House strikes compromise for Year 2000 funding

House leaders plan to move emergency spending proposals for the federal Year 2000 problem out of the Defense and Treasury departments' appropriations bills and into a separate appropriations bill to allay concerns of conservative balanced-budget advocates.

If the Year 2000 proposals were to remain in the Defense and Treasury bills and were designated as emergency funds, money for the proposals— a total of $3.85 billion— would likely come from the expected fiscal 1999 budget surplus. As an alternative, appropriators could cut deeply into other programs within the two bills to offset the cost.

But a newly created bill would allow Capitol Hill budget leaders to leave the surplus untouched and spread the cost over all 13 federal appropriations bills, according to a Hill staff member familiar with Year 2000 appropriations. Moreover, the House would not have to make the offsets until after October.

The proposal strikes a compromise between balanced-budget advocates and appropriators who fear they could not cut enough from programs in the Defense and Treasury bills to cover the $3.85 billion.

The proposal was in reaction to House conservatives, including Appropriations Committee member Rep. Mark Neumann (R-Wis.), who this month strongly opposed including Year 2000 emergency proposals in the Defense and Treasury appropriations bills, arguing that the emergency proposals would not be subject to spending caps and would violate last year's balanced-budget agreement. But conservatives now say the possibility of a separate Year 2000 funding bill would leave the surplus intact and is a better solution.

"Our concern with the Y2K funding was not the underlying issue," said Chris Jones, a spokesman for Rep. David McIntosh (R-Ind.), chairman of the Conservative Action Team on Capitol Hill. "The problem here was the internal way that this was happening with the budget."

Jones said McIntosh and other conservatives are "absolutely" happy with plans to move Year 2000 funding to a separate bill. Elizabeth Morra, a spokeswoman for the House Appropriations Committee, said leaders have not decided when they will submit their new bill.

House appropriators, with strong backing from House Speaker Newt Gingrich, are aiming to set aside $2.25 billion on the federal Year 2000 problem in fiscal 1999, plus an additional $1.6 billion for DOD's Year 2000 problem. The Clinton administration built close to $1 billion for the Year 2000 problem into its 1999 budget proposal.

Administration officials— who had built into their budget request a $3.2 billion contingency fund to cover anything from natural disasters to the Year 2000 problem— did not initially request the combined $3.85 billion in emergency Year 2000 money that House leaders want to give agencies. But as 2000 draws nearer and as observers expect labor rates to increase, administration officials seem more eager to provide more money.

Before news of the separate Year 2000 appropriations bill hit last week, Edward DeSeve, acting deputy director for management at the Office of Management and Budget, told the House Subcommittee on Government Management, Information and Technology that attempts to strip Year 2000 emergency funding from the Defense and Treasury appropriations bills would be "regrettable" and would "not help agencies move forward" in fixing the millennium bug.

But Rep. Steve Horn (R-Calif.), chairman of the subcommittee, assured DeSeve that Gingrich is committed to helping agencies fix the Year 2000 problem and would not deny agencies the money they need to fix the problem. "We don't intend to deny you one penny," Horn told DeSeve. "You're going to get every dime you need."

Fixing the federal Year 2000 problem from fiscal 1996 through fiscal 2000 is expected to cost nearly $5 billion, according to OMB estimates. But Year 2000 experts expect the cost to increase later this year and next as the Year 2000 glitch is discovered in more systems and embedded computer chips and as the cost of labor increases.