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7336213
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Budget Deferrals and Rescissions [Fact Sheet]
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7336213
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Budget Deferrals and Rescissions [Fact Sheet]
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White House Press Releases (Ford Administration)
Press Releases
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1974-09-20
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1974
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Digitized from Box 2 of the White House Press Releases at the Gerald R. Ford Presidential Library
EMBARGOED FOR RELEASE
September 20, 1974
UNTIL 12:00 NOON, EDT
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
BUDGET DEFERRALS AND RESCISSIONS
The President today is transmitting to Congress the first
message on deferrals and rescissions of budget funds. The
message complies with the requirements of the Congressional
Budget and Impoundment Control Act of 1974 (P.L. 93-344).
In all, the proposed rescissions and doferrals total $20.3
billion in authority to spend over a number of years.
BACKGROUND
Under the Act, a message to the Congress is required in
two kinds of circumstances. First, a message is to be sent
to the Congress whenever the President determines that funds
provided should not be spent for the purposes intended.
In such cases a "rescission" must be proposed, i.e., a plan
to withdraw authority to spend funds must be sent to the
Congress. Second, whenever any other action is taken to
withhold or delay the use of funds, a report on the "defer-
ral" is to be sent to the Congress.
The first messages to the Congress will include rescission
and deferral reports on determinations to withhold budget
authority made before enactment of the law. The Attorney
General is of the opinion that the Congressional Budget
and Impoundment Control Act of 1974 applies only Ito such
determinations made since July 12, 1974, the effective date
of the Act. However, determinations made prior to that
date and continuing in effect will be reported to keep the
Congress informed. These withholdings would come before
the Congress for consideration pursuant to this Act should
further Executive action be taken in the future. Of the
twenty reports made in this message, six of the withholding
actions. (both rescissions and four deferrals) were taken
prior to July 12, 1974.
The President is particularly interested in further guidance
from the Congress on operations under the new Act.
Action on Rescissions
To rescind funds, the Congress as a whole must pass legis-
lation within 45 days of continuous session after the message
is received. If the Congress does not act within 45 days,
the funds must be made available for use.
This part of the Act is intended to make the Congress and
the Executive Branch partners in determining programs to
be terminated or substantially reduced.
Action on Deferrals
Funds proposed for deferral may be withheld unless either
House of Congress enacts a resolution that they be spent.
However, funds may not be proposed for deferral beyond the
end of the current fiscal year. If further deferral is
to be proposed for the next fiscal year, a new message is
to be transmitted at that time.
more
(OVER)
2
Other Requirements
Each message under the Act is to explain reasons for each
deferral or rescission, its fiscal, economic and budgetary
effects, and other facts concerning the proposal. The
Comptroller General is required by the Act to review each
of the proposals and advise the Congress on them.
RESCISSIONS AND DEFERRALS PROPOSED TODAY
This message proposes $19.8 billion in deferrals and nearly
$0.5 billion in rescissions. These actions are already
assumed in the current estimate of $305.4 billion outlays
for fiscal year 1975. The immediate release of these funds
would increase spending by about $600 million in fiscal
year 1975, over $2 billion in fiscal year 1976, and larger
amounts in fiscal year 1977 and in later years.
A.
Major deferrals
1. Grants for waste treatment plant construction ($9
billion deferred)
The Federal Water Pollution Control Act authorized
$18 billion to be allotted to States to finance
the construction of waste treatment plants. The
Administration has held that the Act vests dis-
cretion in the Administrator of the Environmental
Protection Agency to allot less than the maximum
authorized. The present status follows:
(in billions of dollars)
Fiscal year
Amount
Amount
Not
authorized
authorized
allotted
allotted
1973
5.0
2.0
3.0
1974
6.0
3.0
3.0
1975
7.0
4.0
3.0
18.0
9.0
9.0
The question of the discretion of the Administrator
to allot funds has been challenged in a number of
cases in the Federal Courts, with conflicting
results. Two cases are now pending before the
Supreme Court on writs of certiorari.
It is the judgment of the Administration that
allotment of the additional $9 billion would
generate undesirable inflationary pressures in
both the pollution abatement industry and in
the economy as a whole.
This deferral action was taken prior to enact-
ment of the Congressional Budget and Impoundment
Control Act. A deferral report has been included
in this message to keep the Congress informed of
the status of the unallotted funds.
2. Federal aid highway funds (deferral of $4.4 billion
for the fiscal year 1975 program and $6.4 billion
for the fiscal year 1976 program)
Federal aid highway funds become available for
distribution to the States one year in advance
of the fiscal year in which they can be expended.
more
3
Since 1967, it has been the position of various
Administrations that the Executive Branch has authority
to control the rate of spending under this highway
program so long as the purposes of the program are not
frustrated.
Funds are withheld to avoid adverse economic impacts
both in terms of overall Federal budget effects and
effects on the economy as a whole and the construction
industry in particular. While construction of the
Interstate Highway System remains a national priority,
its claim to a larger share of the Federal budget is
less clear than in 1956 when construction began.
In accordance with past practices of several adminis-
trations, a substantial portion of the deferred funds
is expected to be made available at the beginning of
FY 1976.
3. Health, Education, and Welfare programs ($42 million
deferred)
These funds are provided under a continuing resolution
for seven HEW programs. The funds are being deferred
pending final decisions on HEW funding levels in 1975.
If these funds were used at this time, the flexibility
of the Congress and the Administration in reaching
decisions on a 1975 Labor-HEW Appropriations Act would
be affected.
4. Oregon and California grant lands ($24 million deferred)
Receipts from the sale of sawtimber from the grant lands
that are in excess of annual program planning require-
ments are routinely deferred for use in the subsequent
year. This financial management practice contributes to
a consistent program level from year to year which, in
turn, promotes more efficient operations. Although
this deferral action was taken prior to fiscal year 1975
and thus is not covered by the Congressional Budget and
Impoundment Control Act of 1974, a report has been made
to keep the Congress informed of the status of the funds.
5. General Services Administration's Automatic Data
Processing Fund ($14 million deferred)
These funds are being deferred to promote their most
efficient use. GSA is now developing criteria for
the purchase of computer equipment at savings to the
Government. Funds for the purchase are being held
until appropriate criteria are developed.
6. Prisoner of war claims administered by the Foreign
Claims Settlement Commission ($10 million deferred)
These funds cannot be used until the appropriate
military service determines the status of each
serviceman missing in action. This deferral action
has been taken, therefore, to meet contingencies
arising from claims that may be paid at a later date.
more
4
7. Programs of the Corps of Engineers, the Departments
of Agriculture, Commerce, Interior and State ($7.6
million deferred)
Most of the items proposed for deferral are related
to construction projects held up for the lack of
detailed plans and studies. The Agriculture and
Commerce deferral actions were taken prior to the
enactment of the Congressional Budget and Impoundment
Control Act of 1974.
B. Rescissions
Neither of the proposed rescissions of budget authority in
the President's message are covered by the Congressional
Budget and Impoundment Control Act of 1974. The determina-
tions that the funds were not needed to carry out the full
objectives and scope of the programs involved were made
prior to the effective date of the new Act. Thus, the
President is formally proposing the following two res-
cissions under provisions of the Antideficiency Act
(31.U.S.C. 665):
1. Rural Electrification Administration Loans ($456 million)
Funds proposed for rescission were originally provided
for rural electrification and telephone loans at a 2%
interest rate. Rescission is sought because a sub-
stitute program limiting the availability of 2% loans
was enacted by the Congress in 1973. Use of the funds
at this time would be inconsistent with Congressional
intent as expressed in the 1973 legislation that 2%
loan authority be used only in cases of special need.
2. Appalachian Regional Development Airport Construction
($40 million)
The airport safety objectives contemplated when these
funds were provided are being achieved through the use
of other appropriated funds.
A second report covering other rescissions and deferrals assumed
in current budget estimates will be transmitted in the next few
weeks. Additional messages will be transmitted as required to
control Federal spending and promote an orderly execution of
Federal programs.
###