construction and operation, (4) United States Attorneys, and (5) the federal Judiciary. The Committee-reported resolution assumes discretionary spending in this function would total $33.9 billion in BA and $37.6 billion in outlays for 2004. This represents a decrease of $2.2 billion in BA and an increase of $2.1 billion in outlays from the 2003 level. The Committee-reported resolution includes the following specific assumptions: Department of Homeland Security (DHS) In order to better secure our nation's borders and enforce our immigration laws, the DHS will create two operating agencies by merging four existing organizations (also see separate discussion of homeland security). They are: the U.S. Customs Service, the Agricultural Quarantine and Inspection Program (AQI), and the Immigration and Naturalization Services's Inspection program and Border Patrol. The Bureau of Customs and Border Protection will consist of primarily of Border Patrol officers and inspectors from INS, Customs, and AQI and the main focus will be border security. The Committee-reported resolution assumes $5.6 billion in discretionary funds in 2004 for these activities, an increase of $800 million or 16.7 percent over 2003. The Bureau of Immigration and Customs Enforcement will be made up of investigative and other enforcement personnel from the Customs Service, INS, and the Federal Protective Service and their focus will be the enforcement of immigration and customs laws. For 2004, the Committee-reported resolution assumes $1.4 billion in discretionary funds, an increase of $300 million or 26 percent over 2003. Department of Justice (DOJ) For the Federal Bureau of Investigation (FBI), the Committee-reported resolution assumes a total of $4.1 billion, an increase of $397 million or 10.6 percent from 2003. This increase would be primarily used for intelligence analysts, surveillance personnel, and field investigators, including cybercrime investigators, as well as to support FBI-led interagency task forces. The Committee-reported resolution assumes the President's proposal to reduce state and local assistance programs by $1.3 billion or 63 percent. This continues the shift in priorities and funding for the Department of Justice. In 2003, the President cited a strong desire to reduce the amount of project earmarking in many of the state and local grant programs run by the DOJ. Once again, the President proposes the elimination of many grant programs includ ing the Byrne grants and the local law enforcement block grants. The President continues to fund the Justice Assistance Grants at $600 million with the hope that the funds will be awarded on a more competitive basis with a strong emphasis on performance accountability. The Committee-reported resolution also assumes $500 million for the Office of Domestic Preparedness to be used exclusively for grants to local law enforcement agencies to combat terrorism. The Committee feels very strongly about the effectiveness of the law enforcement programs in this function. Therefore, the Committee assumes that enough funds (at the 2003 levels, at a minimum) are included in this resolution to specifically continue funding for unique programs such as the Juvenile Accountability Block Grant Program and the Coverdell Grant program, which addresses DNA and forensic backlogs. In addition, the Committee also supports adequate funding for vigorous enforcement of the federal obscenity laws throughout the United States. Mandatory The Committee-reported resolution assumes two mandatory proposals in the President's budget concerning the extension of expiring Customs user fees. If extended, the combined resulting collections would be $1.3 billion in 2004 and $17.8 billion through 2013. Function 800: GENERAL GOVERNMENT This function includes the fiscal operations of the Department of Treasury (including the IRS's tax collection activities), the Legislative Branch, the Executive Office of the President, personnel and property management, and general purpose fiscal assistance to states, localities and U.S. territories. The Committee-reported resolution assumes discretionary spending in this function would total $17.1 billion in BA and $16.8 billion in outlays for 2004. This represents an increase of $1.4 billion in BA and $1.2 billion in outlays from the 2003 level. The Committee-reported resolution includes the following specific assump tions: The Committee-reported resolution allocates $10.4 billion for the Internal Revenue Service (IRS), an increase of $550 million or almost 6% from 2003. Of that increase, 50 percent is directed into Tax Law Enforcement (TLE), 23 percent toward Processing Assistance and Management (PAM), and 19 percent for reducing fraud in the Earned Income Tax Credit (EITC) program. In comparison to historical funding levels, this budget exceeds the compound annual growth rate from 1990-2004 by 1.3 percentage points. Adopt ing the President's proposal reflects a real commitment to funding a range of compliance initiatives, including ensuring fair compliance among upper income and business taxpayers as well as reducing erroneous EITC payments. The funding provided by this resolution translates into an additional 888 full-time equivalents (FTEs). Furthermore, the combination of additional resources and the reallocation of reprogrammed funding will permit the IRS to dedicate 2,350 more FTEs towards compliance. The Committee-reported resolution included a sense of the Senate amendment that the rates of compensation for civilian employees of the United States should be adjusted at the same time, and in the same proportion, as the rates of compensation for members of the uniformed services. The President's budget proposed a 2.0 percent pay increase for civilian employees as well as a Human Capital Performance Fund at the Office of Personnel Management. The President's proposal would provide $500 million to award additional pay to federal employees based on their performance. The new approach would complement the existing General Schedule (GS) system. Performance-based awards would be counted for retirement and other benefit calculations. The Committee-reported resolution allocates $223 million for payments in lieu of taxes for 2004, $23 million more than the President's request. Over the next decade, this translates into an additional $300 million above the President's request. These payments compensate municipal governments for forgone revenues stemming from the presence of the federal government. The Committee-reported resolution increases Homeland Security funding within Function 800 by $214 million in 2004. The additional funds are dedicated to developing the site plan for the new headquarters, converting wireless radio communication narrowband operations and bolstering security at federal buildings. Mandatory to Under the President's proposal to open ANWR for oil and gas leasing (the total federal receipts portion appears in Function 950Offsetting Receipts), the State of Alaska would receive a payment of one-half of the proceeds, or $1.7 billion in 2006, which is reflected in Function 800. In their examination of selected government programs, OMB determined through the Performance Assessment Rating Tool (PART) that IRS collection efforts do not efficiently utilize its available resources. In response, the President proposes legislation that would permit the IRS to enlist the help of private collection agencies to obtain payment from delinquent taxpayers. The Committee-reported resolution includes $226 million to fund this proposal within the current budget window. The Committee-reported resolution assumes that President's $386 million Financial Agent Services proposal is enacted. Currently, financial institutions that operate major collection and payment programs on behalf of the federal government are reimbursed via compensating balances. The President's proposal would instead replace the existing barter arrangement with a more transparent fee for service agreement. Function 920: ALLOWANCES Function 920, Allowances, usually displays the budgetary effects of proposals that cannot be easily distributed across or that affect multiple budget functions. In past years, Function 920 has included total savings or costs from proposals associated with emergency spending or proposals contingent on certain events that have uncertain chances of occurring. The Committee-reported resolution assumes discretionary spending in this function would total $3.9 billion in BA and -$3.6 billion in outlays for 2004. The Committee-reported resolution includes the following specific assumptions. Currently there is an overcompensation of baseline budgetary resources for pay raise-related costs. Due to a requirement contained in the Balanced Budget and Emergency Deficit Control Act, as amended, the Congressional Budget Office is required to annualize pay raises. This requirement was originally intended to compensate for temporary, three-month pay delays; if the current year appropriation was only going to include budget authority (BA) for 3 quarters of the pay raise, an extra quarter's worth of pay-related BA had to be added to the inflated level, in order to provide a constant level of services. Such an adjustment is no longer necessary because the date that pay raises take effect is now permanently set in law as the first pay period in January. As a result, by adding an extra quarter's worth of pay-related BA, the baseline now overstates the cost of providing a constant level of services. The Committee-reported resolution assumes removal of the effects of pay annualization, which would reduce discretionary BA by about $2 billion annually. Because the President did not submit a budget request covering the 2009-2013 period, CBO prepared an illustrative scenario for discretionary spending based on the last year of the President's request-2008. Future Congresses and Presidents could choose among many alternate paths for defense and nondefense discretionary spending in those years. The Committee-reported resolution assumes one of many such alternate scenarios for discretionary spending, with the defense path reflected in function 050 and all the nondefense effects aggregated in this function. Function 950: UNDISTRIBUTED OFFSETTING RECEIPTS This function records offsetting receipts (receipts, not federal revenues or taxes, that the budget shows as offsets to spending programs) that are too large to record in other budget functions. Such receipts are either intrabudgetary (a payment from one federal agency to another, such as agency payments to the retirement trust funds) or proprietary (a payment from the public for some type of business transaction with the government). The main types of receipts recorded as "undistributed" in this function are: the payments federal agencies make to retirement trust funds for their employees, payments made by companies for the right to explore and produce oil and gas on the Outer Continental Shelf, and payments by those who bid for the right to buy or use the public property or resources, such as the electromagnetic spectrum. COMMITTEE-REPORTED RESOLUTION [In billions of dollars] Budget Authority 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 - 50.5 - 52.9 -63.4 -69.4 -61.3 -65.2 -66.9 -69.9 73.3 -78.6 -82.1 - 50.5 - 52.9 -63.4 -69.4 -61.3 -65.2 -66.9 -69.9 -73.3 -78.6 -82.1 Mandatory • The Committee-reported resolution instructs the Senate Committee on Energy and Natural Resources to decrease outlays by $2.15 billion over the 2004-2013 period. The policy should be consistent with opening up the 1002 area of the Arctic National Wildlife Refuge for oil exploration and production in order to decrease our dependence on foreign oil. Because the Administration discovered that payments required of the Postal Service under current law will result in an overpayment for pension obligations, the President's budget proposed a significant reduction in the Postal Service's obligation. ĈBO estimated the President's proposal would increase the federal deficit by $40 billion over the 2003-2013 period, even as it would allow Postal Service to charge lower postal rates than it would otherwise have to under current law. Because CBO, CRS, and GAO have all observed that the Postal Service has other long term unfunded liabilities and challenges and that the Congress should carefully consider forgoing the flexibility to address them, the Committee-reported resolution assumes alternate_legislation (similar to H.R. 735, ordered reported in the House). Such legislation would reduce the Postal Service payment for 2003-2005, but then would reinstate and redirect the payment to an escrow fund until Congress can enact subsequent law regarding how the Postal Service should address its retiree health liabilities and other concerns. This proposal would increase the deficit instead by $7.3 billion over the 2003-2013 period. The budgetary effect on the Postal Service is reflected in function 370, and the effect on the receipts of the CSRS fund are shown in this function. • The Committee-reported resolution assumes the President's proposal to extend the authority of the Federal Communications Commission to auction spectrum, which would otherwise expire at the end of 2007. B. REVENUES Federal revenues are taxes and other collections from the public that result from the government's sovereign or governmental powers. Federal revenues include individual income taxes, corporate income taxes, social insurance taxes, excise taxes, estate and gift |