ADDITIONAL VIEWS AND ESTIMATES OF REPRESENTATIVE JUDY BIGGERT While I share many of the thoughts expressed in the Science Committee's views and estimates for Fiscal Year 2000, I wanted to take this opportunity to provide additional comments on some issues of particular importance to me. For decades, basic research has provided the foundation for our nation's progressive advances in science and technology, and served as a source of strength in our growing economy. Our nation's commitment to scientific research has strengthened the United States' position as a world leader in technology, energy, medicine, and other scientific fields. It is for this reason that I believe the committee must ensure that our national labs, such as Argonne National Laboratory, are provided adequate resources. A renowned multiprogram laboratory, Argonne already represents a significant national investment in basic scientific research -- as evidenced by its expertise in Basic Energy Sciences -- with world class science programs and user facilities. Argonne's premier science programs include materials science, chemistry, nuclear physics, and math and computer science. These programs benefit from the presence of three major user facilities at Argonne: the Advanced Photon Source, the Intense Pulsed Neutron Source, and the Argonne Tandem-Linac Accelerator System. In particular, the Advanced Photon Source provides the world's brightest beams of X-rays for research. Basic research at the Advanced Photon Source is expected to lead to rapid practical advances in such fields as metals, ceramics, alloys, composite materials, catalysts, petrochemicals, computers, electronics, biology, medicine and pharmaceuticals. Argonne has made significant headway in addressing energy and waste issues associated with nuclear fission. The Electrometallurgical Treatment (EMT) program, in particular, attempts to address DOE's most toxic nuclear waste. The purpose of the EMT program is to develop a treatment technology for spent fuel that has become seriously degraded during storage or that contains chemically reactive materials, such as metallic sodium, which can cause an explosion when brought into contact with water. The DOE is responsible for the treatment and storage of approximately 8000 tons of spent nuclear fuel containing 2700 metric tons of uranium and transuranic elements from various civilian and defense-related programs. Unfortunately, the President's budget proposal for the Department of Energy did not contain sufficient funding for this program. If funding is not restored, staff with programmatic or institutional knowledge will have to be let go or reassigned, and a considerable amount of progress may be lost. No other process exists or is under development to treat some of our most toxic nuclear waste, which means that it will remain untreated and returned to storage. A significant investment already has been made to address the treatment of spent nuclear fuel, but without the EMT program, we will not be able to capitalize on our investment. In its spring 1998 status report on Argonne's research and development activity, the National Research Council recognized that, "Given the time and cost required to develop these processes as alternatives to Electrometallurgical treatment, none of these alternative processes could be implemented and validated without significant further R&D and "hot" demonstrations. This would result in increased costs and delays in processing of the Experimental Breeder Reactor-II spent nuclear fuel relative to Argonne's proposed schedule for complete processing of EBR-II fuel." I share the Science Committee's commitment to substantial and sustainable funding increases for scientific research and development for Fiscal Year 2000 and the next five years. As the committee of jurisdiction over science and energy programs, I believe it is our responsibility to emphasize basic, fundamental science and the importance of such research in addressing issues associated with nuclear energy. I look forward to working with the Science Committee and the DOE to ensure adequate funding and continued oversight of the department's The Committee on Small Business submits these views and estimates on the FY 2000 budget submission on matters within our jurisdiction in compliance with Rule X, clause (4)(f), of the Rules of the House of Representatives. These views and estimates are based on the President's Budget for FY 2000 as well the Small Business Administration's budget submission. The President's proposed budget for FY 2000 requests an increase of $41 million dollars over FY 1999, for a total request of $761 million dollars. It also requests contingency emergency appropriations in the amount of $233 million. These contingency amounts would be for anticipated disaster loan spending. While the Committee believes that many of the provisions of the budget are reasonable, 2 (1) SMALL BUSINESS FINANCIAL PROGRAMS SUMMARY The FY 2000 SBA proposed budget for small business financial assistance discusses building a twenty-first century financial management organization and providing assistance for small business. The President's Budget requests a total of $200,118,000 in subsidy budget authority for financial programs. 7(a) LOANS This is the SBA's leading loan guarantee program. The Administration proposal for appropriations for this program is based on an estimated program demand of $10.5 billion in loans, requiring $155 million in budget authority. The Committee currently believes this request is adequate. Recent SBA estimates of demand for 7(a) have proved accurate. However, industry estimates place demand at a level of $11 billion dollars. The Committee is more concerned over reports from the GAO that SBA subsidy cost estimates are inflated. This has the potential to lead to overcharging of small business borrowers, but it may also point to reduced subsidy costs allowing the Congress greater flexibility in budgeting. 504 LOANS Thanks to legislation passed in the 104th Congress, the 504 program has a zero subsidy rate, which means that the program requires no appropriations. This was accomplished through heavy fees that were placed on borrowers and lenders -- fees needed to offset a severe subsidy rate. The Administration believes that the Section 504 loan program will not require appropriations for FY 2000, and will also be able to lower fees to the program's borrowers. However, larger improvements have yet to appear in the program's liquidation performance, the largest single factor in the subsidy rate equation. The Committee also has concerns that subsidy estimate problems exist in the 504 as well as the 7(a) program. The Committee agrees that no appropriation will be needed for this program but is concerned with the apparent uncertainty in the subsidy rates. SMALL BUSINESS INVESTMENT COMPANY PROGRAM The SBA proposes a significantly increased program level for the SBIC program but also projects a decrease in appropriations due to revisions in the subsidy rate. The Committee supports the requested budget amount. 3 The Administration anticipates a demand for $1.5 billion in participating securities leverage at a subsidy cost of $25.8 million. They also anticipate $800 million in demand for debenture leverage at no cost due to a zero subsidy rate. This rate is based in large part on the absence of default on any SBIC debenture since 1992. MICROLOAN PROGRAM The SBA requests a 100% increase in funding for the microloan program for FY 2000. The SBA believes that program demand will increase by an overwhelming amount. This increase reflects the Administration's desire to expand this program into all sectors of the country. However, the Committee is troubled by the SBA's simultaneous support for the PRIME/CDFI microloan proposed for the Treasury Department. If the microloan program at SBA is, in fact, highly effective at assisting entrepreneurs in underserved areas, why is PRIME/CDFI necessary? If the SBA program is not effective then why is such a dramatic increase requested? The Committee believes this estiinate may be valid, but not in light of the conflicting and duplicative PRIME/CDFI program. The Committee also continues to urge greater efforts by the SBA to make the guaranteed microloan program a viable option, current regulations appear to have been drafted in a fashion that discourages participation. (2) ASSISTANCE PROGRAMS SUMMARY The FY 2000 SBA budget submission proposes some significant increases in spending on its non-credit business assistance programs. While these programs represent well-intentioned efforts to aid small business, there is an increased tendency to fragment rather than consolidate these efforts. In addition, areas of proven value appear to be targeted for cuts to support other initiatives that may be redundant. MICROLOAN TECHNICAL ASSISTANCE The microloan program is requesting $32 million in technical assistance funds. These funds represent a hidden subsidy cost to the microloan program. While the reported subsidy rate of this program is relatively low, there is evidence that the technical assistance grants to the microlenders are, in fact, going to support operational expenses of the lenders rather than counseling. The Committee reserves judgment on the need for this additional funding. The Committee is particularly concerned that the need for this funding is duplicative of funding proposed in the PRIME/CDFI program, and vice versa. BUSINESS INFORMATION CENTERS/USEACS The SBA proposes level funding for these programs. However, the agency fails to explain whether it intends to co-locate any of these centers with existing Small Business Development Centers. In fact, there are instances in several cities where these centers are located in separate sites within blocks of each other, rather than in a single central location. The Committee tentatively supports these projects but would like the SBA to provide more substantial information. SMALL BUSINESS DEVELOPMENT CENTERS (SBDCs) The SBA proposes a significant (nearly 25%) cut in funding for the SBDC program. This proposal is unacceptable. The SBA is proposing to strip a quarter of the funding from this program and asking the SBDCs to institute fees instead. SBDCs are currently statutorily prohibited from charging fees. Fees are allowed in other programs; but if the statutory prohibition is lifted and the draconian cuts implemented, SBDCs would become the only program forced to charge fees. ONE STOP CAPITAL SHOPS The SBA FY2000 budget proposes a significant (210%) increase in funding for this program, from $3.1 million to $10 million. The SBA proposes to open the shops in each of the newly declared Empowerment Zones. The Committee notes that information regarding the use. services and merits of One Stop Capital Shops is limited. The Committee is also concerned that the efforts of this program and Business Information Centers is duplicating efforts best left to other more established programs. NEW MARKET VENTURE CAPITAL COMPANIES The Administration proposes $15 million in subsidy budget authority to support $100 million in lending from these NMVCCs. The Administration's FY 2000 budget also proposes $30 million in grant money for New Markets Venture Capital Companies. These NMVCCs will make SBIC loans in Low & Moderate Income areas. This means the Administration plans to spend $45 million in order to make $100 million in loans in LMI areas The Committee finds this unjustified, particularly in light of the fact that regular SBICs did $660 million in lending to LMI areas last year without this program. While the Committee supports the goal of increasing lending in LMI areas, it can not support the inordinately high cost of this proposal SUMMARY The SBA budget submission proposes an increase to non-credit assistance totaling $9.4 million dollars. However, the Committee has concerns over how these funds will be spent. New programs are being targeted for substantial expenditures while existing, proven programs are being dramatically cut. The Committee believes that non-credit assistance programs are valuable |