FY2002 funding level for core programs, as adjusted for inflation and salary and benefits, withno additional funds or staff for new programs or initiatives. That request included $1,673,000 toaccount for a new method of providing for federal retirees under the Civil Service RetirementProgram (CSRS), which the Administration has proposed for all government agencies.

In the wake of enactment of the Bipartisan Campaign Reform Act of 2002 ( P.L. 107-155 ), the FEC submitted an amended request, calling for an additional $5,366,200 to implement the new law. Taking this into account, the House Appropriations Committee recommended an appropriation of$49,426,000, including $4,198,000 to implement the new law. This amount reflects a decrease of$1,168,200 from the FEC 's amended request but $4,182,000 above the Administration's request. The House adopted the $49,426,000 appropriation recommended by its Committee, with additionaldesignations of no less than $5,866,700 for internal automated data processing systems and no morethan $5,000 for reception and representation expenses.

The Senate Appropriations Committee, however, recommended an appropriation of $45,668,000, which does not take into account the amended request by the FEC for implementingthe new statute. The Senate figure reflects the Administration's request, plus $224,000 for payparity, and allows no more than $5,000 for reception and representational expenses.

Federal Labor Relations Authority (FLRA). The agency serves as a neutral party in the settlement of disputes that arise between unions, employees,and agencies on matters outlined in the Federal Service Labor Management Relations Statute;decides major policy issues; prescribes regulations; and disseminates information appropriate to theneeds of agencies, labor organizations, and the public. The FLRA also engages in case-relatedinterventions and training and facilitates labor-management relationships. It has three components: the Authority which adjudicates labor-management disputes; the Office of the General Counselwhich, among other duties, investigates all allegations of unfair labor practices filed and processesall representation petitions received; and the Federal Service Impasses Panel which resolvesimpasses which occur during labor negotiations between federal agencies and labor organizations.

P.L. 108-7 funds FLRA at $28,950,000, including $273,000 to fully fund FY2003 operations.

The amount of money requested for FY2003 was $28,684,000 for the FLRA, an increase of 8.1% over the $26,524,000 appropriated in FY2002. Both the Senate passed version of H.J.Res 2 and the House-passed H.R. 5120 from the previous Congresswould have funded the agency at $28,677,000, $7,000 less than the President's request. In the 107thCongress, the Senate Committee on Appropriations recommended an appropriation of $28,950,000.

General Services Administration (GSA). The General Services Administration administers federal civilian procurement policies pertaining to theconstruction and management of federal buildings, disposal of real and personal property, andmanagement of federal property and records. It is also responsible for managing the funding andfacilities for former Presidents and presidential transitions. The President's FY2003 budget requestfor GSA includes the largest requests to date to renovate and improve security measures in federalbuildings.

P.L. 108-7 ( H.J.Res. 2 , 108th Congress) funds GSA at a level totaling $586,933,000. The funding breaks down as $66,304,000 for policy and citizen service; $83,663,000for operating expenses; $37,916,000 for Office of Inspector General; $5,000,000 to the electronicgovernment fund; $3,339,000 for allowances and office staff for former Presidents; and $15,000,000for election reform reimbursements. It also provides limitations on Federal Buildings Fundobligations at $7,006,033,000.

H.R. 5120 (107th Congress), as introduced, reported, and passed, would authorize $65,995,000 for policy and citizen services; $77,904,000 for operating expenses (two new accountsto replace policy and operations); $37,617,000 for the Office of Inspector General; and $3,339,000for allowances and office staff for former Presidents.

S. 2740 (107th Congress), as reported, would authorize an appropriation of $75,304,000 for salaries and expenses; $87,674,000 for operating expenses; $37,916,000 for theOffice of Inspector General; $45,000,000 for electronic government; and $3,344,000 for allowancesand office staff for former presidents. S. 2740 , as introduced, would authorize$75,304,000 for policy and citizen services; $87,674,000 for operating expenses; $45,000,000 forthe electronic government fund; and $3,344,000 for allowances and office staff for former presidents.

The President's FY2003 budget contained a request of $143,139,000 for policy and operations, of which $25,887,000 would remain available until expended; $39,587,000 for the Office ofInspector General, $3,441,000 for allowances and office staff for former Presidents; $45,000,000 forinteragency electronic government initiatives; and $12,681,000 to be deposited into the FederalConsumer Information Center Fund.

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

H.R. 5120 , as introduced, reported, and passed, would authorize a direct appropriation of $325,711,000 into the Federal Buildings Fund. An amount of $646,385,000 fromthe FBF would be made available until expended for new construction, which includes 11 newcourthouse projects totaling $309,349,000. In addition, $978,529,000 would be made available untilexpended for repairs and alternations, including three courthouses totaling $44,192,000. Alsoincluded is $8,000,000 for a chlorofluorocarbons program, $20,000,000 for a glass fragmentationprogram, and $10,000,000 for terrorism. A total of $178,960,000 is to be made available forinstallation acquisition payments, $3,153,211,000 for rental of space, and $1,925,160,000 forbuilding operations.

S. 2740 , as reported, would authorize $653,913,000 to be made available for the construction and acquisition account. The Senate Committee also recommended new obligationalauthority of $995,589,000 for repairs and alterations. S. 2740 , as introduced, wouldauthorize that $6,952,703,000 remain available until expended: $653,913,000 for construction anddesign, and $995,589,000 for repairs and alterations.

Of the $6,885,375,000 deposited in the FBF, the President's FY2003 budget requested that $276,400,000 remain available until expended for the operation, maintenance, and protection offederally owned and leased buildings, and that $556,574,000 remain available until expended for construction and design services (approximately $260,000,000 for courthouse projects). ThePresident's budget also requested that $986,029,000 from the FBF be made available for repairs andalterations of federal buildings, an increase of $117,000,000 over FY2002 enacted. Of this total,$367,340,000 would be used to fund costs associated with implementing security improvements tofederal buildings; $20,000,000 to implement a glass fragmentation program; $8,000,000 toimplement a chlorofluorocarbons program; and $10,000,000 for antiterrorism efforts.

Electronic Government Fund. As it was last year, the Electronic Government Fund continues to be a somewhat contentious matter between the Presidentand Congress. In advance of his proposed budget for FY2002, the President released, on February28, 2001, A Blueprint for New Beginnings: A Responsible Budget for America's Priorities . Intendedas a 10-year budget plan, the Blueprint , among other innovations, proposed the establishment of anelectronic government account, seeded with "$10 million in 2002 as the first installment of a fundthat will grow to a total of $100 million over three years to support interagency electronicGovernment (e-gov) initiatives." Managed by OMB, the fund was foreseen as supporting "projectsthat operate across agency boundaries," facilitating "the development of a Public Key Infrastructureto implement digital signatures that are accepted across agencies for secure online communications,"and furthering "the Administration's ability to implement the Government Paperwork EliminationAct of 1998, which calls upon agencies to provide the public with optional use and acceptance ofelectronic information, services and signatures, when practicable, by October 2003." (47) About onemonth later, on March 22, OMB Deputy Director Sean O'Keefe announced that the BushAdministration had decided to double the amount to be allocated to the e-gov fund, bringing it to $20million. (48)

As included in the President's budget, the fund was established as an account within the General Services Administration (GSA), to be administered by the Administrator of GeneralServices "to support interagency projects, approved by the Director of the Office of Management andBudget, that enable the Federal Government to expand its ability to conduct activities electronically,through the development and implementation of innovative uses of the Internet and other electronicmethods." The President's initial request for the fund was $20 million, to remain available untilSeptember 30, 2004. Congress, however, appropriated $5 million for the fund for FY2002, toremain available until expended. Appropriators specified that transfers of monies from the fund tofederal agencies could not be made until 10 days after a proposed spending plan and justification foreach project to be undertaken using such monies had been submitted to the Committees onAppropriations. Expressing general support for the purposes of the fund, they also recommended,and both chambers agreed, that the administration work with the House Committee on GovernmentReform and the Senate Committee on Governmental Affairs to clarify the status of its authorization.

The President's budget for FY2003 "recognizes GSA as operator of the official federal portal for providing citizens with one-stop access to federal services via the Internet or telephone" and,therefore, a key agency in implementing the President's e-gov vision, which will "requirecross-agency approaches that permit citizens, businesses, and state and local governments to easilyobtain services from, and electronically transact business with the federal government." In thisregard, an administration interagency Quicksilver E-Gov Task Force, according to the budget, has"identified 23 high priority Internet services for early development." Seeking $45 million for thee-gov fund, the budget acknowledged that this amount was "a significant increase over the $20million requested in 2002," but noted that the request "is supported by specific project plansdeveloped by the Quicksilver Task Force." (49) Furthermore, according to the fund account statement,these monies "would also further the Administration's implementation of the GovernmentPaperwork Elimination Act (GPEA) of 1998, which calls upon agencies to provide the public withoptional use and acceptance of electronic information, services, and signatures, when practicable,by October 2003."

The House Appropriations Committee again rejected the amount requested by the President and recommended $5 million for the fund, reiterating, as previously, that transfers of monies from thefund to federal agencies could not be made until 10 days after a proposed spending plan andjustification for each project to be undertaken using such monies had been submitted to theCommittees on Appropriations. The committee also declined to recommend an appropriation forthe fund as a GSA account, but did fund it as an account under the jurisdiction of the Office ofManagement and Budget within the Executive Office of the President. (50) The Senate Committee onAppropriations recommended the full $45 million requested by the President. Their report states thatOMB "would control the allocation of the fund and direct its use for information systems projectsand affect multiple agencies and offer the greatest improvements in access and service." (51) As notedabove, P.L. 108-7 funds the account at $5,000,000.

Election Reform. P.L. 108-7 , Division J, provides $15,000,000 for a program of payments to states that obtained optical scan or electronic votingequipment for the administration of federal elections prior to November 2000. (52) In addition, inDivision N of the Act, Congress provides GSA with $650,000,000 "to carry out a program ofpayments to the States for improving the administration of elections and replacing punch card andlevel voting machines with new voting technology." (53) The Division N funding is part of a$1,500,000,000 appropriations for election reform.

Merit Systems Protection Board (MSPB). The MSPB serves as guardian of the federal government's merit-based system of employment. Theagency carries out its mission by hearing and deciding appeals from federal employees of removalsand other major personnel actions. MSPB also hears and decides other types of civil service cases,reviews OPM regulations, and conducts studies of the merit systems. The agency's efforts are toassure that personnel actions taken involving employees are processed within the law and thatactions taken by OPM and other agencies support and enhance federal merit principles.

P.L. 108-7 appropriates $32,027,000 for this account. The amount of money requested for FY2003 was $31,790,000 for the MSPB, an increase of 4% over the $30,555,000 appropriated inFY2002. The Senate has passed, the House Committee on Appropriations had recommended, andthe House had passed an appropriation of $31,788,000, $2,000 less than the President's request. TheSenate Committee on Appropriations had recommended an appropriation of $32,027,000.

National Archives and Records Administration (NARA). The custodian of the historically valuable records of the federalgovernment since its establishment in 1934, NARA also prescribes policy and provides bothguidance and management assistance concerning the entire life cycle of federal records. It alsoadministers the presidential libraries system; publishes the laws, regulations, and presidential andother documents; and assists the Information Security Oversight Office (ISOO), which managesfederal security classification and declassification policy; and the National Historical Publicationsand Records Commission (NHPRC), which makes grants nationwide to help nonprofit organizationsidentify, preserve, and provide access to materials that document American history.

P.L. 108-7 funds the NARA accounts at $263,397,000. The specific account amounts are $249,875,000 for operating expenses; -$7,186,000 for reduction of debt; $14,208,000 for repairs andrestoration; and $6,500,000 for the national Historical Publications and Records Commission grantsprogram.

On July 24, the House passed H.R. 5120 without amending provisions related to the NARA accounts, as reported. The House Appropriations Committee had recommended$267,189,000 for NARA, $12,202,000 less than the President's $279,391,000 budget request, whichwas a $10,435,000 decrease from the $289,826,000 appropriated for, and requested by the Presidentfor, NARA for FY2002. Of the total amount requested, $2.3 million, according to the President'sbudget, "will enable NARA to continue leading the Electronic Records Management project." (54) Thecommittee recommended $249,731,000 for NARA operating funds, which is $14,202,000 less thanthe $263,933,000 requested (the requested amount being a $19,686,000 increase over the FY2002allocation of $244,247,000). The committee report explained that the "reduction from thePresident's request is for the initiative to train state and local personnel in the handling of classifiedand sensitive homeland security data." It was felt that "funding this effort in this account ispremature" because the "directive for addressing sensitive homeland security information has notbeen issued, the specific state and local needs for training have not been determined, training optionshave not been fully developed, and the portion of the initiative aimed at ensuring that Federalagencies have appropriate authorities is unknown." (55) For repairs and restoration, the requestedamount of $10,458,000 was recommended. This is a $28,685,000 decrease compared to the FY2002appropriation of $39,143,000 for this account. Furthermore, the recommended amount is providedin accordance with the dedication of funds specified in the President's request: $1,250,000 forMilitary Personnel Records Center design studies and $3,250,000 for repair of the Lyndon BainesJohnson Presidential Library plaza. For the NHPRC, $7 million was recommended, $2 million morethan requested (the requested $5 million being a $1,436,000 reduction compared to the FY2002appropriation).

The Senate Committee on Appropriations recommended funding the NARA accounts at $265 million. Of this amount, $249.9 million is recommended for operations, $14.2 million for repairsand restoration, and $8 million for NHPRC. The recommended appropriation provides for, amongother activities, "training personnel at the State and local level in the proper use and handling ofclassified and sensitive but unclassified homeland security information. Funding," the reportcontinued, "will also be used to facilitate security clearances for appropriate individuals at the Stateand local level, and to ensure that Federal agencies have the necessary classification authority forhomeland security information." (56) Elsewhere,the report indicated that section 515 of theappropriation bill was "a new provision increasing the size of the endowment for future Presidentiallibraries." (57) (For further discussion, see theInformation Resources Management section below.)

Office of Government Ethics (OGE). The Office of Government Ethics, a small agency within the executive branch, was established by the Ethics inGovernment Act of 1978. Originally part of the Office of Personnel Management, OGE became aseparate agency on October 1, 1989, as a result of the Office of Government Ethics ReorganizationAct of 1988. The Office of Government Ethics exercises leadership in the executive branch toprevent conflicts of interest on the part of government employees, and to resolve those conflicts ofinterest that do occur. In partnership with executive branch agencies and departments, OGE fostershigh ethical standards for employees and strengthens the public's confidence that the government'sbusiness is conducted with impartiality and integrity.

P.L. 108-7 funds OGE at $10,557,000. The funding request for FY2003 is $10,488,000, a 3.3% increase over the enacted FY2002 amount of $10,117,000. The House passed the recommendedfunding at the requested level of $10,486,000. The Senate Committee, however, has recommended$10,557,000. The Senate report states that the increase is for pay parity.

Office of Personnel Management (OPM). The budget for OPM is comprised of budget authority for both permanent and current appropriations. This report discusses the budget authority for current appropriations. The agency is responsible foradministering personnel management functions. Among the activities OPM engages in are helpingagencies develop merit-based human resources management accountability systems to support theirmissions; developing, implementing, and monitoring employment policies for agencies in the areasof workforce planning, recruiting, selecting, promoting, reassigning, downsizing, and reshaping;administering the retirement, health benefits, and life insurance programs for current and retiredfederal employees; developing and implementing policies on pay and leave administration andevaluating the effectiveness of alternative compensation systems; and developing governmentwidepolicies, issuing guidance, and providing assistance to agencies on employee relations issues. TheOffice of Inspector General (OIG) conducts audits, investigations, evaluations, and inspectionsthroughout the agency and may issue administrative sanctions related to the operation of the FederalEmployees Health Benefits Program.

P.L. 108-7 appropriates a total of $16,559,682,000. The funding of the accounts is as follows: salaries and expenses, $129,486,000; Office of Inspector General, $1,519,000; government paymentfor annuitants (employee health benefits), $6,853,000,000; government payment for annuitants(employee life insurance), $34,000,000; and payment to civil service retirement and disability fund,$9,410000,000. Sums were included to carry out a telecommuting training program ($500,000) andto award a grant or contract to study retirement readiness ($250,000). The conferees also instructedOPM to report to the Committees on Appropriations, within 45 days, on certain locality payconsideration and, by June 1, 2003, on official time used for representational activities. (58)

The amount of money requested for FY2003 is as follows: Discretionary funding of $128,804,000 for salaries and expenses and $1,498,000 for OIG salaries and expenses. It alsoincludes mandatory funding of $6,853,000,000 for the government payment for annuitants of theemployees health benefits program, $34,000,000 for the government payment for annuitants of theemployee life insurance program, and $9,410,000,000 for payment to the civil service retirement anddisability fund. The request is 29.3% more than the $99,636,000 appropriated in FY2002 for salariesand expenses; the same as the $1,498,000 for OIG salaries and expenses; 11.8% more than the$6,129,000,000 for the government payment for annuitants of the employees health benefitsprogram; the same as the $34,000,000 for the government payment for annuitants of the employeelife insurance program; and 2% more than the $9,229,000,000 for payment to the civil serviceretirement and disability fund.

The House Committee on Appropriations recommended and the House passed the following appropriation: Discretionary funding of $128,986,000 for salaries and expenses, ($182,000 morethan the President's request) and $1,498,000 for OIG salaries and expenses (the same amount as thePresident's request). It also includes mandatory funding in the same amounts as the President'srequest. Of the $128,986,000 appropriated for salaries and expenses, $20,800,000 would fund theHuman Resources Data Network, $5,800,000 would fund the electronic government initiatives,$2,500,000 would fund the governmentwide payroll modernization initiatives, and $500,000 wouldestablish a telecommuting training program.

The Senate Committee on Appropriations recommended an appropriation of $129,686,000 for salaries and expenses; $1,519,000 for OIG salaries and expenses; $6,853,000,000 for health benefits;$34,000,000 for life insurance; and $9,410,000,000 for the civil service retirement and disabilityfund.

Office of Special Counsel (OSC). The agency investigates federal employee allegations of prohibited personnel practices and, when appropriate,prosecutes matters before the Merit Systems Protection Board; provides a channel for whistleblowing by federal employees; and enforces the Hatch Act. In carrying out the latter activity, theOSC issues both written and oral advisory opinions. The OSC may require an agency to investigatewhistleblower allegations and report to the Congress and the President as appropriate.

P.L. 108-7 funds the OSC at $12,449,000, including full operational funding for FY2003. The amount of money requested for FY2003 was $12,434,000 for the OSC, an increase of 4.6% over the$11,891,000 appropriated in FY2002. According to the budget, "This request will enable OSC tocontinue to reduce its long-standing case processing backlogs." The number of pending prohibitedpersonnel practice cases older than 240 days were reduced by 15% in 2001. (59)

In the 107th Congress, for FY2003, the House Committee on Appropriations had recommended and the House had passed an appropriation of $12,432,000, $2,000 less than the President's request. The Senate Committee on Appropriations had recommended an appropriation of $12,449,000.

General Provisions

This section of the report discusses, briefly, general provisions such as governmentwide guidance on basic infrastructure-like policies. Examples would be provisions related to the BuyAmerica Act, drug-free federal workplaces, and authorizing agencies to pay GSA bills for spacerenovation and other services which are annually incorporated into the Treasury and GeneralGovernment appropriations legislation. Quite frequently, additionally, there will be provisionswhich relate to specific agencies or programs. For both Title V and VI, with noted exceptions, thesections discussed here will be those which are new or contain modified policies.

H.R. 5120 , as passed by the House, has dropped the requirements (formerly Sec. 513) that read: "The costs accounting standards promulgated under section 26 of the Office ofFederal Procurement Policy Act (Public Law 93-400; 41 U.S.C. 422) shall not apply with respectto a contract under the Federal Employees Health Benefits Program established under chapter 89 oftitle 5, United States Code." There was considerable floor debate related to whether there would benegative impact on the federal employees who subscribe to the program if the carriers are requiredto be subject to these cost accounting standards. (60)

The Administration's proposed language for general provisions in Title VI is found the Appendix . (61) The House and Senateamendments adopted and rejected during House considerationand passage will be presented in the section of the report entitled "Status and Legislative History." Table 2 provides a comparison of the disposition of key sections under discussion. Unless thetextappears in quotations for H.R. 5120 , the language and section designation are from theHouse report as cited in the notes. The right-hand column reflects the statutory enactment.

Table 2. Title VI Governmentwide GeneralProvisionsa

Note:

a. See H.Rept. 107-575 , pp. 95-98, for H.R. 5120 (107th Congress); S.Rept. 107-212 ,pp. 93-95, for S. 2740 (107th Congress);and H.Rept. 108-10 , pp.1355-1361, for P.L. 108-7 , enacted.

Homeland Security

Prior to the terrorist attacks of last fall, the Office of Management and Budgethad identified several accounts under this appropriation (Department of the Treasury,Bureau of Alcohol, Tobacco, and Firearms, U.S. Customs Service, U.S. SecretService, and the General Services Administration) as being funded for functionsrelated to countering terrorism. With the exception of the Counterterrorism fundaccount within the Department of the Treasury, none of the agencies carried a lineaccount specifically funding counterterrorism, or terrorism responses.

Emergency Counterterrorism Funding

Subsequent to the attacks, certain accounts have been allocated funds from the Emergency Response Fund established through P.L. 107-38 . Also, under theprovisions of P.L. 107-38 , a further supplemental appropriation is authorized. TheAdministration submitted detailed information for the allocation of funds under suchan emergency supplemental and through P.L. 107-117 funds were appropriated. (62)

The role of the Department of the Treasury relates to both its statutory missions and the capabilities of its law enforcement groups. Although the FederalBureau of Investigation is the lead agency for several functions, the Customs Servicehas the lead in preventing terrorists from entering the United States; the SecretService is responsible for protection of officials and facilities and has the lead inproviding security plans to prevent terrorist incidents at National Special SecurityEvents, such as the 2002 Olympics; and the Bureau of Alcohol, Tobacco andFirearms is the lead on firearms and explosives. The Department itself has a generalresponsibility for the support and security of the nation's financial structure.

The General Services Administration has the responsibility for the management and oversight of federal buildings and federal real property. Under theGovernment Information Security Reform Act of 2000, ( P.L. 106-398 ) the GSA isdirected to assist agencies in fulling their responsibility to maintain procedures fordetecting, reporting, and responding to security incidents. In this latter regard, GSAoperates the Federal Computer Incident Response Center (FedCIRC), whose purposeit is to ensure that the government has a central focal point for handling computersecurity related incidents, can withstand or quickly recover from attacks against itsinformation systems, and has a centralized computer security information-sharingprogram.

Office of Homeland Security, Executive Office of the President

There has been established, within the Executive Office of the President, an Office of Homeland Security. (63) Funding for thisactivity was requested in theconsolidated account for the Executive Office of the President. Both the House andSenate committees recommended funding of $24,061, 000. H.Rept. 107-575 statesthat the activity is of a high priority and should be funded as a separate activity. Thereport goes on to explain that in "creating a new Office of Homeland Security withinthe Executive Office of the President, the Committee seeks to better highlight andisolate those costs directly associated with the operations of this office." (64) TheCommittee further explains its position:

Despite its strong belief that the Committee should have received testimony from the Director of the office ofHomeland Security within the regular Committee hearing process, the Committeeaccommodated the executive branch by conducting a more informal briefing. Thecommittee's decision to focus on cooperation rather than confrontation does notdiminish its belief that a regular hearing with testimony should have been agreed toby the executive branch.

It is the expectation of the Committee that, by establishing anew account for this function, information related to theoperations of and funding for this office will be more readily available. Witnesseswho testify before the Committee on behalf of this account are expected to be fullyprepared to answer questions about the functions and operations of the Office ofHomeland Security. (65)

With the adjournment of the 107th Congress, that account remained undefined. It was expected that discretionary funding available to the Presidentwould continue to fund that activity until an appropriation were available. As notedabove, P.L. 108-7 funds the office at $19,398,000. The Senate-passed version wouldhave provided $24,844,000. In the explanatory section of the conference report, thereare references to funding that would related to the operation and location of theDepartment of Homeland Security in Washington, DC, referenced as the NebraskaAvenue site:

The conferees agree to provide $19,398,000 instead of $24,061,000 as proposed by the House and $24,844,000 asproposed by the Senate. The conferees agree to transfer $738,000 to the Office ofAdministration in support of the pilot program to centralize the procurement ofcertain common goods and services. The conferees do not include $4,663,000 infunds proposed for various costs associated with the operations of the NebraskaAvenue complex. The conferees are aware of an unobligated balance of $3,745,200in fiscal year 2002 supplemental appropriations for Nebraska Avenue; and theconferees also note that funds were transferred through the authority provided inPublic Law 107-294 for various Nebraska Avenue operations. The conferees notethat detailed justification materials related to the funds transferred under the authorityof Public Law 107-294 have not yet been provided to the Committee. Given theavailability of these other funding sources, the conferees defer consideration of$4,663,000 proposed for Nebraska Avenueoperations. (66)

The conferees went on to remark that they are aware of mail processing problems in the Executive Office of the President and support the plans to transfer$9,000,000 of FY2003 funds from the Office of Homeland Security to theDepartment of Homeland Security.

The conferees support this transfer of responsibilities and encourage the Office of Administration to move expeditiouslytoward this goal. The Office Administration is directed to report back to theCommittees on all efforts to transfer funds and responsibilities for this effort to theDepartment of Homeland Security no later than 60 days after enactment of thisAct.

(67)

Department of Homeland Security

Under the provisions of P.L. 107-296 (November 25, 2002), effective January 24, 2003, there will be established the Department of Homeland Security. (68) Amongthe units and activities, covered by Treasury and General Government appropriationsaccounts, being transferred to the department are the U.S. Customs Service, the U.S.Secret Service, as well as the GSA's Federal Protective Service and the FederalComputer Incident Response Center. (69) Also, theBureau of Alcohol, Tobacco, andFirearms will be renamed the Bureau of Alcohol, Tobacco, Firearms, and Explosivesand transferred to the Department of Justice.

On March 25, 2003, the President sent a FY2003 supplemental request to Congress, with requests for additional funding in support of actions in the MiddleEast. While most of the funds would go to support the military effort, $4.25 billionis requested for homeland security requirements. The Department of HomelandSecurity would receive $3.5 billion, the Department of Justice, $500 million; and theExecutive Office of the President, $250 million. The Director of the Office ofManagement and Budget would be required to provide Congress with 15 days noticebefore any such transfer were made. (70)

Counterterrorism Activity Funding -- OMB Annual Report

The Office of Management and Budget is required to submit an Annual Report on Combating Terrorism. (71) The2002 report was released on June 24, 2002. It provides projects for FY2003 funding needs. (72)

Federal Personnel Issues

Pay

General. Under the Federal Pay Comparability Act of 1990 (FEPCA), federal white collar employees, paid under theGeneral Schedule and related salary systems, are to receive annual adjustments basedon two separate mechanisms. The first is the adjustment to base pay which is basedon changes in private sector salaries as reflected in the Employment Cost Index(ECI). The rate of pay adjustment is supposed to be the percentage rate of change inthat element of the ECI, minus .5. Under that formula, for January 2003, the basepay adjustment will be 3.1%. On December 31, 2002, the President signed anExecutive Order establishing the salary schedules for federal civilian personneleffective January 2003. (73) The President haddetermined that the localitycomparability payments will be made at the same rate at that effective January 2002. Therefore, the federal General Schedule net increase was 3.1% payable ratethroughout the system.

Under the provisions of Section 637, Division J, P.L. 108-7 , the full pay increase for the General Schedule is 4.1%. There was no stipulation as to how theadditional 1% will be apportioned between base pay and locality-based comparabilitypayments. On March 21, 2003, the President signed Executive Order 13291, whichapplies the additional 1% to locality-based comparability payments. The paymentwill be retroactive to January 2003. (74)

The President's budget proposed a federal civilian pay increase of 2.6% in January 2003. (75) However, the proposal did notindicate how the pay increase wouldbe split between basic pay and locality-based payments for the General Schedule andrelated pay systems.

In the 107th Congress, both the House Committee on Appropriations and the Senate Committee on Appropriations supported an overall federal civilian payadjustment of 4.1%, which would put it in parity with the projected military payadjustment. The House-passed version includes the 4.1% adjustment but stipulatesthat the adjustment would be absorbed by the agencies. The Senate committeeversion would have increased salaries and expenses accounts in the bill to fund thepay parity provision.

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 managed as planned, the wage rates and the ratesof adjustment in the over 130 wage areas would vary, according to the labor costs andcompensation in the private sector. For the last several years, Congress has limitedthe rates of adjustment, based on the rates of adjustment for the General Schedule( P.L. 108-7 , Division J, Sec. 613). Part of the rationale for that decision is that, incertain high cost areas, some FWS wages would exceed the salaries paid to GeneralSchedule supervisors. Wages in lower cost areas will be allowed to increaseaccording to the findings of the wage surveys but the high cost area wages will becapped. (76)

P.L. 107-117 extends the Monroney Amendment out-of-area survey application to Department of Defense personnel.

Members of Congress, Judges, and Other Officials. Under the Ethics Reform Act of 1989, as amended, payadjustments for federal officials, including Members of Congress and judges, are alsobased on ECI calculations, but for a different 12-month period. The ECI calculationsdictate a pay adjustment in January 2003 of 3.3%. However, the statute limits thoseadjustments to the rate of adjustment for base pay of the General Schedule. Therefore, since the General Schedule base pay is being adjusted at the rate of 3.1%,3.1% is the maximum rate of adjustment in salaries of federal officials for January2003. Since the additional 1% in General Schedule pay was apportioned to localitypay only, the salary of officials is unaffected and the rate of adjustment for January2003 remains at 3.1%.

Unlike that for Members of Congress and executive branch officials, the annual pay increase must be specifically authorized for judges. The authorization forthe January 2002 pay increase was in the Commerce, State, Justice and Judiciaryappropriation ( P.L. 107-77 , section 305). The language permitting the judges toreceive the January 2003 increase was reported by the Senate Committee onAppropriations as section 304 of S. 2778 . However, Congressadjourned prior to enactment. Therefore, the judges did not receive the 3.1%adjustment as of January 1, 2003. The 108th Congress enacted P.L. 108-6 (77) for thepurpose of permitting the judges to receive the increase retroactive to the first of theyear. At no time, since the authorization was required, have the judges receivedlower adjustments than the other officials.

Because the mechanism described above is automatic, there is no bill language necessary to establish the pay adjustment for January 2003. During debateon the Treasury bill rule and provisions there was very brief discussion about whetherthe bill would allow an increase in pay for Members. (78)

President. Pursuant to the Treasury and General Government Appropriations Act, 2000 ( P.L. 106-58 ), effectivenoon, January 21, 2001, the President receives a salary of $400,000 per annum . Since 1969, Presidents had been paid a salary of $200,000. No further action onpresidential pay is expected. Former Presidents receive a pension equal to the rateof pay for Cabinet Secretaries (currently $161,200) and the pension is adjustedautomatically as those pay rates are changed. (79)

Federal Employee Benefit Programs Pre-funding Proposal

In its report, the House Committee addresses the funding strategies of the Administration with regard to the accrual funding proposals set out in S. 1612 (107th Congress), the Managerial Flexibility Act: (80)

The President's Budget included a legislative proposal under the jurisdiction of the House Committee on GovernmentReform to charge to individual agencies, starting in fiscal year 2003, the fully accruedcosts related to retirement benefits of Civil Service Retirement System employeesand retiree health benefits for all civilian employees. The Budget also requested anadditional dollar amount in each affected discretionary account to cover theseaccrued costs.

Without passing judgement on the merits of this legislative proposal, the Committee has reduced the dollar amounts ofthe president's request shown in the "Comparative Statement of New BudgetAuthority" and other tables in this report to exclude the accrual funding proposal. The disposition by Congress of the legislative proposal is unclear at this time. Should the proposal be passed by Congress and enacted, the Committee will makeappropriate adjustments to the President's request to include accrualamounts.

The Senate Committee on Appropriations joined with the House Committee in admonishing the Administration for adjusting the funding data in the budgetrequest to reflect a pending legislative proposal rather than waiting to adjust thefigures after enactment. Since the Senate "authorizing committee has not acted onthis legislation ... the Senate Appropriations Committee has reduced the dollaramounts of the President's request ... to exclude the accrual funding proposal." (81)

Federal Retirement Program. Pensions for federal employees are funded through contributions by employees andthe federal government to the Civil Service Retirement and Disability Fund(CSRDF). Under the Federal Employees' Retirement System (FERS), which coversfederal employees hired since 1984, employee pensions are fully "pre-funded" bycontributions from employees and their employing agencies and interest on thosecontributions. Pensions under the Civil Service Retirement System (CSRS), whichcovers only federal employees who were hired before 1984, are not fully pre-funded. Contributions from employees and their employing agencies and the interest on thosecontributions do not cover the full cost of the pension benefits that employees in theCSRS accrue each year. The CSRS therefore has a substantial unfunded liability, andit accrues additional unfunded liability each year. Part of this unfunded liability ispaid for by annual transfers from the general revenues of the U.S. Treasury to theCSRDF. The part of the unfunded liability that is not paid for by these transferseventually will be paid for through additional transfers to the CSRDF from thegeneral revenues of the Treasury.

Subtitle A of Title II of S. 1612 (107th Congress), the Managerial Flexibility Act, would have required each federal agency to make additionalcontributions to the CSRDF on behalf of employees covered by CSRS. (82) Theseadditional contributions would be made from the salary and expense accountsappropriated annually by Congress to each agency. Whether the agencies' salary andexpense accounts would be increased by the amount of the additional contributionswould be determined by the Congress. The additional contributions would preventfurther unfunded liability from accruing to the CSRS. They would not amortize (payoff) the unfunded liability that already has accrued under the CSRS. Increasingagency contributions to the CSRDF requires legislation and could not be done underthe existing regulatory authority of the Office of Personnel Management, whichadminister the Civil Service Retirement System.

In the FY2003 Budget documents, the primary account presentations, for Salaries and Expenses Accounts, factor in the pre-funding proposals. Alternativetables are also provided.

Federal Employees Health Benefits Program. Under the Administration's pre-funding proposal, thehealth plans covering federal retirees would also be affected. The current programand the possible effects of the proposal on the program are discussed in a CRScongressional distribution memorandum by Carolyn Merck, entitled Pre-FundingFederal Retiree Health Insurance (February 13, 2002).

H.R. 5120 (107th Congress), as passed by the House, dropped the requirements (formerly Sec. 513) that read: "The costs accounting standardspromulgated under section 26 of the Office of Federal Procurement Policy Act(Public Law 93-400; 41 U.S.C. 422) shall not apply with respect to a contract underthe Federal Employees Health Benefits Program established under chapter 89 of title5, United States Code." There was considerable floor debate related to whether therewould be negative impact on the federal employees who subscribe to the program ifthe carriers are required to be subject to these cost accounting standards. (83)

Federal Employees Workers Compensation Program (FECA). The Federal Employees Compensation Act(FECA) provides workers compensation benefits for injured Federal employees. Under current law (5 U.S.C. Sect. 8147), the direct costs of these benefits arereimbursed via transfers from the budgets of each Federal agency to the LaborDepartment, which administers the program and disburses the benefits. The costs ofadministration are covered by appropriation directly to the Labor Department.

The proposed legislation would have charged administrative costs in the same manner as benefit costs, i.e. through the budgets of each employing agency. Thestated intention was to make each agency explicitly bear the full cost of theiremployees' claims, thus "bolstering their incentive to improve workplace safety." Based on recent experience, the administrative surcharge would be around 4.5% ofbenefit costs. (For example, in FY2000 this would have represented $92 million inadministrative costs related to $2,025 million in program benefits.) Most of thesurcharge would be paid by the two agencies that account for more than 60% ofFECA claims: the U.S. Postal Service and the Defense Department. (However, thePostal Service already pays its share pursuant to 5 U.S.C. 8147(c).)

The Senate Committee on Appropriations addressed the proposal. (84)

The authorizing committee has not acted on this legislation; therefore, the Senate Appropriations Committee will continue tofund this administrative cost through the Department of Labor, EmploymentStandards Administration Salaries and ExpensesAccount.

Federal Child Care

The Bush administration has proposed elimination of the provisions found at Section 630 of P.L. 107-67 . The provisions authorize use of appropriated funds(salaries and expenses accounts) to provide child care in a federally owned or leasedfacility, either directly or through contract, for civilian employees of the agency. Thefunds used are to be applied so as to improve affordability of the service for lowerincome personnel. The Committees on Appropriations are to be notified beforeimplementation. P.L. 107-67 also added language authorizing payment to licensedor regulated child care providers "in advance of services rendered, covering agreedupon periods, as appropriate."

Neither the House and Senate bills ( H.R. 5120 and S. 2740 , 107th Congress) nor H.J.Res. 2 (108th Congress) propose repeal of the aforementioned provisions found in Section 630 of P.L. 107-67 . (For more information on child care issues in the 107th Congress, see CRS Report RL30944(pdf) .)

Information Resources Management

Overlapping Cyber-SecurityInitiatives. In its report, the House Committee on Appropriationsindicated that it was "concerned about redundancies in developing and implementinggovernmental cyber-security initiatives for the protection of government informationtechnology" and directed OMB to submit a report within 90 days of the enactmentof the appropriation bill detailing "the cyber-security initiatives undertaken by thevarious government departments and agencies," specifying "total costs, as of the dateof the report, by department or agency for cyber-security, an identification of thoseinitiatives that are being shared between departments or agencies, an identificationof those initiatives that respond to unique requirements, and an identification ofinitiatives that satisfy requirements of more than one department or agency yet arenot being shared." (85)

Government Web Sites. Concerned "about the lack of uniformity of standards and user friendliness that affectusability of the various department and agency web sites," the House Committee onAppropriations, in its report, encouraged "the adoption by the Administration ofuniform standards that can lead to more user friendly and usable government websites." (86)

Government Printing. The House Committee on Appropriations took issue with a recent OMB proposal for"disregarding the statutory requirement of Title 44, U.S. Code, Section 501, thatExecutive-branch agencies produce or procure their printing through the GovernmentPrinting Office." (87) In a May 3, 2002,memorandum to the heads of all executivebranch departments and agencies, OMB Director Mitchell E. Daniels, Jr., set forthnew policy with respect to the use of GPO in handling departmental and agencyprinting and duplicating needs. The new policy allowed that, 44 U.S.C. 501 notwithstanding, "Executive Branch departments and agencies should not be required to select GPO when more efficient and cost-effective options are available throughthe private sector or other avenues." Continuing, the memorandum specified that"Executive Branch departments and agencies should select printing and duplicatingservices based upon the best quality, cost, and time of delivery." The memorandumimplied that this change in policy was effective immediately, and stated that guidancewould be forthcoming from OMB's Office of Federal Procurement Policy and thata proposal would be made for amending the Federal Acquisition Regulation to reflectthe new policy. (88)

Noting that prior "examinations of such proposals have questioned whether such a policy could result in significant increases in the cost of printinggovernment-wide and could substantially impair public access to governmentinformation through the Federal Depository Library Program," the House committeedirected OMB to report within 30 days on how its proposal "(1) improves economyand efficiency in federal printing; (2) improves public access to governmentinformation; and (3) comports with the concern that unless and until Title 44 ischanged by a constitutional process, Executive-branch officials responsible forprinting are legally bound to uphold it." (89)

Similarly, in its report, the Senate Committee on Appropriations stated that it "strongly opposes the Office of Management and Budget's plans, announced in aMay 3, 2002, memorandum (M-02-07), to ignore the statutory requirement that theprocurement of Government publications must be conducted through theGovernment Printing Office (GPO). Not only has the administration announced anintention to completely disregard a law which has been in place since 1895 andstrengthened in 1994," the report continued, "it has failed to consider theconsequences particularly in terms of Government printing costs and public accessto Government publications." The committee directed "the administration to abideby the statutory requirement, 44 U.S.C. 501, that printing be done by or through theGovernment Printing Office." (90)

E-Government Initiatives. In its report, the House committee expressed concern "about the establishment ofgovernment's proper role in providing digital services." Noting that "the federalgovernment's investment in information technology is estimated to be $50 billion forfiscal year 2003 and rife with inefficiencies and redundancies," the report indicatedthat "the Administration is to be strongly encouraged to leverage related governmentbusiness processes to improve productivity, eliminate redundant systems, andsignificantly improve the quality of government services," but added that "itsE-government plans must be carefully evaluated and monitored to ensure that theydo not support government competition with market-based private providers ofdigital services." Furthermore, the committee report expressed concern "that thegovernment needs a new blueprint for guiding e-government initiatives." Consequently, the committee directed OMB to provide within 90 days after theenactment of the appropriations bill a report detailing the blueprint used by thee-government task force in its review and adoption of the e-government initiativesmentioned in the President's budget. (91) Othermatters to be addressed in the reportinclude "The process used by the Task Force to consider, and adopt or rejectE-Government initiatives; the evaluations of those and other E-Governmentinitiatives that were already provided for, or were requested by an agency or from theprivate sector; the reviews undertook [sic] by the Task Force for establishing anddeciding which digital activities and services are inherently governmental and shouldbe pursued as an E-Government initiative and which are non-governmental andtherefore fall under private provider's domain; and the support and guidance from theprivate sector used by the Task Force in its work."

Endowment for Presidential Libraries. The report of the Senate Committee on Appropriationsnoted that section 515 of the bill ( S. 2740 ) "is a new provisionincreasing the size of the endowment for future Presidential libraries." (92) Current lawprovides that presidential libraries built after 1985 must have a privately fundedendowment equal to 20% of the facility's assessed value to defray operational costs. (93) The provision in the appropriations bill would increase the private endowmentrequirement to 40%. Presidential libraries are constructed at private expense and,when completed, are deeded to the federal government for operation by the Nationalarchives. The private endowment requirement provides an offset to the public costof maintaining the facility.

Cuba Sanctions

Since the early 1960s, U.S. policy toward Cuba has consisted largely ofefforts to isolate the communist government of Fidel Castro through comprehensiveeconomic sanctions, including a near total trade embargo and prohibitions on U.S.financial transactions with Cuba. The Bush Administration has continued this policyof isolating Cuba. Restrictions on travel to Cuba have been a key and oftencontentious component of the sanctions, as have restrictions on agricultural exportsto Cuba. The 106th Congress passed the Trade Sanctions Reform and ExportEnhancement Act of 2000 ( P.L. 106-387 , Title IX), which allows for one-year exportlicenses for shipping agricultural exports to Cuba, although no U.S. privatecommercial financing is allowed.

Numerous initiatives have been introduced to ease U.S. sanctions toward Cuba, including efforts to ease restrictions on travel and the prohibition againstprivate commercial financing for agricultural products. In the first session of the107th Congress, the House debated two amendments to the FY2002 TreasuryDepartment appropriations bill, H.R. 2590 , that would ease U.S.sanctions on Cuba, approving one, which would prohibit spending for administeringTreasury Department regulations restricting travel to Cuba, by a vote of 240-186( H.Amdt. 241 , offered by Representative Flake) and rejecting thesecond, which would prohibit Treasury Department funds from administering theoverall U.S. embargo on Cuba, by a vote of 201-227 ( H.Amdt. 242 ,offered by Representative Rangel). Ultimately, however, the provision regardingCuba travel restrictions was not included in final congressional action on the bill. Inthe second session, the Senate approved its version of the 2002 "Farm Bill," H.R. 2646 , on February 13, 2002, which included a provision (Section335) that would have eliminated the prohibition on U.S. private commercialfinancing for agricultural sales to Cuba. The House version had no such provision,and it was not included in the conference report on the bill.

The issue of whether to ease Cuba sanctions was part of the debate during consideration of the FY2003 Treasury Department appropriations measure( H.R. 5120 and S. 2740 ). Secretary of State Colin Powelland Secretary of the Treasury Paul O'Neill said they would recommend that thePresident veto legislation that includes a loosening of restrictions on travel to Cubaor the prohibition on private financing for U.S. agricultural exports to Cuba. TheWhite House also indicated that President Bush would veto the Treasury Departmentappropriations bill if it had such provisions.

In July 23, 2002 floor action on H.R. 5120 , the House approved three Cuba sanctions amendments and rejected two. The House approved a Flakeamendment ( H.Amdt. 552 ), by a vote of 262-167, that would providethat no funds could be used to administer or enforce the Treasury Departmentregulations with respect to travel to Cuba. The Flake amendment would not preventthe issuance of general or specific licenses for travel to Cuba. The House alsoapproved a second Flake amendment, ( H.Amdt. 553 ), by a vote of251-177, that would prohibit funds from being used to enforce any restriction onremittances to nationals of Cuba. Current regulations allow remittances, but theseare limited to $300 per quarter. Finally, the House approved a Moran (Kansas)amendment ( H.Amdt. 554 ), by voice vote, that would provide that nofunds could be used to implement any sanction on private commercial sales ofagricultural commodities or medicines. Some suggest that the practical effect of thisamendment would be to prevent the Treasury Department's Office of Foreign AssetsControl (OFAC) from ensuring that sales to Cuba do not include private financing. (94) Some observers have also raised the issue of whether the effect of all three of theseamendments would be limited since the underlying embargo regulations wouldremain unchanged; enforcement action against violations of the relevant embargoregulations could potentially take place in future years when the Treasury Departmentappropriations measure did not include the funding limitations on enforcing the Cubaembargo. (95)

The House also rejected two Cuba amendments during consideration of H.R. 5120 . A Rangel amendment ( H.Amdt. 555 ), rejectedby a vote of 204-226, would have prevented any funds in the bill from being used toimplement, administer, or enforce the overall economic embargo of Cuba. A Gossamendment ( H.Amdt. 551 ), rejected by a vote of 182-247, would haveprovided that any limitation on the use of funds to administer or enforce regulationsrestricting travel to Cuba or travel-related transactions would only apply after thePresident certified to Congress that certain conditions were met regarding biologicalweapons and terrorism. The rule for the bill's consideration, H.Res. 488 ( H.Rept. 107-585 ), had provided that the Goss amendment would not be subject toamendment.

The Senate version of the Treasury Department appropriations measure, S. 2740 , as reported by the Senate Committee on Appropriations( S.Rept. 107-212 ), includes a provision, in Section 516, that is similar although notidentical to the Flake amendment described above regarding travel. It provides thatno funds may be used to enforce the Treasury Department regulations with respectto any travel or travel-related transactions, but would not prevent OFAC, whichimplements the travel regulations, from issuing general and specific licenses fortravel to Cuba. In addition, Section 124 of the Senate bill stipulates that no TreasuryDepartment funds for "Departmental Offices, Salaries, and Expenses" may be usedby OFAC, until OFAC has certain procedures in place to expedite the processing oflicense applications for travel.

Final action on the FY2003 Treasury Department appropriations measure was not completed before the end of the 107th Congress, but in the 108th Congress, theFY2003 omnibus appropriations bill ( H.J.Res. 2 ) included TreasuryDepartment Appropriations. The Senate version of H.J.Res. 2 , approvedJanuary 23, 2003, did not include the Senate Appropriations Committee provision from the 107th Congress that would have eased travel restrictions. However, theSenate omnibus bill included a provision with the goal of expediting action by theTreasury Department's Office of Foreign Assets Control on license applications fortravel within 90 calendar days (Division J, Treasury appropriations, Section 124). In the end , however, the conference report to the omnibus bill, H.Rept. 108-10 , filedon February 13, 2003, did not retain the provision expediting action on travel licenseapplications.

For further information, see CRS Report RL31139 , Cuba: U.S. Restrictions on Travel and Legislative Initiatives ; CRS Issue Brief IB10061, Exempting Food andAgricultural Products from U.S. Economic Sanctions: Status and Implementation ;and CRS Report RL31740 , Cuba: Issues for the 108th Congress .

Major Funding Trends

The FY2003 funding cycle was unusual in several respects. The House andSenate generally agree upon a congressional budget resolution which sets a ceilingfor overall spending. The respective Committees on Appropriations then allocate tothe subcommittees what their spending limits are for the funding cycle. During theFY2003 funding cycle, there was no formal agreement on such a resolution. TheHouse Committee on Appropriations issued so-called 302(b) allocations for theHouse subcommittees on June 21, 2003. (96) Asecond unusual aspect was that not onlydid the funding measures fail to be adopted prior to the beginning of the fiscal year,there was no solution by the time the Congress adjourned. The funding for the fiscalyear was enacted almost two months into the next Congress, one month short of thehalfway mark of the fiscal year. During the interim period, the accounts were fundedat the FY2002 enacted levels.

P.L. 108-7 , the Consolidated Appropriations Resolution, 2003 funded the Treasury and General Government accounts at $34,653,476,000. (97) The conferencereport does not provide a breakdown of mandatory and discretionary funding.

The House Committee on Appropriations filed a report to accompany H.R. 5120 . H.Rept. 107-575 shows that the bill, as reported, would fundthe discretionary accounts at $18.5 billion, for a total of $35.1 billion. (98)

The following summaries appeared in the press release from the House Appropriations Committee following their July 9, 2003 mark up: (99)

The Subcommittee recommends $18.5 billion in support of fiscal year 2003 operations of programs under its jurisdiction. This recommendation is above the President's request by $538 million and isconsistent with the Subcommittee's 302(b) spending allocation. The Committeeincludes $200 million for election administration reform and makes the availabilityof these funds subject to authorization. Excluding election administration reform, theSubcommittee's recommendation is $338 million above the President's request and$51 million below the fiscal year 2002 enactedlevels.

The Subcommittee rejects the President's proposal to fund $250 million in base operations of the Customs Servicethrough an increase in passenger processing fees - estimated to generate only $167million in new revenue. Instead, the Subcommittee funds base operations thru adirect appropriation, which accounts for most of the increase above the president'srequest. The Committee provides approximately $4.2 billion in support of homelandsecurity efforts; $246.4 million for the High Intensity Drug Trafficking Areasprogram; $439 million for Customs Service Automation Modernization, including$316.9 million to continue modernization of the antiquated Automated CommercialSystem; $646 million for GSA's construction program, including $309 million forsite acquisition, design and/or construction of 11 courthouse; and $436 million forcontinued upgrades to IRS's information technologysystems.

The Senate Committee on Appropriations filed S.Rept. 107-212 to accompany S. 2740 . The report shows that the accounts would befunded at $34,766,450,000 (mandatory and discretionary), which exceeds the requestof $34,276,277,000, an increase of almost $500 million. It appears that a significantamount of the increase reflects the committee's recommendation that the pay parityprovision be funded.

Table 3. Appropriations for the Treasury, PostalService, Executive Office of the President, and General Government, FY1998 toFY2002 (in billions of current dollars) a

Source for FY2002: U.S. Congress, House, Committee on Appropriations.

a These figures, in current dollars, include CBO adjustments for permanent budget authorities, rescissions, and supplementals, aswell as other elements factored into the CBO scorekeepingprocess. For a brief presentation on CBO scorekeeping see: U.S.Congressional Budget Office, Maintaining Budgetary Discipline:Spending and Revenue Options (Washington: GPO, 1999). Theappendix beginning on p. 281 provides the "ScorekeepingGuidelines," as found in the conference report to the BalancedBudget Act of 1997. Also available at http://www.cbo.gov/ .

Table 4. Treasury, Postal Service, Executive Office of the President, and General Government Appropriations, FY2003, by Titleand Major Accounts (In millions, without CBO scorekeeping)

Source: "Conference Report on H.J.Res. 2 , Consolidated Appropriations Resolution, 2003," Congressional Record, vol. 149, 108th Cong.,1stsess., Feb. 14, 2002 (Washington: GPO, 2003), pp. H639-H645.

Table 5. Department of the Treasury, Postal Service, ExecutiveOffice of the President, and General GovernmentAppropriations, 2003 (in thousands of dollars)

Sources: "Conference Report on H.J. Res. 2, Consolidated Appropriations Resolution, 2003," Congressional Record, vol. 149, 108th Cong., 1st sess.,Feb. 14, 2002 (Washington: GPO, 2003), pp. H639-H645. Figures for S. 2740 are from S.Rept. 107-212 . Note that figures do not reflectthe 0.65% across-the-board rescission required by P.L. 108-7 .

Glossary of Budget Process Terms

The following definitions are selected from the "Glossary of Budgetary Terms," asfound in CRS Report 98-720(pdf) , Manual on the Federal Budget Process , by RobertKeith in consultation with Alan Schick.

Account. A control and reporting unit for budgeting and accounting.

Appropriation. A provision of law providing budget authority that permits federal agencies to incur obligations and to make payments, of the Treasury for specifiedpurposes. Annual appropriations are provided in appropriations acts; mostpermanent appropriations are provided in substantive law.

Authorization. A provision in law that authorizes appropriations for a program or agency.

Budget Authority. Authority provided by law to enter into obligations that normally result in outlays. The main forms of budget authority are appropriations, borrowingauthority, and contract authority.

Budget Resolution. A concurrent resolution passed by both Houses of Congress, but not requiring the signature of the President, setting forth the congressional budget forat least the next five fiscal years. The budget resolution sets forth various budgettotals and functional allocations, and may include reconciliation instructions, todesignated House or Senate committees.

Continuing Resolution. An act (in the form of a joint resolution) that provides budget authority to agencies or programs whose regular appropriation has not beenenacted after the new fiscal year has started. A continuing resolution usually is atemporary measure that expires on a specified date or is superseded by enactment ofthe regular appropriations act. Some continuing resolutions, however, are in effectfor the remainder of the fiscal year and are the means of enacting regularappropriations.

Direct Spending. Budget authority, and the resulting outlays, provided in laws other than annual appropriations acts. Appropriated entitlements are classified as directspending. Direct spending is distinguished by the Budget Enforcement Act fromdiscretionary spending and is subject to the PAGO rules. It is also referred to as"mandatory spending."

Discretionary Spending. Budget authority, and the resulting outlays, provided in annual appropriations acts, but not including appropriated entitlements.

Federal Funds. All monies collected and spent by the federal government other than those designated as trust funds. Federal funds include general, special, publicenterprise, and intragovernmental funds.

Mandatory Spending. See "Direct Spending."

Obligation. A binding agreement (such as through a contract or purchase order) that will require payment.

Outlays. Payments made (generally through the issuance of checks or disbursement of cash) to liquidate obligations. Outlays during a fiscal year may be for payment ofobligations incurred in prior years or in the same year.

PAGO (Pay-as-You-Go) Process. The procedure established by the Budget Enforcement Act to ensure that revenue and direct spending legislation does not addto the deficit or reduce the surplus. PAGO requires that any increase in the deficitor reduction in the surplus due to legislation be offset by other legislation orsequestration. PAGO is enforced by estimating the five-year budgetary effects of allnew revenue and direct spending laws.

Reconciliation Process. A process established in the Congressional Budget Act by which Congress changes existing laws to conform tax and spending levels to thelevels set in a budget resolution. Changes recommended by committees pursuant toa reconciliation instruction are incorporated into a reconciliation bill.

Revolving Fund. An account or fund in which all income derived from its operations is available to finance the fund's continuing operations without fiscal yearlimitation.

Scorekeeping. Procedures for tracking and reporting on the status of congressional budgetary actions affecting budget authority, receipts, outlays, the surplus or deficit,and the public debt limit.

Supplemental Appropriation. Budget authority provided in an appropriations act in addition to regular or continuing appropriations already provided. Supplementalappropriations acts sometimes include items not included in regular appropriationsacts for lack of timely authorization.

Trust Funds. Accounts designated by law as trust funds for receipts and expenditures earmarked for specific purposes.

User Fees. Fees charged to users of goods or services provided by the federal government. In levying or authorizing these fees, Congress determines whether therevenue should go into the U.S. Treasury or should be available to the agencyproviding the goods or services.