President Requests Fiscal 1997 Increase for NEH

With little fanfare, President Clinton sent forward his budget request for the fiscal year beginning in October 1996 (fiscal 1997). The $136 million request for the National Endowment for the Humanities (NEH) is a significant increase over the likely budget for fiscal 1996. The request demonstrates that the administration assigns relatively high priority to the NEH and its sister agency, the National Endowment for the Arts (NEA), for which a $136 million budget is also proposed. Should the NEH end up with $136 million for next year-and many observers believe the agency will be lucky to end up with level funding the money would contribute to repairing the damage caused by the sharp reduction in the agency's budget in the present fiscal year, although, as detailed below, the final budget level for fiscal 1996 remains unsettled.

Fiscal 1996: Background

The federal appropriations budgets are divided into 13 separate appropriations bills that are handled by 13 appropriations sub committees in both the House of Representatives and the Senate. The NEH and most other federal cultural agencies are part of the Interior and Related Agencies annual appropriation. The Interior budget for fiscal 1996 has been vetoed by the president and, in various configurations, voted down by the House as well. Interior is one of five appropriations bills upon which Congress and the president have failed to agree. It has therefore been included in each of the continuing resolutions (CR) that have kept the government running when the president has accepted them. All of the agencies contained in the Interior bill have been .shut down when the president vetoed the CRs. For more than three months and without success, the congressional leaders and the president have sought a formula that both could live with to continue Interior and four other appropriations bills through the end of the fiscal year. Because of the nature of the CRs, the NEH has at various times operated under 11 short-term CRs that provided one of three different levels of funding:

1. The conference level of funding negotiated by the House and the Senate last year, which is $110 million, a 36 percent cut from the fiscal 1995 approved budget of $172 million (after a $5 million rescission was imposed last year);
2. The "lower of the two houses" formulation, in which case the NEB operates at $99.5 million, the level approved by the House last year before the conference level was accepted; or
3. At a level "not less than 75 percent of the previous year's appropriation" (i.e., $129 million).

Although it was a possibility, the agency has not spent at level 3 when a CR permitted because when a final appropriation is established, any over expenditures will have to be paid back. While in recent weeks most signs point to the agency ending up at $110 million, a final budget of either $99.5 or $129 million is still possible—with $99.5 million more likely than $129 million.

The Budget Request

The fiscal 1996 budget cuts fell particularly hard on research, education, and public programs. That was not because either Congress or the administration was trying to eliminate those programs, but rather because there was pressure in Congress to lessen the impact of the cuts on the state humanities councils and preservation programs. The new recommendations seek to provide extra resources to the programs that bore the heaviest cuts before. Assuming that the fiscal 1996 budget ends up at $110 million, the distribution proposed by the administration is as shown in the chart below with fiscal 1996 as the base figure.

Hurdles to Clear

The NEH has a number of hurdles to clear in order to secure an approved fiscal 1997 budget at any level above $100 million. These fall under two categories: (a) deficit reduction and the discretionary portion of the federal budget, and (b) the lack of formal authorization for the agency.

While factors such as the drop in interest rates probably have more to do with the narrowing gap in producing new deficits, it is the discretionary portion of the federal budget that Congress turns to when seeking further reductions. While nearly everyone agrees that Medicare and other entitlements are driving the deficit up, all attempts to negotiate a broad budget agreement between Congress and the Clinton Administration have failed to date (and no one expects that such an agreement could be negotiated in a presidential election year). On the other hand, there are broad goals for reducing the growth of the budget each year. Although Congress has agreed upon certain reductions-for instance, not all qualified applicants for benefits like food stamps will necessarily receive them-it large portion of the cuts necessary to achieve the reduced budget goals will come out of the 17 percent of the federal budget that is discretionary. This does not mean that the NEH cannot receive the level of funding proposed by the president, only that it will be more difficult.

For some of the appropriators, the budget reduction goals are a convenient cover for reducing or eliminating programs for ideological or other nonfiscal purposes. This aspect appears to be at play in the disproportionate reductions the NEH and the NEA have suffered in the l04th Congress.

Reauthorization Problem

The National Foundation for the Arts and the Humanities Act of 1965 has been without formal reauthorization since October 1993. While reauthorization bills have cleared committees in both houses, they have not reached the floor for a vote, and there is a good chance they will not win passage before the l04th Congress adjourns. If no action is taken (and the agencies survive), the new Congress that begins in January 1997 will essentially start again from scratch. The present status of reauthorization and its effect on appropriations in the l04th Congress is sharply different in the two chambers.

Current Status in the House

The House of Representatives is the home of significant bipartisan support for the NEH—and also of a large body of legislators who for varying reasons do not believe the federal government should be in the business of supporting grant-making cultural agencies (outside of institutions like the Smithsonian and National Gallery of Art). Principally because of concerns about the arts endowment, but also in some instances the NEH, a number of members have made commitments to the politically active religious right and other critics to terminate the agencies. Usually, a presidential election year is one of danger for vulnerable programs with grants or other activities that can be portrayed as offensive. On the other hand, in the present situation, the more radically conservative members of the House may respond to election pressures by moving toward the political center.

Last May, the House Economic and Educational Opportunities Committee narrowly agreed upon a "reauthorization" bill [HR. 1557] offered by the committee chair, William Goodling (R-Pa.), that would phase out the NEA in two years, the NEH in three years, and shift 80 percent of the funds during the phaseout period to the states. The bill never reached the floor but served as a basis for appropriating funds, albeit sharply reduced ones, for the agencies. There does not seem to be any new movement toward legislation to reauthorize the NEH in the House, but since the Goodling bill provided a basis for appropriating funds for the current fiscal year, it could do the same in fiscal 1997. Many observers think that the Goodling bill has not been taken to the floor because the GOP leadership doubts that it would be approved in an up-or-down vote (it's unclear what the case would be if the bill were attached to more attractive legislation or otherwise maneuvered through). Advocates for the endowments worry that a House passed Goodling bill would be very difficult to reconcile in conference with the friendlier Senate because virtually every provision of the bill would be damaging to the endowments.

The House Budget Committee will not establish an overall allocation for the Interior subcommittee until sometime in May. As for the president's fiscal 1997 budget proposals, committee staff say that a good outcome for the NEH would be level funding (i.e., $110 million).

Current Status in the Senate

In general, the Senate in the 104th Congress is more hospitable to the endowments than the House. One impediment to passage of the very favorable reauthorization bill reported out of committee (S. 856, also known as the Kassebaum-Jeffords bill) is that the majority leader, Robert Dole (R-Kans.), has, in connection with his campaign for the GOP presidential nomination, publicly called for an end to the NEA. While Dole has been mostly silent on the endowments in the past, the positions he has taken in his campaign may preclude reauthorization progress this year. Ironically, as noted above, other election-year forces may bring greater moderation in the House.

In recent days, however, there have been bipartisan discussions among staff and senators from the offices of Ted Stevens (R-Ala.), Claiborne Pell (D-R.I.), Nancy Kassebaum (R-Kans.), James Jeffords (R-Vt.), Edward Kennedy (D-Mass.), Robert Bennett (R-Utah), Kay Bailey Hutchison (R-Tex.), and Alan Simpson (R-Wyo.), as well as others. The conversations are based on a belief by some, but not all, that (a) if the committee reauthorization bill was brought to a vote, the Senate would approve, but (b) more conservative legislation would stand a better chance in the House. Staff for the members of the labor and Human Resources Committee believe that S. 856 already represents careful compromise among various Senate views. Opinions vary as to the likelihood that any committee bill could actually make it to the floor while Dole is both majority leader and the presumptive GOP presidential nominee.

As with the House, the Senate Budget Committee allocations are several weeks off. Most observers believe that the chances of achieving budget numbers in the range proposed by the president are most promising in the Senate. But the Senate, too, is subject to the downward pull of deficit reduction. (For more information about the NEH budget, see pp. 36-39 of this issue of Perspectives.)