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Friday, April 21, 2006

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Legislative Update

NASAA Legislative Counsel Thomas L. Birch

Congress Demands Spending Room in Tight Budget Plan: Congressional response to the Presidentas FY 2007 budget proposing a funding freeze or cuts in most domestic discretionary spending is beginning to take shape. The Senate and House have begun work on the budget resolution which will serve as a blueprint for the appropriations bills setting the final funding levels for federal programs for the fiscal year starting October 1, 2006. The politics of this yearas budget reflect the legislatorsa frustration with the Presidentas call for spending cuts in the face of their own desire to maintain support for popular programs.

The Senate has already passed its version of the spending plan, including approval of an amendment adding $7 billion in funding for discretionary programs in labor, education and human services. The amendment, offered by Sen. Arlen Specter (R-PA) and Sen. Tom Harkin (D-IA), the chair and ranking Democrat on the Senate Labor-Education-HHS Appropriations Subcommittee, passed by a 73-27 vote on March 16, with 28 Republicans joining all Democrats voting to add the extra spending authority above the Presidentas benchmark as part of the FY 2007 budget resolution. The Senate showed its further dissatisfaction with proposals to cut spending by voting down amendments proposed to reduce spending in Medicare and Medicaid. The Senate later cleared the budget resolution by a narrow 51-49 margin.

The House Budget Committee is scheduled to mark up its version of the budget resolution on March 29, with floor votes due the following week and a House-Senate conference committee on the budget expected to convene following the Easter recess. Appropriations leaders in the House from both parties have already indicated their intention to follow the Senateas lead and propose adding money into the budget over the spending levels requested by the White House.

For example, Rep. Ralph Regula (R-OH), who chairs the House appropriations subcommittee for the Departments of Labor, Education and Health and Human Services, has made known his plan to push for a larger allocation for his subcommittee than the Bush budget would allow. At a hearing on March 9 before the Regula subcommittee, Education Secretary Margaret Spellings heard criticism from both sides of the aisle about underfunded or eliminated programs. Regula expressed support for the need to increase rather than freeze or cut spending on education in order to meet the challenge of global competition that was the centerpiece of the Presidentas recent State of the Union address. Another member of his subcommittee, Rep. Rosa DeLauro (D-CT), plans to go further and offer in the House the same $7 billion Specter-Harkin amendment approved by the Senate. That amendment would restore funding in the subcommitteeas appropriations bill to FY05 levels, including the arts education program set at zero in the Presidentas spending plan.

The Interior Appropriations Subcommittee plans to have its bill drafted and out to the House floor first, with a target date of early May. Dana Gioia, chair of the National Endowment for the Arts, testified before the subcommittee on March 29 to present the Administrationas budget proposing level funding for the agency at $124.4 million, with a shift of $1.843 million out of program granting dollars to cover rising administrative expenses at the agency. Subcommittee members quizzed Gioia on the possibility of sharing some administrative functions with the National Endowment for the Humanities to achieve cost savings. Republicans and Democrats alike lamented the tight money situation this year, knowing that a floor amendment would again be anticipated to increase appropriations for the NEA and the NEH.

Additional Funds Tagged for Cultural Exchange: While work goes forward on the FY07 budget, Congress is wrapping up additional spending requirements for the current 2006 fiscal year. In mid-March, the House passed its version of the FY06 Emergency Supplemental Appropriations Bill totaling $91.9 billion, mostly for expenses associated with the war in Iraq and further relief for hurricane victims in the Gulf Coast states. Arts advocates are hopeful that when the Senate drafts its supplemental money bill it will include funds to the National Endowment for the Arts to assist arts organizations suffering damage from Hurricane Kartrina.

In the meantime, the House-passed bill includes an additional $5 million in the Department of Stateas budget for educational and cultural exchange programs. An amendment offered during the House floor debate by Rep. Scott Garrett (R-NJ) to strike the funding for the educational and cultural exchange programs was rejected by a vote of 78 to 343. Rep. Frank Wolf (R-VA), chair of the appropriations subcommittee overseeing the State Departmentas budget, spoke in opposition to Garrettas amendment, saying the administration is trying to accomplish change abroad by the same means that succeeded during the Cold War: apublic diplomacy, exchange programs, change their government through peaceful means.a

Looking toward the FY07 budget, Secretary of State Condoleezza Rice testified on March 9 before the Wolf subcommittee to present the Administrationas funding request for next year. Included in the Presidentas budget is a proposal to increase spending for the State Departmentas Educational and Cultural Exchange Programs for Professional and Cultural Exchange by $17 million. It is not clear how much of that increase would go strictly for cultural exchanges, which currently receive about $4 million in the State Departmentas allocation.

NASAA took the lead with other arts service organizations to develop testimony submitted for the Wolf subcommittee hearing record in support of increasing the State Departmentas funding of international cultural exchanges. A copy of the testimony, endorsed by 15 organizations, is included in this issue of NOTES.

Artists' Deduction Possible in Final Tax Bill: With Congress expected to take up a final version of new tax legislation some time in May, House and Senate conferees are at work trying to reconcile the differences between the two tax measures already passed by both chambers. The Senateas bill, but not the Houseas version, contains language providing artists with a full fair-market value deduction for the charitable donation of their works. The new provision would encourage artists, writers and composers to donate their original works to museums, libraries, and archives rather than sell them to private collections or abroad, retaining their art work in the public domain.

NASAA and other advocates are working to urge the conference committee members to retain the Senateas provision in the final bill.