American Geological Institute

Government Affairs Program SPECIAL UPDATE


Interior Appropriations, Tax Cut Legislation Making Progress

(6-20-97)


This update was originally sent out as an e-mail message to AGI's member societies

With the passage of the congressional budget resolution earlier this month, budget season is now in full swing on Capitol Hill. The budget resolution is based on a potentially historic agreement reached by the President and congressional leaders in May to achieve a balanced budget in the year 2002. It does not require a presidential signature and is not law, but it guides the congressional appropriations process for discretionary spending and a separate budget reconciliation process for changes in mandatory spending and tax cuts.

Legislation is moving forward on both the discretionary spending side and on tax cuts. This update summarizes action taken by the House Interior Appropriations Subcommittee on the fiscal year 1998 (FY98) budget for the U.S. Geological Survey and Department of Energy Fossil Energy R&D Program as well as provisions in tax cut legislation that would affect geoscientists. Although AGI has not taken a position on this legislation, we encourage geoscientists to contact Congress about provisions that concern them. Additional information on the budget resolution is available on this web site, as well as information needed to contact Congress. Additional information on the appropriations process is also available from the AAAS Budget Policy web site.

House Subcommittee Marks Up USGS Budget

On Tuesday, June 17th, the House Appropriations Subcommittee on Interior and Related Agencies passed its version of the spending bill covering the Department of the Interior, U.S. Forest Service, DOE Fossil and Energy Conservation programs, Smithsonian Institution, and other agencies. Discussion during the subcommittee markup focused on funds allocated for land acquisitions, fuel cell research, and cuts to the National Endowment for the Arts and the Woodrow Wilson Institute for Scholars. The subcommittee's bill contains good news for the U.S. Geological Survey and for DOE oil and gas programs.

The USGS would receive $755.8 million, more than $10 million more than the Administration requested, and up $16.7 million from FY97. The Biological Resources Division would receive the largest increase over FY97 (up $10.3 million) with smaller increase for the National Mapping Division (up $4 million) and Water Resources Division (up $2.4 million). The Geologic Division would receive nearly flat funding, but even that would be $2.4 million more than requested by the Administration for FY98. The bulk of the overall increase for the Survey is directed toward cost-of-living increases for USGS employees.

The subcommittee did not allocate the $9 million requested by the Administration for its Kalamazoo Initiative in water quality. Those funds were to be re-programmed from the existing NAWQA and Water Resources Research Institute programs. The subcommittee also did not grant the Administration's request of $3 million for the Global Seismographic Network. When USGS Director Eaton testified before the subcommittee (report available on AGI web site), Chairman Ralph Regula (R-OH) and several subcommittee members were very skeptical of shifting this responsibility from the Department of Defense to the USGS, arguing that DOD had much more money to spend. The subcommittee instead chose to fully fund the National Cooperative Geologic Mapping Program (funded at $22.2 million, up from $21.9 million in FY97), which the Administration had sought to cut.

Funding for the DOE Fossil Energy R&D program was up for both the oil technology and natural gas research accounts. Those increases were offset by cuts to the fuel cell research program, which the chairman sought to move to DOE's energy conservation program. The oil technology program would receive $49.4 million, up $3.5 million from FY97 but $2.8 million below the Administration request. The natural gas research program was funded at $61.6 million, a decrease of $9.6 million from last year but actually an increase because the subcommittee shifted funding for advanced turbine systems (a $14 million earmark last year) elsewhere in the budget.

The full Appropriations Committee is scheduled to vote on this bill on Thursday, June 26th. Under the Constitution, the House acts first on appropriations legislation. The Senate is not expected to take up its version of the bill until sometime in July. Action on other key spending bills, including the VA/HUD/Independent Agencies bill that funds the National Science Foundation, NASA, and EPA, will begin next week.

Tax Cut Legislation Moves Forward in House, Senate

On June 11, the House Ways and Means Committee passed a tax bill introduced by Chairman Bill Archer (R-TX) that includes provisions affecting geoscientists in academia, the oil patch, and particularly geoscience graduate students. This week, the Senate Finance Committee marked up a bill introduced by Chairman William Roth (R-DE) that does not contain any of the education-related provisions in the House bill. Both bills include provisions, albeit differing ones, to reform the percentage depletion allowances for marginal oil and gas wells. The Archer bill could reach the House floor as early as next Thursday.

Of greatest concern to graduate students is a provision to phase out section 117d of the tax code. This section protects tuition waivers, which are reductions in tuition often granted by universities to graduate and professional students in return for teaching and research assistance, from taxation as gross income. The bill proposes to gradually decrease the excludable percentage to zero by 2001. The National Association of Graduate-Professional Students profiled students from around the country to determine the effects of the proposed bill, and found that some students would face an increase of over 1000% in their taxes, and net losses of up to $500 per month. The Senate version of the tax bill does not include this provision. AGI has sent a memo to its member societies seeking their input on this issue.

Another tuition-related provision would affect geoscientists taking graduate classes. Section 127 of the tax code provides a tax exemption for the first $5,250 of employer-provided educational assistance. The section was designed to encourage employed students to take additional courses in order to increase their own productivity, and, by extension, the productivity and competitiveness of this nation's work force. The bill originally included exemptions for both graduate and undergraduate classes, but the reauthorization in 1996 only provided for undergraduate class exemption. The Archer bill would only extend the program through December 1997. In contrast, the Senate plan reinstates graduate education to Section 127 and makes it a permanent part of the tax code.

Chairman Archer's tax plan also revokes the tax-exempt status of TIAA-CREF, which is the principal retirement system for most of the colleges and universities -- public and private, undergraduate as well as graduate -- in the United States. Revoking the company's tax-exempt status will materially and adversely affect the pensions of nearly two million people in the education community -- teachers, researchers, administrators, and staff across the nation. Pension plans for other American workers are entirely exempt from taxation, and TIAA-CREF's pension operations are in essence equivalent to those of a multi-employer pension trust. According to Archer, the provision is intended to level the playing field for other companies seeking to enter the academic market. According to Bob Park of the American Physical Society, the only major competitor to TIAA is Valik, a company based in Archer's congressional district in Houston. The Senate bill does not include this provision.

Both the House and Senate bills contain provisions to maintain existing production from marginal oil and gas wells. The House bill would suspend for two years the net income limit on percentage depletion for marginal wells. The Senate version, introduced as an amendment by Sen. Don Nickles (R-OK) would make the suspension permanent but only if the price oil fell below $14 a barrel.


Contributed by David Applegate, Kasey Shewey, and Jenna Minicucci, AGI Government Affairs

Please send any comments or requests for information to the AGI Government Affairs Program.

Last updated June 20, 1997

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