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Newly passed budget allows for $112 billion in domestic spending.

The House and Senate gave President Clinton a major victory when they voted to endorse his budget blueprint for changing federal spending priorities and reducing the deficit. The adoption of the $1.5 trillion budget resolution paves the way for Congress to begin action to cut defense spending, raise taxes, and to make long-term investments in the nation's cities and towns.

For municipal leaders, the agreement, worked out by a team of House and Senate conferees led by House Budget Committee Chairman Martin Sabo (D-Minn.) and Senate Budget Committee Chairman Jim Sasser (D-Tenn.) provides less in funding for long-term domestic investment than the President and House had wanted, but removes threats to NLC-supported tax incentives from the Senate and appears to reduce limitations on using defense cuts for domestic conversion and investment.

As passed, the resolution provides a blueprint for $496 billion in deficit reduction and $112 billion in new domestic investment over 'the next five years. The final agreement calls for $273 billion in tax hikes over the next five years, $110 billion in defense cuts, and over $100 billion in domestic spending cuts.

Overall the budget agreement limits discretionary-non-entitlement or automatic--spending to this year's level for each of the next five years and requires Congress to come up with $335 billion in cuts in entitlement spneding and revenue increases.

The agreement assumes most of President Clinton's proposed new investments in jobs, job training, infrastructure, housing, and defense conversion.

The conferees rejected the $22 billion in new taxes over and above what the administration had requested, reducing pressure on the House and Senate tax-writing committees to limit the President's NLC-supported tax incentives for cities, including permanent extensions of municipal authority to issue mortgage revenue and small issue industrial development tax-exempt bonds, and for all distressed cities and towns to issue a new kind of economic development tax-exempt bond. The Senate had proposed higher tax increases than either the President or House with a suggestion that the revenues could be realized by cutting short the priority municipal programs instead of granting permanent extensions. Sabo stated: "This package assumes the President's tax package will be enacted."

The conferees agreed to drop $2.8 billion in mandatory or entitlement savings, modifying proposals by the administration to raise mining, grazing, and timber -fees for industries operating on public lands. To make up for some of the tax and entitlement lost savings, the conferees agreed to less in discretionary spending than in the President's plan, which Sasser said would force cutbacks in long-term initiatives to invest in people and communities.

Shark Tank Processes to Begin

Although the budget resolution is not binding, it will set in motion a mandatory process called reconciliation as soon as Congress returns from its Easter recess. As passed, the budget resolution instructs each of the committees in Congress to make cuts or tax increases to achieve the level of deficit reduction set in the Budget Committee's instructions by June 18.

For cities and towns, this will create some especially difficult struggles in the appropriations or spending. committees, where the committees will find the President's long-term initiatives pitted against proposed cuts in existing programs. For instance, the Space Station Freedom will be pitted against both the Community Development Block Grant (CDBG) and EPA Clean Water programs. It will mean the President's proposed new funding to help cities and towns meet Safe Drinking Water mandates would compete against the Community Development Block Grant (CDBG) program. The freeze will force difficult tradeoffs.

Outlook

The Congressional action on the budget sets mandates on the totals, but is non-binding on the specifics. It clears the way for the next step, reconciliation, where the budget blueprint will actually be translated into specifics affecting every city and town later this year. Senate Minority Leader Robert Dole (R-Kans.) has portrayed the action so far as a skirmish before this next part, the real war, begins.
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Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Apr 5, 1993
Words:648
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