7 January 2003

MEMORANDUM

TO:  NHA Members and Friends
FR:  John Hammer and Jessica Jones

RE:  Appropriations Update


The 107th Congress adjourned leaving most of the FY-2003
discretionary appropriations budgets wrapped together in a continuing
resolution so that the government could continue to function.  But
the CR means that most of the government agencies are operating on
FY-2002 budget level.  The overall mess results from the seeming
inability of the legislators to find compromise -- a situation
resulting from many issues, but most would agree that the $1.4
trillion tax cut enacted in 2001, combined with the economic
downturn, has forced the federal budget back into the massive
deficits that only recently departed from the scene.  The non-defense
discretionary budget in FY-2002 equals about 17% of the overall
federal budget.  Yet it is this area from which virtually all
reductions will be found.

The budget problems inherited by the 108th Congress, which is
convening today, are likely to affect the performance and tone of the
entire session.  First on the agenda for the new Congress is the need
to regularize the FY-2003 appropriations, a problem new Congresses
rarely face.  There is precedent for one option which is to simply
extend the CR through September and then pass a supplemental FY-2003
appropriation to pick up important increases that were lost when the
CR was formed.  A second option is to complete work on the 11
appropriations bill left incomplete last year.  As you will see
below, there is some movement toward completing committee work for
FY-2002.  But the overall problem is that the leadership in both
houses wants to reduce the growing deficit so that significant cuts
are needed in most budgets.  Needless to say, however the Congress
chooses to complete work on FY-2003, it will be using time normally
available for the FY-2004 appropriations process.

The situation for the National Endowment for the Humanities (NEH) in
the interior appropriations budget (in millions of dollars) is as
follows:

o $124.504 = FY-2002 appropriation (current level) = approximate
level in the continuing resolution
o $126.893 = FY-2003 administration request
o $127.754 = FY-2003 Senate level (S. 2708, reported by committee,
pending full Senate vote)
o $131.054 = FY-2003 House level (H.R. 5093, passed by full House)

S. 2708 contains an additional $2 million for the federal/state
partnership over the FY-2002 level, as well as an additional $1.25
for administrative costs.

H.R. 5093 contains an additional $5 million undesignated funds for
NEH over the FY-2002 level, as well as an additional $300,000 for
web-site development and $1.25 million for administrative costs.

Briefly, the status of other grant-making cultural agencies is as follows

National Endowment for the Humanities
o $115.2= FFY-2002 appropriation = Approximate continuing resolution level
o $117 = FY-2003 administration request
o $126.5 = FY-2003 House vote (Senate level funded)

Institute of Museum and Library Services (no longer in Interior budget)
o $26.9= FY-2002 (and continuing resolution)
o $29.02= FY-2003 administration request
o $29.02= FY-2003 Senate Vote
   House Labor, Health and Human Services and Education has not marked up

The House leadership is calling for the Appropriations Committee to
cut $800 million from the FY-2003 interior appropriation.  Last
month, Congressional Arts Caucus chair Louise Slaughter (D-NY) and
the caucus's new co-chair Jim Ramstad (R-MN) wrote to Appropriations
Committee chair C.W. Young (R-FL), ranking member David Obey (D-WI)
and ranking interior member Norm Dicks (D-WA)* that read in part::

"As your Committee completes work on FY03 Interior Appropriations
bill, we write to urge you to retain the modest budget increases for
two agencies that provide critical support for arts organizations and
activities across the country:  $10 million for the National
Endowment for the Arts and $5 million for the National Endowment for
the Humanities.  We understand that you are under pressure to make
major cuts in the final bill, but we ask you to remember the strong
bipartisan vote in the House on this amendment last July.  Clearly,
these small increases are not the places to cut."

*Joe Skeen (R-NM) chaired the interior subcommittee in the 107th
Congress but has now retired.  The new interior chair has not been
announced.